By Andrew Mernin
Although saving the planet has been low on the agenda of many companies in the region in recent times, a new breed of green CEO is now leading the way in cashing in by being eco-friendly. CEO Middle East meets the executives that are getting rich by cleaning up their act
|~||~||~|The emergence of the Arab world as an economic superpower over the last 20 years has not come without cost. As business and tourist visitor numbers have swelled, so too have the number of vehicles on the roads — in Dubai alone there are over 600,000 registered cars spurting toxic fumes into an increasingly polluted atmosphere.
As construction tycoons strive to create more space for hospitality infrastructure, vast marine eco-systems have been swallowed up by the many offshore developments surfacing along the region’s shoreline. Expansive use of air-conditioning continues to eat away at depleted energy levels while millions of gallons of water — a precious commodity in the Middle East — are being sprinkled everyday on the many plush golf courses that adorn the region’s business centres.
The amount of renewable water available per person in the Middle East and North Africa (MENA) is only 20% of what it is in the rest of the world and, by 2025, the average water availability in the region is expected to be just over 500 cubic meters (m³) per person, per year, compared to a world average of 7,000 m³.
A report by Emirates International Bank claims that by 2010, the UAE will boost electricity generation by 60% from 16,200 megawatts (MW) to 26,000 MW, while, by 2030, there will be global demand for an extra 500 million tonnes a year of liquified natural gas.
With 80% of air pollution in Dubai caused by vehicle emissions, recent studies have also suggested that many areas of the UAE fail to meet the air quality standards set by the World Health Organisation.
Amid this impending widespread environmental breakdown however, there are a number of businesses in the region that are not only tackling environmental issues, but also making money by alleviating them. And by following their lead you can not only cut your operating costs, but also provide a healthy boost to your company’s profits.
It is no surprise that in the Middle East — a largely temperate, arid area with an ever-increasing population — water is big business. MENA countries have the highest water consumption rates in the world where in the UAE for example, per person consumption is around 570 litres a day, over three times the world average. As the potable (fit to drink) water network only reaches 70% of the region’s population, by 2015, MENA countries are expected to spend US $24 billion (AED 88 billion) in desalination costs with Saudi Arabia and the UAE contributing US $13 billion to that total.
Offering a cheap and eco-friendly solution to the issue of water shortage in the region is Metito, an international desalination and wastewater treatment specialist proving that it really does pay to go green. Setting up a water recycling plant on the man-made island development, the Jumeirah Palm in Dubai, the company is leading the way in showing that recycling wastewater can be a far more cost-effective solution than other conventional methods of water retrieval.
“Traditionally waste water treatment is treating waste, using it a little bit for irrigation and then dumping it somewhere, but water can be fully recycled and you can bring it up to a bottled water standard if you wish,” says Bassem El Halabi, group business development director at Metito.
The GCC currently has a combined desalination plant capacity of 2,664 million imperial gallons per day. According to El Halabi, some of the main drivers of this huge figure — the construction industry, golf course irrigation and the bottled water sector — could save vast amounts of revenue by turning to recycled wastewater.
“It costs around half a dollar to bring a cubic metre of wastewater up to bottled standard compared to US $1.2 to desalinate a cubic metre of sea water,” he says. With a current capacity to treat 18,000 m³ a day, El Halabi estimates that Metito’s Jumeirah Palm recycling plant can save over US $9000 a day, or US $3 million a year.
“All industries across the Middle East could save money by making use of recycled water. A small golf course can use up to 3000 cubic metres a day easily in the UAE, so if it is not using recycled water that’s a lot of money.”
While not every business may have access to treated wastewater, with the ongoing growth of companies like Metito, there could be more and more opportunities to save money by investing in the eco-friendly, cost-effective source. And, as El Halabi explains, there are a number of ways you can save and even make money by re-assessing your company’s use of water.
“For real estate or residential businesses, by recycling grey water (from showers and kitchens) and using treated effluent for toilet flushing, you can save 60% of your water bill.”
“In the tourism sector, by using treated wastewater instead of municipality water for the irrigation of golf courses, you can cut down water cost by as much as 50%,” he says.
El Halabi adds that factory owners could capitalise on recycling sewage to use in plant washing, while companies whose headquarters are decked out with lavish water features should “seriously consider” the use of treated wastewater instead of the municipality source.
One final measure that could reduce your operational costs is to set up an onsite recycling plant to save on logistics outlays, particularly in remote areas where it may be difficult to connect to the local water network.
While it is estimated that water and wastewater investment in the region will reach US $120 billion over the next decade, El Halabi admits that there is a stigma in the region surrounding the use of wastewater. “Although there is a water shortage, it is not fully exploited in the Middle East. The main reason is the psychological barrier, people here think that no matter what you do with it you can’t drink wastewater,” he says.
“The pioneer wastewater recycling operation is in Kuwait, but even there they use the water for irrigation and industrial purposes, but they don’t drink it,” he adds.
With operations in 14 countries, Metito can only hope that the region’s consumers overcome their misconceptions over re-treated wastewater and embrace the cheaper alternative to change the course of dwindling conventional water sources.
As the first business in the region to win the platinum award from the United States Green Building Council (USGBC), Pacific Controls is another Middle Eastern company looking to clean up by being eco-friendly.
“This is the beginning of a new era, this a time when everybody is looking at ways of conservation,” says Dilip Rahulan, chairman and CEO of the automation solutions company.
