Masdar Clean Energy

Profiting from the Persian Gulf's Clean Energy Moonshot

Written by Brian Hicks
Posted August 20, 2009

Investment columnists like me love days like today.

I've told you for a few years now about Masdar, Abu Dhabi's ambitious initiative to build a zero-carbon, zero-waste city in the heart of the Persian Gulf petroleum economy.

The Abu Dhabi Future Energy Company endowed Masdar with $22 billion in resources, but it's always been "I'm watching for. . . " or "you'll hear it first when. . . "

And that gets old.

Back in March, we reported that the global financial crisis knocked Abu Dhabi and neighboring Dubai for a loop. Abu Dhabi had to bail out Dubai — known to some as the "Inflated Emirate" because of wild property developments and prices — to the tune of $10 billion.

Future Energy Company CEO Sultan Ali al-Jaber seemed to hedge a bit at the time, even while committing to progress: "2009 is an execution year for us. We will be looking for opportunities worldwide but are being cautious in finding investment opportunities. It is wait and watch now. . . how the economic downturn will be." Like plenty of other world leaders and capitalists with fortune and civil unrest see-sawing before them, the Sultan seethed with uncertainty.

Nevertheless, the goal of making a city that uses water, waste, and fuel with the smallest footprint possible persisted.

Fast-forward to the sweltering summer along the Persian Gulf — the $15 billion first phase of Masdar is not only alive and kicking; it's given us a fresh investment opportunity with Germany's BASF SE.

BASF Becomes Part of the Masdar Team



With institutions like the Massachusetts Institute of Technology and the nascent International Renewable Energy Association (IRENA, founded this year in Germany), setting up shop in Abu Dhabi and then Masdar City itself, the principality had already accumulated some heavy R&D momentum. How to profit though? In early 2008, I even jokingly wished that we could buy stock in MIT!

But where research and development are concerned, it's much easier to make money from the latter.

That's why I'm glad to tell you that BASF, the world's top chemical company, has been selected to provide next-generation building materials for the construction of Masdar buildings. The company will also be first in line for experimental design endeavors that emerge from this town-sized Petri dish about 11 kilometers outside Abu Dhabi's city core.

BASF will help Masdar developers achieve carbon neutrality with products like:

  • concrete admixtures that lower emissions by as much as 60%
  • phase-change materials (PCM), that store and release latent heat in response to temperature changes
  • low-absorption black roof coating that minimizes urban heating effects
  • polystyrene and polyurethane insulation to keep Masdar buildings cool when they need to be cool and warm when they need to be warm
BASF, which started in 1865 as a dye maker, is one of those German companies that are better known around the world as an acronym (BMW and VW also come to mind). Its full name is Badische Anilin- und Soda-Fabrik, or Baden Aniline and Soda Factory.

Yeah, it's a mouthful. . .

And even abbreviated, you won't find BASF on the U.S. big board these days. In 2007, the company pulled its Level 3 ADR listing on the NYSE in favor of home-country liquidity on Germany's Xetra electronic exchange (ETR:BAS). Regulatory changes on Wall Street prompted BASF and many others to pull their listings if the liquidity they generated wasn't worth the accounting toil and trouble, but U.S.-based investors can still trade BASF shares over the counter (OTC:BASFY). The company is still maintaining a full investor relations operation for their Level 1 ADR presence.

BASF's somewhat self-effacing slogan is, "We don't make a lot of the products you buy. We make a lot of the products you buy better."

The fact is a lot of the prototypes and variations on existing products that BASF cooks up in the desert in the coming years will be far from anything you've ever bought at the corner store.

Masdar: A Renewable Energy Moon Shot

For example, phase-change material technology comes straight from NASA experiments, and Masdar is shaping up to be nothing less than a renewable energy moon shot by the least likely of nations.

Abu Dhabi's quest for renewable energy success begs a planet-sized question you can't ignore: if the fossil fuel economy is here to stay, why is a major oil producer spending billions to break away from the pack and develop an entire zero-carbon city?

Maybe you're cynical. Maybe Sultan al-Jaber is just a rich kid with a really big train set. Maybe Abu Dhabi just wants to maximize oil output as price volatility gives them record crude prices to take advantage of. Or maybe, as we've been saying of ideas and investments alike, there's something much bigger going on. Something world-changing.

I invite you to join Green Chip International to take your portfolio to another level of access when these trans-border opportunities crop up. It may be a behind-the-scenes industrial mainstay like BASF. . . or a pimple-faced start-up full of excited engineers backed by the most seasoned cleantech venture capitalists out there.

What's clear is that seeds are being sown for tomorrow's market profits to be reaped, and what seemed like pie in the sky yesterday may put a meal on your table today, if you played it right and stayed ahead of the pack.

Regards,
Sam Hopkins
Sam Hopkins

International Editor