Highlights-OECD Environmental Performance Reviews: Israel 2023

Israel 2023 HIGHLIGHTS

OECD ENVIRONMENTAL PERFORMANCE REVIEW OF ISRAEL

THE OECD

The Organisation for Economic Co-operation and Development (OECD) provides its 38 member countries with a forum to work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to help governments respond to new developments and concerns. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies.

WHAT ARE EPRs?

The OECD Environmental Performance Reviews (EPRs) provide evidence-based analysis and assessment of countries’ progress towards their environmental policy objectives. They promote peer learning, enhance government accountability, and provide targeted recommendations to help countries improve their environmental performance. They are supported by a broad range of economic and environmental data. Over the last 30 years, the OECD has conducted over 100 EPRs of OECD members and selected non-member countries.

All reports, and more information, are available on the EPR website: http://oe.cd/epr.

THE SECOND EPR OF ISRAEL

This is the second Environmental Performance Review (EPR) of Israel. The previous one took place in 2011. The EPR reviews the country’s environmental performance in the last decade. The process involved a constructive and mutually beneficial policy dialogue between Israel and the countries participating in the OECD Working Party on Environmental Performance (WPEP). The OECD is grateful to the two examining countries: Germany and Greece.

The EPR provides 24 recommendations, approved by the WPEP on 5 December 2022. It aims to help Israel improve environmental performance, with a special focus on waste management and circular economy. http://oe.cd/epr

KEY ENVIRONMENTAL INDICATORS 2021 (or latest available year)

Energy intensity – Total energy supply per capita

2.3 toe per capita (OECD average is 3.8)

Renewables (% of total energy supply)

5% (OECD average is 12)

GHG intensity – GHG emissions per capita

8.8 t CO2 eq. per capita (OECD average is 10.5)

Mean population exposure to PM2.5

19 μg/m3 (OECD average is 14)

Municipal waste per capita

691 kg per capita (OECD average is 534)

Material recovery of municipal waste (% of composting and recycling in total treatment)

20.7% (OECD average is 34.3)

Material productivity (USD, 2015 PPPs/Domestic material consumption, kg)

1.8 USD/kg (OECD average is 2.5)

Wastewater treatment (% of population connected to tertiary treatment)

56% (OECD average n.a.)

Environmental protection expenditure (% of GDP)

0.6% (OECD average is 0.5)

Share of CO2 emissions priced above EUR 60/tCO2 (including emissions from biomass)

21.6% (2021, OECD average is 14.1)

R&D budget for environment and energy (% of total government R&D budget)

1.2% (OECD average is 6.3%)

Road vehicle stock

40 vehicles/100 inhabitants (OECD average is 67)

Overview

Israel is a small, open economy, with a high degree of biological diversity. Gross domestic product (GDP) per capita has been increasing, converging towards the OECD average. Water scarcity is a major concern, leading Israel to pioneer the development of a range of water-related technologies.

Israel’s fast economic and population growth along with a high degree of urbanisation continue to exert significant pressure on the environment. Meanwhile, the country has managed to slowly decouple several environmental pressures from economic growth, including both total and per capita greenhouse gas (GHG) emissions and air emissions of key pollutants. In recent years, Israel has raised its climate ambitions with national and sectoral GHG emissions reduction targets. However, it is not on track to reach these targets.

The country’s biodiversity continues to suffer from habitat fragmentation, invasive alien species, over-exploitation of water resources and pollution. Addressing these issues, as well as adapting to the impacts of climate change, requires further action. Israel has taken a number of key steps to advance its zero waste and circular economy agenda. However, further efforts are required to improve waste management and introduce an economy-wide shift to a circular economy.

ISRAEL 2021

(or latest available year)

Population: 9 million

GDP per capita: USD 44 000 (current purchasing power parities) (OECD average is 49 000)

Total land area: 22 000 km2

Population density: 425 inhabitants/km2 (OECD average is 37)

Currency: USD 1 = ILS 3.23

* Note: rounded figures.

