With the Democratic National Convention in full swing, expect much attention focused on alternative energy, Cleantech and environmental issues. After all, House Speaker Pelosi has mentioned that her goal is to save the planet and Al Gore will show up and do his usual speech on how global warming will destroy the planet if we don’t do anything ASAP. I don’t want my cynicism to show through but have the DNC and Obama’s organizers taken any measures to ensure that this convention is environmentally friendly? How much energy is being used to run the event? Just asking.

Anyway, a great article out in the Jpost today about how Israel is on the way to being a world leader in Cleantech. While Shai Agassi’s electric car initiative has gained many headlines around the world, Israel is also very quietly making strong inroads, in solar and water technologies. The article focuses on how Israel is developing the technology for the purpose of letting larger nations do the implementation. Much like the current technological revolution, Israel has been behind many of the advances that have powered us forward. The view is that Cleantech will be Israel’s next boom industry as technologies will be developed that power a move away from crude oil towards alternative energy sources.

The article quotes Isaac Berzin, an expert in using algae to curb greenhouse gases: “Israel should be a world leader - creating the solutions the world is looking for. Investments are coming to Israel [as a result] and lots of jobs are created. Let’s say you develop a major solar technology, which is cost effective etc. What’s the demand for electricity in Israel? A small fraction of world demand. If your only output is Israel then you are in trouble. Hi-tech was great for Israel. Where were the markets? Out there, which is absolutely fine.”

It’s interesting that the one thing Israel lacks is natural resources. The one thing Israel has loads of is brainpower, ingenuity and entrepreneurship. Isn’t it ironic that Israel is using its’ main resource to try and level the economic playing field by developing technology that will greatly lessen the need for natural resources.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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You turn on the faucet, and-voila-you have a drink of water! Those of us who come from western nations tend to take water for granted. However, after a few years in Israel, we appreciate the fact that whatever water we receive is a gift. The media is filled with reports about how the world is running low on crude oil, but not too much attention is paid to the growing water crisis.
Water as an Investment
As abundant as it appears to be, only about 20% of the global population has access to running water.  Additionally, only one-third of the world’s population has access to clean water. In fact, many estimate that in 40 years, more than four billion people, half the world’s population, will be living in areas that are chronically short of water. Moreover, economic development has placed greater pressure than ever on the supply of fresh water. In 1900, the global annual water use per capita was 350 cubic meters. In 2000, that number had grown to 642 cubic meters. In the United States alone, the demand for water has tripled in the past 30 years, while the population has grown by just 50%.
China, Africa and the United States
The need to increase access to clean water around the world has led some to call water the “oil” of this century. As the world becomes more and more developed, wealthy countries will not only be able to afford, but will also have a moral obligation to provide this basic necessity to their citizens. China and India, which are experiencing economic booms right now, are therefore investing hundreds of billions of dollars in improvements to their water infrastructure, while many sub-Saharan African countries that are beginning to show signs of economic growth will soon need to begin to provide basic resources to their population. In all three of these examples, these are huge populations that are in their infancy when it comes to the basic needs of their citizens. They have been steeped in poverty for decades, and they are emerging only now. As such, they need to start from scratch, which means access to water and building roads.
In terms of the United States, the Environmental Protection Agency estimates that up to $1 trillion will have to be spent on upgrading U.S. water infrastructure over the next few years. The country’s aging infrastructure, much of which is more than 100 years old and has long exceeded its useful life, is in a state of utter disrepair. In the United States alone, the network of drinking water pipes extends more than 700,000 miles - more than four times the length of the National Highway System. This all adds up to the need for new reservoirs, better water canals and more efficient irrigation systems. Israel happens to be a global leader in the innovative technology needed for making such repairs.
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While many experts believe that there will never be substitutes for water, I tend to take a much more optimistic view of things. All kinds of technologies are being created to tackle the issue before it turns into a crisis. If we were to fast-forward 50 years, I am sure that we would be shocked at the technological advances made. Investors should speak with their financial advisers to see what options are available to invest in the water industry.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Save the world, enough with crude,
Drill offshore now? hey, surf’s up, dude.
Warming planet, costly food,
Oil firms with attitude,
The ‘wakening has been quite rude.

“It’s our own fault”, we like to say,
Our cars, our wars, and our hairspray,
Now waves, wind, solar–are in play.
Renewables will save the day,
Drive SUVs? get locked away.

“But it’s just nature,” others cry,
We are not about to die.
There’s still ozone in the sky,
Temperatures are not so high,
They aim to tax both you and I.

Soon we’ll turn another page,
Global cooling they will gauge.
Environmentalists will rage,
“We’re entering a new ice age!”
Is that judgment any more sage?

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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The Israeli company Energtek (EGTK.ob) has developed a new alternative technology allowing motorcycles to be powered with natural gas.

According to a report in the Jpost: “Energtek has developed a system to power two- and three- wheeled vehicles with natural gas. The motorcycles and scooters use gas canisters that can be replaced in less than a minute, without the need for special refueling stations, CEO Lev Zaidenberg said. The technology also makes it more cost efficient to tap so-called stranded gas in reservoirs that aren’t large enough to justify building a pipeline.”

The company plans to target Asia, where there are more than 250 million two- and three-wheeled vehicles. The company plans on doing a private placement shortly in order to fund the initiative, and they claim that they will be profitable in 2010.

It’s funny because Israel never had an auto or transportation industry, but because of the country’s global technological edge in alternative energies, an alternative transportation industry is starting to pop up. From natural gas powered motorcycles to electric cars, as in Project Better Place,  to GreenRoad Technologies, - Zack” Cleantech” Miller’s favorite-who employ a in-vehicle device that improves driver safety and betters fuel consumption for car fleets, maybe just maybe Israel will be the Detroit of the 21st century.

Disclosure: Author’s fund has no position in any stock mentioned as of 7/30/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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