Masdar – Green flagship or polluted by oil?UAE’s clean energy pioneers face COP28 spotlight

As the eyes of the world turn to the United Arab Emirates (UAE) as host of the COP28 climate action conference at the end of November, one name will receive more attention than ever – Masdar, Abu Dhabi’s global clean energy champion, Has been the green face of the UAE for almost two decades.

The appointment of Sultan Ahmad Jaber as COP28 president in January heralds the controversy that is sure to drag on the UN summit. In addition to serving as the UAE’s Minister of Industry and Advanced Technology, Al Jaber is the CEO of Abu Dhabi’s national oil company, Adnoc, provoked the ire of some activists Whoever appoints him as president of the next COP would be tantamount to handing over global climate policy to the fossil fuel sector.

However, when the renewable energy pioneer was founded in 2006, Al Jaber was also the founding CEO of Masdar (see panel below) and continued as chairman – a fact that was quickly cited by those keen to defend his role at COP28. They include Frans Timmermans, the EU’s climate chief, who said Aljaber “started on sustainable development policy long before anyone else in the oil and gas industry was persuaded”, referring to the His early years at Masdar.

Masdar – new Triple shareholding structure The split between Adnoc, Abu Dhabi utility group Taqa and sovereign wealth fund Mubadala, its original backer – now aims to amass a total renewable energy portfolio of 100GW, up from the current 20GW, and produce 1 million tons of green hydrogen, totaling by 2030 would put it among the top clean energy companies in the world. In the longer term, its renewable energy ambitions will expand to 200GW.

We have a legacy. We take risks in this space and everything we do is renewable.

However, with its fossil fuel-heavy owners, can Masdar really hope to be seen as a truly green entity as it expands globally – let alone its flagship role as the UAE at COP28?

“We are confident that we will do this because we have a heritage. We have taken risks in this space and everything we do is renewable [and green hydrogen]’, said Nikolas Meitanis, Masdar’s acting executive director for strategy and corporate development, who has been with the company for more than a decade.

Meitanis earlier this month recharge At Abu Dhabi Sustainability Week hosted by Masdar himself.

“Renewable energy was called ‘alternative energy’ at the time. The technologies were not competitive, they were not bankable, and insurance was difficult to obtain. Leadership [of Abu Dhabi] There’s this groundbreaking appetite for adventure. They put their capital at risk,” said Metanis, acknowledging that 2023 will be a “big year” for Masdar because “this is the time when the UAE collaborates, supports and pursues decarbonisation globally. one of the main tools”.

Masdar is poised to invest more on top of the $30 billion in projects it has already backed, while also planning a foray into sustainable finance in 2023, including issuing its first green bonds. Chief financial officer Niall Hannigan said the company would support its activities with a first-ever green finance framework, expected to be released “soon”.

“Masdar has been discussing its plans to become a debt capital markets issuer with lead investors and the feedback has been very positive,” he told recharge.

“Our goal is to demonstrate that Masdar meets the highest standards of transparency, disclosure and integrity so banks and investors can confidently participate in our drive to achieve net zero emissions. We will use all debt funds raised to develop deep green [ranked as the most sustainable] Projects are implemented globally with the highest ESG standards, with a significant proportion of deployments taking place in developing countries where the need for clean energy infrastructure is greatest. “

Masdar’s emphasis on its “dark green” credentials is unlikely to quell the harshest criticism of the UAE’s hosting of COP28 or its chairman’s role as summit chair.Global Witness, one of the climate movement groups most vocal in attacking Al Jaber’s appointment, told recharge: “You don’t invite the tobacco industry to host a health conference. The fact that Al Jaber is the CEO of Adnoc presents a huge conflict of interest at the heart of COP28.

“This decision on the COP chair also undermines any good work that the UAE-owned Masdar is doing, and threatens to undo them before this year’s climate talks begin.”

However, Shashi Barla, director and head of renewable energy research at consultancy group Brinckmann, said Masdar’s ties to the UAE’s oil resources should not be a hindrance to its pursuit of ambitious growth targets. “I don’t think it’s going to be a detractor, on the contrary it could generate positive sentiment. It’s very similar to other oil and gas companies entering the renewable energy space: Shell, TotalEnergies, Eni, Equinor, etc.,” Barra told recharge.

Masdar’s “challenging market”

Climate credentials of the shareholders aside, how well is Masdar able to deliver on its growth ambitions in the global renewable energy market, with Barra’s names mentioned above and many more vying for the best projects and prospects?

In that regard, Barla believes its owner will be an asset. “Of course, state financial support will add more miles to Masdar’s journey. Masdar can take advantage of the lower cost of capital, stronger financial strength and the bilateral trade relationship of the Abu Dhabi government.”

But the Brinckmann analyst also believes that to achieve its goals in a crowded market, Masdar will need to “target emerging markets with limited competition. Most Western developers have not explored these markets due to policy uncertainty.”

Masdar has expressed its willingness to consider large-scale developments in a range of African countries and huge emerging Southeast Asian markets such as Indonesia.

One region where Masdar is growing in influence is Central Asia, where it has built the region’s largest wind farm, Uzbekistan 500MW Zarafshanand has reached an agreement with the Azerbaijani government for the future development of more than 10GW – including Gigascale offshore wind linked to green hydrogen Produced in the Caspian Sea.

Also marked in Kyrgyzstan, Kazakhstan and Turkmenistan, developers are ubiquitous in Central Asia, with economic ties to the UAE, where the government is embracing the opportunities presented by its vast open spaces and strong wind and solar resources.

Fawaz Al Muharrami, executive director of Masdar’s clean energy unit, said the developer is reaping the rewards of its pioneering role in the region. More broadly, Al Muharrami confirmed that Masdar is willing to focus on “difficult markets that other developers have avoided”.

While that doesn’t mean Masdar will ignore more established renewable energy projects — it has big plans for offshore wind in the U.S. and North Sea, for example — Al Muharrami said the company is “ready to take more risks and Beyond the level of ordinary developers” do.

“The key here is your ability to develop. Our ability to mobilize [finance] And visit key suppliers,” he said.

“Chinese wind suppliers emerge”

That supplier base already includes collaborations with Chinese companies, and Al Muharrami confirmed that he expects the global supply chain for renewable equipment to continue to be dominated by China, especially in the solar sector.

What about the wind power industry? Although its current fleet consists mainly of Western manufacturers, the Zarafshan wind farm in Uzbekistan will feature half-gigawatt turbines from Beijing-based Goldwind.

“We’re seeing more and more activity around Chinese manufacturers,” said Al Muharrami. “They [Goldwind] very strong [as] A major supplier in the global market. A number of other Chinese manufacturers are also on board. “

Summing up Masdar’s prospects for achieving 100GW, Brinckmann’s Barla said: “From a financial standpoint, it is well positioned to achieve these targets due to its strong financial position and government support.”

From a project development perspective, he believes Masdar will have to rely heavily on the capabilities of external partners, and that the emerging markets it is targeting “offer a lucrative proposition, but at the same time there are unforeseen risks— — Masdar does, however, have the potential to achieve these goals”.

Gaurav Metkar, analyst at energy research specialist Rystad, added: “With Taqa and Adnoc as partners, Masdar has solid financial support and will continue to grow in the coming years. It can also leverage the company’s technical and commercial Network and experience to accelerate business to achieve expected goals.

“However, 100GW is a huge target and with only eight years left, it means the company has to add an average of 10GW of capacity per year. This seems like an ambitious target and Masdar needs to consider some big acquisitions, otherwise It may miss its target.”