4. Policies for a sustainable transport sector in Israel

4.3.1. Israel has high effective carbon rates but the prices across different fuels are misaligned with climate and other well-being objectives

Israel taxation on fossil fuels for road transport is high relative to other OECD countries. The OECD report “Taxing Energy Use” (OECD, 2019[11]) shows that Israel has the highest effective carbon price on road emissions among 44 OECD and G20 countries (more than EUR 280/tCO2, while the median rate is around EUR 160/tCO2). As Israel does not have an explicit carbon tax, this high price is due to high excise taxes on fuels for transport. The level of taxation is also higher than the highest estimates, in other countries, of the full range of external costs, including GHG emissions, congestion, noise, accidents and local air pollution. While the excise tax amounts to NIS 2.4 per litre for diesel and NIS 3.1 per litre for gasoline (see Table 4.1), the highest estimates of marginal costs in France and the United Kingdom do not exceed ILS 1.37 per litre (equivalent EUR 0.35 per litre)10 (OECD, 2019[11]).

Whatever the level, the price differential between fuels however, should be aligned with their different social costs, including their related GHG emissions. Policies need to give incentives to drivers to choose greener vehicles and to reduce journeys in vehicles running on fossil fuels. Putting the right price signal on fossil fuels in the transport sector would reduce the use of the most emitting vehicles; for the owners of those vehicles, it would limit unnecessary journeys and foster car-sharing and public transport use, which only accounts for 20% of daily journeys so far (Trajtenberg et al., 2018[9]) This could also create new options for new transport alternatives such as shared mobility services and car-pooling.

Although the average taxation rate on fuels is high, the different excise tax rates between fuels do not provide the right price signals on their external costs on climate and air pollution. As a consequence, drivers’ choices of vehicles will not be steered towards greener vehicles. Table 4.1 shows the different excise tax tariffs for each fuel as well as their estimated emissions of GHG. A striking example of this misalignment is the higher tax rate on gasoline relative to diesel, although it emits less CO₂ per volume consumed (OECD, 2016[4]). The lower tax rate for diesel fuel is even less justified when pollutants other than GHG are taken into consideration, since diesel vehicles tend to emit much more particulate matter and nitrogen oxides (OECD, 2016[4]). Finally, there is no argument, from an environmental point of view, for applying a much lower rate on the local production of biodiesel than on imported biodiesel.

LPG and natural gas taxation is also particularly low relative to other fuels. It is taxed about 30 times less than gasoline although it emits two thirds of the CO₂ equivalent from petrol. Natural gas that can be used for transport, and more particularly trucks (CNG and LNG) has an excise tax of ILS 17 per ton, which is equivalent of EUR 1.90 per ton of CO2eq (with the perspective of increasing the excise rate to 1,400 per ton within a period of eight years). The share of vehicles running with alternative fuels (gas and electricity) only amounted to 0.8% of the car fleet in 2015, but the discovery of a new source of gas by Israel will lead to the development of gas-powered vehicles. Although it is not carbon neutral, LPG and natural gas can be considered a useful transition fuel to go towards the low-carbon economy, as other modes (and more particular EVs) require heavy investment that are hard to implement fully in the short term. However, policies enhancing the use of LPG and natural gas in transport should be made on a clear assessment of the costs and benefits, including for public health and climate, as a recent study showed that gas-motored trucks emit much more NOx than diesel (Vermeulen, 2019[12]).

Aligning the excise tax rates to carbon emissions would be a first step towards a greener taxation of fuels. However it is important that, this alignment is not made by simply reducing the gasoline tax rate. This would be counterproductive concerning the wider objective of reducing fuel combustion since it entails a decrease in fuel prices for 96% of private vehicles. An alternative, more palatable from an environmental point of view, is to make the alignment upward, increasing diesel and biodiesel taxation. This increase in diesel prices would affect mostly users of taxis, buses and trucks, since 67% of their fleet consists of diesel-fuelled vehicles. Increased resort to the existing supports for the renewal of these vehicles might therefore be needed and should be anticipated in budget. Distributional and sectoral effects of this policy should also be assessed in order to calibrate other enabling and compensating measures.

