Interview with Israeli Environmental and Carbon Markets Pioneer – Dr. Noam Gressel
Line BreakAuthor: Eli Magid (12 Articles)
Eli is an Associate at the Widebridge Group, a Herzliya based investment banking boutique and was previously with Morgan Stanley Tel Aviv. In addition, he is a financial markets entrepreneur and co-founder of a green start-up which utilizes carbon finance to prevent rainforest destruction in developing countries. Eli began his career at Credit Suisse, structuring over $15 billion of debt securitizations across a diverse credit and product spectrum. Eli has a BSc in Applied Economics & Management from Cornell University.
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Dr. Noam Gressel is one of Israel’s early movers and top leaders in the environmental and carbon markets, being involved in the sector for now over a decade. He is founder and CEO of Assif-Strategies, an environmental management and consulting firm, as well as co-founder and managing partner of Elysium Carbon Trade & Investment, which develops, trades, and invests in the global market for certified and voluntary greenhouse gas reduction offsets. Dr. Gressel became a venture partner at Greylock in 2008 and leads their Cleantech investment efforts. He is also a co-founder and board member of biotech company TransAlgae. In addition, Dr. Gressel served as a consultant for both the Israel’s Inter-Ministerial Commission on Climate Change and the UNFCCC, and formerly served as Executive Director for the Arava Institute for Environmental Studies and as Science Director at the Israel Union for Environmental Defense.
Dr. Gressel earned his Ph.D. from the Department of Environmental Science, Policy & Management at the University of California at Berkeley and a B.Sc. from the Faculty of Agriculture at the Hebrew University of Jerusalem.
In 2001, you founded Assif-Strategies Ltd, one of Israel’s leading environmental strategic consulting companies which provides services for industry, businesses and financial institutions. What was your motivation behind its founding?
In 2001 most people didn’t really understand what we were talking about. The perception was that environmental quality costs money, and it was often difficult justifying these costs to corporate boards and shareholders. Assif was founded to improve environmental quality while also creating operational efficiencies. We created models where environmental improvements positively impact P&L and business, simultaneously creating both business and environmental value.
Who were some of Assif’s first clients and what type of environmental consulting did they need?
Soon after its founding, Assif began representing companies involved in huge environmental battles with either the Ministry of Environment or non-profit organizations. Assif helped them achieve new way of thinking and dealing with crisis management through accounting beyond compliance.
Assif comes into a company and measures its environmental performance. It looks at it internally to see if it holds itself to accepted environmental values, as well as whether it can exploit opportunities within its current condition.
One example of this was with Egged (Israel’s main public transportation service provider). A few years back they launched a “green” campaign which included painting their buses green, a sort of “green wash” that was supposed to showcase their environmental progress. However, there were no changes within their operations that supported such a claim. Environmental issues in Israel really came to the forefront when the press and commentators started questioning whether Egged’s “green wash” was ethical?
When Egged called upon Assif for guidance, there were seven separate legal procedures against Egged all relating to the environment. Israel’s Green Party was even suing them for using the word “green.” The loss of public support hurt Egged, and influenced the decision by the Ministry of Finance to privatize bus services throughout the country.
What was Assif’s solution for Egged?
Egged needed a comprehensive approach to environmental performance. Assif helped them come up with a number of measures they would subsequently take and published them in Egged’s first Environmental Report, published in 2002 and made available to the public.
Recently, Assif also devised a carbon monitoring system to be integrated with its fleet management platform in 2010. As Egged’s bus fleet comprises 90% of its carbon foot print this was the principal solution to integrate. The system is able to drill down to individual bus lines and find the shortest and most efficient route for a bus to take. Besides from reducing Egged’s emissions, this is helping them cut costs as well.
Can you share with us how Elysium spun out of Assif in order to focus on carbon trading and development?
Elysium grew out of Assif in 2005, just as the carbon markets were taking off with the launch of the EU ETS and the UN Clean Development Mechanism (CDM) carbon project offsets were being traded. At the time we were consulting for the Ministry of Environment, first helping them compose the Israel National Report on Climate Change and launching the Inter-Ministerial Commission on Climate Change as part of Israel’s commitments to the United Nations Framework Convention on Climate Change. Chapter 6 which I wrote with Nir Becker and Doron Lavee is an authoritative model which still stands today.
Yitzchak Goren, the former Executive Director of the Ministry of Environment who was retired by then, approached me in 2005. We both knew something about carbon so we decided to create Elysium to conduct carbon development and trade and we took on a small angel investment to help get us started.
What projects has Elysium completed, what is it currently working on?
Elysium has thus far registered two CDM projects with the UNFCCC and a number of voluntary projects. The first is a renewable energy wind farm in Northern Israel that will generate 39,000 C02 offsets per year. The second is a fuel switching facility in Maanit which will produce steam for energy at a food production facility by burning biomass instead of fossil fuels, generating 27,000 C02 offsets per year.
