09/17/2010 03:48

A national plan for developing alternatives to oil will be proposed by the prime minister to the cabinet; calls for the government money to be supplemented by private sector.

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. a year.

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.

Reducing 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 residents.

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 up.

Some projections predict oil rising to $130 a barrel by 2030.The world used 85 million barrels of oil a day in 2007.

The 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 priority.

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 proposal.

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 technologies.

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.

When the 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.

The academic 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 flex-fuel cars.

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 needed.

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 industry.

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 instead.

An NIS 2m. President’s Prize for cutting-edge technology in substituting for oil should also be created, and the option of enlarging the prize by finding more outside donors should be explored, the proposal’s authors wrote.

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 exempt from future government budget cuts, although not from a government decision to reduce funding to the plan altogether, according to the proposal.