Israel’s Paris climate change commitment: Is it enough?

If Israel is the world’s “start-up nation” which prides itself on innovation, why is it not leading the world toward a zero-carbon future?

January 20, 2016 21:11

OIL DERRICKS.. (photo credit: REUTERS)

At the Paris climate talks December last year, Prime Minister Benjamin Netanyahu announced that 17 percent of the electricity generated in Israel will be from renewable sources by 2030.

This target is half of the global country average announced at the conference. The question arises whether this target is sufficient for a country such as Israel from an economic, social and environmental perspective.

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First let us consider that renewable energy is now cheaper than new coal and gas power generation. In addition, transportation fuels when coupled with electric vehicles is significantly cheaper on a per km basis than petroleum or diesel cars. Energy storage technologies have also seen significant cost reductions and offer a competitive alternative to gas, nuclear and coal when coupled with solar or wind energy.

So if Israel is the world’s “start-up nation” which prides itself on innovation, why is it not leading the world toward a zero-carbon future? When one looks at the evidence, it is clearly in Israel’s self-interest to do more. In many respects the issue of climate change distorts the debate and separates the “greenies” who are focused on environmental impacts from the “capitalists” who are focused on the financial consequences of this debate. It is time to re-frame the debate and accept that all three key issues – environmental, social and economic – are equally important and impacted by one another.

Dr. Eugene Kendel, adviser to the prime minister on economic issues, evaluated the costs and benefits of renewable energy and concluded that there are significant financial benefits of switching from coal and gas to solar and wind. Prof. Yaron Zelika, previously director-general of the Finance Ministry, found that the total benefit of Solar PV on rooftops is between NIS 1.0847 per kWh and NIS 1.153 per kWh, significantly higher than the costs and thus there is a net benefit to the economy.

Some say that the new gas discoveries off the Israeli coast should be given priority over solar and wind energy. In fact the government has confirmed that it will continue to contribute to a partial switch from coal to natural gas in Israel’s fuel mix as part of their contribution to greenhouse gas emissions reduction.

However, according to various reports, including one by Deutsche Bank and by the US government’s Environmental Protection Agency, pound for pound, the comparative impact of CH4 on climate change is more than 25 times greater than CO2 over a 100- year period. Physicians for Social Responsibility point out that we haven’t taken into account the leakage of methane during mining or transport. Leaks occur when the well is drilled, during transport in pipelines, at storage sites, or when methane is pumped into the fancy new natural gas-powered buses. Thus much of the potential benefits of switching coal with gas are canceled out by methane leaks. Case in point is the recent gas leak in California late last year when thousands of residents in Southern California were displaced as a result of a major methane leak from an underground gas pipe.

So what should Israel’s renewable energy targets be? According to a Stanford University research project headed by Prof. Mark Jacobson, professor of civil and environmental engineering and director of its Atmosphere and Energy Program, the transition to 100% renewables (wind, water and sun) for all purposes (electricity, transportation, heat/cooling, industry) with no nuclear, gas, coal or liquid fuels is not only possible by 2050 globally but is the lowest-cost option.

Their study has gained widespread support from government, corporations and civil society.

The conclusions of this study are that projected demand in Israel under a business as usual scenario shows a capacity requirement of 27.0 GW, while by implementing the study’s recommendations, peak capacity will reach only 16.8 GW.

Israel can achieve the 100% renewable goal by 2050 with the following energy mix: residential rooftop solar 5.7% or 0.9576 GW, large solar plants 47.5% or 7.98 GW, concentrated solar plants with storage 20% or 3.36 GW, onshore wind, 10% or 1.68 GW, offshore wind 3% or 0.504 GW, commercial and government rooftop solar 13.7% or 2.3 GW and tidal turbines 0.1% or 0.168 GW.

Under this plan 37,484 operational jobs and 35,321 construction jobs will be created, avoided health costs per year of $26.3 billion are saved, or 4.3% of GDP and every year, 2,526 air pollution deaths are avoided. The plan pays for itself in as little as 1.2 years from air pollution and climate cost savings alone.

