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Financial institutions urged to invest NIS 20 billion in green infrastructure

Finance Ministry initiative announced at Environment 2050 conference, which also hears about monopolization of electricity sector, carbon taxes and H&M’s sustainable fashion

Sue Surkes is The Times of Israel's environment reporter.

The Tel Aviv-Jerusalem train seen seen outside of Jerusalem, December 22, 2019. (Yonatan Sindel/Flash90)
Israel is embarking on clean infrastructure projects such as the Tel Aviv-Jerusalem railway, pictured on December 22, 2019. (Yonatan Sindel/Flash90)

The Finance Ministry is pushing ahead with new regulations to encourage insurance, pension and provident funds to invest up to NIS 100 billion ($31.4 billion) in large-scale infrastructure projects in Israel — NIS 20 billion ($6.3 billion) of it in environmental-friendly initiatives — the annual Environment 2050 conference heard on Thursday.

This amount is out of a total of some NIS 3 trillion ($942.5 million) managed by these institutions, said Moshe Bareket, supervisor of the Capital Market, Insurance, and Savings Authority.

The authority is hoping that the new regulations, which also oblige the institutions  to consider incorporating Environmental, Social and Governance criteria into their risk analysis, will be approved before national elections are held in March.

Environmental, Social and Governance criteria — or ESG — are standards which investors across the developed world are increasingly demanding from business.

Environment 2050 brings decision-makers, regulators, business leaders, academics and environmental organizations together to discuss issues of relevance. This year, the confab was held online because of coronavirus restrictions.

Illustrative: Solar panels in the desert near Eilat, Israel. (Moshe Shai/FLASH90)

One key issue under discussion was Israel’s move to renewable energy.

Israel is a signatory to the 2015 Paris agreement, which aims to cap global warming at well under 2° C (3.6° F), and ideally no more than 1.5° C (2.7° F), by the end of the century.

The government, however, has not yet decided on the ambitious targets for cutting carbon emissions that it was supposed to submit to the UN Climate Change Convention by December 31.

The environment and energy ministries are at odds over the targets. Last month, the Environmental Protection Ministry called for two long-term national goals for 2050: a reduction of at least 85 percent in Israel’s greenhouse gas emissions compared to 2015 and the generation of 95% of electricity from renewable sources.

The Energy Ministry aims to cut emissions of all facilities under its control, including those for electricity production, by 80% by 2050, compared with a baseline of 2015. A large part of reaching that goal will depend on reducing private vehicle use to almost zero, forcing a radical rethink of how cities are built.

‘Israel needs a competitive electricity market’

Hen Herzog of BDO, a business accounting and consulting firm, told the conference that Israel sets goals time and again, only to fail to meet them. By way of example, he said that the Energy Ministry had pledged to generate ten percent of all energy from renewable sources by 2020, but had only reached 5.7% by last month.

The problem was not money, he explained: This was raised via consumers’ electricity bills. What had to change was the centralization of the electricity sector and the monopoly held by the Israel Electric Corporation and Electricity Authority.

“People receiving renewable energy can only sell [surplus energy] to the Israel Electric Company, and those wanting to produce renewable energy have to wait for the Electric Authority to issue quotas,” he said. “We need a competitive market.”

He added that natural gas had to be seen as complementary to renewable energy, given that were no solutions yet for storing energy generated from the sun in the summer for use during the winter.

Energy Ministry Director-General Udi Adiri pledged that Israel would reach 10% renewables during 2021.

Moving toward a carbon tax

Unlike most other OECD nations, Israel has neither a carbon tax nor a “cap and trade” program (also known as an emissions trading scheme) aimed at reducing and eventually eliminating the use of fossil fuels, whose combustion is destabilizing and heating up the global climate.

According to the business daily Globes, economists at the Bank of Israel have already decided in favor of a carbon tax and will shortly publicize recommendations for the rates.

Yuval Laster, head of the Environment Ministry’s policy and strategy unit, told the conference that if Israel fails to introduce carbon taxes, Israeli companies could expect to have to pay such taxes as a condition for trading with the European Union.

Sustainable fashion

One of the more compelling lectures was delivered by Hendrik Alpen, Head of Sustainability Engagement and Social Sustainability at the Swedish multinational clothing-retail company H&M Group.

Fashion is one of the most carbon-intensive industries, he told the conference, because of the requirements to grow cotton and the use of oil industry byproducts to create textiles such as polyester.

To reduce its carbon footprint and its dependency on natural resources, the company is moving towards garment recycling — receptacles for old clothes are already located in its stores — and ways to prolong the life of garments through initiatives such as renting them out rather than selling them. H&M is investing in a Swedish company that picks up unwanted clothes from their owners and sells them on, splitting the profit, Alpen said.

Furthermore, to help people “buy less by enabling them to buy better,” H&M recently launched its Singular Society brand. Customer subscriptions provide a steady income for H&M, which can then afford to sell high quality, responsibly-made garments at cost.

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