Our long-running advocacy for a Carbon Tax as part of Israel’s climate response was rewarded this month when the Finance Committee approved a statutory order under Israel’s tax laws.
The Importance of Taxes in fighting the Climate Crisis
Fossil fuel combustion— in electricity, industry, and transportation—produces harmful pollutants and greenhouse gases. Moreover, it imposes significant social and environmental costs, public health impacts and climate-related damage. These costs are not reflected in the market price of fuels, leading to a market failure. Israel’s carbon tax will help balance this distortion by making renewable energy more cost-competitive and appealing and fossil fuels more expensive, to reflect their true cost to society. Moreover, a carbontax will provide core funding for climate-related initiatives. By imposing a carbon tax in Israel before the European Union’s carbon tax comes into force in 2026, the government will ease Israel’s exporters continued business in EU countries.
Adam Teva V’Din’s role
Since 2021 Adam Teva V’Din has participated in key discussions in the Knesset Finance Committee, advocating for a carbon tax that balances environmental goals with social justice. Our recommendations were based on the global research of carbon pricing conducted by our Economics Department, as well as the core values – particularly environmental justice – that always motivate our work.
In a decisive Knesset meeting, the Finance Committee accepted our critical recommendations relating to a special budgetary allocation to ease the economic burden of the climate tax on disadvantaged populations, i.e. those communities that contribute less to the climate crisis while disproportionately affected by its impacts. Importantly, the Finance Committee also accepted our strong recommendation for a mandatory Annual Reporting Requirement which will be designed to facilitate transparency and accountability in the Ministry of Finance’s oversight and management of the carbon tax’s performance.
Next Steps
Adam Teva V’Din will now continue to press the government to enact the pending Climate Bill as the comprehensive framework for Israel’s tackling of the climate crisis. “We will in parallel monitor implementation of the Carbon Tax as a vital tool for addressing both climate change and social equity,” noted Amit Bracha, Executive Director of Adam Teva V’Din. Two major points of concern are that the carbon tax as approved underprices natural gas; moreover, there is no allocation at this point for funds to promote low-carbon technologies, another important tool in any carbon pricing strategy.
