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Price war on oil and gas market from geopolitical perspective

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The collapse of the OPEC+ deal, coupled with a drop in demand amid the raging coronavirus pandemic, has sent tectonic shocks across the global oil and gas markets. Simultaneously, attacks on the Nord Stream-2 gas pipeline project have intensified again.

The global demand for oil had started to decline well before negotiations on the possibility of OPEC+ extension got under way in Vienna at the beginning of  March. The decline was due to the pandemic and warm winter. In the course of  Vienna talks Riyadh issued an ”ultimatum-like demand” for a dramatic reduction in oil production, which was unacceptable for a whole number of supplier countries because of the risk of losing their share of the market. Meanwhile, accusations on the part of Saudi and western politicians and mass media who blame Moscow for initiating the OPEC+ failure are groundless. Cartel agreements naturally lose their attractiveness over time, since «every participant tends to cheat on others». Another substantial flaw of the OPEC+ is that there are no oil companies from the United States among its signatories. As a result, the reduction in oil production on the part of OPEC+ countries has increased the market share of American producers.

In response to the OPEC+ fiasco, Saudi Arabia (KSA) announced its intention to “inundate the market” by boosting the output by 25%. Riyadh launched a price war in the hope  of “regaining the lost share of the market”. KSA cut the oil prices it offered for April by 5-8 dollars per barrel in an attempt to exert pressure on Russia and “on other producers, which are not members of  OPEC, including the United States». A number of Gulf countries have also announced an increase in production. As a result, by the end of March, oil prices had reached an 18-year low, the Russian Urals hitting less than 15 dollars per barrel. Should the price war escalate, the Urals price may drop to 5-8 dollars.

Observers present different comments as to Riyadh’s reasons for doing so. From purely tactical considerations – «to force Moscow to return to the negotiating table», to long-term ones, oriented at re-carving the entire oil and gas market, including destabilization of the oil industry of competitor countries, first of all, Russia and the United States. It could even be an attempt to undermine the social and political stability in economies which are dependent on oil and gas exports.

The Saudis’ major advantages comprise, first of all, the lowest production cost, huge oil reserves, substantial, over 0.5 trillion dollar state reserves, and unlimited opportunities for foreign loans. At the same time, experts say, «the Saudi economy is bogged down in debt». If it wants to maintain deficit-free budget, Riyadh ought to keep prices at no less than 80 dollars per barrel. According to IMF experts, even a return to «the rate of 50-55 dollars per barrel» will not be enough for KSA.

By 2024, Saudi Arabia may face a balance of payments crisis and could choose not to tie the rial to the dollar . Meanwhile, on March 27, The Wall-Street Journal reported mass consumer refusals in Europe and North America to accept new shipments of Saudi oil, as “there is nowhere to store more of it.”

The dramatic decline in oil prices has seriously hit the US oil business, as fears of mass bankruptcies in the American shale oil production sector build up. Regular suppliers are preparing to significantly reduce investments and supplies.

The “shale boom” made it possible for America to surpass Saudi Arabia and Russia in 2018 and become the world’s largest oil producer. Unlike earlier, when cheap oil always played into the hands of the American economy, now the situation has changed radically. In the conditions of the coronavirus pandemic, the money saved by gasoline consumers is unlikely to whip up demand in other sectors of the economy. What will sustain damage as well is the shale oil sector on which a number of US states depend. The breakeven threshold for shale oil companies, according to The Economist, varies from $ 23 to $ 75 per barrel, depending on the oil basin. The price collapse is fraught with mass layoffs – right in the year of the presidential election.

Meanwhile, shale oil producers have experienced mounting difficulties even before the start of the current price war. Many companies have been reporting only losses in balance sheets of late. Investors have turned away from the shale sector, most companies found it almost impossible to draw new loans or refinance the old ones. Now, given the dramatically developing situation in the oil market, many shale producers may see being taken over by larger players as the “best” option.