Key recommendations

CLIMATE AND AIR QUALITY POLICIES

• Adopt a law on climate with legally binding GHG reduction and renewable energy production targets; promote and remove administrative barriers for solar power installations, mindful of the need to preserve open spaces and biodiversity; accelerate integration of renewable sources into the electric grid.

• Develop a coherent interagency strategy for a lowcarbon transition in the transport sector, enhancing the role of local governments; strengthen links between transport and land-use planning.

• Accelerate implementation of the mandatory Sustainable Building Standard for all new buildings; establish energy efficiency standards for existing buildings.

NATURAL RESOURCE MANAGEMENT

• Adopt and implement a national biodiversity strategy and action plan with measurable targets; pursue better mainstreaming of biodiversity protection into sectoral policies, particularly agricultural, including regulatory measures to stem the introduction and spreading of invasive alien species.

• Protect terrestrial ecosystems outside national parks and nature reserves by minimising urban sprawl and integrating ecological corridors into spatial planning.

• Continue to reduce freshwater consumption in agriculture through better water allocation planning and price signals; reduce nutrient loading from agriculture through stricter requirements for fertiliser application, taxes on fertilisers, awareness raising and training for farmers.

REGULATION AND COMPLIANCE ASSURANCE

• Establish a comprehensive system of environmental assessment of all projects, policies, plans and programmes with a potentially significant environmental impact, including climate change mitigation and adaptation effects, that would provide for consideration of alternatives and broad public participation.

• Adopt the Environmental Licensing Law to consolidate environmental permits and pursue further cross-media integration of permit conditions on the basis of best available techniques.

ECONOMIC INSTRUMENTS AND INVESTMENT FOR GREEN GROWTH

• Implement a carbon pricing framework, making sure the increased excise tax rates are commensurate with the fuels’ carbon content; phase out excise tax rebates for diesel and eliminate subsidies for natural gas producers.

• Increase the landfill levy to provide a greater incentive for waste reduction and recycling; gradually raise water tariffs for agriculture while preserving and strengthening incentives for farmers to use recycled wastewater for irrigation.

• Ensure that environment-related economic instruments (fuel and vehicle taxation, water tariffs) consider impact on low-income households and ensure targeted measures to address affordability issues where they arise.

WASTE MANAGEMENT AND CIRCULAR ECONOMY

• Implement the Sustainable Waste Economy Strategy for 2030; create comprehensive and coherent framework legislation aligned with the strategy’s quantitative targets to ensure common statutory definitions and market certainty, set targets and provide regulatory tools.

• Establish a roadmap towards a circular economy to define clear objectives and actions across sectors and government departments, anchored in framework legislation.

• Move from waste to resource management by starting to develop higher-value material loops, whereby materials are recovered, reclaimed, recycled or biodegraded through natural or technological processes, and fostering eco-design, repair and reuse; mainstream resource efficiency goals into governmental policy related to climate change, innovation, education, etc.

• Set up incentives for separate collection of waste streams and recycling, such as deposit-refund schemes and weight-based disposal fees differentiated by collection bin; gradually introduce pay-as-you-throw schemes for waste handling to separate waste collection fees from municipal taxes as a way to incentivise waste reduction and separation of recyclables at the level of households.

Towards sustainable development

ENVIRONMENTAL PERFORMANCE: KEY TRENDS

Decoupling has started to emerge. Israel’s carbon footprint was increasing steadily over 2014-20 but started to decline in recent years. Both total and per capita GHG emissions and air emissions of key pollutants have decoupled slowly from GDP, mostly due to the rapid replacement of coal by natural gas in the energy mix.

develop a coherent interagency strategy for a lowcarbon transition in the transport sector and prioritise investment in public transport.

Israel’s share of renewables in the energy mix (5%) was the second smallest in the OECD (average 12%) in 2021.

climate induced natural disasters. Few municipalities are neutrality by 2050. However, Israel is not on track to reach

Climate ambition has grown, but the country is not on track to reach targets. Israel has raised its climate ambitions in recent years. It has set an 85% GHG reduction target for 2050, as well as sectoral targets for GHG emissions from electricity generation, solid waste, transport and industry, before declaring the overall ambition of carbon neutrality by 2050. However, Israel is not on track to reach these targets with existing measures (Figure 1).

