Cabinet approves plan to switch from oil to gas for transport

The government wants to use compressed natural gas (CNG) instead of gasoline in public transport.

The cabinet today approved a plan to encourage the switch from oil to domestically produced compressed natural gas (CNG) for transportation. The plan calls for an initial use of 15% methanol in gasoline, use of CNG and electric engines by buses, the import of hybrid engine motor vehicles, and the extensive use of mass transit. The plan sets ambitious targets: cut the use of oil for transportation by 30% by 2020 and by 60% by 2025, compared with current projected oil consumption based on business as usual.

Switching to could cut the price of fuel for motor vehicles by at least 25%, Eyal Rosner, the head of the Administration to Reduce Dependence on Oil for Transportation at the Prime Minister's Office told "Globes", last week.

Rosner said that the administration estimates that 80 billion cubic feet (BCM) of gas should be set aside for domestic use through 2040, double the amount mentioned by the Committee for Reviewing Government Policy on the Natural Gas Economy report (the Tzemach Committee). The higher figure would reduce the amount of natural gas available for export by a further 40 BCM.

Gas exports are already under review after a series disappointing wells, which cut 300 BCM from previous estimates of Israel's gas reserves. Asked about this, Rosner replied, "80 or even 100 BCM amounts to just 10% of Israel's natural gas reserves, so we’re not talking about a big number, especially since we do not rule out imports of some of the amount needed."

To achieve the targets, the committee recommends a series of measures intended to lower the cost of fuel for transportation, develop Israel's energy and technology sectors, and improve the environment. The cabinet will order the Ministry of Energy and Ministry of Transport to review instituting a standard of 15% methanol in the first stage, and to gradually raise the standard to 30% and 85%. Methanol can be produced from natural gas and a 15% mix with gasoline does not require the redesign of engines.

Another key recommendation is to encourage the switch to CNG by providing incentives to build a nationwide CNG refueling network. The committee hopes that it will be possible to begin refueling vehicles with CNG by the end of 2014. Rosner says that the cost of Israeli natural gas is currently $6 per million British Thermal Units (mmBTU), almost two-thirds less than the price of oil of $16 per mmBTU. Government experts found that, even after processing, CNG is 25% cheaper than gasoline.

Rosner says that CNG would cost NIS 5.50 per liter, compared with the current price of gasoline of NIS 7.52 per liter, assuming that CNG has the same excise as gasoline. Given, however, that the government intends to levy a lower excise on CNG to encourage its use because it is cleaner than gasoline, the difference could be greater. It is important not a caveat - the cost of converting engines from gasoline to CNG, which is still too high to justify the conversion for individuals, which means that the main beneficiaries would be trucks, buses, and other heavy vehicle users.

The plan which the cabinet will approve, follows on the national plan to develop alternative fuels approved by the government in February 2010. The idea behind that plan was for Israel to lead the development of alternative fuel technologies for transportation. Oil currently is the source of over 90% of fuel for vehicles on the land, sea, and air worldwide, and the finding of alternative fuels would break the OPEC oil cartel, which is dominated by Saudi Arabia, Iran, and Venezuela, and end the world's dependence on Arab oil.

"During the work, we discovered that there is definitely room for a plan for Israel's transportation sector," said Rosner. "We're talking about a plan which will generate growth through the construction of heavy industry for the production of alternative fuels, such as methanol, and through the encouragement of initiatives to develop Israeli technologies which will lower the production costs of alternative fuels and make them more available."

Rosner added, "Implementation of the plan does not require money, but will save the economy costs and improve the environment."

"Globes": Wouldn’t this affect oil refineries?

Rosner: We believe that oil refineries will play a key role in these processes. No one has greater ability to develop methanol or gas to liquids (GTL) than oil refineries."

Published by Globes [online], Israel business news - www.globes-online.com - on January 13, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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