The collapse of oil prices has dealt an equally devastating blow to the geopolitical plans of the US leadership. As dependence on oil imports decreased,  Washington became ever more confident that the United States would now be able, through sanctions, to completely halt oil exports from Venezuela and Iran, without fearing uncontrolled global destabilization. A number of experts in Russia express concerns that the growth of production and export capacities in LNG and shale oil sectors, according to the standard scheme now, could prompt Washington to “tighten sanctions” against the Russian oil and gas industry.

In the summer of 2017, President Trump announced plans to secure a US dominant position in the global gas market. An energy strategy that saw light at that time as well “describes Russia as a competitor,” claiming that “Russian projects to diversify supply routes to Europe run counter to the  US policy.” Resulting from such political approaches is “concerted effort … against Nord Stream-2 (NS-2)” and other Russian projects on the construction of new gas pipelines to Europe.

At the end of 2017, the United States, for the first time in 60 years, began to export more gas than it imported. The growth of shale production enabled the United States to produce 733 billion cubic meters by the end of 2017 – more than anywhere in the world, including Russia. However, until recently, one of the major obstacles to expanding US gas exports was the US dependence on oil imports. Oil in the US domestic market is several times more expensive than gas in energy equivalent. If the US is to increase the supply of its “cheap” gas – to compensate for the shortage of oil and gas in the domestic market – it would have to increase the import of “expensive” oil.

Another deterrent is competition from Russia. American LNG is more expensive than Russian pipeline gas. As a result, in 2017, gas supplies from the USA to Europe amounted to no more than 3 billion cubic meters of gas. Meanwhile, gas consumption in Europe last year reached 500 billion cubic meters. In an attempt to reverse the trend, in the same 2017, the US Congress voted in favor of a package of sanctions that put under “threat the construction of any new gas pipeline” in Europe with the participation of Russia. In general, it was supposed to launch sanctioned weapons against Moscow by the time the LNG production in the USA reaches full capacity – by 2020-2022. On December 21, 2019, when the United States imposed sanctions against companies engaged in laying NS-2, foreign project contractors suspended all operations.

It cannot be ruled out that if and when the EU sees American LNG as a good alternative to Russian gas, Brussels may choose to swap restrictions on gas supplies from Russia to Europe. The political will to “pay extra for energy security” is also present in a number of European countries. Another scenario could feature a US attempt to force a price war on Moscow, to guarantee dumping in the European direction. In this case, Nord Stream-2 will fall not only under political, but also under direct financial pressure. But it’s hard to imagine how the US authorities are going to convince their power engineers to supply Europe at a loss?

Meanwhile, the long-term strategy of the United States, according to a number of Russian analysts, may not boil down to the struggle for the gas market, but for its transformation by analogy with the oil market. If it were possible to block the maximum number of existing and under construction pipelines, the lion’s share of gas in the world would go by sea in the form of LNG. This would help “untie” gas prices from oil and transform the international gas market into a single, global and spot one where transactions are quick and are made in US dollars to minimize costs and risks. Thus, the main goal of the hype around the “shale revolution” and the “seizure of the global gas market” is to keep the global oil and gas market tied to the US dollar.

The price war declared by Saudi Arabia may put an end to such plans. That the situation in the United States has reached a critical point becomes clear on the basis of recent statements from Washington. According to US media reports, on March 26, the US Secretary of State called on Saudi Arabia to “stop the price war with Russia”. Texas shale producers have urged state officials to “consider reducing oil production … due to falling demand”. On March 30, at the initiative of the White House, there was a telephone conversation between Vladimir Putin and Donald Trump. The two parties agreed to hold “Russian-American consultations” “on the current state of the world oil market” “on the level of ministers of energy”. Markets took the news with some hope of  concluding a comprehensive agreement on the regulation of oil production between Moscow, Washington and Riyadh.

