Carbon Pricing in Israel | Israel 2050 | A Thriving Economy in a Sustainable Environment | The Israel Democracy Institute | Israel Ministry of Environmental Protection
11 December 2022
In an ETS, the quantity of permits is predetermined and permit price is set by the market (in contrast to a carbon-tax mechanism, in which the price is predetermined and the quantity of emissions is set by the players in the market). [...] In recent years, following several targeted reforms (along with the rebound of the economy from the 2008 crisis), the ETS carbon price has been rising and reached over €50 in the EU countries in 2021.18 The EU ETS has succeeded in reducing emissions considerably, with the EU estimating a reduction of 21 percent in emissions quantity, in the sectors included in the ETS, over the period from the est. [...] The number of allowances given in each sector will be determined on the basis of a benchmark that reflects the average emissions of the 10 percent of enterprises that have the lowest emission intensivity in the sector. [...] By comparing the level of the excise with the external costs associated with the use of fuels, due to emissions of both air pollutants and greenhouse gases,53 the excise on fuels used for the electricity system and industry are found to be hundreds of percent lower than the external cost of the GHG emissions and air pollutants occasioned by these 52 Israel Tax Authority, January 2021 data. [...] Macroeconomic modeling of the effect of carbon pricing on carbon-emission mitigation by the energy sector and on growth in Israel This section presents the main conclusions of a macroeconomic study that used the MESSAGEix-IL-MACRO tool to model Israel’s energy system and to calculate the effect of imposing a carbon tax on the quantities and types of fuels consumed and the resulting GHG emissions a.