Energy Efficiency in Israel – market barriers and policy solutions
The Israeli energy market is in a sever crisis as the current demands are steadily growing and creating a threat to cause a genuine shortage of electricity. The Israeli government is working to resolve the crisis by continuously increasing supply (power capacity), while also decreasing the demand for electricity. While aggressive measures are being taken to increase the energy capacity – such as an emergency plan to establish new power stations based on natural gas and an additional coal-fired power station (Project D in Ashkelon), the government is moving slowly to decrease energy consumption using energy efficiency measures. In 2008, this issue was addressed by the state comptroller in its 59th annual report.
In 2008, the government made important decisions regarding energy efficiency, by establishing efficiency goals of 20% of the electricity needs by year 2020. In reality, no real steps have been taken to achieve this target. The government decision presents a series of steps to reduce consumption, mainly in the public institutions, government ministries and local authorities, but lacks reference to the other economic sectors, such as industry, commerce and households, even though their energy needs reach nearly 90% of the total. In addition, no decision has been made to include sufficient detail for implementation and there is a lack of suitable budgets for the implementation of these steps.
The importance of energy efficiency as a central part in planning Israeli’s electricity sector appears in several policy documents of the Ministry of National Infrastructure - which deals with the energy sector. The comprehensive master plan for the energy sector, complied by the Ministry in 2004 by an external team under the leadership of Dr. Erez Sverdlov and Dr. Amit Mor, emphasized the importance of advancing energy efficiency, however the plan was not adopted and its principals are not expressed in office operations.
The master plan for the electricity sector for 2007-2030 is another plan prepared by the Director of Electricity at the Ministry of National Infrastructure. This program is a development program for the electricity sector and refers to the importance of promoting energy efficiency as a component of central governmental policy in the electricity sector. The target established for energy efficiency was set at 20% by 2020; however, this goal is not reflected in the demand forecasts, of which the Electricity Sector Development Program is based on, and the program does not provide operational steps to reach this goal
The governmental is based on the assumption that energy efficiency measures result in substantial financial savings and profits. Hence, according to the market rules, it will motivate companies and factories to implement efficiency measures in order to create maximum profits. However in practice, the number of projects for energy efficiency is small and on a very limited scale. The assumption that it is possible to impose full responsibility for energy efficiency on the free market needs to be reevaluated. The government must act to remove various failures off the market and examine the measures to provide governmental assistance to fund such projects in order to accelerate the pace of implementation and increase the scope.