Europe, in the event of further blockage of the Nord Stream 2 project, risk falling hostage to Washington’s geopolitical ambitions, what with its statements about the intention to fill the market with its LNG. But this may undermine the economic leadership of Germany, and, accordingly, the policy of strengthening EU unity. Finally, if, after all the current cataclysms, the European Union is still adamant to fight for energy independence, it will have to think how to reduce the share of international commodity trade in dollars. Back in September 2018, the then head of the European Commission, Jean-Claude Juncker, said it was “absurd” for the EU to pay for 80% of its energy imports in dollars, considering that these imports are estimated at 300 billion euros per year. And this is despite the fact that only 2% of Europe’s energy imports come from the United States.

Rumors circulating in the oil market are about the possibility of behind-the-scenes agreements between the United States and Saudi Arabia, which will be directed  against Moscow. At the same time, The Financial Times writes, “Russia’s major oil companies have every chance of surviving a drop in oil prices over the next two years, taking into account the advantages that they have over foreign competitors.” For example, Russian oil companies will remain profitable even at a barrel price of $ 15.

Significantly, the ability of the Russian fuel and energy complex to effectively resist price fluctuations is largely the result of Western sanctions. For example, “a large part of the costs and debts” of Russian oil companies is denominated in rubles. At the same time, the ruble exchange rate is free, “floating,” while the currencies of the KSA and the UAE are tightly tied to the dollar. The decline in the ruble leads to an increase in export revenues. The Russian tax system flexibly responds to falling oil prices. Finally, “the country’s oil companies have built up large foreign exchange reserves in recent years”.

Russia’s positions in the European gas market remain strong as well. Despite the year-on-year increase in political and sanction pressure, as well as the decline in contract prices, Russia accounts for a third of the European market. The Russian leadership, as well as Gazprom, have repeatedly emphasized their commitment to completing the Nord Stream 2. The energy strategy of Russia until 2035 provides for the progressive development of new projects in the LNG sector, where world trade is expected to increase to 70% by 2040.

Thus, the current state of the global oil and gas market is determined by three key factors: the price war, the coronavirus pandemic and, as a result, an excess of oil supply. In addition, the situation in the world economy may break the sad “records” of the 2008-2009 crisis. According to the estimates of the Xinhua News Agency, the whole world is “in survival mode.” In such circumstances, each of the supplier countries faces a dilemma: to fight for a greater market share in the hope of beating the competitors, or try to coordinate efforts to stabilize prices. It seems that the struggle for exhaustion is the last thing the world community needs now. For this reason, Moscow calls for dialogue and a return to constructive cooperation, which hinges on a thorough analysis of the long-term consequences of decisions made.

From our partner International Affairs

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Oil and the new world order: China, Iran and Eurasia

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The world oil market will undergo a fundamental change in the future. Choosing petrodollars or oil wars is no longer a question that can be answered. With the Strategic Agreement on the Comprehensive Economic and Security Partnership between China and Iran officially signed by the Foreign Ministers of both countries in Tehran on March 27, 2021, the petrodollar theorem is broken and the empire built by the US dollar is cracked.

This is because the petrodollar has not brought substantial economic development to the oil-producing countries in the Middle East during over half a century of linkage to the US dollar.

The Middle East countries generally have not their own industrial systems. The national economies are heavily dependent on oil exports and imports of cereals and industrial products. The national finances are driven by the US dollar and the financial system that follows it.

If the Middle East countries wanted to escape the control of the dollar, they should face the threat of war from the United States and its allies – things we have seen over and over again. Just think of Saddam Hussein being supported when he was fighting Iran and later being Public Enemy No. 1 when he started trading oil in euros.

The West has always wanted the Middle East to be an oil ‘sacred cow’ and has not enabled it to develop its own modern industrial system: the lack of progress in the Middle East was intended as long-term blackmail.

In the Western system of civilisation based on exchange of views and competition, the West is concerned that Iran and the entire Middle East may once again restore the former glory and hegemony of the Persian, Arab and Ottoman empires.

