VZCZCXRO5320
PP RUEHROV
DE RUEHTV #2572/01 3241316
ZNR UUUUU ZZH
P 191316Z NOV 08 ZDK
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC PRIORITY 9217
INFO RUEHXK/ARAB ISRAELI COLLECTIVE
RUEAEPA/HQ EPA WASHDC
RHMFISS/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 02 TEL AVIV 002572 
 
SIPDIS 
 
DEPT FOR NEA/RA, NEA/IPA, OES/SENV 
EPA FOR INTERNATIONAL - Metcalfe 
DOE FOR EERE 
AMMAN for ESTH - Bhalla 
 
E.O. 12958: N/A 
TAGS: SENV ENRG EINV IS
SUBJECT:  WATER - ENERGY LINK EXPLORED AT PM'S CONFERENCE 
 
TEL AVIV 00002572  001.2 OF 002 
 
 
¶1. (U) Summary: The Prime Minister's Conference on Export and 
International Cooperation on November 12 devoted a quarter of its 
program to the link between water and energy issues, in the context 
of green technologies and the business opportunities these present 
for Israeli exports.  Israel's ongoing water shortage and drive for 
developing alternative energy sources have merged into a 
"clean-tech" business focus that is attracting global investor 
attention.  Both public and private sectors in Israel hope this 
investment trend will help the country solve its projected shortfall 
of both critical resources.  Meanwhile, those projections are 
worsening, and water rationing may be needed if conservation is 
insufficient.  End Summary 
 
¶2. (U) The Prime Minister's Conference on Export and International 
Cooperation was strongly focused this year on energy and water 
issues.  Although the global financial crisis and its impact on 
Israel formed the backdrop of the discussions, the country's 
critical needs in these two areas drew high-level attention. 
Israeli Ministers of Environment and Infrastructure both spoke, as 
did the environment ministers from Korea, Romania, Hungary, and 
Serbia.  The Israeli ministers dwelled on the nexus between water 
and energy: with water one can create power (hydropower), with power 
one can create freshwater (desalination).  Poorly used water wastes 
energy, while recycling water can save energy.  In effect, each 
cubic meter of water is valued at 4 kilowatts of electricity, thus 
leaving the tap running for five minutes, for example, is equal to 
14 hours use of a 60 watt light bulb.  The ministers urged that 
water and energy be thought of as interchangeable, and conservation 
be sought for both.  Infrastructure Minister Ben-Eliezer restated 
his target of obtaining 15-20 percent of Israel's electric power 
from alternative energy by 2020, chiefly through solar technology. 
He intends to issue a tender each year for a new solar power plant, 
and has had the Negev Desert declared a reference region for 
alternative energy research to facilitate access to land.  (Note: 
Bureacratic delays in designating land in the Negev as suitable for 
solar power has slowed Israel's adoption of this alternative energy 
source; IDF, National Parks and bedouin use also compete for space.) 
 Ben-Eliezer wants to increase Israel's energy independence for both 
strategic and economic reasons. 
 
¶3. (U) Environment Minister Gideon Ezra noted a cumulative deficit 
of 940 million cubic meters (mcm) of water over the last four years. 
 This is nearly a year's worth of consumer demand for fresh drinking 
water.  Already 43 percent of all agricultural water used is treated 
wastewater (greywater), but Israel's total of 1,175 mcm of water 
available for recycling is not being fully utilized.  Within four 
years fully a third of Israel's water (including most consumer 
drinking water) is expected to come from desalination, but this will 
place a tremendous burden on the installed power generating 
capacity.  Desalination will add 3 percent to total national 
electricity demand, on top of the 6 percent (expected to grow to 9 
percent) of national demand used for pumping water around the 
country.  Electricity demand is already growing by 1.2 percent each 
year.  This could mean nearly 15 percent growth in electricity 
demand over the next five years.  If the higher demand is satisfied 
through existing power generation methods (business-as-usual 
scenario) using coal and some natural gas, Ezra noted that Israel's 
Greenhouse Gas emissions will increase by 45 percent before 2030. 
Israel is constrained by environmental imperatives, by energy 
imperatives, by consumer demands, and now by global financial market 
restraints. 
 
¶4. (U) The good news at the conference was the high rate of "clean 
tech" enterprise creation and investment Israel is experiencing. 
Israel boasts 270 water treatment and technology companies, over 100 
alternative energy companies, and dozens of environmental technology 
firms.  An estimated USD 100 billion in alternative energy was 
invested globally in 2007, and the global market for water 
technology is estimated at USD 450 billion in the coming five years. 
 These are the growth markets Israeli firms are targeting, according 
to private sector participants at the conference.  Local clean-tech 
firms received over USD 100 million in venture capital funds in 
2007, according to industry sources.  Private sector participants 
from both business and academia urged further investment in new 
technologies, and in combining technologies to resolve both energy 
and environmental problems at once.  Cogeneration plants that 
reclaim thermal energy for desalination are an example, as is 
utilizing solar power for desalination energy needs.  Business 
participants at the conference expressed confidence that global 
venture capital resources would rise to the challenge of finding the 
needed technologies, and in doing so would fund the research needed 
to keep Israel's green technology export sector expanding.  Reports 
claim that Israeli water technology firms alone generated USD 1 
billion in export sales in 2007.  Equally important, foreign venture 
capital investment will help find the solutions to Israel's domestic 
water/energy constraints. 
 
TEL AVIV 00002572  002.2 OF 002 
 
 
 
¶5. (U) The up-beat investment picture contrasts sharply with the 
worsening projections of Israel's water/energy predicament.  This 
year's rainy season got off to a strong start, but the forecast is 
not optimistic.  In a special Cabinet meeting November 16, Israel 
Water Authority Director Uri Shani noted the decline of natural 
freshwater resources by 175 mcm, and said the forecast for the 
coming two years was for continued sub-normal rainfall. Savings of 
30 mcm through government-promoted conservation measures were 
touted, but saving another 100 mcm would require drastic action, 
including the possibility of household rationing by Autumn 2009 and 
cutting a further 100 to 150 mcm from the share devoted to 
agriculture.  The Infrastructure Minister warned that this could be 
a death blow to parts of the agricultural sector.  Prime Minister 
Olmert blamed "unacceptable bureaucratic errors" for the delays in 
moving forward on new desalination plants, and led the Cabinet in 
action to waive the standard tender process for national water 
company Mekorot to facilitate quick construction of another desal 
plant in Ashdod.  While desalination may be considered the ultimate 
solution, desal water consumes four times more energy than natural 
freshwater.  Nonetheless, Israeli technology has helped the price of 
desal water drop from $4.00 per cubic meter in 1965 to $0.60 per 
cubic meter in 2008.  The cost of energy, the chief component in the 
desal water price, has varied so wildly in the past year that long 
term water prices are hard to target, which complicates investment 
decisionmaking. 
 
Cunningham