Attainment of climate goals requires robust measures across all sectors. Electricity production is the largest source of GHG emissions in Israel, followed by transport, manufacturing and construction. Although the solar generation capacity has been expanding in recent years, it is facing barriers such as limited land availability. To address the country’s high car dependency, Israel should

Climate change adaptation efforts are at an early stage. In 2018, the government created a Climate Change Adaptation Administration under the Ministry of Environmental Protection (MoEP) to elaborate strategies and action plans to increase Israel’s resilience to climate change. Moreover, climate change has recently been integrated into the aggregate national threat assessment. However, adaptation measures tend to focus on technological rather than naturebased solutions to prevent climate changeinduced natural disasters. Few municipalities are proactive in adaptation efforts.

Air pollution has improved but remains a problem in several areas. Emissions of all key air pollutants have been steadily declining over the last decade due to reduced combustion of coal and implementation of the 2011 Clean Air Law. However, exposure to particulate matter pollution remains one of the highest among OECD countries. The 2022 national programme for the

Figure 1. Meeting the 2030 and 2050 climate targets will require substantial new measures in Israel GHG emissions trends, projections and targets

Note: GHG emissions exclude land use, land-use change and forestry. Dashed lines refer to emission projections according to the business-as-usual (BAU) scenario. Dotted lines refer to trajectories towards 2030 and 2050 GHG reduction targets with abatement measures according to Government Decision 171/2021.

Sources: Country submission; Government of Israel (2021), Updated Nationally Determined Contribution under the Paris Agreement; OECD (2022), “Air and climate: GHG emissions by source”, OECD Environment Statistics (database); UNFCCC (2022), Israel National GHG Inventory 2021.

Israel’s gross freshwater abstraction per capita (138 m3/ capital year) is among the lowest in the OECD (average 691).

reduction of air pollution sets new emission reduction targets for 2030, with a range of sectoral measures.

Biodiversity protection should go beyond protected areas and be mainstreamed across sectoral policies. The increasing demand for new housing and infrastructure is putting more pressure on open natural landscapes and adding to land scarcity and habitat fragmentation. Israel is making progress in expanding protected areas. However, most vulnerable ecosystems are under significant stress outside protected areas. The country should pursue better mainstreaming of biodiversity protection into sectoral policies, and intensify efforts to protect terrestrial ecosystems outside national parks and nature reserves by minimising urban sprawl.

Almost 60% of indigenous mammal species are threatened in Israel (highest share in the OECD).

Pressure on the availability of freshwater resources is easing, but water quality needs improvement. Israel is one of the most water-stressed countries in the world, with agriculture accounting for over half of water consumption. It has invested massively in large-scale reuse of wastewater and desalination of seawater, which together account for almost half of the total water supply (Figure 2). Israel is the largest user of recycled effluent water for agriculture in the OECD; desalination secures the country’s supply of potable water. However, both surface water and groundwater remain polluted. Israel needs to continue to reduce freshwater consumption in agriculture, reduce nutrient loading and complete upgrades of its wastewater treatment infrastructure.

Figure 2. Israel’s wastewater reuse and seawater desalination are reducing freshwater scarcity

: Panel A – Water stress = total freshwater abstraction as percentage of total renewable water resources. A water stress higher than 40% indicates serious water scarcity and shows unsustainable water use.

Environmental governance and management

Israel’s environmental regulatory framework is fragmented and in part outdated. Environmental assessment does not yet cover all projects, policies, plans and programmes with a potentially significant environmental impact. The country’s environmental permitting system is governed by several disparate issuespecific laws. Adopting the draft Environmental Licensing Law would be an important step towards substantive integration of environmental permit conditions.

Compliance assurance is improving but remains mostly reactive. The country’s environmental compliance monitoring and enforcement capacity has increased over the last decade but remains insufficient. Inspections are mostly prompted by incidents or

complaints. Israel should strengthen risk-based targeting of compliance monitoring and engage in more active compliance promotion. It also needs to improve compliance-related reporting and data management.

