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Home Archive April 2013 Issue Issue Content Fuels for Thought: a Competitive Fuels Future in Israel

Fuels for Thought: a Competitive Fuels Future in Israel

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According to Eyal Rosner, Director of the Alternative Fuels Initiative in the Prime Minister's Office, Israeli Prime Minister Benjamin Netanyahu decided two years ago to throw his political support behind a 10 year initiative to explore options for competitive fuels that can be used in the transportation sector.  “If we can find good and genuinely competitive fuel replacements in the transportation sector we may have a good chance to reduce the monopoly of oil that harms the interests of not only Israel but of the entire world, ” Rosner said.    

In quantitative terms, the goal is to reduce the share of crude oil in Israel’s transportation sector by 30% by 2020 and by 60% by 2025.   According to the Alternative Fuels Initiative’s Strategic Plan, “The process will build industry knowhow, position Israel as a center for industry and knowledge in the field, and serve as an example and catalyst for other countries. In addition, cheaper prices, lower carbon emission, and the developing industry in the field will support green growth. To accelerate the process, the Israeli government supports several pilots and demonstration of various technologies (natural gas technologies such as CNG, Methanol, and GTL), electric mobility, (such as electric buses, super capacitors, new battery technologies) and bio fuels, and an innovative Personal Rapid Transportation (PRT) system.”

Source: Alternative Fuels Initiative, Prime Minister's Office, Israel  

Government-wide approach
The initiative is a comprehensive, government-wide effort that involves nine different ministries across the Israeli government, among them the Ministry of Transport, National Infrastructures,  Road Safety, the Ministry of Energy and Water Resources, the Ministry of Finance and the Tax Authority, the Ministry of Industry, Trade and Labor, the Ministry of Foreign Affairs, and the Ministry of the Environment.  This approach is both new and ground-breaking.  For example, the introduction of a new fuel blend or transportation modality is not done exclusively in pilot mode but part of the first step in a long process which requires the establishment of a research program and the launch of demonstration projects that can gauge the viability of new efforts to alter the oil-based transportation paradigm.  Concurrently all other considerations from regulatory and tax policies to infrastructure implications are examined in sync with one another in order to short-circuit barriers to the future implementation of pilot programs that prove to be economically, socially, environmentally and even politically viable.  The approach is the opposite of how most government decision making occurs, e.g. in stove-pipe fashion within a single ministry without consultation with other affected ministries and their own areas of responsibility.  Horizontal lateral decision making is this model, and if it works, could provide a bold example to others.  

Background
This is a multi-faceted initiative grounded in three government resolutions.  The first of these is  Government Resolution No. 1354 dated February 7, 2010, regarding the establishment of a national effort to reduce global dependence on petroleum-based fuels in transportation. Second is  Government Resolution No. 2790 dated January 30, 2011, regarding executing the national plan to reduce global dependence on petroleum-based fuels in light of the national-strategic interest and economic and environmental potential inherent in the issue. The third resolution (5327) from Jan. 2013 focuses on activities and tools to reduce the weight of petroleum-based fuels as an energy source in transportation in Israel by approximately 30% by 2020, and by approximately 60% by 2025.     
These resolutions are in fact a response to real energy challenges Israelis face, and as a result the government faces, on a daily basis. In Israel, as around the world, approximately 96% of transportation fuel is oil based.

As mentioned, together with nine partner government ministries the aim is to create a business-supportive environment for the market through simplification of bureaucratic processes and an ability to respond quickly to market changes and needs. The plan is to make use of Israel’s strengths, including its interdisciplinary nature and Israeli entrepreneurs’ operational agility, as well as the research power and the exceptional cooperation between academic research bodies and industry.

Responsibility begins at home
Clearly the catalyst for Israel’s transportation initiative is home-based.  As Eyal states, “We have to begin in our own home market.  The fact is today we can adopt quite quickly methanol for the light duty vehicles sector, and CNG (compressed natural gas) into heavy duty trucks and public transport sectors, but we also aim to find other solutions as well.  For example, we will examine the utility of using electric busses for public transport and potentially electric bikes which would extend the range of this two-wheel transport modality in urban settings like Tel Aviv.  I should also add that we are not in the business of picking technological winners, which is to say to push one technology over another.  The market is highly inventive and should lead innovation.  Through a comprehensive approach to testing, measuring, and gauging technologies for their most appropriate application landscape, we will be able to understand what is most appropriate where.”

The Alternative Fuels Administration
This administration promotes several program including the following: 

Academic and Applied Research
Two dedicated inter-university research centers with new laboratories and research teams were inaugurated in early 2012. One center focuses on biofuel and synthetic fuels research, and the other on batteries, fuel cells, and energy storage. The centers were granted NIS 60 million and NIS 45 million, respectively. A third research center was founded at the Agricultural Research Organization (Volcani Center) with a focus on non-food energy crops.  Additionally, a new research fund was established to award grants of up to US $450,000 to research groups in the field of alternative fuels.

Industrial Research and Development
The Alternative Fuels Administration operates a number of programs for applied research within companies, research institutes, and universities including a large research consortium in the field of batteries and fuel cells.

Venture Capital Investments
In addition to the long term support to start-ups, a new governmental co-investment fund was established to promote large investment in venture-backed companies. The government share in each investment will be 33%, up to US $8 million. Eligible private co-investors include investment funds and corporations, both Israeli and foreign.

Local Test-Bed
The Initiative has commenced the operation of a governmental one-stop-center that supports companies conducting innovative technological demonstrations, by tailoring Israeli regulations to facilitate each case.  In addition, the Administration promotes small and medium scale demonstrators under a new technological demonstrations program, financially supporting demonstrations of up to US $1 million.
 
