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Accelerating emission reduction in Israel: Carbon pricing vs. policy standards

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Accelerating emission reduction in Israel: Carbon pricing vs. policy standards

  1. 1. Accelerating emission reduction in Israel: Carbon pricing vs. policy standards Dr Ruslana Rachel Palatnik (YVC, UoH, IIASA) Dr Ayelet Davidovitch (TAU, IIASA) Dr Volker Krey (IIASA) Prof. Nathan Sussman (HU) Prof. Keywan Riahi (IIASA) Dr. Matthew Gidden (IIASA) SEMI-ANNUAL ETSAP MEETING 23-24/5/2022 Palatnik Ruslana Rachel, Davidovitch Ayelet, Volker Krey, Nathan Sussman, Keywan Riahi, and Matthew Gidden. (Forthcoming) Is carbon pricing more efficient than policy standards? Insights from a co-production of knowledge process in Israel. Energy Strategy Reviews, Elsevier
  2. 2. National Development Targets of OECD countries submitted to UNFCCC Portugal GHG emissions by 2050: 85%, compared to 2005, and ensuring an agricultural and forestry carbon sequestration Norway Net 0 by 2030 Sweden Net 0 by 2045 with a 15% offset limit Denmark Net 0 GHG by 2050 UK Net 0 GHG by 2050 France 75% reduction of GHG emissions by 2050, compared to 1990, with detailed sector targets. -the goal to net 0 is under consolidation Germany 80% - 95% GHG emissions reduction by 2050, compared to 1990, EU Green Deal net zero GHG emissions by 2050. Japan, 2050 target (80% reduction from current levels) Canada 80% below 2005 levels Ruslana Rachel Palatnik 2 Israeli policy makers question the need for active climate policy: • Israel contributes only about 0.5 percent to global emissions of greenhouse gases (GHGs). • From coal to natural gas • Solar is the main renewable energy (RE) with high intermittency Too expensive! What target is not too expensive?
  3. 3. Research structure Ruslana Rachel Palatnik 3 Carbon tax Higher share of RE in power gen. 100% elect. trans. 2050 Zero coal start. 2030 Baseline scenarios Policy scenario Cost of policy vs baseline in terms of GDP Scenarios for energy related GHG emission reduction Ambitious policy scen. Link to MACRO From MESSAGEix global to MESSAGEix-IL Update of data for Israel Min. of Energy Min. of Transport Planning Administration Min. of Economy and Industry
  4. 4. Oil import Coal import Gas extraction Renewables (RE) Power Plant Refinery Consumer PRIMARY SECONDARY FINAL USEFUL Conversion Conversion Transmission & Distribution - oil - gas - coal - RE - lightoil - fueloil - gas - electricity - lightoil - fueltoil - gas - electricity - Transport - Residential- commercial (RC) electric - RC thermal - industry electric - industry thermal - industry feedstock T&D Network Overview of MESSAGEix_IL Energy System Ruslana Rachel Palatnik 4 Export - lightoil - fueloil - gas Objective: The least cost option for meeting certain services (demand) over the modeling period Open model, data and documentation https://docs.messageix.org
  5. 5. Ruslana Rachel Palatnik Iteration between MESSAGEix-MACRO MESSAGEix prices MACRO Quantities of energy demand MESSAGEix prices MACRO Quantities of energy demand 5 MESSAGE-MACRO is a linked model that reflects the influence of energy supply costs on the wider economy and vice versa.