China is facing the exploitation of the global oil market and the threat of its supply disruption. Relying on industrial, financial, and military strength, Europe and the United States control the oil production capital, trade markets, dollar settlements, and global waterways that make up the entire petrodollar world order, differentiating China and the Middle East and dividing the world on the basis of the well-known considerations. You either choose the dollar or you choose war – and the dollar has long been suffering.

Just as in ancient times nomadic tribes blocked the Silk Road and monopolised trade between East and West, Europe and the United States are holding back and halting cooperation and development of the whole of Asia and the rest of the planet. Centuries ago, it was a prairie cavalry, bows, arrows and scimitars: today it is a navy ship and a financial system denominated in dollars.

Therefore, China and Iran, as well as the entire Middle East, are currently looking for ways to avoid middlemen and intermediaries and make the difference. If there is another strong power that can provide military security and at the same time offer sufficient funds and industrial products, the whole Middle East oil can be freed from the dominance of the dollar and can trade directly to meet demand, and even introduce new modern industrial systems.

Keeping oil away from the US dollar and wars and using oil for cooperation, mutual assistance and common development is the inner voice of the entire Middle East and developing countries: a power that together cannot be ignored in the world.

The former Soviet Union had hoped to use that power and strength to improve its system. However, it overemphasised its own geostrategic and paracolonial interests – turning itself into a social-imperialist superpower competing with the White House. Moreover, the USSR lacked a cooperative and shared mechanism to strengthen its alliances, and eventually its own cronies began to rebel as early as the 1960s.

More importantly – although the Soviet Union at the time could provide military security guarantees for allied countries – it was difficult for it to provide economic guarantees and markets, although the Soviet Union itself was a major oil exporter. The natural competitive relationship between the Soviet Union and the Middle East, as well as the Soviet Union’s weak industrial capacity, eventually led to the disintegration of the whole system, starting with the defection of Sadat’s Egypt in 1972. Hence the world reverted to the unipolarised dollar governance once the Soviet katekon collapsed nineteen years later.

With the development and rise of its economy, however, now China has also begun to enter the world scene and needs to establish its own new world order, after being treated as a trading post by Britain in the 19th century, later divided into zones of influence by the West and Japan, and then quarantined by the United States after the Second World War.

Unlike the US and Soviet world order, China’s proposal is not a paracolonial project based on its own national interests, nor is it an old-fashioned “African globalisation” plan based on multinationals, and it is certainly not an ideological export.

For years, there has been talk of Socialism with Chinese characteristics and certainly not of attempts to impose China’s Marxism on the rest of the world, as was the case with Russia. China, instead, wishes to have a new international economic order characterised by cooperation, mutual assistance and common development.

Unlike the Western civilisation based on rivalry and competition, the Eastern civilisation, which pays more attention to harmony without differences and to coordinated development, is trying to establish a new world economic order with a completely different model from those that wrote history in blood.

Reverting to the previous treaty, between the US dollar and the war, China has offered Iran and even the world a third choice. China seems increasingly willing to exist as a service provider. This seems to be more useful for China, first of all to solve its own problems and not to get involved in endless international disputes.

It can thus be more accepted by all countries around the world and unite more States to break the joint encirclement of the “democratic” and liberal imperialism of Europe and the United States.

Consequently, China and Iran – whose origins date back almost to the same period – met at a critical moment in history. According to the Strategic Agreement on Comprehensive Economic and Security Partnership between China and Iran, China will invest up to 400 billion dollars in dozens of oil fields in Iran over the next 25 years, as well as in banking, telecommunications, ports, railways, healthcare, 5G networks, GPS, etc.

China will help Iran build the entire modern industrial system. At the same time, it will receive a heavily discounted and long-term stable supply of Iranian oil. The Sino-Iranian partnership will lay the foundations for a proposed new world order, with great respect for Eastern values, not based on some failed, decadent and increasingly radicalising principles.

Faced with the value restraint and the pressure of sanctions from the United States and Europe, China is seeking to unite the European third Rome, Indo-European Iran, the second Rome and the five Central Asian countries to create a powerful geoeconomic counterpart in the hinterland of Eurasia.

