At Tuesday’s Maariv Business Summit, Yossi Rosen, Chairman of the Board of the Israel Institute of Energy and Environment, discussed the future of both green and traditional sources of energy in Israel. At the Summit, Rosen was interviewed by Yehuda Sharoni, economic commentator for Maariv.
Rosen stated that ultimately, significant changes will occur in the types of energy used in Israel. However, in 2030, Israel will still have gasoline-burning cars on the road. “Anyone who says that by 2030, all of the cars on Israel’s roads will be electric vehicles is misleading the public,” said Rosen. “There will be a greater number of electric cars on the road by 2030, as well as other technologies, but a complete changeover from gasoline will not be reached by 2030, perhaps not until 2050.” The demand for fuel can not be covered by adding new energy sources, noted Rosen.
Rosen added that fossil-based fuels will be used for quite a while longer but will be much cleaner than the fuel that is currently used. “Almost every product that we use has oil or one of its substitutes, and this will continue for many years,” he said. In addition, Israel’s security needs do not allow it to completely abandon traditional fuel sources at this point.
Sharoni pointed out that the tax on fuels in Israel which the government collects comes to NIS 20 billion annually. Currently, 65% of every shekel spent on a liter of gasoline goes to the state coffers. Rosen noted that the amount of tax makes up 51% of the cost of energy for the average family in Israel, which in November 2021 stands at NIS 1,700 per month, of which close to NIS 900 is the tax component. “When you come to a fuel pump,” said Rosen, “more cash is generated that goes to the Treasury than fuel.”
How can the State afford to give up on those tax revenues when the focus shifts to electric cars? Rosen answered that when that day comes, the Treasury will develop a way to levy additional taxes on electric vehicles to make up for the shortfall.
Commenting on the cost of oil and natural gas, Rosen said that the price of natural gas in Israel is relatively stable, calling Israel an “island of stability” in terms of the price. While the cost of natural gas in the world rose to $50 per unit, prices in Israel remained stable at just $5 per unit. Rosen predicts that fossil fuel prices are close to reaching their peak and will soon decline. He stated that electricity prices are not going down because the Israel Electric Company has set its tariffs to make up for past losses experienced by the company. Rosen said that the Israel Electric Company is today very efficient, and ultimately, at some future date, it may be able to lower prices.
Rosen commended Minister of Finance Avigdor Liberman and the Finance Ministry on the passage of the Knesset’s Arrangement Law (Hok HaHesderim). Discussing the regulatory section in the law regarding energy regulation, he explained that the problem lies with the implementation of these laws. Rosen added that several years ago a government decision was made to coordinate regulations between various government ministries, but today, each office makes its own regulations.
To illustrate his point, he said that building and opening a gas station in Israel today requires no less than the signatures of fifty different regulators, which can take up to five years from purchasing the land until government approval. “The test of the regulatory law under the Arrangements Law,” he said, “will be in its implementation. Today some government ministries are starting to torpedo it. Regulators do not like being supervised.”
Concluding his remarks, Rosen said that Israel’s energy economy is a growth engine. “You can see it in the gas exports to Jordan and Egypt. I am optimistic that we will open this market, and it will be a growth engine for exports and improving the economy.” Fossil fuels will remain alongside renewable energy, but will become cleaner, said Rosen. “We need a balance between the old and the new, with energy security and reasonable energy prices.”
This article was written in cooperation with the Israel Institute of Energy and Environment.