Israel's cleantech mega-plan

The country is investing billions to become a world leader in renewable energy technologies and oil alternatives.

"The global interest in Israel's energy R&D and technology is out of all proportion to the size of the country," says Dr. Eli Opper, former Chief Scientist and now chairman of the Eureka High Level Group (HLG). Israel currently holds the chairmanship of Eureka, the European R&D program, of which more than 40 countries are members. According to Dr. Opper, Israel's technological achievements were an important consideration in the award of the chairmanship. "The world looks for two things in Israel," he says, "R&D and technology. Our manufacturing and marketing capabilities are of far less interest to it."

Dr. Opper points out that Israel has an impressive record in developing breakthrough energy technologies. "Israel was a world pioneer in developing water desalination and solar energy technologies," he says. "Unfortunately, in Spain and California there are solar installations that operate using Israeli technologies, but in Israel itself we have missed the opportunity to implement them, among other things for political reasons.

"Another reason is the small size of the Israeli market. On this point, Israel has a great deal to gain from cooperation with the large European market. Moreover, Israelis have a lot to learn from the Europeans when it comes to environmental protection. This is an area in which Israel considerably lags behind European countries. Up to now, Israelis have preferred to deal with more urgent issues on the agenda."

This highlights the importance of the conference being organized by the European Friends of Israel in Jerusalem this week, in collaboration with "Globes." The conference is beng attended by about 500 of the European Parliament's 736 members. Over the course of the conference, the European parliamentarians will visit Israel's leading industrial plants. This is no small thing, given that they represent a market of 375 million consumers, who could help promote Israeli technology.

Dr. Opper defines cleantech as comprising three sub-fields: water, environment, and renewable energy. One of the most interesting Israel developments, he says, is in water. "The hot topic in water technologies these days is prevention of leaks from water pipes. There are some very interesting Israeli developments in this area, that could be especially relevant to large European cities with antiquated water infrastructure. In cities like London and Paris, the rate of water loss can be counted in tens of percents.

"The Israeli technology is two-stage. The first stage is locating the leak, using sophisticated control systems. The second is blocking the leak, by introducing special, non-toxic materials."

A few years ago, one of the technology incubators operating in Israel, Kinrot, decided to become a dedicated water technologies incubator. Another incubator, L.N. Innovative Technologies, based near Haifa, has declared itself an "environmental incubator."

More cleantech technologies are at various stages of development in more than 26 incubators that operating in Israel under the aegis of the Office of the Chief Scientist in the Ministry of Industry, Trade and Labor. According to Dr. Opper, there are 8-10 companies that have been in the incubators for an average of two years, and altogether, the state supports about 200 start-up companies.

Dr. Opper, who was Chief Scientist from 2002 to 2010, says that the past three years have seen substantial change in the scope of activity and investment in cleantech R&D in Israel. "Energy has expanded in recent years because the market understood that money could be made from it," he says. "The figures are dramatic, and indicate a very clear trend. Investment in cleantech is growing steadily from year to year."

In 2007, applications for research project in cleantech were received in the Chief Scientist's Office worth a total of NIS 150 million. By 2010, the amount had jumped to NIS 380 million, representing a rise of more than 250% in three years. The amount of grants and the number of applications approved have grown by similar rates. At the same time, it must be remembered that cleantech still accounts for only a small proportion of the total of R&D projects approved by the Chief Scientist of about NIS 5 billion annually.

NIS 57 million to set up a technology center

The technology incubators and research budgets are only two elements of the R&D activity in Israel in renewable energy. Another important factor that will soon come into play is the Renewable Energy Technology Center. The center will be set up by a private consortium selected by the Ministry of Industry, Trade and Labor in a tender the result of which was published in September. Dr. Opper points out that a second technology center is planned in the next few years for developing water technologies.

Under the terms for setting up and operating the Renewable Energy Technology Center, the state committed to injecting NIS 57 million over five years, while the franchisee committed to match that amount of funding. In September, the tender for the center was won by The Eilat-Eilot Renewable Energy Initiative, a consortium that comprises some of Israel's most important companies in R&D (Ormat, Elbit Systems, and Rafael Advanced Defense Systems), together with leading research bodies in renewable energy (Ben Gurion University of the Negev, and The Arava Institute for Environmental Studies), and venture capital firm ProSeed.

The center will be constructed in the Arava, north of Eilat, in the Eilot Regional Council. The Eilat-Eilat Renewable Energy Administration is an important partner in the winning consortium. The win in the tender consolidates the Eilot region as the Israeli Mecca for renewable energy.