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The stages and choices of energy production from hydrogen

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There are three main ways to use hydrogen energy:

1) internal combustion;

2) conversion to electricity using a fuel cell;

3) nuclear fusion.

The basic principle of a hydrogen internal combustion engine is the same as that of a gasoline or diesel internal combustion engine. The hydrogen internal combustion engine is a slightly modified version of the traditional gasoline internal combustion engine. Hydrogen internal combustion burns hydrogen directly without using other fuels or producing exhaust water vapour.

Hydrogen internal combustion engines do not require any expensive special environment or catalysts to fully do the job – hence there are no problems of excessive costs. Many successfully developed hydrogen internal combustion engines are hybrid, meaning they can use liquid hydrogen or gasoline as fuel.

The hydrogen internal combustion engine thus becomes a good transition product. For example, if you cannot reach your destination after refuelling, but you find a hydrogen refuelling station, you can use hydrogen as fuel. Or you can use liquid hydrogen first and then a regular refuelling station. Therefore, people will not be afraid of using hydrogen-powered vehicles when hydrogen refuelling stations are not yet widespread.

The hydrogen internal combustion engine has a small ignition energy; it is easy to achieve combustion – hence better fuel saving can be achieved under wider working conditions.

The application of hydrogen energy is mainly achieved through fuel cells. The safest and most efficient way to use it is to convert hydrogen energy into electricity through such cells.

The basic principle of hydrogen fuel cell power generation is the reverse reaction of electrolysis of water, hydrogen and oxygen supplied to the cathode and anode, respectively. The hydrogen spreading – after the electrolyte reaction – makes the emitted electrons reach the anode through the cathode by means of an external load.

The main difference between the hydrogen fuel cell and the ordinary battery is that the latter is an energy storage device that stores electrical energy and releases it when needed, while the hydrogen fuel cell is strictly a power generation device, like a power plant.

The same as an electrochemical power generation device that directly converts chemical energy into electrical energy. The use of hydrogen fuel cell to generate electricity, directly converts the combustion chemical energy into electrical energy without combustion.

The energy conversion rate can reach 60% to 80% and has a low pollution rate. The device can be large or small, and it is very flexible. Basically, hydrogen combustion batteries work differently from internal combustion engines: hydrogen combustion batteries generate electricity through chemical reactions to propel cars, while internal combustion engines use heat to drive cars.

Because the fuel cell vehicle does not entail combustion in the process, there is no mechanical loss or corrosion. The electricity generated by the hydrogen combustion battery can be used directly to drive the four wheels of the vehicle, thus leaving out the mechanical transmission device.

The countries that are developing research are aware that the hydrogen combustion engine battery will put an end to pollution. Technology research and development have already successfully produced hydrogen cell vehicles: the cutting-edge car-prucing industries include GM, Ford, Toyota, Mercedes-Benz, BMW and other major international companies.

In the case of nuclear fusion, the combination of hydrogen nuclei (deuterium and tritium) into heavier nuclei (helium) releases huge amounts of energy.

Thermonuclear reactions, or radical changes in atomic nuclei, are currently very promising new energy sources. The hydrogen nuclei involved in the nuclear reaction, such as hydrogen, deuterium, fluorine, lithium, iridium (obtained particularly from meteorites fallen on our planet), etc., obtain the necessary kinetic energy from thermal motion and cause the fusion reaction.

The thermonuclear reaction itself behind the hydrogen bomb explosion, which can produce a large amount of heat in an instant, cannot yet be used for peaceful purposes. Under specific conditions, however, the thermonuclear reaction can achieve a controlled thermonuclear reaction. This is an important aspect for experimental research. The controlled thermonuclear reaction is based on the fusion reactor. Once a fusion reactor is successful, it can provide mankind with the cleanest and most inexhaustible source of energy.

The feasibility of a larger controlled nuclear fusion reactor is tokamak. Tokamak is a toroidal-shaped device that uses a powerful magnetic field to confine plasma. Tokamak is one of several types of magnetic confinement devices developed to produce controlled thermonuclear fusion energy. As of 2021, it is the leading candidate for a fusion reactor.

