At the Women in Science and Technology conference in Dubai last week, the talk on start-ups was packed; the simultaneous session on energy was sparsely attended. If the region is to create the jobs it needs, it has to regard the energy industry not as a cash cow but as the driver of economic growth and innovation.
Of course, there are some excellent start-ups in the Middle East. But imitating Silicon Valley-style tech firms and adapting services such as Uber to the local context does not leverage the region’s strengths to generate enough new export-orientated globally competitive businesses.
Instead, imagine what the Arabian Gulf’s energy sector could look like by 2040.
Supercomputers determine the underground location of oil and gas, and a dense network of wells like tree roots extracts it. Highly efficient power plants burn the gas, trap all the pollutants and dispose of them safely in depleted oil reservoirs underground or use them to make eco-friendly cement and other building materials.
Solar panels, optimised for hot weather, are integrated into every new building and installed on desert land by robots.
Along with mini-nuclear reactors, their abundant cheap power makes the Gulf the world’s heavy manufacturing and chemicals hub. Surplus electricity generates hydrogen to fuel ships and aeroplanes, or is exported along transcontinental high-voltage direct current cables.
Homes adjust themselves intelligently to their residents’ needs, providing cool air and hot water directly with solar thermal systems. Desalination driven by renewable energy provides drinking water and irrigates desert farms. Hyperloop systems whisk tourists and goods between Gulf cities in minutes.
How could such a vision become reality? There are two main pillars: profit, and people.
A recent MIT study found that the traditional US venture capital model for conventional “tech” products and health care does not work for energy. The long lead times and capital intensity of the energy industry do not allow impatient investors a quick profit. A fire in a Samsung phone or a hacked internet-connected toaster is a problem; for an oil rig or nuclear power plant, a fire or hack would be a catastrophe.
And it is hard for individual companies to capture profits: the solar and shale revolutions have generated tremendous value, but most has gone to the consumer.
Instead, energy research and deployment needs patient capital. Government institutions, such as the soon-to-be-merged Petroleum Institute, Masdar Institute and Khalifa University in Abu Dhabi, are doing some excellent fundamental studies. Saudi Aramco has an extensive network of technology centres.
But most non-state companies do not spend enough on innovation, and the bold financing to turn promising ideas into billion-dollar start-ups is absent.
Sovereign wealth funds with long-term outlooks should play a greater role but need to be more willing to take risks and move faster.
People in this region do not have the anti-oil and gas prejudice becoming more prevalent in Europe and North America.
As Andrew Gould, formerly chairman of BG and Schlumberger, now a Saudi Aramco board member, said in the Financial Times last week: “If the West loses the ability to attract the brightest minds into the oil industry, it is going to gradually skew control towards Asia and the Middle East, where there is no problem attracting talent.”
Just like Silicon Valley, or the UK’s “Silicon Fen” at Cambridge, the region needs more world-class, research-orientated universities to provide technological brainpower and serendipitous breakthroughs.
Science, technology and engineering need to be prestigious, lucrative, exciting professions. As Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, said last week: “We work today to develop a generation of UAE scientists able to compete for the Nobel Prize in the next decades”.
The Gulf enjoys an abundance of hydrocarbons, sun, land and capital. But sustainable economic growth and job creation have to move beyond simple extraction and processing. Create the conditions for energy innovation, and the Silicon Sand Dunes will guarantee the region’s future.
Robin Mills is the chief executive of Qamar Energy and the author of The Myth of the Oil Crisis.
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