Remediation of contaminated sites is hindered by a regulatory gap. Israel has made progress in creating a methodological framework for remediation of contaminated sites. However, draft legislation on preventing and remediating land contamination has been stalled for many years. The issue of securing funds for remediation of the contaminated environment remains unresolved. Moreover, remediating sites where the responsible party is either unknown or insolvent is a challenge in the absence of appropriate legislation.

Investment and economic instruments for green growth

Fossil fuel taxes and subsidies do not facilitate a low-carbon transition. Environmentally related tax revenue represented 2.3% of GDP and 7.7% of total government revenue from taxes and social contributions in 2020 (Figure 3). Excise taxes on motor fuels are among the highest among OECD countries. However, other fossil fuels have so far been taxed at very low rates. Israel is planning to gradually increase excise taxes on other fossil fuels so that carbon pricing would cover about 80% of its GHG emissions. Fossil fuel subsidies increased over the past decade. They include consumer subsidies through excise tax rebates on diesel fuel for buses, taxis, and several other vehicle categories, as well as support for natural gas producers. These subsidies should be phased out.

Taxes and charges increasingly account for environmental externalities. Israel has made some progress in applying charges to pollution, such as wastewater or waste discharges into the sea. It started applying a charge on single-use plastic utensils in 2021. Congestion charges are also expected to be introduced in Tel Aviv in 2025. Despite those efforts, the landfill levy is not high enough to support the goal of reducing municipal solid waste landfilling.

Water tariffs ensure recovery of costs of service provision. The Israeli water sector has almost achieved financial autonomy. The 2017 amendments to the Water Law removed tariff differentiation between sources.

However, treated wastewater for irrigation is still significantly subsidised to encourage farmers to use it instead of freshwater, contributing to the decrease in average price of water for agriculture.

Environmental investments have been substantial but need scaling up for solar energy and electric vehicles (EVs). Israel has made significant investments in solar power generation, including in the residential sector. It has also had some success in promoting public transportation, including railways. The low-carbon transition requires the country to ramp up investments in these sectors. Israel should develop and implement a medium-term investment plan for the production, storage and transmission infrastructure for solar-based electricity. To address the slow and limited uptake of EVs, it should accelerate investment in charging infrastructure.

Environmental risks started to be incorporated into the financial system. In Israel, companies are now required to include environmental risks in their stock exchange prospectuses. In 2021, the country’s financial regulator required institutional investment firms to incorporate environment, social and governance criteria into their investment policies. However, Israel has not yet made use of sustainable financing instruments, such as green bonds, that could facilitate the transition to a low-carbon economy.

Just transition requires continuous measures to mitigate social inequalities. Israel is among the OECD member countries with the most income inequality. Poverty is widespread, especially among Arab-Israeli and Jewish ultra-orthodox communities, exacerbating inequality and poor environmental performance. A 2021-26 whole-of-government Arab Society Programme allocated about ILS 550 million for a just transition towards a circular and low-carbon economy.

Among total vehicles registered in Israel in 2020, only 0.1% were EVs and 6% were hybrid vehicles.

Figure 3. Environmentally related tax revenues in Israel are growing slower than GDP and total tax revenue Environmentally related tax revenue by tax base, 2005-20

Waste management and circular economy

Waste generation and landfilling continue to grow. Israel aspires to “zero waste” by 2050. However, Israel’s sustained economic and population growth over the past decade and the absence of robust waste management policies have contributed to growing municipal solid waste (MSW) levels. The share of both landfilling (80%) and recovery (20%) have remained stable over 2010-20 (Figure 4). Growing waste generation, high landfilling rates and poor separation of bio-waste all contribute to making the waste sector a significant emitter of GHG emissions. The Sustainable Waste Economy Strategy (2021-2030) aims to reduce the share of total MSW landfilled to 20% by 2030.

