Accelerating Climate Action Accelerating Climate Action in in Israel REFOCUSING MITIGATION POLICIES FOR THE ELECTRICITY, RESIDENTIAL AND TRANSPORT SECTORS Israel REFOCUSING MITIGATION POLICIES FOR REFOCUSING MITIGATION THE ELECTRICITY, RESIDENTIALELECTRICITY, AND TRANSPORT SECTORS Accelerating Climate Action in Israel REFOCUSING MITIGATION POLICIES FOR THE ELECTRICITY, RESIDENTIAL AND TRANSPORT SECTORS This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. Note by Turkey The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey shall preserve its position concerning the “Cyprus issue”. Note by all the European Union Member States of the OECD and the European Union The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus. Please cite this publication as: OECD (2020), Accelerating Climate Action in Israel: Refocusing Mitigation Policies for the Electricity, Residential and Transport Sectors, OECD Publishing, Paris, https://doi.org/10.1787/fb32aabd-en. ISBN 978-92-64-68251-1 (print) ISBN 978-92-64-42029-8 (pdf) Photo credits: Cover © vvvita/Shutterstock. Corrigenda to publications may be found on line at: www.oecd.org/about/publishing/corrigenda.htm. © OECD 2020 The use of this work, whether digital or print, is governed by the Terms and Conditions to be found at http://www.oecd.org/termsandconditions. 3 Foreword Israel, along with the rest of the world, is confronting an immediate health and economic crisis due to COVID-19, which is adding greater complexity to the low-carbon transition. The development of Israel’s long-term low emissions development strategy (LT-LEDS) has constituted an opportunity to align government action around the pursuit of a low-emissions future. This instrument is today, more than ever; key to support the alignment of near-term action with long-term goals. An integrated approach that addresses climate and well-being as part of a cohesive and coherent strategy is indispensable for making climate action more feasible, acceptable and cost effective as well as to avoiding further lock-in of emissions and inequalities. Developing sectoral policy packages in line with this approach – especially for sectors that are difficult or key to decarbonise - will be necessary. This will allow Israel to transform the economy, benefit from its capacity for technological innovation, and reach multiple well-being priorities while building its resilience towards future shocks, such as heat waves, droughts or other diseases. This report is part of a collaboration project between Israel’s Ministry of Environmental Protection and the OECD Environment Directorate to support the development of Israel’s LT-LEDS. The report is an input to governmental discussions in Israel to develop a roadmap that will back the implementation of Israel’s LT- LEDS. It analyses needed actions in the next five to ten years to align three sectors – electricity, residential and transport – with long-term climate objectives and broader well-being goals such as incomes, jobs, good and affordable housing, access to services and opportunities, health, and equity. Whilst written before the COVID-19 crisis, this report can inform decisions for Israel’s economic recovery, helping to ensure that stimulus packages do not risk locking the country into carbon intensive infrastructure and activities, but instead advance and catalyse long-term aims for well-being in the country, of which climate change mitigation is a pillar. This report can also serve as a resource for other governments, particularly as countries form stimulus packages to recover from COVID-19 and continue to work on longer-term instruments (such as revised Nationally Appropriate Mitigation Actions – NDCs or LT-LEDs). There are examples of national and sub- national governments who are using the recovery from COVID-19, as an opportunity to advance both climate and wider well-being goals, but this is far from ubiquitous. This OECD report provides an application of the well-being approach to climate change mitigation, which governments can use to increase viability and acceptance of climate action, while ensuring consistency across actions planned for different timeframes. Rodolfo Lacy OECD Environment Director ACCELERATING CLIMATE ACTION IN ISRAEL © OECD 2020 4 Acknowledgments This working paper is an output of the Climate, Biodiversity, and Water Division of the OECD Environment Directorate. It has been prepared under item 2.3.2.2.1 in the Programme of Work and Budget for 2019- 2020 of the Environmental Policy Committee (EPOC). The report was authored by Aimée Aguilar-Jaber, Brilé