Dubai is seeking its first tradable emission credits as it seeks to increase energy efficiency and rely more on solar power to meet future demand.
Dubai Electricity & Water Authority, the government-run utility, is among companies planning to amass credits with a total value of as much as €144m ($211m) over the next decade, according to Waleed Salman, chairman of the government-sponsored Dubai Centre for Carbon Excellence.
Revenue from selling United Nations-overseen credits would help defray the cost of upgrading power plants and replacing water pumps, Salman said in an interview.
“The main objective is not profit only,” said Salman, who also is vice president for business development at Dubai Electricity & Water. “It’s to adopt carbon reduction in an economical way.” The Dubai Centre held its first assembly on May 29.
Dubai is following Abu Dhabi, its larger neighbour and capital of the United Arab Emirates, which already won credits under the UN’s Clean Development Mechanism. Qatar is also seeking credits as Arabian Gulf nations seek to cut emissions in a region with the world’s most emissions per capita, the World Wildlife Fund said in an October report.
Emirates, the Dubai-based airline, may be a buyer for the credits as it faces new requirements starting next year to buy carbon allowances or offset greenhouse gases produced by its jetliners, Salman said. The European Union will require all flights serving Europe to participate in its emissions-trading system in 2012.
A Dubai-based spokeswoman for Emirate declined to comment.
Dubai seeks to diversify its electricity supply and improve efficiency over the next two decades, Salman said. While the UAE is the fourth-largest crude producer in OPEC, Dubai pumps less than 4 percent of the country’s oil. The emirate already imports natural gas to meet almost all its power needs and may develop renewable-energy sources, clean coal and nuclear power.
Arabian Gulf-based companies now have no requirements to curb their greenhouse gas output. The European bloc started its carbon trading market for factories and power stations in 2005. EU December allowance prices fell 0.5 percent to €16.74 at 11:25am on the ICE Futures Europe exchange in London. UN Certified Emission Reductions for December closed at 12.69 euros on ICE on June 3.
Dubai companies plan to earn credits for a total of 5 million tons of carbon-dioxide equivalent by 2015 and 10 million tons by 2020, Salman said. Credits for 2015 were at €14.39 a ton last week.
Dubai’s Supreme Energy Council, a policy-setting body, signed an agreement in January with the UN Development Program for advisory assistance on carbon reduction, the UN agency said in a statement at the time. The council formed a venture with the government-owned utility, an aluminum smelter, Dubai’s government-owned refinery and a local environmental consultancy called Istidama, according to an April statement.
Dubai Electricity & Water Authority is in talks to sell credits it earned by running turbines more efficiently. A prospective buyer is Germany’s RWE AG (RWE), the EU’s biggest emitter, Salman said. Brigitte Lambertz, an Essen, Germany-based spokeswoman at RWE, declined to comment in an e-mailed response to questions.
DEWA, as the Dubai utility in known, is adding 400 megawatts of capacity to a 1,500 megawatt power station. By re- using a turbine’s own exhaust to help cool the unit, the plant can generate more power with the same amount of fuel, Salman said. Because the added capacity creates no increase in emissions, DEWA may win carbon credits, he said.
The government-owned smelter Dubai Aluminium is working on five projects to cut emissions, according to its presentation. Those projects include replacing water pumps and adding more- efficient burners.
Abu Dhabi’s government-run renewable energy company is pursuing UN-certified projects in the Middle East and North Africa and has established funds to buy and trade credits.
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