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Israel’s economy is setting sail into the deep blue tech sea

After missing the boat for years, the country is now casting a net for more maritime innovation and technology, diving into a worldwide trend with a focus on sustainability

Illustrative: A man looks out to the sea from a boat off Haifa's Kishon Port on June 26, 2018. (David Cohen/Flash90)
Illustrative: A man looks out to the sea from a boat off Haifa's Kishon Port on June 26, 2018. (David Cohen/Flash90)

Once a tiny speck in the great big sea of Israeli startups, the “blue tech” industry of companies innovating maritime technologies is now making waves. Big ones.

In September, the Ministry of Innovation, Science and Technology named blue tech as one of Israel’s top research and development priorities over the next five years.

That came after the July launch of the National Center for Blue Economy and Innovation, which aims to build sustainable technological innovation and entrepreneurship in the maritime space.

A couple of months earlier, the government approved a NIS 170 million plan to develop an international center for seafood production, to be situated in Eilat. And this month, the Red Sea resort city is hosting a large international summit sponsored by the government under the punny banner “Sea the Future.”

Israel has 204 kilometers (126 miles) of coastline in the Mediterranean Sea and the Red Sea combined, and its marine footprint  — coastal waters, territorial waters and its exclusive economic zone — dwarfs the country’s terrestrial land area.

It is also a country with a flourishing tech industry. But the Israeli blue tech scene has so far remained relatively small, according to Hilla Haddad Chmelnik, the director-general of the Ministry of Innovation, Science and Technology.

Tel Aviv as seen from the sea. July 2, 2022. (Moshe Shai/FLASH90)

“When you look back at how the high-tech industry in Israel developed, our national priorities have always aligned with what the military invested in,” she said. “The three main fields in Israeli high-tech – cyber[security], software development and fintech – are all built on capabilities developed in the military. In other fields, a significant high-tech industry has not been created.”

In its decision to prioritize blue tech, the Ministry of Innovation, Science and Technology was accepting the recommendation of Israel’s National Council for Research and Development, which conducted a yearlong study to map and define national priority areas based on Israel’s comparative advantages, its strategic needs, global competition, and other criteria.

“In the next 10-20 years the blue economy will become a huge part of the global economy,” said Prof. Peretz Lavie, who heads the R&D council. “Fields like sea-based agriculture and energy production and storage are becoming national priorities in many countries. We must not fall behind.”

A computer simulation of MITRE’s planned BlueTech Lab in Bedford, Massachusetts. (Business Wire via AP)

The inclusion of blue tech as a top priority area will give the industry, and the other four chosen by the council, a leg up in securing chunks of the ministry’s NIS 180 million ($50.8 million) annual applied research fund.

Multi-disciplinary teams, including multiple public sector stakeholders such as various ministries and coastal municipalities, are currently working on creating operational plans for each of the selected fields to determine where to direct funds, Haddad Chmelnik said. By the end of this year, they plan to present the government with a national blue tech blueprint.

Charted waters

Around the world, maritime economic activity — also known as the blue economy — is growing rapidly, driven by population growth, dwindling land resources, new technologies, and the need to respond to climate change, among other factors.

The blue economy includes mature industries such as maritime transportation, fishing, shipbuilding and port infrastructure, as well as emerging sectors like renewable marine energy production, maritime biotechnology, subsea mapping and mining, and aquaculture.

The United Nations estimates the size of the blue economy globally at between $3 trillion and $6 trillion annually.

Mud water from the Yarkon River meets the blue water of the Mediterranean Sea in Tel Aviv on Wednesday, Jan. 22, 2020. (AP/Oded Balilty)

Some markets in the blue economy, like autonomous shipping, underwater drones, and marine-derived pharmaceuticals, are expected to double in size within a few years.

By 2030 “many ocean-based industries have the potential to outperform the growth of the global economy as a whole, both in terms of value added and employment,” the Organization for Economic Co-operation and Development predicted in 2016.

L3 Harris’s Iver4 580 Unmanned Underwater Vehicle (Business Wire via AP)

“For the last four years, the World Bank has dramatically scaled up the work on the blue economy,” said Nagaraja Rao Harshadeep, who serves as global lead for disruptive technology at the World Bank and is an expert on blue tech. “We have created a special trust fun called PROBLUE, which is financed by different countries, and that has provided the stimulus for both analytical work as well as project support related to the blue economy.”

In the evolving blue economy landscape, it is critical for countries to learn from each other’s experiences and share ideas, said Harshadeep.

“Every country in the world is in many ways a ‘developing’ country when it comes to blue tech,” he argued, because of the rapid pace of technological change and the uncertainty created by climate change.

Blue tech means going green

The blue economy is emerging at a time when the maritime space worldwide is increasingly under stress. A wide range of human activities, including the burning of fossil fuel and over-exploitation of resources and pollution, have been degrading oceanic ecosystems for years.

Since the early 2010s, the international community – led by the United Nations, the World Bank and others – has promoted a new approach to blue economy, where ocean sustainability is just as important as economic development.

Asaf Ariel, who serves as science officer for marine protection organization EcoOcean, said that as Israel invests in developing blue tech, adopting the international community’s sustainability framework is crucial.

“Any [technological] development — and it doesn’t matter if it’s a huge algae farm or technology for energy or food production or whatever — must be done with very strict environmental monitoring to see what the environmental consequences are,” said Ariel. “We are not interested in solving one problem and creating another.”

A protest against the expansion of activity at the EAPC oil port in Eilat, southern Israel, on February 10, 2021. The sign reads, ‘Stop the oil agreement now.’ (Egor Iggy Petrenko/Coast Patrol)

The blue economy represents an opportunity to build a new relationship with the oceanic ecosystems, said Hila Ehrenreich, chief executive of the National Center for Blue Economy and Innovation in Haifa. The center, currently funded by the Haifa municipality, was created after the government named the port city as Israel’s blue economy capital.

By the end of this year, the center hopes to have located and selected blue tech entrepreneurs with potential, with plans to begin providing them access to funding and business development services. Sustainability, and not just profits, will play a key role in determining funding priorities.

“We will invest only in technologies whose environmental impact is positive, and that can contribute to decreasing carbon footprint,” Ehrenreich said. “The blue economy must always be sustainable and must always protect the maritime environment.”

Based on her mapping of Israel’s maritime economy, Ehrenreich estimates there are currently about 145 Israeli companies in the blue tech space. The sector encompasses a wide array of businesses that contribute to various industries, from food production to maritime shipping to resource management.

The growing list of Israeli blue tech startups includes SeaErra, which is developing an AI-based underwater vision enhancement solution, and ECOncrete, which installs marine-friendly concrete for use underwater.

A demonstration of SeaErra’s underwater vision technology. (Courtesy SeaErra)

Several companies are working on harnessing the sea for clean energy. Among them are BaroMar, which developed an underwater solution for storing wind and solar power; Eco Wave Power, which is creating electricity from waves; and Nayam Wings, which created a new wind propulsion system for maritime vessels based on a rigid wing sail.

“Israel does not have a rich history of sea-based industries,” said Ehrenreich. “But it does have a strong foundation of knowledge and research, as well as excellent entrepreneurs that could lead us forward.”

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