Carbon Neutral Cities - Where Will The $$ Come From?
The United Arab Emirates’ plan to build a completely carbon free city. Thirty kilometres from capital Abu Dhabi, Masdar (Arabic for ‘source’) will be home to approximately 40,000 people and accommodate a further 60’000 commuters within its 1,500 planned business premises.
Covering six square kilometres and making extensive use of public transport, solar energy and low energy building technology the city will take 10 years to build at a cost of approximately $22billion.
How much?
This is undoubtedly a significant investment, which is fine for petro-rich states such as the UAE, but what about the rest of the world? Is it realistic that we can all afford to build carbon neutral?
Well, a quick calculation shows a cost of around $220,000 per person (including residents and commuters) – certainly expensive, but not by a significant order of magnitude compared to the general cost of building in the developed world. Considering the financial incentives created by selling carbon credits awarded for the carbon not emitted, considering potential scale economies for larger developments, and considering that the new technologies involved will get cheaper over time, massive carbon neutral building doesn’t sound like such a bad deal.
Not so fast
However, we don’t expect to see many more of these initiatives around the world anytime soon. Cash flooded nations like UAE may be able to finance such investments, but the rest of us need to go to the market for investment capital. Whilst governments and venture capitalists are throwing money into research in green technologies, it’s proving harder to get money to actually build anything. This is due to two major uncertainties;
Firstly, the future price of carbon credits is down to much speculation whilst governments make up their mind’s on mandatory emissions reductions. The introduction of carbon trading schemes by major economies along with tough caps on total emissions will drive carbon prices up, and the reverse scenario will drive prices down. Since carbon credits will constitute a significant part of the financing for large green initiatives, investors will be wary until big players such as the US and Japan commit to such schemes one way or the other.
Secondly, renewable energy production requires land use, which is often subject to fickle planning regulations. Many people are against having wind and solar farms in their back yards with objections on numerous grounds from wild life to radar obstruction. For example, Spanish wind turbine manufacturer Iberdrola currently has a healthy advance order book of $9.4 billion. Unfortunately just 7% of these turbines are certain to be built. Around 63% of orders have a 20% chance of gaining final planning approval, with the rest being predicted to have a 50/50 chance. Until governments manage to streamline the planning process for renewable energy development investors will continue to shy away.
Green projects vs Red projects
If these issues are resolved then it is likely that investment markets will be flooded with financing opportunities for green investments. Until then green projects will compete for funding with more certain (and more dirty) developments. Dubai will undoubtedly prove that carbon neutral cities can be built. Now we need to prove that they can be paid for.



10 Years for a pilot project, just to test the feasibility? But we have to be at 20% reductions by then legislated in my country! How is starting from scratch going to help anyone unless we are suggesting bulldozing the existing cities.
We need solutions now, and not just slap up a few million wind turbines and 40,000 sq miles of PVs.
We need to change major industries not just create an office city of white collar administration jobs. Then stand back and stay ooo,aaaa look at that!
You want to impress me then convert a major city to a carbon free one. Including the refineries and factories, farms and livestock. Do it in 5-10 years so we can have chance of replicating it in other locations before the 2050 “death to all humans” climate catastrophe.
UAE and other countries in the region do these things to just say they can, no matter the cost because these people can afford to pay 5 million pounds for a license plate.
A Good example is the indoor ski hill in Dubai. That construction loses so much energy that you can see the cold air leaking out of it.
What do they care, they can afford it. Heck they made a set of islands that look like a map of the earth, just for kicks.
This is not innovative green design, it is bragging rights. So I give that to them, good job.
I am serious if you can come up with a plan that can convert a city of 250,000 people to an emissions-free one, without using up all the CO2 emissions saved over 25 Years in the process, I want to to see it!
I have been trying for 2 years but I cannot even get a 75% reduction without a huge spike in emissions during the process, that would completely negate the reduction effort in the time allowed, especially if replicated globally, and would simply be a huge waste of money and would hasten the process of GHG induced GCC, mitigating NOTHING!
I even selected geographically desirable locations with mild climate and long construction seasons and well trained workforce, availablility to solar and hydro power, with an even distribution of industries and locally ( in region ) natural resources to supply the raw materials required, manufacture the equipment and technologies and have regional farming and livestock available.
Now granted I am not the brightest crayon in the box, but I have never seen one plan that can, if you know of such please share with the group.