Abstract

This case is about the economic diversification initiatives of Abu Dhabi, the largest of the seven emirates of the United Arab Emirates (UAE), and its efforts to transform itself from an oil-based economy into a knowledge-based one and a leader in renewable energy. Abu Dhabi was set to diversify its economy in a bid to reduce its dependence on hydrocarbons and emerge as a green and clean economy focusing on renewable energy. Thus in 2006, the Government of Abu Dhabi through its public joint stock company, the Mubadala Development Company, launched the Masdar initiative to establish a new economic sector in Abu Dhabi – one that would diversify the economy and establish the emirate as a knowledge hub. In addition to economic diversification, the UAE believed that sustainability could also help the country in reducing pollution and environmental risk, and in providing a better quality of environment for its residents. As part of the Masdar initiative, an eco-city – Masdar City – was constructed on the outskirts of Abu Dhabi. The city was constructed with the aim of developing one of the most sustainable cities in the world. Masdar City was the first of its kind where the buildings were designed using the traditional Arabic type of architecture that maximized the use of natural light. The insulation in the building walls aimed to absorb less sunlight, thus keeping the temperature inside lower. The energy needs of the residents were met through solar photovoltaic (PV) panels. The buildings’ water consumption was reduced by fixing smart appliances and smart meters that monitored consumers’ water consumption and notified them about their water usage. The city also encouraged a pedestrian friendly environment while meeting the other transportation needs of the commuters through electric pod cars that ran on magnetic tracks. These cars used electricity and thus reduced carbon emissions. To transform its economy into a knowledge-based economy, the Masdar initiative set up the Masdar Institute of Science and Technology (MIST) in association with the Massachusetts Institute of Technology (MIT) to nurture home-grown talent and come out with innovative and sustainable solutions in renewable energy and water desalination, driving growth for the emirate. Some experts felt that the Masdar initiative was commendable as it could help Abu Dhabi reduce its dependence on hydrocarbons and focus on renewable energy sources. Critics, however, felt that the Masdar initiative was nothing short of greenwashing and a Public Relations exercise as the UAE had the biggest ecological footprint in the world. But Abu Dhabi’s goal was to make Masdar City a global model of a sustainable city and become a global clean energy leader.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the need for Abu Dhabi to future proof its economy by diversifying through the Masdar project.
• Understand how Abu Dhabi aimed to make the UAE a world leader in the provision of renewable energy.
• Analyze how Abu Dhabi aimed to transform itself into a knowledge-based economy through the Masdar Institute of Science and Technology.

Keywords

Abu Dhabi, Masdar, Sustainability, Knowledge economy, Economic diversification, Abu Dhabi Future Energy Company, Mubadala Development Company, Carbon footprint, Renewable energy, Abu Dhabi Economic Vision 2030, Sustainable development, Solar Photovoltaic (PV) panels, Masdar Clean Energy, Green economy, Carbon capture and storage