The name tokamak comes from Russian (toroidal’naja kamera s magnitnymi katuškami: toroidal chamber with magnetic coils). Its magnetic configuration is the result of research conducted in 1950 by Soviet scientists Andrei Dmitrievič Sakharov (1921-1989) and Igor’ Evgen’evič Tamm (1895-1971), although the name dates back more precisely to 1957.

At the centre of tokamak there is a ring-shaped vacuum chamber with coils wound outside. When energized, a huge spiral magnetic field is generated inside the tokamak, which heats the plasma inside to a very high temperature, which achieves the purpose of nuclear fusion.

Energy, resources and environmental problems urgently need hydrogen energy to solve the environmental crisis, but the preparation of hydrogen energy is not yet mature, and most of the research on hydrogen storage materials is still in the exploratory laboratory stage. Hydrogen energy production should also focus on the “biological” production of hydrogen.

Other methods of hydrogen production are unsustainable and do not meet scientific development requirements. Within biological production, microbial production requires an organic combination of genetic engineering and chemical engineering so that existing technology can be fully used to develop hydrogen-producing organisms that meet requirements as soon as possible. Hydrogen production from biomass requires continuous improvement and a vigorous promotion of technology. It is a difficult process.

Hydrogen storage focused on the discovery of new aspects of materials or their preparation is not yet at large-scale industrial level. Considering different hydrogen storage mechanisms, and the material to be used, also needs further study.

Furthermore, each hydrogen storage material has its own advantages and disadvantages, and most storage material properties have the characteristics that relate to adductivity and properties of a single, more commonly known material.

It is therefore believed that efforts should be focused on the development of a composite hydrogen storage material, which integrates the storage advantages of multiple individual materials, along the lines of greater future efforts.

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The advantages of hydrogen and Israel’s warnings

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Hydrogen is the most common element in nature. It is estimated to make up 75% of the mass of the universe. Except for that contained in air, it is primarily stored in water in the form of a compound, and water is the most widely distributed substance on earth.

Hydrogen has the best thermal conductivity of all gases – i.e. ten times higher than most of them – and it is therefore an excellent heat transfer carrier in the energy industry.

Hydrogen has good combustion performance, rapid ignition, and has a wide fuel range when mixed with air. It has a high ignition point and rapid combustion rate.

Except for nuclear fuels, the calorific value of hydrogen is the highest among all fossil and chemical fuels, as well as biofuels, reaching 142.35 kJ/kg. The calorie per kilogram of hydrogen burned is about three times that of gasoline and 3.9 times that of alcohol, as well as 4.5 times that of coke.

Hydrogen has the lightest weight of all elements. It can appear as gas, liquid, or solid metal hydride, which can adapt to different storage and transport needs and to various application environments.

Burning hydrogen is cleaner than other fuels –  besides generating small amounts of water – and does not produce hydrogen azide as carbon monoxide, carbon dioxide (harmful to the environment), hydrocarbons, lead compounds and dust particles, etc. A small amount of hydrogen nitride will not pollute the environment after proper treatment, and the water produced by combustion can continue to produce hydrogen and be reused repeatedly.

Extensive use practices show that hydrogen has a record of safe use. There were 145 hydrogen-related accidents in the United States between 1967 and 1977, all of which occurred in petroleum refining, the chlor-alkali industry, or nuclear power plants, and did not really involve energy applications.

Experience in the use of hydrogen shows that common hydrogen accidents can be summarized as follows: undetected leaks; safety valve failure; emptying system failure; broken pipes, tubes or containers; property damage; poor replacement; air or oxygen and other impurities left in the system; too high hydrogen discharge rate; possible damage of pipe and tube joints or bellows; accidents or tipping possibly occurring during the hydrogen transmission process.

These accidents require two additional conditions to cause a fire: one is the source of the fire and the other is the fact that the mixture of hydrogen and air or oxygen must be within the limits of the possibility of fires or violent earthquakes in the local area.

