A few months ago, close to the opening of the UN International Climate Change Conference in Scotland, the government announced that it would make its climate goals more ambitious, and reset Israel’s greenhouse gas emissions by 2050. It was announced today (Tuesday) that Israel will not meet even the more modest goals it has set in the past: a reduction of 27% of emissions by 2030, and 85% by 2050.
The Bank of Israel examined the feasibility of achieving emission reduction targets according to scenarios based on existing technologies and the policy tools currently used by the government, and states that Israel will have difficulty meeting them, due to the rapid population growth that increases energy consumption by 2.7% per year. In addition, in a situation where the reduction of emissions in the world will be slower than expected, it is necessary to prepare for the new situation, where the rising temperature will have consequences in all life systems. The Bank of Israel warns that the most relevant global warming risks to Israel threaten the economy and public health.
Due to its reliance on fossil fuels, energy generation is the most significant sector for greenhouse gas emissions, and is solely responsible for 76% of the world’s emissions, with an emphasis on burning coal (33%) and oil (27%). Therefore, in order to achieve carbon neutrality, countries must significantly reduce greenhouse gas emissions in the various energy systems – electricity for industry and transportation, and make an energy transition to the use of clean production sources. At the same time, the necessity to maintain energy security, creates tension with the climate agenda and policy questions in the processes of achieving carbon neutrality (decarbonization).
According to the Bank of Israel, Israel’s mission is particularly challenging, due to the unusual population growth relative to the other developed countries, and due to being an “electric island”, without having the ability to rely on the electricity systems of countries in the region. The Bank of Israel emphasizes that an energy transition should be made in order to maintain energy security, but the technologies available for energy production by means of emission-free means are limited to the use of solar and nuclear and both have different restrictions that make it difficult to use them.
In order to meet the goals it has set, Israel will need to set policy measures in the coming years. But even if Israel meets the targets for electricity generation from renewable energies – 30% by 2030 or even if it succeeds in upgrading the targets and producing 40% of the electricity in its territory with renewable energy – this is not enough to meet the general targets it has set for itself, including other sectors.
Promote the renewable energy industry
While carbon capture technologies are not commercial, the only way to decarbonize the energy system is to replace fossil fuels with emission-free energies, such as renewable and nuclear energies. In Israel, renewable technologies are “still the most feasible solution for achieving carbon neutrality”, which is why the Bank of Israel recommends that the government promote the renewable energy industry by pricing external costs in Israel and investing in electricity infrastructure. We emphasize that despite government statements, to date the carbon tax designed to price the external costs of fuels accelerating the climate crisis has remained on the table of the Finance Committee and not before.
The Bank of Israel emphasizes that a significant expansion of the weight of solar energy in Israel’s electricity supply will also require an investment in means of storing energy alongside the holding of power plants based on natural gas. This, to meet the demand in case of extreme weather events.
The Bank of Israel also recommends that the government “carefully examine the production of electricity using nuclear technologies”, in order to diversify its energy sources and not rely solely on solar energy. If it avoids this, the possibility of carbon neutrality will be based on future technologies, which at this stage do not exist or are not commercial, and on policy measures that have not yet been characterized and tested in Israel. Israel is not a signatory to the Convention on the Non-Proliferation of Nuclear Weapons, and therefore its ability to develop nuclear reactors for electricity generation is limited. But the Bank of Israel says that “technological developments in recent years hint at the possibility of developing nuclear technology that will allow even countries that are not signatories to distribution, to produce energy by nuclear means, with the development of small reactors.” Only five countries in the world are not signatories to the treaty: India, Pakistan, Israel, North Korea and South Sudan.
Does Israel have an ‘escape route’ from its international obligation to meet the development of emissions? The Bank of Israel notes that the agreement at the last climate conference on a universal market mechanism for emissions trading may allow this. According to the Bank of Israel, the market mechanism will allow Israel to weigh the cost and benefit of failing to meet climate targets, with the possibility of actually increasing emissions by paying other countries that will reduce their debt more, thus offsetting Israel’s paid emissions. The market mechanism will allow the government to remove much of the uncertainty about future political developments or international sanctions that may be imposed on countries that will not act to reduce their emissions as required.