The main focus of the region's activity in renewable energy is the Eilat-Eilot International Renewable Energy Conference. This year, the fourth year it is being held, the conference will take place in Eilat from February 22 to February 24. In 2010, the conference received official recognition as one of the most important renewable energy events in the world when the European Commission, the executive arm of the European Union, chose to include the event in the ECO4B (environment cooperation for business) project, promoted by the Enterprise Europe Network, which links business support organizations from 47 countries.

The conference will bring together over 2,000 business people, academics, government representatives, and large investment entities, from Israel and around the world. Among other things, a large Italian delegation is expected, to be led by economic development minister Paolo Romani, alongside delegations from the UK, France, and Spain. Two sessions at this year's conference are being sponsored by Eureka, which at the same time will hold its annual gathering under Luuk Borg, head of the Eureka secretariat in Brussels.

Among prominent Europeans in the renewable energy field expected in Eilat this year are European Climate Action Commissioner Connie Hedegaard; Dr. Karl-Josef Kuhn, principle engineer of Siemens AG, and head of Siemens Corporate Technology E-Car; and Dr. Gabriel Marquette, Director of European Affairs at Schlumberger Research, and president of Eurogia. Besides focusing on ways of removing bureaucratic obstacles to implementation of renewable energy projects, a large part of the discussion will be devoted to innovation and the latest technological developments in the field.

NIS 14 billion to replace oil

In the coming years, Israel's R&D efforts will not be devoted to cleantech so much as to a subject close to it: substitutes for oil. On February 7, 2010, the government decided on "a national effort to develop technologies that reduce the world's use of oil in transport." The goal set could hardly be more ambitious: the developed world's dependence on oil for transport is a political problem, but also an economic and environmental problem.

Dr. Gal Luft, executive director of the Institute for the Analysis of Global Security (IAGS) in Washington DC, believes that this is the world's number one problem. The root of the problem, he says, lies in the fact that oil is a monopoly in fuel for transport that is produced by a cartel, OPEC, that controls nearly 80% of the world's oil reserves, and acts avowedly to raise its price.

At the "Globes" Israel Business Conference in Tel Aviv in December, Dr. Luft predicted that oil prices would continue to rise under any possible scenario. "Our luck, in inverted commas, is that we have been in a global recession," he said. "Just imagine what will happen if we emerge from the recession. On the other hand, oil prices will also rise under less optimistic scenarios, such as an outbreak of inflation or substantial weakening of the dollar. If those things happen, investors will rush to oil as a defensive commodity, like gold."

Over the past year, since the government decision, comprehensive staff work has been undertaken by the National Economic Council under Prof. Eugene Kandel. At its January 30 meeting, the government approved a national plan for developing alternatives to oil.

The plan, which will operate between 2011 and 2020, will have a budget of NIS 4 billion for its first five years, and at least NIS 10 billion for the next five years. The government's participation in the budget will be NIS 1.5 billion.

The main goal set in the plan is for Israel to become a world center of know-how in alternatives to oil. According to the plan, this goal will be achieved if, by 2016, over 100 start-up companies and research projects are set up, with the involvement of 20 Israeli global companies. Also, by 2016, about a hundred research and academic groups in the field are due to be formed.

Under the national plan, a program of encouragement for investment in venture-backed companies active in alternatives to oil. The program, which has been allocated government funding of \NIS 400 million, will enable the financing of pilot installations to test new technologies, and will promote implementation of the new technologies in industry. In addition, a NIS 1.5 million annual prize will be awarded by the prime minister for world innovation in alternatives to oil.

The future scientific activity in Israel will be reinforced by collaboration programs and agreements with foreign countries. Preference will be given to countries with high research and technological capabilities, and to countries with the strongest interest in finding alternatives to oil. The government's decision specifically mentions countries like India and China, where the number of motorized vehicles is expected to grow substantially in the coming years.

Uri Ben-Porat economic advisor to President Shimon Peres, recommends teaming with developing countries like Kazakhstan that are dependent on oil exports and seek to diversify their risk. At the recommendation of Dr. Opper, the plan states that Israel will seek to strengthen collaboration between Israeli companies and multi-national companies active in areas connected to alternatives to oil, and with leading research bodies in that area. At the Israel Business Conference, Dr. Opper explained that "particularly players like automobile makers and fuel companies are conducting research on a huge scale to find alternatives to oil, and there is a great deal of strategic sense in linking up with them."

Dr. Opper, who was a member of the steering committee that formulated the national plan, believes that its ambitious goal is attainable. "If Israel helps to solve the world's dependence on oil, it will turn out to have been a very important decision."

Published by Globes [online], Israel business news - www.globes-online.com - on February 7, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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