Under these two conditions, an accident cannot be caused if proper safety measures are established. In fact, with rigorous management and careful implementation of operating procedures, most accidents do not theoretically occur.

The development of hydrogen energy is triggering a profound energy revolution and could become the main source of energy in the 21st century.

The United States, Europe, Japan, and other developed countries have formulated long-term hydrogen energy development strategies from the perspective of national sustainable development and security strategies.

Israel, however, makes warning and calls for caution.

While the use of hydrogen allows for the widespread penetration of renewable energy, particularly solar and wind energy – which, due to storage difficulties, are less available than demand – Israeli experts say that, despite its many advantages, there are also disadvantages and barriers to integrating green hydrogen into industry, including high production costs and high upfront investment in infrastructure.

According to the Samuel Neaman Institute’s Energy Forum report (April 11, 2021; authors Professors Gershon Grossman and Naama Shapira), Israel is 7-10 years behind the world in producing energy from clean hydrogen.

Prof. Gideon Friedman, actingchief scientist and Director of Research and Development at the Ministry of Energy, explains why: “Israel has a small industry that is responsible for only 10% of greenhouse gas emissions – unlike the world where they are usually 20% – and therefore the problems of emissions in industry are a little less acute in the country.”

At a forum held prior to the report’s presentation, senior officials and energy experts highlighted the problematic nature of integrating clean hydrogen into industry in Israel.

Dr. Yossi Shavit, Head of the cyber unit in industry at the Ministry of Environmental Protection, outlined the risks inherent in hydrogen production, maintenance and transportation, including the fact that it is a colourless and odourless gas that makes it difficult to detect a leak. According to Dr. Shavit, hydrogen is a hazardous substance that has even been defined as such in a new regulation on cyber issues published in 2020.

Dr. Shlomo Wald, former chief scientist at the Ministry of Infrastructure, argued that in the future hydrogen would be used mainly for transportation, along with electricity.

Prof. Lior Elbaz of Bar-Ilan University said that one of the most important things is the lack of laws: “There is no specific regulation for hydrogen in Israel, but it is considered a dangerous substance. In order for hydrogen to be used for storage and transportation, there needs to be a serious set of laws that constitute a bottleneck in our learning curve.” “Israel has something to offer in innovation in the field, but government support will still be needed in this regard – as done in all countries – and approximately a trillion dollars in the field of hydrogen is expected to be invested in the next decade.”

Although the discussion was mainly about Israel’s delay in integrating clean hydrogen into the industry, it has emerged that Sonol (Israel’s fuel supplier ranking third in the country’s gas station chain) is leading a project, together with the Ministry of Transport, to establish Israel’s first hydrogen refuelling station. “We believe there will be hydrogen transportation in Israel for trucks and buses,” said Dr. Amichai Baram, Vice President of operations at Sonol. “Hydrogen-powered vehicles for the country – albeit not really cheap in the initial phase – and regulations promoted in the field, both for gas stations and vehicles.”

Renewables account for only 6% of Israel’s energy sources and, according to the latest plans published by the Ministry of Energy and adopted by the government, the target for 2030 is 30%.

This is an ambitious goal compared to reality, and also far from the goal of the rest of the countries in the world that aim at energy reset by 2050.

The authors of the aforementioned report emphasize that fully using the clean hydrogen potential is key to achieving a higher growth target for Israel.

According to recommendations, the State should critically examine the issue in accordance with Israel’s unique conditions and formulate a strategy for the optimal integration of hydrogen into the energy economy.

Furthermore, it must support implementation, both through appropriate regulations and through the promotion of cooperation with other countries and global companies, as well as through investment in infrastructure, and in research and development, industry and in collaboration with the academic world.

There are countries in Europe or the Middle East that have already started green energy production projects, and finally it was recommended to work to develop Israeli innovations in the field, in collaboration with the Innovation Authority and the Ministry of Energy.

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