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Israel’s clean-tech megaproject
By AMIRAM BARKAT
12/02/2011
Bid to become a leader in renewable-energy technologies aims to help wean world off oil.
‘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, a former chief scientist who is now the chairman of the Eureka High Level Group.

Israel holds the chairmanship of Eureka, the European R&D program, of which more than 40 countries are members. According to Opper, Israel’s technological achievements were an important consideration in the award of the chairmanship.

“The world looks for two things in Israel: R&D and technology,” he says. “Our manufacturing and marketing capabilities are of far less interest to it.”

Opper says 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 organized by the European Friends of Israel in Jerusalem last week, in collaboration with Globes. The conference was attended by about 500 of the European Parliament’s 736 members.

Over the course of the conference, the European parliamentarians visited 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.

OPPER defines clean-tech 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,” he says. “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 twostage: The first stage is locating the leak, using sophisticated control systems; the second is blocking the leak, by introducing special, nontoxic 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 clean-tech technologies are at various stages of development in more than 26 incubators that operate in Israel under the aegis of the Chief Scientist’s Office in the Industry, Trade and Labor Ministry.

Opper, who was chief scientist from 2002 to 2010, says there are eight to 10 companies that have been in the incubators for an average of two years, and altogether, the state supports about 200 startup companies.

Opper says the past three years have seen substantial change in the scope of activity and investment in clean-tech 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 clean-tech is growing steadily from year to year.”

In 2007, applications received in the Chief Scientist’s Office for research projects in clean-tech were worth a total of NIS 150 million.

By 2010, the amount had jumped to NIS 380m., representing a rise of more than 250 percent 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’s Office, which are worth about NIS 5 billion annually.

Investment in 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 Industry, Trade and Labor Ministry. Opper says 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 57m. 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 center 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 next Tuesday through Thursday. 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 more than 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 clean-tech so much as to a subject close to it: substitutes for oil. Last February, the government decided on “a national effort to develop technologies that reduce the world’s use of oil in transport.”

The goal could hardly be more ambitious: The developed world’s dependence on oil for transport is a political problem, but it’s also an economic and environmental problem.

Dr. Gal Luft, executive director of the Institute for the Analysis of Global Security in Washington, DC, believes this is the world’s number-one problem.

The root of the problem, he says, is that oil is a monopoly in fuel for transport that is produced by a cartel, OPEC, which controls nearly 80% of the world’s oil reserves and is committed to raising its price.

At the Globes Israel Business Conference in Tel Aviv in December, 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. Last month, 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 4b. for its first five years and at least NIS 10b. for the next five years. The government’s participation in the budget will be NIS 1.5b.

The main goal of the plan is for Israel to become a world center of know-how in alternatives to oil.

This goal will be achieved if, by 2016, more than 100 start-up companies and research projects are set up, with the involvement of 20 Israeli global companies.

Also, by 2016, about a 100 research and academic groups in the field are due to be formed.

THE PLAN encourages investment in venture-backed companies active in alternatives to oil.

The program, which has been allocated government funding of NIS 400m., will enable the financing of pilot installations to test new technologies, and it will promote implementation of the new technologies in industry. In addition, a NIS 1.5m. 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 such as India and China, where the number of motorized vehicles is expected to grow substantially in the coming years.

Uri Ben-Porat, economic adviser to President Shimon Peres, recommends teaming with developing countries – such as Kazakhstan, for example – that are dependent on oil exports and seek to diversify their risk. At the recommendation of Opper, the plan states that Israel will seek to strengthen collaboration between Israeli companies and multinational companies active in areas connected to alternatives to oil and with leading research bodies in that area.

“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,” Opper said at the Israel Business Conference.

Opper, who was a member of the steering committee that formulated the national plan, believes 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,” he says.

Israel’s clean-tech megaproject

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