Another way to make fuel taxation more efficient would be to phase out tax advantages linked to diesel consumption. The Excise Tax on Fuel Order instituted in 2005 tax rebates on diesel for buses, taxis, fishing boats and working vehicles (like tractors for agriculture). In 2018, these tax expenditures amounted to ILS 3.6 billion (0.28% of GDP) and accounted for the bulk of support to fossil fuels in Israel (OECD, 2018[14]). Phasing out such support to working vehicles would reduce the incentives for wasted consumption of diesel, which causes serious pollution. It would also increase incentives for fleet renewal and penetration of cleaner technologies in these segment of the vehicle fleet. While this also holds in the case of vehicles dedicated to public transport services, detrimental effects on different population groups (due to likely fare increases) should be assessed and where necessary compensated (e.g. via targeted subsidies-see below). Putting incentives for cleaner public transport or conditioning tender for public transport to environmental conditions can also be considered.

Phasing out this support to fuel consumption would create fiscal space to reduce the public debt or increase other subsidies or expenses; it would also increase the incentives to invest in less fuel-intensive vehicles. Government could use a part of the savings on fossil fuel subsidies to curb its potential detrimental effect by redistributing revenues to the sectors concerned. More particularly, it could be used to implement measures that would enable and facilitate the transition of the sector towards more sustainable modes of transport and production. In the transport sector, further support to the renewal of the bus and taxi fleets is an option, as they account for a substantial share of GHG emissions in the transport sector (around 15% in 2015 according to (Tamir et al., 2015[5])). Channelling new resources to public transport investment is also an option. For instance, Ile-de-France Mobilités, the metropolitan transport authority in charge of the Paris Region has been granted since 2016 a percentage of the revenue that comes from the internal tax on energy products (petrol and diesel) that are sold in the Paris region; this percentage, is used for improving the public transport network (ITF, 2018[15]).

In the longer-run, fuel taxation could be gradually substituted by a distance-based tax (see section 0).

4.3.2. Making the car fleet more sustainable: finding the right policy mix

Subsidising less polluting vehicles like EVs is not the right answer to improve overall transport and well-being conditions in Israel

If well-designed, the combination of a fuel tax and a car purchase tax reflecting the externalities of car use should provide the appropriate signal in favour of EVs, and there is no need for adding another instrument to incentivise their purchase. It is important to carefully assess the potential reduction of taxation for greener vehicles like electric or hydrogen vehicles, as it may accelerate the increase of car ownership in Israel, worsening congestion and still causing emissions (e.g. electricity production, tyre and break wear) which are not always accounted for. Yet, EVs can also be a major (low-cost) source of flexibility, improving the integration of renewables and the efficiency of the power system (Chapter 2). Overall, if well designed, the modulation of the car purchase tax and the fuel tax should provide enough a signal to stir transport choices and adding a tool could only blur this signal.

Several experiences show how subsidies or preferential tax treatment might increase car ownership and their amenities, and more specifically congestion, which is already a major issue in Israel. Norway has been encouraging EVs since the 1990s by providing registration tax exemption, free public parking, a reduction in the annual circulation tax, a reduction of company car tax and a road toll and a ferry charge exemptions; moreover, EVs have been authorised on bus lanes since 2005. This policy package was successful in increasing the share of electric vehicles, in 2018, Norway was by far the first market for electric cars, which accounted for 46% of all new car sales (IEA, 2019[18]). However, this also resulted in an increased congestion for buses that might have discouraged the use of public transport.

The environmental effects of such policy is also questionable. France introduced a “feebate” policy, including fees and rebates, for car purchase in 2008, which consisted in a rebate for low-emitting cars and a fee for high-emitting cars. This measure finally resulted in an increased number of car sales and a negative environmental outcome (D’haultfoeuille, Givord and Boutin, 2013[19]).

There might also be mitigated effects on air quality. Although the electrification of private vehicles would limit exhaust emissions of particulate matters and NOx, EVs may have less impact that expected on air quality, as they weight much more, and hence emit more particulate matters outside the exhaust system than internal combustion engine vehicles, accounting non-exhaust emissions such as tyre wear, brake wear, road surface wear and resuspension of road dust (that altogether make up 85% of PM2.5 and 90% of PM10 emissions from traffic) (Timmers and Achten, 2016[20]). This makes the case for more stringent regulation for these particular emissions, which have not decreased in Israel since 2000 at least.

