Hydrogen Energy, the joint venture between BP and Rio Tinto, has signed an agreement with the Abu Dhabi-based Mubadala Development Company to start the engineering design of an industrial-scale hydrogen-fired power generation project, Hydrogen Energy’s legal adviser Herbert Smith said.
The project that will require a total investment of $2 billion (Dh7.34bn) – excluding the investment in carbon dioxide sequestration – will see hydrogen fuel being created from natural gas to produce clean electricity.
“Subject to the completion of the engineering design and agreement on an enabling commercial structure, the partners aspire to make the decision to proceed with construction by early 2009. This should allow the plant to come into commercial operation in 2012,” said David Laurence, partner at Herbert Smith, a Dubai-based legal consultancy that advised Hydrogen Energy on the deal.
The UAE is expected to witness more international partnerships in multi-billion dollar clean energy projects in the coming years, according to Laurence.
“At the Masdar Future Energy Conference in Abu Dhabi recently, the emirate announced that it is committing an additional $15bn for new clean energy projects through the Masdar initiative. This is an indication of how seriously the UAE takes its commitment to clean energy. While it is not clear how much of this money will be spent in the UAE itself, there is clear potential here and a number of initiatives are under way. Perhaps the most striking is the proposed development of a carbon-neutral city in Abu Dhabi,” Lawrence said.
“Going forward you will see many more deals of this nature with international collaboration on energy infrastructure,” said Neil Brimson, partner and head of Middle East at Herbert Smith. “You’ve already got a measure of such deals in the region last year. The Rabigh deal in Saudi Arabia is a good example,” he said.
Herbert Smith advised Sumitomo Chemical on the $9.8bn project to develop the Rabigh refinery and petrochemical complex in Saudi Arabia with Saudi Aramco.
“The advice was in relation to the $1bn captive Independent Water Steam and Power Project and construction advice which involved the negotiation of 15 interlinking contracts and performance guarantees,” Brimson added.
At its peak, about 1,000 jobs would be created during construction of the onshore facilities for the Hydrogen Energy project, with up to 100 permanent jobs when the plant is operational.
Following the agreement, Hydrogen Energy and Mubadala will work together on the front-end engineering design of an industrial-scale hydrogen-fired power generation project with capture of the carbon dioxide, which would be available for transportation and storage.
The region is awash with opportunities in infrastructure and energy projects, according to Laurence.
“There are plans for Dubai Aluminium to register under the Clean Development Mechanism [CDM] a project to reduce emissions associated with its aluminium smelting operations. Other CDM projects are also under consideration. It is also important to remember the role that nuclear energy may play in the energy mix going forward, given recent announcements in Qatar and the UAE,” he said.
Both Laurence and Brimson agreed that legal firms would have a pivotal role given the dynamics of such clean energy partnerships.
“Legal advice plays a crucial role in the development of clean energy projects, which are often at the cutting edge of new developments in the law and can require novel thinking on risk allocation,” Laurence said.
Masdar will help emirates cms to go green Masdar, the initiative by the Abu Dhabi Government to promote advanced energy and sustainability, has signed an agreement with Emirates CMS Power Company to develop a project under the Clean Development Mechanism (CDM) of the Kyoto Protocol, which will reduce carbon dioxide emissions at Emirates CMS power generation facility at the Taweelah industrial zone in Abu Dhabi.
The CDM, a project-based mechanism governed and audited by the United Nations, provides financial incentives to reduce greenhouse gas emissions in developing countries by turning emission reductions into tradable assets or “carbon credits”.
The CDM project, the first in the power sector in the Gulf, aims at increasing energy efficiency and reducing carbon dioxide emissions at Taweelah A2 Power Plant through the recovery and utilisation of waste heat in the desalination process.
The project will be developed by Masdar subject to the approval of Abu Dhabi’s power sector Regulation and Supervision Bureau. The CDM project consists of various steps including GHG emission analysis, regulatory documentation, validation and registration at the United Nations.
Design of hydrogen project to start soon