Anderson, Hélène Blake, Daniel Nachtigall and Fatoumata Ngom from the Climate Change Mitigation team of the OECD Environment Directorate (ENV). All authors contributed to the analysis and drafting of this report. Simon Buckle (ENV), Nicolina Lamhauge (ENV), and Aimée Aguilar-Jaber (ENV) supervised the preparation of the report. The authors would like to thank OECD colleagues for the input and comments on earlier versions of the report: Nils Axel Braathen (ENV), Gérard Bonnis (ENV), Lisa Danielson (ENV), Alexander Dobrinevski (ENV), Jane Ellis (ENV), Chiara Falduto (ENV), Florens Flues (CTP), Federico Giovannelli (ECO), Daniela Glocker (ECO), Andrés Fuentes Hutfilter (CFE), Katia Karousakis (ENV), Mireille Martini (ENV), Rokas Markunas (BIAC), Dimitrios Papaioannou (ITF), Stephen Perkins (ITF), Edward Perry (ENV), Marissa Plouen (CFE), Oliver Roehn (ECO), Dirk Röttgers (ENV), Will Symes (TAD), Aayush Tandon (ENV), Jonas Teusch (CTP), and Kurt Van Dender (CTP). In addition, the authors would like to thank Israeli colleagues for their contributions to earlier versions: Avital Eshet (Ministry of Environmental Protection), Yuval Laster (Ministry of Environmental Protection), Gil Proaktor (Ministry of Environmental Protection), and Ron Kamara (Eco Traders). The authors are also grateful for the oversight, review and comments by the Working Party on Climate, Investment, and Development (WPCID) and the Environment Policy Committee (EPOC). The final report benefited greatly from the assistance of Sama Al Taher Cucci (ENV) and Elodie Prata-Leal (ENV). Financial support from Ministry of Environmental Protection in Israel is gratefully acknowledged. ACCELERATING CLIMATE ACTION IN ISRAEL © OECD 2020 5 Table of contents Foreword 3 Acknowledgments 4 Abbreviations and acronyms 8 Executive Summary 10 1 Introduction 13 1.1. How to accelerate climate action in Israel 14 1.2. Aligning short-term actions with a low-carbon trajectory 17 References 20 Notes 22 2 Towards A Sustainable Electricity Sector for Israel 23 In Brief 24 2.1. Introduction 25 2.2. State of play and Israel’s electricity sector through a well-being lens 26 2.3. Policies for a sustainable electricity sector 31 References 42 Notes 49 3 Policies for a sustainable residential sector 51 In Brief 52 3.1. Introduction 53 3.2. State of play: Housing shortage and emissions from residential dwellings 54 3.3. Tackling emissions at the dwelling-level: Deep retrofits and sustainable new builds 57 3.4. Beyond the dwelling: Compact development with integrated infrastructure and green space considerations 70 References 86 Notes 92 4 Policies for a sustainable transport sector in Israel 95 In Brief 96 4.1. Introduction 97 4.2. Context: road transport in Israel 98 4.3. Limiting private cars’ emissions through a consistent pricing policy on fuels and vehicles 100 4.4. Improving road management and allocation will be key for lowering GHG emissions and enhancing life quality 111 ACCELERATING CLIMATE ACTION IN ISRAEL © OECD 2020 6 4.5. Public and active transport needs to be mainstreamed as an attractive alternative to private vehicles 118 References 131 Notes 134 Annex A. Public investment in Israel 137 Notes 142 FIGURES Figure 1.1. OECD Well-being Framework 17 Figure 2.1. Renewables and solar share of electricity generation across OECD countries in 2018 30 Figure 2.2. Share of electricity-related CO2 emissions priced above EUR 5 in 2015 32 Figure 2.3. Duck Curve and ramping requirements 38 Figure 3.1. Projected BAU GHG emissions MtCO2e from the use phase of residential dwellings 56 Figure 3.2. Percent of location efficient neighbourhoods and annual household emissions 57 Figure 3.3. Energy demand over time for hypothetical dwelling in Negev Desert 59 Figure 3.4. Upfront capital costs of complete retrofits in terms of monthly household disposable income of property owners in Israel (by income decile) 65 Figure 3.5. Rent and transport is only affordable for the top four income deciles in 2016 67 Figure 3.6. Framework for compact and sustainable cities 72 Figure 4.1. Impact assessment of policy scenarios on CO2 emissions from private cars 108 Figure 4.2. Impact assessment of policy scenarios on private car mileage 108 Figure 4.3. External costs, drivers of external costs and tax instruments 109 Figure 4.4. Vehicle use intensity per year in thousands of kilometre per road motor vehicle across OECD countries (in thousands vehicle-km per road motor vehicle) 110 Figure 4.5. Road traffic density per network length, 2014 or latest available year 113 Figure 4.6. Public transport use in Israel 119 Figure 4.7.