The climate effect of putting incentives for EVs should be carefully assessed. There might be supplementary emissions by an increased energy consumption. The effect of an increased number of electric vehicles on climate depends on the energy sources of electricity generation. In Israel, electricity is mainly produced from natural gas (66% in 2018, according to IEA) and coal (30%), renewable energies making up less than 3% of total electricity generation (see the chapter on electricity). The share of natural gas is likely to grow to replace coal in the coming years, as both the Ministry of Environment Protection and the Ministry of Energy include a complete coal phase-out by 2030. Final government decision is still pending (EcoTraders, 2019[21]).

Finally, higher penetration of EVs without curbing the expansion of car ownership in Israel would not allow the country to reach its climate goals. A simulation shows that a policy that increases the share of low-emitting vehicles but fails to dampen the current increase of car ownership would fall short of climate objectives (see Box 4.2). It would certainly reduce emissions relative to the government’s BAU scenario but the achievement of objectives rely on a limited increase of cars. If car ownership follows the same pathway than the current one (around +5% per year according to the Statistical Yearbook of Israel), climate objectives are impossible to reach, even with 25% of modal shift towards public transport or active modes. Israel would also fail to significantly reduce private car mileage, which is the objective of the National Plan for Transport to reach for the Israeli contribution for the Paris Agreement. Taking this into account, is important when planning investments in supporting infrastructure for electrification (e.g. charging stations), since the location and type of infrastructure needed will be different if it is to be compatible with high shares of shared rather than private mobility (Goetz, 2017[22]).

As a conclusion, policies supporting low-emitting vehicles should be carefully designed to avoid off-setting efforts to control an increase in the stock of cars. Setting the right standards to support their uptake but regularly updating them is key to limit the increase of car sales to a level that does not undermine climate objectives or worsen congestion. Vehicles’ weight, a driver for non-exhaust emissions, should be integrated in policy design. As the increase of car ownership might be difficult to curb, measures that limit the use of individual cars (including by better managing road space), and foster shared trips and high-occupancy, in parallel to policies that fosters the penetration of cleaner vehicles (see Sections 4.4 and 4.5) are needed. Fostering high occupancy will also be particularly important to meeting climate goals in the light of potential penetration of automated vehicles, which will probably tend to be larger (Fulton et al., 2017[23]).

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Box 4.1. Estimating the effect of an increased growth in the car fleet on climate objectives in Israel

Comparing climate scenarios for emissions from passenger vehicles

We are comparing different mitigation scenarios to asses, under certain assumptions, the impact of a subsidy to low and zero emission vehicle that would improve the car fleet, but also increase the total number of passenger vehicles.

This estimation compares different scenarios that were built in consistency with the hypothesis the Israeli Ministry took to assess the reduction potential of each sector in Israel in 2015 (Tamir et al., 2015[5]). As they do not aim to reflect directly reality, these scenarios provide a schematic assessment of what would happen if some policies were implemented in a certain context.

• The BAU scenario, defined in (Tamir et al., 2015[5]), considers a scenario where the numbers of car increases by 2.38% each year and the share of petrol-motored vehicles slightly decreases (from 95% in 2013 to 77% in 2030), mostly at the benefits of diesel-motored vehicles (from 3.4% to 15% in the same period).

• The mitigation scenario20 is based on the assumptions on mitigations measures made in (Tamir et al., 2015[5]), including major technological innovations and the penetration of more efficient vehicles and fuels. More importantly, this scenario assumes a modal shift from private cars to public transport, walking or cycling of 25%, meaning that 25% of the kilometres driven by private cars would be replaced by more sustainable transport modes. This is reflected in a decrease in the average mileage for each car, but not in the total number of cars, which follows the same path as the BAU scenario.21

• The greening scenario has similar assumptions as the mitigation scenario and includes the same mitigation measures (technological innovation, same decrease of annual average mileage due to modal shift). It also adds-up a policy that increases the share of electric vehicles and LPG-motored vehicles (respectively 15% and 5% of the car fleet in 2030), but also the total car fleet. The car fleet increases by 2.38% per year between 2013 and 2020, following the same path as other scenarios, and by 5% per year between 2020 and 2030 due to the new policy. This latest figure was chosen in accordance with later trends in car ownership and should therefore be considered as a conservative hypothesis. The purpose of this scenario is to estimate the effect of a policy implemented in 2020 that would both reduce average emissions per vehicle and increase the car fleet.

