x Abu Dhabi, UAEThursday 27 July 2017

Sustainability in the region requires subsidy reduction

Sustainable development in the Gulf will not work until governments reduce subsidies on water and energy, according to Masdar's former director of property development.

Masdar scaled back the cost estimate for Masdar City, its carbon-neutral flagship development.
Masdar scaled back the cost estimate for Masdar City, its carbon-neutral flagship development.

Sustainable development in the Gulf will not work until governments reduce subsidies on water and energy, Masdar's former director of property development told the World Economic Forum open panel on "cities of the future" in Dubai.

"There is no business case for sustainability in the Gulf," Khaled Awad, who left Masdar last year, said yesterday. "Sustainability today is just wishful thinking."

Masdar, the Government-owned clean energy company, this year scaled back its cost estimate for Masdar City, its flagship development of what was intended to be a carbon-neutral community near the capital. It said the development would take longer to build than previously anticipated.

"Why should we save energy and water by investing in energy efficiency when energy and water are free? Who is going to do this?" said Mr Awad.

The price-tag was trimmed to US$18.5 billion (Dh67.95bn) from $22bn, reflecting lower construction costs as well as more constrained financial resources. Masdar also found it more difficult to attract initial tenants than it expected. The company also eased its environmental standards for the construction of Masdar City.

Now the development team may be considering how to proceed with the project, and whether its original vision is still viable. Masdar has taken a step in the right direction by basing the community around a university, the Masdar Institute, which Mr Awad called a "knowledge engine".

"If the knowledge engine is successful, things will go in the right direction," he said. "We had the real estate boom and we didn't build offices, we built a university."

Other participants at the open panel addressed the changing path of urban development in the Gulf.

Fahd al Rasheed, the chief executive of Emaar, The Economic City, a residential and industrial development north of Jeddah, said governments needed to take a holistic approach to sustainability, considering social and economic development with environmental issues.

"Unless you look at it holistically, honestly you're just paying lip service" to sustainability, Mr al Rasheed said.

He stressed the importance of government and private sector co-operation in urban development.

He said companies in the Middle East were unwilling to gamble on cutting-edge technology that had not been tested in the environment where it would be deployed.

"All these technologies need to be tested and certified by the government so the private sector can take those on with as little risk as possible," said Mr al Rasheed, referring to smart grids, new building materials and other innovations aimed at saving resources. "As a private developer you don't want to take on that risk."

Konrad Otto-Zimmermann, the secretary-general of the urban development organisation ICLEI-Local Governments for Sustainability in Germany, said large parts of Dubai and Abu Dhabi were built to attract investment rather than to serve the needs of the people who would live there.

"Dubai and Abu Dhabi are both places where cities were built in a way against a natural place," said Mr Otto-Zimmermann. "The goals in the past - to be the biggest, the highest, the richest - those are the goals of yesterday."

That worked for a time, but now the region's priorities have shifted, he said. Dubai and other new cities in the region will be challenged by changing global circumstances, he warned.

"Dubai has been placed like a business object," said Mr Otto-Zimmermann. "The city is a business and is seen as a business, where it's all about investment, having return on investment. It will not be eco-efficient, it will not be resilient, it will not be sustainable over the long term."

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