By Najib Saab

October 2006

Ali Al-Naimi, Saudi Arabia's Minister for Petroleum and Mineral Resources, has raised his concerns that oil producing countries may fall victim of some "selective environmental policies" and demanded a balance between environmental protection and requirements for development.  He cautioned that measures limited to the reduction of oil consumption might "hinder economic development plans in countries whose economies are based primarily on exporting oil". Al-Naimi was addressing a conference on "clean development mechanisms" held recently in Riyadh.

The statements by the Petroleum Minister of the largest oil exporting country could have been considered as a drawback from Saudi Arabia's engagement under the Kyoto Protocol, that aims to reduce carbon dioxide emissions. However, the other part of his statement had reminded us that we are in a time of change, in which it is no longer sufficient to deny the existence of the problem; solutions and alternative are to be put forward. Al-Naimi reiterated his country's commitment to adopting developed technology for the implementation of environmentally sound projects that achieve economic growth while, at the same time, limiting the threats of Climate change.

The concerns raised by oil exporting countries regarding measures that are limited to production restrictions are justified. The concept of Clean Development Mechanism designed by the Kyoto Protocol advocates the development of new technologies that reduce gases responsible for climate change. This does not mean the exclusion of oil. There are many ways in which oil can be used in a clean manner, supported by the development of more efficient technologies. One of those technologies is the capture and storage of carbon dioxide in power production plants, treating it and injecting it back in old oil wells or ocean beds. By using this technology, hydrogen can be generated, for example in centralized plants that run on traditional energy. Carbon dioxide can be treated and stored, and resulting hydrogen can be compressed and used as a clean energy carrier.

One of the feasible measures is the popularization of hybrid cars, especially in congested cities. These cars run by using an engine running on oil and a motor running on electricity from a battery. The electric power source is derived from a battery that can store power while the oil engine is running, as operation changes spontaneously according to driving situation. Knowing that the majority of polluting emissions from car engines occur during traffic congestions in cities, the benefits of this technology become apparent. It is surprising that a brand like Lexus, that produces one of the best luxury hybrid cars (H450) has never thought of promoting its hybrid models in the Arab markets, especially in the luxury and trend-oriented Gulf markets.

These are trends in transport technologies that should enjoy support from oil producing countries as they are based on clean and efficient use of oil. There is no cause for concern about the impacts of such technologies on oil exports, since designing cleaner and more efficient methods will widen the base of users which is now developing with the unprecedented economic development in the Asian markets, especially China and India.

Four years ago, Dubai has launched negotiations with BMW to produce compressed hydrogen and export it to Europe to be used as a clean energy carrier. It has been noted that the programme did not take off because the feasibility study has indicated a lengthy investment return period. At that time we have warned that investments in developing technologies should not be treated like a real estate venture. The return of a partnership in technology is much bigger than being compared to the rental of fancy towers and buildings.

This perspective is changing nowadays into a more practical partnership in developing clean technologies. The Riyadh conference discussed potential investment opportunities in Saudi Arabia and other Gulf countries to develop new technologies that would reduce gas emissions. In the UAE a new company has emerged with the name of Abu Dhabi Future Energy Company, (MASDAR), which has announced the establishment of an investment fund dedicated to clean technology, in partnership with global financial institutions. The seed capital of 250 million USD will be allocated for investments in projects for the development of sustainable energy technologies. MASDAR’s CEO, Sultan Ahmad Al Jaber, has stated that the fund will aim to "attract clean energy technologies to Abu Dhabi".

We hope that these steps are the beginning of a new era, where development plans are based on partnerships in technology and diversification of income sources.