The United Arab Emirates has one foot firmly planted in tradition and the other stretching toward new ground. The UAE was built on traditional fossil fuels – an Opec member since 1967, home to the world’s 7th largest oil and natural gas reserves and the first Middle Eastern country to export LNG – the country is also a regional and global renewable energy pioneer. The UAE recently inaugurated the largest thermal solar power plant in the world, Shams 1, and the Arabian Islamic nation is about to begin producing nuclear power, a significant accomplishment given the region’s geopolitical complexity. Against that backdrop, the UAE has embarked on an aggressive experiment into urban sustainability designed to rely upon and pioneer cutting edge renewable energy technology with a project called Masdar City.

But is Masdar just an expensive gamble bankrolled by oil wealth, or a visionary approach to sustainable urban development that could help turn down the climate change dial? The answer most likely falls somewhere in between. Lessons learned along with technology solutions developed as part of this unique project could be applied in other parts of the developing and developed world to assist governments seeking to reach greenhouse gas reduction targets.

Masdar City is named for the government-owned renewable energy company – Masdar, meaning “the source” in arabic – which is a subsidiary of the massive government investment vehicle Mubadala Development Company. Upon completion, the city will be a technology cluster complete with research laboratories, residential housing and commercial space for 40,000 permanent residents and 50,000 daily commuters. It will be completely powered by renewable energy – 20% of which will be generated on site – and have a limited carbon footprint.

The developers are using state of the art building materials, passive and intelligent design techniques along with ancient Islamic architectural features to achieve an unprecedented level of energy efficiency. High and low heat density materials are used to take advantage of the desert sun so as to minimize heat gain and maximize cooling breezes. Passive building technology accounts for 60% to 80% of Masdar City’s energy savings, Christopher Sorensen, head of strategic global partnerships recently told a group of journalists during a media tour. Surface temperatures in Masdar City at the heart of summer when 130° F is a common occurrence are significantly cooler than adjacent Abu Dhabi where asphalt and traditional concrete absorb and hold the sun’s heat, Sorensen said.

Airflow in maximized inside and out of the library building by designing it with a baseball cap-like roof that shades the sun-facing façade while catching and swirling desert breezes in a shady area on the other side. Centrally-located circular stairs inside also help keep air circulating, thus limiting the energy needed for air conditioning, Sorensen explained.

Some of the world’s leading energy technology companies including GE, Siemens and SK Energy have chosen to build their regional headquarters in Masdar City. Siemens’ state of the art Middle East HQ building uses shading on the façade designed to optimize natural light transfer to the interior, while limiting the amount of direct sunlight emitted through the windows, which helps with cooling and reduces the energy-intensive air conditioning burden.

“A public transport system of electric buses, electric cars, and other clean-energy vehicles will provide transport within the city, while Abu Dhabi’s light rail and Metro lines will pass through the center of Masdar City, providing transport within the city and serving as a link to the wider metropolitan area,” according to the website. “Masdar City also has initiated an electric car pilot with Mitsubishi Heavy Industries to test a point-to-point transportation solution for the city that uses Mitsubishi Motor’s i-MiEV, five-door hatchbacks.”

Masdar has a 10 megawatt PV solar field installed in 2009 – still the largest in the Middle East – that currently supplies more energy than required, allowing the excess to be fed into Abu Dhabi’s public power grid. Blowing sand and dust is a problem for solar in desert locations because it collects on the panels reducing their efficiency, so Masdar has been working with other companies to engineer surfaces with pores smaller than the dust particles causing them to slide right off, “like a child on a play slide,” said Sorensen. Scientists at Masdar Institute are conducting research into light/matter interaction and working on coatings that repel sand or bacteria for use on solar panels and other applications.

But none of this comes cheap. The project has benefitted from historically high oil prices in recent years – the average annual Opec basket price has remained above $100 per barrel since 2011 – which has helped finance Masdar City’s development. The total cost is estimated at $18-$19 billion, according to the website. “It’s an expensive experiment,” Sorensen told Breaking Energy.

If Masdar can pioneer, prove up and deploy new technology that decreases in cost with economies of scale and can be applied to other parts of the world, the experiment will likely be deemed a success regardless its initial of cost. The project’s funding, which largely comes from the UAE government, appears somewhat dependent on the price of oil. A price collapse similar to that of late 2008 and 2009 when the Opec basket fell as low as $34/bbl could challenge the project’s capital structure.

Nevertheless, Masdar City is groundbreaking endeavor in a part of the world with skyrocketing population growth that needs energy efficient housing, cooling, water desalination and renewable energy solutions as energy consumption starts bumping up against oil and gas production jeopardizing exports so vital to Gulf country economies. As the global population continues increasing, all sources of energy will be required and projects like Masdar City can help advance renewable energy technology, which is projected to make up an increasing share of the global energy mix.

Full disclosure: Masdar paid Breaking Energy’s air travel and hotel costs while in the UAE.