Thomas White Global Investing
Green Reports

July 7, 2010

The Green Report

Israel: An Emerging Leader in Clean Technologies

Israel: An Emerging Leader in Clean Technologies

Israel looks set to become number one in the advanced water technology sector. Its water industry was worth $1.4 billion in 2008 and now the country is expected to touch $2.5 billion in water technology exports by 2011.


Climate concerns show no sign of abating. But today, this challenge has a silver lining. Like doctors racing to find a cure for a deadly disease, countries are competing to find the best methods to solve global warming, building entire markets around their quest. Israel is one of the most prominent of them all. After establishing the country as the leader in green technologies like micro-irrigation and water desalination, Israeli start-up firms have embraced clean energy solutions. Their early successes are attracting Silicon Valley venture capital firms to fund more Israeli clean technology enterprises. With its homegrown technical expertise and a highly-skilled and educated workforce, Israel is better placed than most other countries to develop alternative energy technologies.

And Israel is clearly leveraging that advantage. Seambiotic, an Israeli start-up, has developed the technology to grow algae using waste gas from coal-based power plants. Besides animal and fish feed, the algae can also be used to produce bio-fuels. And Brightsource, a solar thermal energy firm, has designed what it calls ‘power towers’ which generate superheated steam by focusing sunlight to a boiler using an array of mirrors. Efficient turbines run on the superheated steam, which is converted back to water and sent back to the boiler to be reused. Brightsource has now inked contracts with electric utilities in California to set up solar thermal plants in the Mojave Desert. Ormat Technologies is already a leading manufacturer of geothermal power equipment, though Israel has no geothermal energy sources.

With the approximate size of New Jersey and a population of a mere 7.5 million, how has Israel forged ahead in a highly competitive sector like clean technology? Among others, the most relevant answer is necessity. The Israeli landscape, made up of long, shimmering stretches of desert, has forced the people to be resourceful. Before clean technology became a fashionable topic of conversation and an environmentalist pursuit, Israel had been quietly practicing green thinking in its community farms, or kibbutzes. Since then, the country has been squeezing out the maximum results from the sun, wind, soil and water. This is true, especially of water, particularly in the practices of drip irrigation, water reuse, recycling, and reclamation technology. Israel currently leads the world in wastewater management by recycling 70% of its wastewater, three times more than that of Spain, the second on the list.

What’s more, Israel has one of the most technically trained workforces in the world, boasting 135 engineers per 10,000, surpassing the United States. This has been one of the pins tagging Israel on the world map. Akin to a gold rush, venture capitalists from all over have flocked to invest in Israel. Around 40 venture funds, most of them from the U.S., are now estimated to have over $10 billion under management in Israel, with a major chunk devoted to the clean technology sector. Israel even has a cooperation agreement with the U.S., signed into law in 2007 by then President George Bush, which allows the two countries to work together on renewable energy projects.

“The people of Israel can lead the way to renewable energy. With its
unique geographical position and clean technology know how,
Israel is a natural leader in the field,” observes former Vice
President Al Gore during a recent visit to Israel.

Yet, despite its success in the clean energy technology sector, Israel, like many other countries, has been slow to adopt the new technologies for its own domestic energy needs. Less than 1% of the country’s own electricity needs are generated from renewable sources. In a country whose attention is perpetually riveted to security issues, emission reduction and renewable energy have never been given much priority. Bureaucracy and lack of state support have further worsened the situation.

But the tides may be shifting. Gilad Erdan, Minister of Environmental Protection, a newly formed department, has declared that emission reductions are now the topmost priority. The department has recently commissioned the research group McKinsey to conduct a survey of Israel’s green energy usage status. Their conclusions were that Israel should increase the usage of solar and wind energy, promote efficient lighting, ramp up fuel efficiency in vehicles, and encourage hybrid, electric and plug-in alternatives.

Encouragingly, Israel has caught the electric car fever and is racing to become the world’s first country to sport an electric car network, comprising well-connected charging stations and facilities. Shai Agassi, the founder of Better Place, one of Israel’s best known clean technology companies, introduced this concept in his home country, and is confident that in five years one-third of Israel’s cars will run on electricity.

Apart from its electric car efforts, Israel is bulking up its wind energy sector, planning to triple the use of wind energy in the next ten years. Sovna, an Israeli start-up, has pioneered wind energy farms in urban environments using small turbines placed on roof tops. But the biggest potential for wind energy lies in the Golan Heights, a windswept plateau. Its far-reaching landscape already contains 18 wind turbines originally used in times of antiquity. If all goes according to plan, by 2011 these aging structures will be replaced with the first of seven wind turbines.

In 2008, Israel announced its aim to derive 10% of its energy requirements from renewable sources by 2020. And Israel has been working towards that goal in earnest. Its electric car network and windmill efforts apart, the country has already opened the largest solar power station in the country in partnership with China. The power station was connected to the national electricity grid and generates 85,000 KW hours in a year. Now Israel plans is to add 250 MW solar plants every year for the next ten years, to make use of its abundant sunshine.

Israel has been acclaimed as one of the most resilient economies in the world and recently gained entry into The Organization for Economic Cooperation and Development (OECD). This is a turning point, as the country finds its place at the table among the major economies of the world. Through its exports, international joint ventures and technology licensing, Israel is promoting its green energy value on the global front. But equally important, Israel is now also making the push to safeguard that economy with an equally resilient green shield.




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