Low carbon cities and the development of cleantech innovation clusters in oil-rich economies: A case study on Masdar City

Can oil-rich economies turn into low-carbon economies or achieve the even more ambitious goal of transforming into hot spots of clean technology (hereafter ‘cleantech’) innovation? And, if so, what policies would help to engage the private sector? The Masdar City initiative, a US$18 billion project initiated by the Abu Dhabi government in 2006, aims to achieve such goals by attracting 1,500 cleantech R and D and manufacturing companies to establish a presence in a city of green buildings, zero-carbon transport and a low-carbon environment. This chapter investigates the effectiveness of different policies to incentivise relocation of cleantech firms to Masdar City. Results from an ordinal regression analysis of survey data from cleantech firms shows that factors such as easy access to customers and suppliers, as well as seed funds, tax exemptions and business-friendly local regulations, are critical for increasing firms’ interest in relocating to Masdar City.