Israel has made limited progress on waste management laws and regulations. Israel has taken a number of key steps to advance its zero waste and circular economy agenda. These include establishing a tax on certain single-use items, broadening the depositrefund scheme and adopting a Packaging Law. The government has also made progress in fighting illegal waste dumping. However, illegal open burning of waste persists in certain areas of the country. The “patchwork” of laws and regulations, combined with the absence of harmonised definitions, hinder efficient and effective waste management, policy making and implementation.

An economy-wide approach is needed to shift to circularity. The government has launched several circular economy initiatives, including a 2019 National Programme for a Circular Economy in Industry. However, there is no consolidated national circular economy plan. A roadmap towards a circular economy with clear objectives and targets could introduce a life-cycle perspective to policies and projects. Bridging the data gap on material flows, resource efficiency, material exports and imports would help identify most resourceintensive sectors and take targeted actions to promote circularity.

Local governments are not sufficiently engaged in the circular transition and waste management. Strengthening the role of municipalities will be key to achieving recycling targets and applying circular economy principles in areas such as built environment. Separate waste collection is not widely practised, largely due to insufficient economic incentives and a lack of recycling infrastructure. The central government should provide local authorities with regulatory and technical support and build their capacity.

Figure 4. Growing municipal solid waste generation and persistently high landfilling rate increase total volume of landfilled waste in Israel Municipal waste collected by treatment type, 2010-20

Note: Municipal waste includes household waste and similar waste collected by or on behalf of municipalities. It includes bulky waste and excludes construction waste and sewage waste. Breakdown data for recycling and composting are available from 2013.

Full potential of waste management tools has yet to be leveraged. Existing economic instruments for waste management do not provide sufficient incentives for behavioural change. The total cost of landfilling in Israel is lower than that of more sustainable treatment methods such as incineration with energy recovery and organic waste treatment. Israel has not yet implemented the pay-as-you-throw mechanism, which would increase the costs of waste disposal and make waste prevention and recycling more attractive.

Introduction of green public procurement is still limited. Israel should implement circularity criteria

Working across the value chain can reduce food waste in Israel

Food waste is a significant issue in Israel: food residues constituted 43% of MSW in 2020. The Ministry of Agriculture and Rural Development (MoARD) works across the value chain to reduce food loss and waste, including by developing packaging to extend shelf life. The MoEP developed Israel’s Food Donation Act in 2018 to protect those in the food donation chain from liability. The MoEP, the MoARD and other ministries have also been collaborating with The Natural Step (TNS) Israel on reducing food waste. In March 2017, the MoARD, TNS and the Manna Center Program for Food Safety & Security at Tel Aviv University held a “hackathon” on reducing food loss and waste.

The total cost of landfilling in Israel, including the landfill levy, handling fees at the landfill site and transport costs, is among the lowest in OECD member countries.

in green public procurement, incorporate different business models in tenders and build capacity in contract management and tender definition.

Stakeholder engagement is a must in a circular economy transition. Education and awareness raising will play an important role in making citizens and businesses part of the circular economy transition. These initiatives to date such as the AMCHAM Circular Economy Forum have largely been voluntary and targeted at the private sector. However, engaging stakeholders beyond the private sector, such as civil society, community-based organisations and knowledge institutions, is critical.

POLICY TOOLS FOR TRANSITION TO A CIRCULAR ECONOMY

OECD Environmental Performance Review of Israel 2023

MORE INFORMATION

OECD Environmental Performance Reviews: Israel 2023

The report and all data are available on http://oe.cd/epr-israel

Environmental Performance Review programme

http://oe.cd/epr

Find internationally comparable indicators and country profiles

OECD Environment at a Glance: http://oe.cd/env-glance

CONTACTS

Head of Division

Nathalie Girouard

Nathalie.Girouard@oecd.org

Report Co-ordinator

Eugene Mazur Eugene.Mazur@oecd.org

Communications

Natasha Cline-Thomas

Natasha.Cline-Thomas@oecd.org

IMAGE CREDITS

All images are from Shutterstock.com unless otherwise specified.

This document and any map 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.