Israel's finance ministry is proposing initiatives that could stimulate the adoption of gas-fuelled vehicles, even though there is not enough domestic gas production yet to supply them in any quantity.

In a new document, "The Arrangements Law," an appendix to the annual budget law, the ministry proposes gradually abolishing fuel tax rebates for heavy goods vehicle operators that run on diesel engines.

Fuel taxes in Israel are quite high, up to 70% of the fuel costs, though HGV operators, public transport operators and taxi drivers enjoy tax returns.

In addition the treasury proposes to set a higher depreciation rates for commercial and heavy vehicles from 3.5 tons upward which are natural gas fueled, and to abolish for a five-year period, 2017-2021, the annual license fee for natural gas fueled vehicles.

The ministry also proposes a higher depreciation rate for natural gas refuelling stations as well as incentives and a safety net for their operators for seven years.

However, despite the government efforts to promote the use of natural gas in transportation, it is unclear what will be the gas source, since currently the supply from the Tamar gas field is barely enough to meet demand. The natural gas monopoly still has to decide on the development of Leviathan gas field.

In its latest quarterly report, Noble Energy, one of the main stake holders in Leviathan and the operator said that the final investment decision for Leviathan  is not expected before the year's end and is dependent, among other factors, on a gas sales and purchase agreement. So far, Noble said, there are sales agreements for some 100mn ft³/d – a far cry from the sales volume required for commercial development.