“This is a relatively small project, however it’s symbolically highly significant, as is this first stakeholder meeting. This is history in the making,” said Xenel-Balderrie’s CEO Rachad Itani who conducted the meeting. The project, which involves a switch from electric to absorption chillers for the King Road Tower building, will reduce CO2 emissions by about 10,000 tons per year, generating emission credits that could amount to $2 million over the project’s 10-year registration period.
It was initiated by Source Energy, part of STCC, a major Saudi energy company specialized in financing, developing and operating power and thermal utility solutions utilizing tri-generation technologies to provide energy efficient district cooling and power services. The company is building an efficient power plant that will provide the King Road Tower with electricity and air-conditioning services.
Source Energy will use absorption chillers to produce refrigeration by capturing the waste heat generated by the diesel power plant. This will lower fuel consumption and therefore CO2 emissions. The project owners have retained the services of Jeddah-based Xenel-Balderrie to register the project as CDM compliant, in a bid to generate carbon credits that can be sold to European and Asian companies through the CDM’s financial mechanisms.
NTCC representative Ahmad Abu Hamdieh commented that the switch to Absorption Chillers would reduce operating and maintenance expenses to provide refrigerated water to the building’s air-conditioning system by 20 percent. However, since absorption chillers are more expensive than electric chillers, the additional expense when electric energy is so cheap can be justified only if the project owner can generate additional income from the CDM.
Antoine Nasrallah, the general manager of Faden, the company overseeing the construction of the King Road Tower, explained that the switch to modern insulating materials would increase the tower’s energy efficiency by 21 percent compared with building practices commonly utilized in the Kingdom. He added: “We expect to receive a LEED Silver certification” for the building.
Participants in this first stakeholder consultation included three representatives from Green Nation, Saudi Arabia’s first eco-friendly initiative. Representing Green Nation at the stakeholder meeting were Lulwa Bin Mahfouz, Rana Jan, Aya Naghi, and Mohammed Al-Homssi. They gave an overview of Green Nation’s activities, which include a number of initiatives and lectures aimed at raising the Saudi public’s awareness with regards to environmental conservation.
Itani commented that it was this type of youth-led effort that and initiatives that holds the real promise for the future economic well-being of Saudi Arabia, a country where more than 50 percent of the population is under 18.
Hasan A. Abu Ahmad from Tamlik company stated that he would definitely recommend that the efficient building techniques utilized by the King Road Tower owners, as well as energy solutions similar to those pioneered in the Kingdom by NTCC and Source Energy, be adopted by his own company in its future real-estate developments.
“Given the benefit that these techniques and technologies represent to investors, and the additional income that can be generated by certification under Kyoto Protocol rules, all new buildings should follow the example that we have seen here today. We are investors after all, and any additional income or savings are important to us,” he added.
Itani described the complex workings of the CDM in detail, detailing the significant monetary benefits that both institutional investors and the country as a whole would derive from certifying energy efficiency projects under the Kyoto Protocol.
“In some cases, investors can generate a substantial percentage of their equity finance from selling their emission credits on the futures carbon market” he said. He added that it was very important for project owners to seek advice on the applicability of CDM enhanced carbon finance before they sign any contracts, and before municipalities or ministries issue tenders related to energy projects, lest they forgo the revenues that can derive from CDM certification.
“Worse, if energy efficiency projects are not certified under the Kyoto Protocol, this could be deemed by the UN-approved certifiers as representing the norm in business practice, thus destroying the CDM baseline for these types of projects in Saudi Arabia.” This, he said, “would mean that Saudi companies, as well as the public sector, could lose hundreds of millions of dollars in virtually free finance. It would be a pity if it turned out this way.”
