So what if oil prices have fallen

The fluctuating price of oil is not relevant when considering investment in cleantech.

At the end of 2007 the price of a barrel of oil was close to $100. By July 2008 it was $150 but by January 2009 it had plummeted to $35. It now stands at $68.

The fluctuating price of oil and gas influences more than media headlines. It also influences decision makers when considering budgets for R&D and producing renewable energy sources.

As somebody who has accompanied the cleantech sector for many years, I was there to see solar energy companies in the 1980s, when oil prices peaked and they received government funds to develop their technologies. Two or three years went by and oil prices fell, and the new government decided that such technologies were not necessary and cut the budgets.

We see the same today now that oil prices have fallen. On the new government's agenda is whether to develop the renewable energy sector in a period when it is only looking to make cuts. Yet the fluctuating price of oil should not be a factor in considering whether to invest in high-tech.

Israel's cleantech sector has to cope principally with a lack of financing sources. The economic crisis has virtually eliminated the natural possibility of raising funds on the capital market. The result is a break in development just whn it looked like the sector was on the verge of a breakthrough.

It is true that the Israeli government recently published tenders for setting up solar power stations although the tenders method hints at the government's intention of creating competition as to which bidder is prepared to lose more in order to win the tender. No wonder that some of the international companies who had decided to bid for the tender have now withdrawn.

In the US, despite the global crisis and monetary difficulties, the Obama administration has decided to allocate vast sums to cleantech in the coming few years totaling tens of billions of dollars. The plan has political and social importance and therefore it has passed swiftly over bureaucratic hurdles without too much concern for the smaller details.

The US administration's target is to generate 25% of its energy from renewable energy by 2025. Today only 2% of energy in the US is from renewable energy.

I hope that the US program will influence the Israeli economy in two ways: firstly I hope and believe that Israeli cleantech companies because of their leading technologies will benefit from the unprecedented budgetary allocations by the US and will take part in projects funded by the US and this will provide an opportunity for leveraging Israel through local venture capital funds; secondly Israel's leaders will emulate Obama and allocate funds for the development of renewable energy regardless of whether the price of oil is rising or falling.

Dan Margalit is BDO Ziv Haft managing partner and head of the high-tech cluster

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