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Better intentions

June 30, 2007 10:00 by


Qatar Energy City (QEC) could easily have been just another giant development project for housing the companies and employees of a specific industry. Its decision to partner with an environmental consultancy firm, Energy Management Services, however, has turned things a fresh shade of green.

The idea is for UAE-based Energy Management Services (EMS) to promote energy conservation and the like among energy companies as a sound business strategy that yields financial benefits. QEC and EMS are still working out the details, but the decision to promote environmental standards is itself a welcome departure from the norm in a region that has witnessed feverish development in its energy sector that mostly ignored environmental considerations.

Ideally, participating companies will work toward green certification. EMS is developing a green solutions framework and a variant of its LEED certification program for QEC, and participants will be guided on resource and energy conservation, water and air quality control, and waste management. Hesham Al Emadi, the chief executive of QEC, is confident that under EMS’s guidance QEC can meet its green objectives. “On average, EMS projects achieve a 20-40 percent reduction in electrical bills and a payback period of around two years,” he said.

QEC aims to attract the oil and gas production industry, support services and downstream activities, shipping, and energy trading, according to Gulf News. QEC recently bagged an award from Britain’s The Banker magazine for the quality of its financial management, beating over 650 nominees. However, QEC has yet to lay down a regulatory framework on environmental issues and is unsure of the kind of energy companies it should be hoping to attract. There is interest from the right quarter: the authorities say some inquiries have come from firms that use renewable sources of energy.

According to Emadi, an increasing number of Middle East property developers are going green as they come to appreciate the environmental, social and economic benefits that flow from it.

Define green

A green building is a structure that is designed, constructed, renovated or operated so as to minimize its impact on the environment, protect the health of its occupants and use resources efficiently. It’s not so easy, however, to establish the extent to which QEC buildings will be green in terms of their design, but resource and energy conservation definitely forms part of the planning.

Khalid Bushnaq, the managing director of EMS, said the fact that an energy business center is going green tells its own story about the growing importance of conserving resources in the region. “By incorporating effective green solutions, Qatar Energy City is setting a great example for other Middle Eastern developers to construct sustainable communities that support conservation of energy and water resources,” said Bushnaq. For QEC’s Emadi, the most attractive reasons for developers to integrate green solutions into their projects are the considerable economic incentives. “EMS solutions will ensure Qatar Energy City will benefit from reduced operational costs, reduced capital and installation costs, reduced maintenance and labor costs in addition to reduced water costs,” he said.

EMS’s LEED (Leadership in Energy and Environmental Design) certification is an accepted benchmark in the US for the design, construction and operation of high-performance green buildings, according to the US Green Building Council. The certification provides a roadmap for designing or modifying already built buildings for every building type and phase of a building lifecycle. LEED gives building owners and operators the tools they need to have an immediate and measurable impact on their buildings’ performance. “LEED promotes a whole-building approach to sustainability by recognizing performance in five key areas of human and environmental health: sustainable site development, water savings, energy efficiency, materials selection, and indoor environmental quality,” said Bushnaq.

EMS has reported increased demand for its services as developers in the region are increasingly adopting sustainable development practices to address various environmental issues. It was announced recently that Dubai is planning to build the world’s first green skyscraper that will produce more electricity than it actually uses as part of the emirate’s efforts to remain an international trendsetter in building technology. EMS at present manages more than 200 energy management projects throughout the Middle East.

Also included is an Energy Efficient Architecture (EEA) analysis, through which the company delivers a systematic evaluation directed at analyzing the function of systems, processes and building equipment for the purpose of achieving required functions at the lowest cost. EMS, which has been offering such solutions to industrial, commercial and residential sectors in the region for 15 years, also does audits to determine the practical and feasible energy saving measures. EMS has had a track record of identifying typically between 11-35 percent of savings of total energy bills (electricity, fuel and water) with simple paybacks of two years or less. However, EMS admits the results vary widely and are difficult to categorize.

Big plans

At present the Qatar government has energy investment of about $80 billion underway and the country’s pull as the energy center of the Gulf is ever increasing with its immense reserves of natural gas and its business friendly identity. Last month, Gulf News reported that Kuwait’s National Petroleum Services Co. signed a 65 million riyal deal with QEC to build its new corporate headquarters there. The company’s president, Abdul Aziz Al Dolaimi, said his firm understood “the business benefits of being located alongside other world class energy companies.”

QEC as a fully integrated business cluster is expected to have a catalytic effect on the value/supply chain of national and global oil companies, their support services and downstream activities. But more than this, it has put the city firmly on the world energy map. Even though the energy city does not at this stage have a regulatory framework to highlight the need to limit carbon output or stress the need for waste management, the company says that is something they will be looking into in the near future.

When the $2.6 billion QEC project was launched as the Middle East’s first energy business center, Qatar had already embarked on a five-year energy investment program worth $70-80 billion. The country aims to become the world’s biggest liquefied natural gas exporter and the world leader in gas to liquids production at more than 300,000 barrels a day, in the process becoming the fourth largest petrochemicals producer globally. Even though the region, according to one estimate, accounts for over 60 percent of the world’s proven oil reserves and over 40 percent of the world’s natural gas reserves, there has been no business center dedicated to the industry. The setting up of the QEC was a step toward filling in this void. QEC has already started looking at possible expansion of this concept. Gulf Finance House - the leading Islamic investment bank and lead financial advisor to QEC - has already announced its plans to develop India’s first integrated energy business district, Energy City India, with an estimated development value of $2 billion.

Almost a year after its launch, the project is beginning to look like a one-stop-shop for energy traders. In December 2006, QEC announced the launch of the second phase of the project at an investment of $1 billion. There are also plans to launch the International Mercantile Exchange, a dedicated energy trading platform. Electronic energy trading is set to galvanize the energy trading markets. There is a chance that electronic energy trading will be the fourth super asset class for global investors, alongside conventional debt, equity and forex, in the next few years. The city has also identified a number of industry specific products, services and facilities that are either prerequisites or competitively advantageous to offer in the establishment of a global energy hub. QEC is forging partnerships with the Qatar Foundation, Qatar Petroleum and QTel to further enhance its role as a leading socioeconomic development in Qatar.

This article first appeared in the June 2007 issue of Trends.

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