Elysium is currently working on two projects in Israel. The first is a biomass boiler at the Strauss Coffee factory in Tzfat. It burns spent coffee beans instead of fossil fuels to produce steam which powers part of the factory. It also means that heavy fuel doesn’t need to be trucked into Tzfat or waste trucked out to a landfill. This generates 10,000 C02 offsets per year.
In addition, we are awaiting registration for a 50MW natural gas power plant for the Nesher cement factory in Ramle. This will replace coal fired power from the electricity grid which will be a huge environmental benefit. In addition we are developing a number of hydroelectric facilities in Turkey, a small-scale solar PV program in Israel, a wind farm in Eastern Europe, and working on a feasibility study for a biofuel project.
As the United States carbon market has begun to develop, we’ve also begun consulting in the US at the corporate level offering carbon management, carbon accounting and carbon strategy development services. One of the projects we are currently working on involves the embedding of Israeli renewable energy technologies into the carbon asset strategy of a US corporation.
As a co-founder and board member of TransAlgae, can you discuss the company’s progress and what you are trying to achieve?
TransAlgae’s vision is to solve the world’s worsening resource crises in both the energy and food sectors, using efficient, clean and safe algae-based alternatives.
TransAlgae, which has now been active for 18 months, has developed a sophisticated biotech lab which created a 1st generation of genetically engineered algae. Our algae platforms include genes that ensure bio-safety so that algae are unable to survive under natural conditions. This allows algae production to scale up to a major crop worldwide without impacting natural habitats such as wetlands, rivers, lakes and oceans. Our 1st generation is thus safer than using a wild type species from an ecological perspective. We’ve added various components to increase productivity and reliability, and efficient harvesting.
Algae is the ultimate replacement for soybeans. It can yield up to 40x more biofuel per unit area without requiring arable land and provides a yield of protein 10x higher that could serve as an animal feed. Animal feed accounts for 40% of the crops being grown. With the remarkable growth of the middle class in the developing world, there has been a major limitation of land to create feed for animals or fish. The 1st generation algae species we’ve created is a higher quality feed with a higher nutritional content. Our goal is for algae to evolve from a wild species to a domesticated crop that can be used as a biofuel and animal feed, as well as a way to reduce carbon dioxide emissions from the atmosphere. Wheat took 10,000 yrs to domesticate. Corn took approximately 5,000 years. The world can’t wait thousands of years to domesticate a new crop if we are to meet humanity’s needs.
Where have been some TransAlgae’s achievements to date?
The company’s scientific team has completed its first generation of transgenic algae and a field research site has been established at the Ashdod 400 megawatt natural gas power station. Additionally, we’ve just signed our first biofuel MOU with Endicott Biofuels LLC of Houston Texas for the development of algae as a potential transportation fuel and renewable chemical feedstock source.
We’ve already begun our next phase, creating a 2nd generation of improved algae species for seawater and freshwater and developing a large-scale pilot facility for demonstration purposes and continued development. We expect that with domestication of algae, it could be 10x more efficient to produce in terms of land and energy and can generate a biofuel which can replace the majority of transportation fuels while also reducing the amount of arable land and potable water required for production.
Is there a common theme among the Cleantech companies you choose to invest in at Greylock?
We’re primarily looking for technologies that provide radical improvements in resource efficiency use, companies which have the potential to create extraordinary and widespread improvements much like TransAlgae.
One trend we are seeing is that the latest Cleantech technologies today are coming from a whole new generation of Cleantech entrepreneurs. These are new entrants who were previously in other spaces such as electro-optics, homeland security and software. While Cleantech is the domain defining the issues that need to be addressed, the technologies and solutions are often imported from other sectors.
What does the next decade hold for the Environmental Markets and Cleantech?
Some people in these sectors exclusively focus on global warming and climate change. However I tend to frame these industries in a broader fashion, by seeing us providing techologies that address a reality of multiple resource limitations – a condition that existed for most of human history, except during a brief period following the industrial revolution.
Natural resources are becoming strained: energy, land, water, food and minerals. The coming decade will define the framework for solutions, either market or technology based, that will allow us to manage these resources in more sustainable and efficient manners. These tasks should keep us busy well beyond the next decade.
Line BreakAuthor: Eli Magid (12 Articles)
Eli is an Associate at the Widebridge Group, a Herzliya based investment banking boutique and was previously with Morgan Stanley Tel Aviv. In addition, he is a financial markets entrepreneur and co-founder of a green start-up which utilizes carbon finance to prevent rainforest destruction in developing countries. Eli began his career at Credit Suisse, structuring over $15 billion of debt securitizations across a diverse credit and product spectrum. Eli has a BSc in Applied Economics & Management from Cornell University.