Local Markets
Israel is incentivizing its local fuel and transportation markets for implementation of novel technologies, in order to create an initial market for innovative transportation fuel options, specifically by promoting electric vehicles, natural gas based transportation, and advanced biofuel solutions.

Global Partnerships
The Administration is building partnerships with leading global corporations, research institutes and non-governmental organizations, to create strategic cooperation with the State of Israel, its industry and academia. In addition, the Israeli government is creating frameworks and working plans with foreign governments in order to enhance such cooperation. In November of this year, the Alternative Fuels Initiative will host visitors from around the world at its first Alternative Fuels Summit, in which the Prime Minister’s Prize for Innovation in Alternative Fuels will be awarded.

Methanol Program
Another initiative, the introduction of methanol into the fuel blend for private vehicles, has already been running for a year.  The initial mix, a 15% methanol blend with gasoline (M15), is being tested in regular cars and doesn’t require any retrofit for a car’s engine, and provides no corrosion damage to a combustion engine.   The next stage of testing will involve using a fuel blend with 57% methanol (M57) which has shown in tests to be energy equivalent to E85.  The M57 test will be employed in flex-fuel vehicles.  Rosner adds that,“if all goes well we could have M15 on the market by 2014 and M57 by 2015.“

 

Source: Alternative Fuels Initiative, Prime Minister's Office, Israel 

An additional advantage of methanol worth pointing out is that existing service stations can streamline its use through existing infrastructure, leveraging the extra tanks almost all gas stations have. Among the tools the government plan to use to speed up future adoption of new fuel standards is a progressive  tax regime favoring substitute fuels.

According to Rosner, Israel is working with partners around the world, including China the world’s biggest producer of methanol, to learn best practices and help assimilate methanol into the country’s fuel blend.  These discussions have also involved the United States. “I’ve spoken with US policy makers about methanol and offered them the results of our tests.    We also invited several car manufactures to take part in the pilots,” he adds. 

According to Dani Ben-Ner, CEO of Ten Petroleum, an Israeli fuel stations chain participating in the methanol pilot project a, “15% methanol in a mix with gasoline could save Israel $3.95 billion USD in imported oil and refined petroleum products, and save some $1.85 billion in spending on gasoline. Cost savings to consumers are estimated to be from 5% to 7% over ordinary fuels. Now that Israel has a glut of natural gas, this could be a welcome move in the energy industry.” 

Natural gas opens possibilities
In recent years, natural gas fields have been discovered off of Israel’s coast.  The Tamar  and Leviathan natural gas fields were discovered in 2009 and 2011 respectively some 50 miles (80 kilometers) off Haifa's coast..  The reserves are estimated to be 250 billion cubic meters (9 trillion cubic feet)  in Tamar and 450 billion cubic meter in Leviathan; Alaska's North Slope, for instance, is believed to hold four times as much fuel as Tamar, But Tamar is large enough to meet all of Israel's natural gas requirements for 20 to 30 years, the experts say.

Israel’s gas finds have the potential for not only providing base load power generation but can be transitioned into the transport sector in the form of methanol. 

This spring Israel will also test buses which run on electricity and compressed natural gas (CNG).    According to the Israeli business website Globes, the buses operates on CNG will be tested not for their fuel efficiency but for their potential to tolerate an explosion.  Two buses will be intentionally exploded, one being a standard diesel powered bus and the other CNG fueled, to examine whether in the event of a terrorist attack the CNG vehicle will suffer more (or less) damage than its diesel counterpart.  Given persistent security concerns in Israel from terrorist inspired incidents this seems a rational variable to consider in addition to cost savings and environmental advantages CNG transport may provide to have over diesel. 

Another natural gas related track for fuel is cooperation with South Korea in the field of DME.  DME or dimethyl ether (DME) can be generated from coal or natural gas, as well as from other feedstock, and used as an additive to mix with LPG and ultimately can be used as a diesel fuel substitute.  On top of it, from an emissions standpoint it is cleaner than gasoline.  Apart from South Korea and China that are exploring this fuel, Volvo has designed an engine that can burn DME.  “DME is [also] being developed as a synthetic second generation biofuel (BioDME), which can be manufactured from lignocellulosic biomass. Currently the EU is considering BioDME in its potential biofuel mix,” adds Rosner.   As Israel is exploring the entire gamut of fuels and technologies, including electric buses, this ten year initiative could be said to test it, prove it, and then deploy it as one technology’s (or fuel’s) advantages rise above the others.      

Raising global awareness of the potential of fuel competition
Clearly Israel has much to gain, at home and abroad, from raising global awareness of Israeli activity in the field of transportation fuel substitutes for building partnerships that work.  The Alternative Fuels Initiative has a number of events spread out over 2013 that international scientists and policy makers may be interested in.  These include Ecomotion a smart mobility un-conferences (this type of gathering also known as a hackathon) over May 8-9, a conference on electric transportation and storage over May 29 - 31, a transportation conference with a section about smart transportation and e- mobility in June, an agro-energy conference over October 20 - 22, and finally an Alternative Fuels Summit hosted by the Prime Minister of Israel which will cover policy and finance over November 10-11, 2013.  These events are designed to accelerate the process of finding solutions, and creating policies that are supportive of market penetration of oil alternatives for transportation. The network they create will take place over time and establish working contacts with various governments, research centers, NGOs, and business partners, with the assumption that in order to open doors to fuel substitutes, the world must join forces.

Kevin Rosner is a Senior Fellow with the Institute for the Analysis of Global Security.  He would like to thank Eyal Rosner, Chairman and Director of Administration, Fuel Choices Initiative, Prime Minister's Office, Israel, for his assistance in this article's preparation.

 

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