Netanyahu grandiosely declared at last year’s President’s Conference in October
that Israel would find a substitute for oil in the next 10 years. Nearly a year
later, he’s proposing to put his money where his mouth was.
On Sunday, a
national plan for developing alternatives to oil will be proposed by the prime
minister to the cabinet.
Developed by Dr. Eugene Kandel, head of the
National Economic Council in the Prime Minister’s Office, with the help of
several expert committees, the plan proposes investing NIS 198.2m. a year for
the next 10 years in financing research and development and companies involved
in creating alternatives to oil.
The plan calls for the government money
to be supplemented by donations from the private sector to the tune of NIS 180m.
Since Netanyahu’s declaration last year, Kandel and his
compatriots came to the conclusion that there was no single substitute for oil.
Rather, a range of technologies held the potential to replace the world’s
dependence on oil.
Furthermore, when replacing oil, what was really meant
was replacing gasoline and diesel, since 60 percent of oil is used for
transportation purposes, wrote the crafters of the national plan. Electricity
production uses only 5% of oil, since the oil crisis of the 1970s encouraged
many countries to switch to other fossil fuels, such as coal and natural gas, to
produce electricity. Twentyfive percent of oil is not used for energy purposes
but for petrochemicals, fertilizer and other oil-based products.
Israel’s dependence on foreign oil is advantageous for three reasons, the
authors of the national plan argued.
First, foreign oil is produced
largely by countries that do not have cordial relations with Israel – some of
which even fund terrorist activity against it.
Second, transportation is
responsible for about 40% of greenhouse gases, and massive amounts of air
pollution, which adversely affect the health of many of the country’s
Third, buying foreign oil is expensive and expected to become
even more so over the next 20 years as the easily available oil gets used
Some projections predict oil rising to $130 a barrel by
2030.The world used 85 million barrels of oil a day in 2007.
US Department of Energy predicts that will rise to 107 million barrels a day by
2030, according to a report commissioned by Kandel. Israel uses between 75 to
100 million barrels a year.
Israel, specifically, is uniquely poised to
become a world leader in the field of alternatives to oil because it has the
security incentive to do so, no competing oil interests to object, and the
scientific and entrepreneurial know-how as well.
Therefore, in accordance
with a government decision from February of this year calling for a national
plan, Netanyahu will propose on Sunday creating a project manager and staff in
the Prime Minister’s Office to make R&D into alternatives to oil a national
The national plan proposes several concrete steps to encourage
research and development.
First, it calls for the appointment of a
project manager with expert staff in the Prime Minister’s Office to emphasize
the national importance of the task. However, the National Infrastructures
Ministry has been arguing that it is the natural home for the position, along
with its significant budget, and for this reason the ministry has objected to
The plan also calls for increasing government funding for
research. The government would put NIS 60m. into research with the hope of
attracting an additional NIS 180m. from the private sector, both here and
abroad. The government would also make every effort to find pilot sites for
A committee of academic experts, commissioned by Kandel,
mapping the field and its obstacles, found that funding had been erratic in the
past, with no assurance of continuity over the span of years.
price of oil went up, more funding was made available.
However, when the
price of oil dropped, those funds dried up. Therefore, the national plan calls
for consistent funding over a 10 year period.
The amounts quoted in the
proposal also represent a much more significant amount of money than has been
invested in recent years in alternative energy technologies.
committee found that there were 50 research groups active in the field right now
in Israel, although it contended that many more people from a variety of
disciplines could enter the field if funding was assured. Nineteen were
researching bio-diesels, 12 synthetic gas, 13 were researching batteries and
electric vehicles, and four were working in other related fields. Similarly, the
committee found 51 companies working on these issues – from electric cars,
alternative engines, to retrofitting internal combustion cars to become
How the plan is presented and the ease with which its
funds can be accessed is paramount, according to the proposed decision.
Therefore a service center should be created to make the plan widely accessible
to the public, both in Israel and abroad. Furthermore, the project manager and
his staff should become a one-stop center for any permits or licenses
The plan would also incorporate a previously proposed plan to
create three central research centers.
Tax breaks should also be
available to entrepreneurs in the field, according to the plan. However, the Tax
Authority has objected to that portion of the plan because it said it was
working on a more general plan to standardize tax breaks for knowledge-intensive
industries and urged the government to wait for that plan to take effect and
then see what else, if anything, would be needed specifically for this
As the idea is to reduce the world’s – and not just Israel’s –
dependence on oil, international partnerships would be critical. Research
partnerships would take advantage of existing knowledge around the world, under
the plan. Business partnerships would help countries implement alternative
technologies. The number of internal combustion vehicles in countries like India
and China in particular is expected to rise dramatically along with the rise in
the standard of living there, unless alternative technologies are implemented
An NIS 2m. President’s Prize for cutting-edge technology in
substituting for oil should also be created, and the option of enlarging
prize by finding more outside donors should be explored, the proposal’s
While a small part of the national plan’s budget would come from
the ministries, most would be allocated directly by the Treasury and be
from future government budget cuts, although not from a government
reduce funding to the plan altogether, according to the proposal.