This can be achieved with only a 2.19% footprint area and 2.40% spacing area of the entire country. In the business as usual scenario average fossil-fuel energy costs* are 10.8 c/kWh (*Health and climate external costs of fossil fuels are another 5.7 c/kWh); average wind, water and sun electricity costs 7.3 c/kWh, annual energy, health, and climate cost savings are $6,807 per person by 2050 and annual energy cost savings per person $354 in 2050.

Even according to world energy expert Peter Lilenthal, who says that 100% is not necessary and perhaps counterproductive, still his research establishes an economic case for integrating high contributions of around 80% of renewable energy into the grid.

What can Israel do to achieve more ambitious targets? Firstly, Israel should revise the renewable energy and fossil fuel generator procurement process, by removing per-technology quotas and allowing solar and wind to compete directly with gas and coal without limitations.

Furthermore, the regulator should issue reverse tenders or a competitive bidding process.

Secondly, implement investment tax credits and a loan guarantee program. These are the key incentives that have enabled the US to become the world leader in renewable energy technological innovation; it is expected to deploy more renewable energy than any other country outside of China over the next 10 years. By adopting programs developed by the US, Israel will further strengthen its ties with the US on a strategic level beyond the security industry.

Third, monitor and measure implementation of government decisions which the Knesset has already enacted such as decisions to curb climate change and advance the implementation of renewable energy.

Fourth, Israel could implement a carbon tax or price carbon for producers. A carbon tax is considered the lowest-cost mechanism to level the playing field between renewable energy and fossil fuels.

Countries that have either implemented a carbon tax or are planning to implement one include: Ireland, Australia, Chile, Sweden, Finland, Great Britain, New Zealand, Quebec, Canada and British Columbia, Canada.

Fifth, fund deployment of existing proven technologies for electric vehicles. Government Resolution 2580 (2007) encourages fuel-free transport, a bill that should be implemented without delay.

Sixth, support large-scale deployment of Israeli storage technologies.

Energy storage technologies coupled with renewable energy developed in Israel should be provided with loan guarantees enabling them to obtain private investments.

Seventh, establish dedicated training courses for energy project development, since highly skilled energy project management professionals are difficult to find which lowers the success rates of projects.

Eighth, financial institutions should adopt the Principles for Responsible Investment and United Nations Environmental Program’s Financial Initiative. Currently there are no Israeli financial institutions signed up to these global initiatives promoting the investment in renewable energy. Regardless of your view on the UN when it comes to Israel, on the topic of renewable energy the UN has got it right. Major global asset managers and financial institutions such as Allianz, ABP, ABN AMRO, Barclays Group, JP Morgan Chase & Co., Lloyd’s, Royal Bank of Canada, Royal Bank of Scotland, BNP Paribas and HERMES Investment Management have signed on. HSBC recently advised its clients to divest from fossil fuels and Norway’s massive $850b. sovereign wealth fund has divested from 114 companies in recent years, aimed mostly at steering clear of coal companies.

As part of their fiduciary duties Israeli financial institutions could be required to manage risks associated with the impacts of climate change. The legal framework on corporate governance exists so there is no legal reason why this cannot be implemented.

Lastly, Israeli companies could sign onto the 100% Renewable Energy initiative which dozens of global companies have pledged to implement. This initiative requires that companies purchase 100% of their energy from renewable sources within the next 10 years. Companies that have already made this commitment include IKEA, Swiss Re, Adobe, Coca Cola, Goldman Sachs, Google, H&M, Johnson & Johnson, Microsoft, Nestle, Nike and many more. Bill Gates, Mark Zuckerberg and Richard Branson, have setup an organization called the Breakthrough Energy Coalition. This could be an excellent platform for the top 100 companies on the Tel Aviv Stock Exchange, and the top 100 hi-tech companies, to join. The companies are making these commitments because it is good for shareholders.

In conclusion, based on the research that has been conducted evaluating the costs of carbon emissions, the debate is no longer only about climate change but rather about economic growth, health costs, jobs and energy security.

It is time for Israel to accelerate the adoption of renewable energy technologies which will in turn incentivize private investments into the sector in the local economy creating jobs, tax revenues, technological innovation and as a result foreign exports and foreign reserves. By going down this path, Israel, the world’s start-up nation, can then claim its world leadership position in a new technologically driven world and lead the transition to a clean energy system.

The author is a serial entrepreneur and currently CEO of Brightmerge.

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