Carbon Tax in Dubai Free Zones?

The National, Abu Dhabi based newspaper has this report:


Free zones to become carbon neutral

Nine free economic zones across Dubai will be made carbon neutral.

According to Tecom Investments, the environmental advisory company EcoVentures will calculate the greenhouse gas emissions of the free zones, with the tally expected in a month’s time.

The programme would cover Tecom-operated free zones, which occupied 24,000 square feet of commercial space, said Ali bin Towaih, the director of the sustainable energy and environment division.

The announcement came as the United Nations put carbon dioxide (CO2) in the spotlight on World Environment Day, which is celebrated across the globe today.

The UN’s Environment Programme encourages countries to kick the CO2 habit and to work towards a low-carbon economy. EcoVentures would examine several key areas to reduce Tecom’s ecological footprint, including water and energy consumption, waste, and emissions generated through business travel, commuting and deliveries, said Shezan Amiji, EcoVentures’ director.

“From then on, Tecom can decide on the necessary measures and over what period they want to become carbon neutral,” said Mr Amiji.

Tecom is a subsidiary of Dubai Holding, which is owned by the Dubai Government.

Reducing a company’s footprint made good business sense, said Mr Amiji, a former media entrepreneur and banker with Goldman Sachs and Standard Chartered. He was inspired to open his consultancy business after watching Al Gore’s Academy Award-winning documentary film An Inconvenient Truth.

“Managing your business responsibly makes you an efficient producer,” he said.

But ecological efficiency alone will not take Tecom to a carbon-neutral position, which is where carbon credit trading comes into play.

The scheme sees carbon-producing companies purchase credits from projects that reduce emissions, including the United Nations’ Clean Development Mechanism.

By charging carbon emitters, these programmes in effect finance “green” projects. A key requirement is that the funding goes to projects that would have not been otherwise profitable.

Carbon trading crosses international borders. Typically, emitters in the West finance projects in developing countries.

Mr Amiji, whose company is affiliated with the UK-based The CarbonNeutral Company, one of the world’s leading offset businesses, said he could give clients worldwide investment options.

But EcoVentures is looking to finance environmentally friendly start-up businesses in the UAE.

“We are trying to source credits in the region and trade them in the region,” he said. “This will be our differentiation.”

Tecom was also keen to encourage green businesses in Dubai, said Mr Towaih, who is also the director of the company’s energy and environment park free zone (Enpark).

“We are not doing all this just for the sake of being carbon neutral, but to encourage industry and projects to come forward,” he said.

While the size and content of Tecom’s future carbon credit portfolio had yet to be determined, Mr Towaih said he hoped some of the carbon credits would be purchased from clean projects in the emirate.

The UAE currently has no projects able to sell carbon credits.

Five projects in the oil and gas sector developed by Masdar, the Abu Dhabi Government’s sustainability initiative, are expecting UN approval. It is not yet clear when approval will be granted.

Masdar previously announced that it was developing a portfolio of CDM projects with asset owners such as the Abu Dhabi National Oil Company, Abu Dhabi Water and Electricity Authority and Dubai Aluminum. The projects include energy efficiency, industrial process improvement, flare gas recovery and power plant upgrades.

The free zones that will participate in Tecom’s carbon neutral scheme are Dubai Biotechnology and Research Park, Dubai Internet City, Dubai Knowledge Village, Dubai Media City, Dubai Outsource Zone, Dubai Studio City, Dubai International Academic City, International Media Production Zone and Enpark.

The audit will cover only the operational activities of the free zones and not the companies registered there.

Meet the players:

EcoVentures, the environmental advisory company, was founded in 2008 by two partners: Shezan Amiji, an entrepreneur with a background in media and venture capital and Khamis Juma Bu Amim, formerly Chairman of the Middle East’s Regional Clean Sea Organisation and VP of Dubai Petroleum.

Shezan Amiji is an entrepreneur based in the United Arab Emirates. In 2003, he launched 7Days. Prior to his role at 7DAYS, Shezan was a banker with Goldman Sachs and Standard Chartered. He has an M.A. (Oxon) from the University of Oxford in Politics, Philosophy and Economics, and an M.B.A. from the Wharton School of Business, University of Pennsylvania.

Check Ecoventures Backgrounder

Ecoventures is going to Audit the carbon footprint. And then Free Zones will have to offset it. It could either be through CER’s (UN regulated and certified) or VERs (unregulated)

Though the report ends with, “The audit will cover only the operational activities of the free zones and not the companies registered there.”

It also says, “EcoVentures would examine several key areas to reduce Tecom’s ecological footprint, including water and energy consumption, waste, and emissions generated through business travel, commuting and deliveries.”

For instance, ITP has a great deal of carbon footprint. If the audit is not going to consider the carbon footprint of companies registered and operating in those free zones – what sort of a white elephant would the audit report be?

On the other hand, if they were to consider the carbon footprint of companies like ITP and others registered in the free zones… Is Tecom going to pay for the companies as well to offset the carbon emissions?

The bottom line has to be simple. You produce co2, you pay.

Chayakada will discuss whether CERs and VERs are going to work. Or is it going to be a flat carbon tax to the companies registered.

There are a lot of questions that need to be answered. Interestingly, questions have to be asked by companies registered in the nine free zones. And that includes big MEDIA companies! Good fun.