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

The implementation of a carbon pricing policy to comply with GHG emission targets faces opposition in small economies. An integrated modeling exercise was carried out for Israel to assess the cost-effectiveness of GHG emission reduction options. Alternative policies in terms of carbon pricing and policy standards are evaluated. The results show that modest carbon pricing is effective. It achieves a 67% reduction in emissions, by 2050 relative to the reference year 2015, while having only a minor impact on economic growth. Policy standards currently proposed by the government will only reach a 40% emissions reduction in the same timeframe. Clean energy standards not coupled with carbon pricing may hinder efficiency but have a lesser impact on income distribution.