Incorporating eco-friendly building materials, solar-powered air conditioning and energy-efficient lighting systems, Pacific Control’s entirely green Dubai head-office is a testament of the company’s awareness of the many opportunities within the environmentally- friendly sector.
One of the numerous areas being looked at by Rahulan as a potential eco-friendly money-spinner, is the harnessing of solar power, as he explains: “The interesting thing about the UAE today is that there are thousands of homes being built, and each one has a hot water heater which uses about 8 to 10 kilowatts (KW) everyday.
“This can be completely replaced by a solar water heater which, after the initial capital cost, is free, so this is a tremendous business proposition for us.” While solar power represents an abundance of potential profit available to Pacific Controls, it can also be used by other companies to help them to significantly cut operational costs. The company has developed a solar powered air-conditioning system which, according to Rahulan, can reduce your business’s energy bills by 70%.
Although he admits that developing the US $14 million (AED 52 million) green building (see box) was 32% more expensive than building a conventional one, Rahulan is adamant that it was “financially worth it” and urges other businesses to follow his example.
“The initial start up costs were high, but operational costs are low and we will be paid back in the long run because of lower energy consumption and water recycling.
“There has already been a lot of momentum in the market and companies like Nakheel and Emaar have met us and talked to us about developing green buildings,” adds Rahulan.
With the construction giants slowly beginning to realise the financial merits of going green, maybe it’s time you also considered developing your own self-sufficient green building. While paying the extra 32% in construction costs may initially be a bitter pill to swallow at first, once the outlay is covered, you can sit back and enjoy the savings you make.
Farhan Faraidooni, another environmentally-friendly business leader as CEO of eco-conscious developer Sama Dubai, believes that eco-issues have been neglected in the region in recent times.
“It is fair to say that for the most part, companies have not, in the past, done much in the way of placing environmental sustainability as a top priority in terms of their strategies, policies, and operational ethics,” he says.
As the real estate investment and development arm of Dubai Holding, Sama Dubai has current projects spanning the region including the US $500 million Dubai Towers in Istanbul, Turkey, and the 40km Lagoons project in Dubai, with other developments in Qatar, Oman, Morocco and Bahrain.
By striving to minimise the hazardous environmental impact of its developments with measures such as protecting local fauna, controlling waste, and preventing pollution, the company has proved that it is possible to get rich by going green.
Although he admits that taking eco-friendly measures, such as the relocation of wildlife, can bring “added financial costs” to a project, he believes that the long-term benefits far outweigh the start-up costs.
“There are numerous long-term financial benefits attained from sustainability practices, such as the advantages of environmentally friendly design within the project, for example, low energy lighting systems, intelligent building control systems and recycling systems to reduce the cost of ownership during the project’s life cycle,” says Faraidooni.
And he insists that even the chief executive working on the tightest of budgets can put the environment onto the company agenda. “Although cost effectiveness may be an issue for other companies, there are numerous ways in which they can play a more positive role with regards to environmental sustainability and minimising negative impact to their surroundings without incurring heavy financial burdens.
Simply promoting environmental responsibility among employees is one such measure,” he says. Another sector where there is a huge opportunity for chief executives to cash in by saving the planet is the motor industry.
As the region’s economic growth has been propelled at full-throttle in recent years, car sales across the Middle East have increased at break-neck speeds. In 2005 BMW sold 13,753 units, a 31% growth on 2004, Mercedes car group (MCG) enjoyed a 25% climb in sales in the region while Nissan dealer Infiniti Middle East recorded a 710% rise in sales, selling 3155 vehicles.
Amid the worsening polluted haze that engulfs many of the region’s urban areas, there are a select few who are striving to disperse the ever-thickening cloud of smog by implementing eco-friendly fuel.
“It’s definitely a marathon not a sprint,” says Guenther Seemann, managing director of BMW Middle East, referring to his company’s struggle to harness Hydrogen as a realistic, widely-used motor fuel. “The BMW clean energy vision allows us to highlight a realistic and necessary route to the era following the end of fossil fuels”, he adds.
Set to launch its first BMW Hydrogen seven series later this year, the company has been investigating the use of the gas as a fuel since the 1970s and in 2004 managed to reach a top speed of over 300 kmph with a Hydrogen-driven vehicle.
Leading by example, Seemann believes that others can follow BMW in their use of hydrogen fuel — a source which, when burned, emits only water. “The BMW Group challenges network partners from politics, the energy industry and science to continue driving forward infrastructures and technologies focused on hydrogen as an energy source,” he says.
With the belief that by using Hydrogen it can combine “lower emissions and greater fuel economy with enhanced dynamism and performance”, BMW considers the fuel, not as a niche product for certain vehicles, but as a source to power the entire fleet of the German corporation’s range.
While petrol barons are unlikely to be panicking at the thought becoming defunct, BMW is proving that hydrogen is a genuinely viable fuel for use in the future. And, with rising oil prices causing your business’s transportation and logistics outlays to soar, the benefits of such clean renewable fuel to your company’s profits are clear.
That environmental issues have been put on the backburner in favour of rapid economic expansion in recent years in the Middle East is not in doubt, and there is certainly a vast amount of room for improvement. But as a core of CEOs continue to harvest huge financial rewards by being eco-friendly, perhaps it is time you too cleaned up your act and joined the green-fraternity to help both your company’s profits and the Middle Eastern environment to flourish.