  6. 6. MESSAGEix-GLOBIOM MESSAGEix-IL Data Source Population growth Medium and high scenarios CBS (2017) GDP growth Medium (BOI, 2019); High (IEC, 2017) Energy prices till 2030 World Bank 2019 Energy prices 2031-2050 EIA 2019 Interest rate Israeli National Economic Council Energy taxes Israel Ministry of Energy, Fuel Department (4/ 2019) Coal power generation Israel Ministry of Energy Chief Scientist Storage costs Israel Ministry of Energy Chief Scientist NG Capital cost and OM cost Ministry of Energy Chief Scientist Coal Capital cost and OM cost Ministry of Energy Chief Scientist Solar Capital cost and OM cost Ministry of Energy Chief Scientist Technology efficiency Ministry of Energy Chief Scientist Power plants lifetime Ministry of Energy Chief Scientist NG reserves Adiri committee 2018 NG export till 2050 Adiri committee 2018 Historical data on energy balance, Israel EIA, IEA and CBS Elasticities of electricity demand MESSAGE-GLOBIOM & BOI (Galo 2017) Emissions factors Ministry of Environmental Protection Carbon Tax EPA (2015) Electricity Transportation Ministry of Energy Renewable energy goals Ministry of Energy Roadmap 2030 and PUA (2019) Ruslana Rachel Palatnik 6
  7. 7. Policy dimension Baseline Policy Standards Carbon Pricing Socio - economic Population (average annual growth) 1.7% (CBS, 2017) Follows baseline GDP (average annual growth) 2.5% (Argov & Tsur, 2019) Power generation RE 17% from 2030 on 85% in 2050 No green policy Targets Coal Reduction of the capacity of coal power plants by 2030, remaining 3400 MW available till 2050 Graduate reduction to 0 by 2030 NG export of 25% of reserves by 2050 No limit on NG capacity after 2025 Electric Transport 30% in 2050 100% in 2050 Carbon tax (Average annual in a 5-year period, per ton CO2eq) No Carbon Pricing No Carbon Pricing 2020 $0 2025 $23.3 2030 $48 2035 $53 2040 $58 2045 $62 2050 $67 2055+ $69
  8. 8. 0 100 200 300 400 500 600 700 0 10 20 30 40 50 60 70 80 90 100 2015 2020 2025 2030 2035 2040 2045 2050 Bil USD 2015 Mil ton CO2 eq GDPbase GHGs_base Baseline: GHG emissions and GDP Ruslana Rachel Palatnik 8 30% 140%
  9. 9. 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 0 1 2 3 4 5 6 7 8 9 2015 2020 2025 2030 2035 2040 2045 2050 USD per capita ton CO2 eq GDP/CapitaBase_I GHG/CapitaBase_I Baseline: GDP and GHG per capita Ruslana Rachel Palatnik 9 - 37% 30%
  10. 10. Ruslana Rachel Palatnik 10 0% 18% 17% 18% 21% 25% 29% 35% 0% 17% 15% 6% -3% -11% -21% -40% 0% 10% -1% -23% -39% -49% -63% -67% 0% 9% -1% -23% -49% -62% -71% -72% -80% -60% -40% -20% 0% 20% 40% 2015 2020 2025 2030 2035 2040 2045 2050 Baseline Policy Tax Policy+Tax GHG% relative to 2015 and GDP % relative to baseline * ‫האנרגיה‬ ‫ממשק‬ ‫הנובעות‬ ‫פליטות‬ ( ‫כ‬ 85% ‫פליטות‬ ‫מכלל‬ ‫גז‬ " ‫ח‬ )
  11. 11. Ruslana Rachel Palatnik 11 -0.35% -0.30% -0.25% -0.20% -0.15% -0.10% -0.05% 0.00% 2020 2025 2030 2035 2040 2045 2050 Tax The estimated direct economic cost of tax policy in terms of GDP
  12. 12. Ruslana Rachel Palatnik 12 Baseline Energy mix in power generation TWh 0 20 40 60 80 100 120 140 160 2015 2020 2025 2030 2035 2040 2045 2050 2015 2020 2025 2030 2035 2040 2045 2050 2015 2020 2025 2030 2035 2040 2045 2050 2015 2020 2025 2030 2035 2040 2045 2050 POLICY Tax POLICY+Tax TWh gas coal oil solar wind bio
  13. 13. The whole story in 3 energy indicators Ruslana Rachel Palatnik 13 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0 0.01 0.02 0.03 0.04 0.05 0.06 2015 2020 2025 2030 2035 2040 2045 2050 TFC /GDP toe per thousand USD 2015 Energy intensity, share of electricity in final energy mix, and share of RE in power generation energy intensityPol share electricity inTFC RE in Elec
