Israel's cleantech advantage

As Business Week recently reported, . Need additional evidence? On Nov. 15, both authors of the House-passed cap and trade bill participated in conversations about the burgeoning Israeli cleantech sector. Congressman Henry Waxman spoke at the Saban Forum in Jerusalem while Congressman Ed Markey addressed a packed house at Harvard’s Kennedy School of Government in Cambridge.

But can a tiny nation really be a global cleantech leader? Absolutely. There are several reasons to believe that Israeli cleantech is here to stay.

First, human capital. “Israel has one of the world’s highest concentrations of scientists and engineers. It is similar to Boston and San Francisco. Within a fifty mile drive, you’ve got a half dozen of the world’s top research universities, ” said Jonathan Shapira, a business lawyer at Goodwin Procter and the founder of the .

Second, natural resources and lack thereof. Israel has plenty of sun, which enables it to serve as a laboratory for solar innovation. It lacks water and oil, which provides a strong and persistent incentive for the country to be a world leader in desalination and wean itself off fossil fuels.

Third, a unique entrepreneurial culture. From a young age, Israelis are direct and outspoken. Later in life, their frankness allows for vibrant debate that helps startups rethink their assumptions and retool their plans. This is an essential and underappreciated trait for new firms as they undergo substantial change from idea to commercialization. During mandatory military service, Israelis develop valuable teamwork and problem-solving skills, particularly under duress. Most importantly, they learn to take risks and to proceed with confidence. “A technology venture is three guys starting a company and going to war against… GE, Siemens or Dow Chemical, the big players who are going to dominate cleantech in 20 years,” said David Anthony of cleantech venture firm 21 Ventures. “The Israeli entrepreneur is used to this metaphorical David vs. Goliath.”

Fourth, geopolitics, at least as long as the United States government and market as a critical source of capital and demand for cleantech.

Put simply, America and American investors view Israel as a more reliable ally and an easier country in which to do business than China. “It is key that we not have ‘made by OPEC’ substituted with ‘made in China.’. We need a strategy where [cleantech] is made in the USA and Israel,” said Markey. Toward that end, Markey will next year take to Israel the members of the House Select Committee on Global Warming.

Guest blogger Yoni Cohen is focusing on green business as a joint-degree student at the Yale Law School and the Wharton School of the University of Pennsylvania.

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