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Mon 11 Feb 2008 12:49 AM

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UAE 'green city' to cost $22bn

Carbon credits to be sold to help finance development of Masdar's Abu Dhabi car-free zone.

State-controlled Abu Dhabi Future Energy (Masdar) said it would cost $22 billion to develop a "no-carbon" urban district it is planning in the UAE.

The district, Masdar City, on the edge of the city of Abu Dhabi, will eventually be home to 50,000 people and 1,500 businesses, Masdar said in a statement. No cars will be allowed.

Abu Dhabi, capital of the world's fifth-largest oil exporter, will invest $4 billion of equity in the project, and borrow some of the rest, Masdar CEO Sultan Al-Jaber told reporters late on Saturday at a ground-breaking ceremony.

"We are creating an array of financial vehicles to finance the $22 billion development," Al-Jaber said. "We will monetise all carbon emission reductions ... Such innovative financing has never been applied on the scale of an entire city".

Licences to emit the carbon that Masdar City does not produce will be sold, and the money used to help fund development, Al-Jaber said.

Under the so-called Kyoto Protocol, wealthy countries can meet their domestic greenhouse gas-emissions goals by buying carbon offsets from emissions-cutting projects in developing nations, in a scheme meant to reduce climate change.

In January, the Abu Dhabi government said it planned to invest $15 billion in its Masdar Initiative, which includes building the world's largest hydrogen power plant.

Masdar City will be built in seven phases, and include educational and research institutes, laboratories and production facilities for new advanced energy products, Al-Jaber said.

The district will need a quarter of the typical power-generating capacity for a similar-sized community, Masdar said. Its water needs will be 60% lower, the company said. (Reuters)

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