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Energy Governance Through Innovation
November
2010
Publisher: Koret-Milken Institute Fellows Program
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Rapid growth in the demand for crude oil, especially in emerging economies, is driving a global quest for alternative resources and other innovative solutions. Israel hopes to lead the way, turning renewable and alternative energy into its economy's leading growth engine.
Israel announced in February 2010 that it will join the global effort to reduce oil dependency in transportation through four sectors: biofuels, synthetic fuels, internal combustion systems and electric/hybrid systems. "Energy Governance Through Innovation," a report from the Koret-Milken Institute Fellows Program, extensively maps the main barriers and superbarriers that prevent the development of innovation-based fuel substitutes industry in Israel, and it details several strategies for achieving Israel's ambitious goals.
Among the recommended steps:
Form a central government authority. A central government authority to coordinate efforts, eliminate duplication and red tape, and oversee a long-term, sustainable energy policy is an essential first step.
Use existing policy and finance tools. Modifying already successful schemes is a way to jump-start the effort quickly, overcome organizational resistance and help reduce the risk involved in infrastructure investment.
Promote international cooperation. Israel's economy is too small to distribute all its technology locally, so it should cooperate with foreign governments, academia, and industries to create demand for its technologies.
Create a local test market. Creating a test market is vital because unproven technologies are less attractive to investors. Government could become a first adopter and encourage corporations to join it through incentives. The government could also create an insurance pool for such tests and develop a guarantee scheme to allow bankable credit for projects.
Use the military and defense-related industries as change agents. Israel's high-tech industry was conceived in the Israeli army for defense purposes. This has allowed the industry a relatively long period of inception, creating spillovers and a cadre of experts. The same could be done with energy.
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