The results, presented in Figure 4.1 and Figure 4.2, show that a greening scenario does not reach the same level of mitigation than a full mitigation scenario. This means that climate objectives are harder to reach if the deployment of low or zero emission vehicles increases the total number of vehicles. More specifically, the mitigation scenario would decrease CO₂ emissions by 33% relative to a BAU scenario and a greening scenario would only reduce them by 22%.

More strikingly, the greening scenario falls short of the transport sector objective set in Israel NDCs which consisted in the decrease by 20% of car mileage relative to a BAU scenario. If the mitigation scenario succeeds at decreasing private car mileage by 25% (as initially considered), the greening scenario reduces total private car mileage by only 5%. The reduction is driven by a modal shift towards more sustainable transport that decreased the average mileage for each car. But this effect was largely offset by the increase of car ownership.

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Figure 4.1. Impact assessment of policy scenarios on CO₂ emissions from private cars

 StatLink https://doi.org/10.1787/888934156162

Source: Authors calculations using data and assumptions from (Tamir et al., 2015[5]).

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Figure 4.2. Impact assessment of policy scenarios on private car mileage

 StatLink https://doi.org/10.1787/888934156181

Source: Authors calculations using data and assumptions from (Tamir et al., 2015[5]).

4.3.3. Considering a distance-based taxation in the long term

In the longer term, a distance-based taxation would efficiently replace the fuel tax, as well as congestion charges (see Section 4.4.2). The transition should be carefully monitored in order to avoid a shock on public finance.

The externalities of transport use have many different drivers (see Figure 4.3). Some of them are dependent on fuel use and type (like GHG emissions), others on combined factors: the impact of driving on exhaust pollution, for instance, differs, according to the car quality, its use intensity and the place it is used (such as road and infrastructure wear, occupation of free parking) (van Dender, 2019[24]). As for the effect of vehicle use on congestion, which stands for 27% of estimated costs from transport usage according to (van Essen et al., 2019[25]), it depends on the size of the car and the timing of its use. The relations between externalities are therefore complex and taxing them appears as a challenge.

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Figure 4.3. External costs, drivers of external costs and tax instruments

Source: Van Dender (2019).

Existing taxes on transport in Israel fail to reflect correctly the different externalities of transport use. While fuel taxation can reflect the effect on climate, it fails to price precisely the effect that fuel combustion has on local air quality, as it strongly depends on the vehicle quality, but also, for instance, on the initial pollutant concentration, hence on other people’s use.

On the other hand, vehicle taxation, which is calibrated in order to reflect the average costs of car use does not account for the intensive use of each car. Reducing car use is a prominent lever for reducing GHG emissions from transport in Israel, as the country has the second highest mileage per car in the whole OECD (17,700 vehicle-km per road motor vehicles-see Figure 4.4) after the United States of America although population density is more than ten times lower in the latter.22 As car taxation fails to put a price on every kilometre driven, it does not reduce unnecessary trips and has a limited effect in reducing pollution. Nor does it foster car sharing, while 80% of Israelis drive alone (Trajtenberg et al., 2018[9]).

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Figure 4.4. Vehicle use intensity per year in thousands of kilometre per road motor vehicle across OECD countries (in thousands vehicle-km per road motor vehicle)

Note: the year is 2015 or the latest data available.

Source: OECD-ITF.

 StatLink https://doi.org/10.1787/888934156200

A tax proportional to the distance driven has the advantage of being suited to integrating many externalities linked to transport, such as noise, road wear, congestion and air pollution, which are often proportional to car use (Figure 4.3). Implementing such taxation, with a modulation by vehicle type that applies a higher rates for more polluting models, constitutes a good option to supplement fuel taxes.

