Israel’s New Motor Fuels Strategy Leans on Gas

TEL AVIV (Reuters) -
A highway in Tel Aviv. Israel plans to cut oil use in transportation by 60 percent by 2025, an aggressive target by world standards, and will tap into its newfound natural gas deposits to make it happen. (REUTERS/Nir Elias)
A highway in Tel Aviv. Israel plans to cut oil use in transportation by 60 percent by 2025, an aggressive target by world standards, and will tap into its newfound natural gas deposits to make it happen. (REUTERS/Nir Elias)

Israel plans to cut oil use in transportation by 60 percent by 2025, an aggressive target by world standards, and will tap into its newfound natural gas deposits to make it happen.

It is also investing heavily to help start-ups developing battery and biofuel technologies, and is offering an annual $1 million prize to innovators in the field, almost on par with winning a Nobel.

The program, the Fuel Choices Initiative, has a 10-year budget of 1.5 billion shekels ($430 million).

No single fuel will replace oil. The government will draft regulations and help with tax benefits and infrastructure, but says the market will determine which succeeds.

The next five years will likely be dominated by compressed natural gas (CNG) and natural-gas based methanol, with battery and biofuel technology penetrating the market as technologies improve.

“Israel is certainly showing some great will, and certainly this is a very ambitious target to be achieved in a bit more than a decade,” said Francois Cuenot, a transport and energy analyst at the Paris-based International Energy Agency.

Delek Israel, a unit of conglomerate Delek Group that owns and operates 250 gas stations, will complete Israel’s first CNG station in 10 months. It signed this month a seven-year deal to buy $105 million worth of natural gas from the Tamar field.

“In the next five years there will be at least 40 CNG stations in the Israeli market,” said chief executive Avi Ben Assayag. The cost of each station can reach $1million, and he expects Delek to keep its market share of about a third.

CNG, he said, makes the most sense for heavy vehicles and will cost about half of what is paid for diesel or gasoline.