TBY talks to Ivano Iannelli, CEO of the Dubai Carbon Centre of Excellence, on energy efficiency in the GCC, clean development initiatives, and Dubai as a green financing hub.
TBY What is the role of the Dubai Carbon Centre for Excellence (DCCE)?
IVANO IANELLI Gulf Cooperation Council (GCC) countries are often painted with the same brush. There is a perception that they have no interest in the environment or sustainability, but that could not be farther from the truth. A lot of what we do does not make it into the media, but we have a solid record of success stories that drive social and economic development forward. The DCCE works under the Supreme Council of Energy as a market enabler. Our role is to identify areas of the carbon value chain that can be facilitated through market-based mechanisms—to promote the involvement of business in the low-carbon economy. We usually focus on projects that are almost ready for commercial implementation, but need a final layer of efficiency. We help to provide this efficiency, whether economic, financial, or policy-driven, by putting all the actors around the table, tapping into international markets, or creating our own mechanisms.
What practical initiatives do you have in place at the moment?
Our first projects were focused on developing the carbon potential of Dubai-owned assets through the clean development mechanism (CDM). The money from these projects provided us with the financial stability to continue the initiative. We now work with a range of organizations, both large and small. We are working with Dubai Electricty and Water Authority (DEWA) and Dubai Aluminium (DUBAL) on projects as large as the DUBAL GTX project, which takes very large steam power plants and centralizes the steam distribution to improve efficiency and avoid additional fuel burn. On the less industrial side, we have projects such as a program of activities for green buildings and grid-connected solar installations. We help smaller projects access the carbon market by allowing them to register with us under an umbrella agreement. We also act as an advisor on low-carbon development, usually focusing on emissions reduction projects, which are really our bread and butter. We focus on projects where we see emissions reduction potential that the project owner may be unaware of or may not have the expertise to take advantage of alone.
Is there the potential to develop technology in the UAE for regional export?
Funnily enough, I’ve just learned of a solar manufacturer that produces solar cells here in the UAE and exports them to China. That means there is a UAE-based company that is already price- and quality-competitive enough to enter a highly developed market such as China. Emirati investors are growing more sophisticated and there is a growing appetite for this type of investment. Dubai used to be all about real estate, services, tourism, finance, transport, and commodities, but now everyone’s eyes are opening up to other areas of investment, such as the energy sector and green technology products. This means that the green industry is suddenly seeing a lot of new interest.
What about the UAE as a green financing hub?
We are seeing new financing mechanisms that are being developed here. There is a lot of synergy between Islamic banking and green technologies. Something as simple as an ESCO model with a performance agreement to encourage energy efficiency is totally new here. That sounds simple, but putting it in place through a financial tool is complicated because there is nothing to securitize on the back end. However, if we utilize an Islamic financing approach, you can all of a sudden leverage participation in the project to mitigate some of these risks. So what was unfortunately difficult to put in place has actually turned out to be a specific fit to the market. We are focusing on developing financial markets and new investment platforms. One of the biggest barriers to getting projects off the ground has been access to finance. Not because there is no finance in the UAE, but because banks need to be motivated by raising their awareness to finance projects. We are working with some banks right now to finance very small, low-risk projects just so we can see what the banks consider opportunities in terms of know-how processes, and how we can help them develop these processes.
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