Renewables, a Better Energy Future for Israel

To great fanfare, Israel has become a natural gas producer.  Its discoveries in the Mediterranean, with help by such American companies as Noble Energy are indeed great achievements in that for the first time Israel can achieve a degree of energy independence.  That said, the future of Israel and indeed the rest of the world must be in the form of renewable energy and Israel should utilize the revenues from natural gas to create a clean energy future.

There are many reasons why renewable energy is preferable to further development of carbon based forms of energy.  Of course if one believes (as most scientists) in global climate change, it seems is quite obvious.  Nevertheless, the argument for renewable energy is not only on the basis of climate, it is an economic argument.

Indeed I propose take on all comers, natural gas, oil, nuclear on the simplest economic basis, that of supply and demand.  For while natural gas prices are at their lowest in a very long time (oil is not) there is one fundamental difference between renewable resources such as the sun and wind and a finite terrestrial commodity such as natural gas and oil; that is that the price of a commodity responds to supply and demand and the price of sunlight or wind does not.

Anyone who has lived for a significant length of time on this planet cannot help but notice the historical volatility of energy prices.  Even in large producing countries such as the United States, the price of feedstock for the production of energy has gyrated wildly, subject to drastic changing in supply and demand as well as other factors such as the impact of war and politics.  Contrast that with energy from the sun.  No matter how much we consume of it, the sun continues to bombard the earth with energy in the form of photons and the wind continues to produce kinetic energy.  The prices of sunlight and wind do not change with and are for all intents and purposes zero.

What this means is that renewable energy is not subject to the dramatic price changes of other forms of energy.  In fact, the vast majority of the cost of solar and wind projects is the up-front installation of the project. These costs have been falling at a geometric rate over the last 20 years. Once built and deployed, renewable project will produce energy for the next 40 years or so with little or no additional capital expenditures required.  Compare that to a traditional commodity-based energy system where the raw material must be extracted, piped all over the world and then burned under controlled conditions.  The plants that burn these materials must then be protected from both accidents and terror attacks.  For country like Israel where the threats of both are exceedingly real it seems like a no-brainer.  When Haifa came under attack during the last war with Hezbollah people were very concerned about the safety of the refineries in the region.

Finally, there is something to be said about economic inequality.  The sad truth is that oil and gas investments tend to be made for the benefit of a small group of people who wish to extort monopoly rents from the rest of the population.  This simple distinction; between something that nature provides for free and something for which some highly interested party is going to charge you as much as he can, explains why oil and natural gas have such a well-heeled constituency and why there will always be someone to tout the advantages of reliance upon their commodity.  Nobody can get rich selling sunlight but they can sure get rich buying a commodity like natural gas on the cheap and then selling it to the public.  In Israel, where there are already wide divergences in the fortunes of the rich versus the rest of society, an oil boom is an anathema and will serve to create even greater divergence.  Renewables can be done at a small scale and owned by anyone, from the smallest individual home owner to the largest industrial user.  It simply provides a better model for a society that aspires to equality and economic justice.


About the Author
David Sher has a keen, longstanding interest in Israel and spent a study year abroad in Israel in 1984. He is an entrepreneur who has founded four businesses including Greenbacker Renewable Energy Company, his current business.