  14. 14. Energy mix in transportation according to scenarios Ruslana Rachel Palatnik 0 50 100 150 200 250 300 2015 2020 2025 2030 2035 2040 2045 2050 2015 2020 2025 2030 2035 2040 2045 2050 2015 2020 2025 2030 2035 2040 2045 2050 2015 2020 2025 2030 2035 2040 2045 2050 BASELINE_I POLICY Tax POLICY+Tax PJ electr biofuel gas lightoil synthetic fuel 14
  15. 15. Carbon tax revenue as % of public income Ruslana Rachel Palatnik 15 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 2025 2030 2035 2040 2045 2050 %Tot_TaxInc_Tax * ‫האנרגיה‬ ‫ממשק‬ ‫הנובעות‬ ‫פליטות‬ ( ‫כ‬ 85% ‫פליטות‬ ‫מכלל‬ ‫גז‬ " ‫ח‬ ) year $ per ton CO2eq 2020 $0 2025 $23.3 2030 $48 2035 $53 2040 $58 2045 $62 2050 $67 2055+ $69
  16. 16. Discussion Ruslana Rachel Palatnik 16 • Only energy related GHG emissions are analyzed • Only direct costs of the transition are evaluated • Related benefits for health, productivity, are not in the model BUT • Khan et al (2019) analyzed climate impact on countries’ productivity • Israel will lose 1.15% GDP per capita in 2050 in case of “no global climate mitigation policy” • Israel will gain 0.24% GDP per capita in 2050 in case of “global climate policy
  17. 17. Conclusions Ruslana Rachel Palatnik 17 • Carbon tax speeds up phase-out of oil in transport and decarbonization of industry • Another important step for decarbonization is diverting energy production from the use of polluting fossil fuels to RE while electrifying the economy. • The improved efficiency and transition to RE are partly due to the exogenous targets for RE in power generation and full electrification of transport and are partly due to the imposition of a carbon tax. • Relatively low carbon tax values reduce energy-related GHG to 33% in 2050 compared to 135% in the Baseline with only a minor impact on GDP growth.
  18. 18. A personal note Ruslana Rachel Palatnik 18 • For years public policy in Israel ignored environmental considerations. • In the past year there was a wind of change • Carbon tax is a part of the government budget • Yet geopolitical tensions, energy prices, and other political circumstances might humper the progress • The public, decision-makers and policymakers should internalize environmental impacts in our decisions. • We need to understand that there is a synergy in economic and sustainability goals, not a contradiction.
  19. 19. Within crisis, are the seeds of opportunity -Marilyn Monroe Ruslana Rachel Palatnik 19 Ruslana Rachel Palatnik rachelpa@yvc.ac.il
  20. 20. ‫לדיון‬ ‫נוספים‬ ‫שקפים‬ Ruslana Rachel Palatnik 20
  21. 21. ‫תמהיל‬ ‫הדלקים‬ ‫תרחיש‬ ‫לפי‬ ‫חשמל‬ ‫ביצור‬ Ruslana Rachel Palatnik 21 0 20 40 60 80 100 120 140 160 2015 2020 2025 2030 2035 2040 2045 2050 2015 2020 2025 2030 2035 2040 2045 2050 2015 2020 2025 2030 2035 2040 2045 2050 2015 2020 2025 2030 2035 2040 2045 2050 POLICY Tax POLICY+Tax TWh gas coal oil solar wind bio Baseline 65% ‫סולארי‬ 35% ‫גז‬ 85% ‫סולארי‬ 15% ‫גז‬ 17% ‫סולארי‬ 83% ‫גז‬ 85% ‫סולארי‬ 15% ‫גז‬
  22. 22. Ruslana Rachel Palatnik 22 0 0.01 0.02 0.03 0.04 0.05 2020 2025 2030 2035 2040 2045 2050 BASELINE POLICY TAX Policy+Tax ‫האנרגיה‬ ‫יחס‬ ( ‫אנרגטית‬ ‫עתירות‬ :) ‫לתוצר‬ ‫סופית‬ ‫אנרגיה‬ ‫צריכת‬ ‫בין‬ ‫היחס‬
  23. 23. GDP and GHG emissions in Baseline I, Policy and Ambitious policy scenarios Ruslana Rachel Palatnik 23 0 100 200 300 400 500 600 700 0 10 20 30 40 50 60 70 80 90 100 2015 2020 2025 2030 2035 2040 2045 2050 Bil USD PPP 2015 Mil ton CO2eq Baseline 1 GDP Policy GDP GDP_AmbPol Baseline 1 GHGs Policy GHGs GDP_AmbPol

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