This type of tax relates the price paid more closely to actual pollution than the car purchase tax by pricing both vehicle use and equipment choices. In order to reflect a broader range of externalities, congestion charges can be integrated by applying higher rates in case of congestion. As the purchase tax has however the advantage of providing an immediate price signal at the point of decision to purchase, the complete phase-out of this tax could result in accelerating car ownership, and deteriorating the tax base. Thus, an optimal combination of these taxes should be assessed.

The development in electronic metering technologies and its diffusion in the car fleet will probably reduce these costs of implementation. Finally, recent technology developments using GPS allow for a modulation of this tax according to the place and the moment of driving, and would then contribute to a broader internalisation of costs, including congestion (van Dender, 2019[24]).

Action in the short term would consist in implementing congestion charges in metropolis based on the distance driven. In the longer term, those schemes could be transformed into a national distance-based taxation by being expanded to the whole country and modulated according to vehicles characteristics (higher rates would be applied to more polluting vehicles) and to congestion.

Distributive effects of combining the car purchase tax with a distance-based taxation can be important. It would benefit households and firms that do not use much their vehicle or use it for short distances, and would negatively affect long commuters. Targeted compensatory measures can be considered but an efficient public transport network would be the best policy tool to smooth the transition (see section 4.5).

4.4.1. Rethinking road management to increase the use of sustainable modes

Generating an efficient use of road space needs to be a priority for transport systems in Israel. Thus, transport modes that generate higher social benefits and lower GHG emissions and other social costs, relative to the road space they consume (e.g. walking, cycling, public transport and other forms of shared-trip services), need to be prioritised. Making an efficient use of road space will also require that the demand for the use of this infrastructure is managed to avoid congestion; which in addition to generating time and other economic losses exacerbates traffic noise and emissions of gaseous pollutants, greenhouse gases and particles (Crozet and Mercier, 2018[26]). Rethinking road allocation is also an opportunity to incorporate new transport modes (e.g. electric scooter often known as micro-mobility), which have a strong case in the light of road space allocation that prioritises low-carbon and space efficient modes (OECD, 2019[1]). Having dedicated road space and specific regulation could avoid the negative impacts (e.g. accidents) from the expansion of these modes.

The allocation of road space in cities in a way that is coherent with sustainable goals (including climate) is particularly important since public space (and road space as part of this) is scarce in these territories, especially as they grow. A number of cities worldwide, like Paris and Copenhagen, have for this reason engaged in plans and projects that reallocate road-space from cars to other users. Israel authorities could use international guidelines as a reference to rethink road allocation in existing urban areas as well as in new neighbourhoods being planned. For instance the Institute for Transportation and Development Policy (ITDP, 2016[27]) explicitly establishes the following hierarchy of users: 1) pedestrian access; 2) non-motorised vehicles movement and parking; 3) public transport; 4) non-motorised goods carriers; 5) freight movement; 6) taxi services/car-pooling/car-sharing; 7) private motor vehicle movement; 8) private motor vehicle parking.

A “Complete Streets” approach should also be adopted so that transport projects planned are embedded in a holistic strategy for reconfiguring street design and public space. Complete Streets refers to a design that aims at safely balancing space between a diverse range of users and activities, such as walking, cycling, public transport, private vehicles, commercial activities and residential areas (Litman, 2015[28]). Although there is no singular design prescription, main elements of this approach include prioritisation of space for the pedestrian environment (i.e. sidewalks, crosswalks), implementing traffic calming measures, bicycle accommodation (i.e. protected or dedicated bicycle lanes) and dedicated space for public transport (i.e. BRT, transit signal priority, bus shelters). The new approach to road design and allocation should also incorporate safety considerations and be aligned with a safe system approach, i.e. the principle that errors will happen but traffic fatalities and serious injuries should not be inevitable. Therefore the system of roads should be designed so that human error does not result in serious or fatal injuries (Lockard et al., 2018[29]), As put by (Lockard et al., 2018[29]) “[s]afety and the environment converge when it comes to land use”.

Introducing well-tailored parking policies will also be needed for efficiently managing road space. International evidence has demonstrated that the parking space required could be reduced by 10-30% with efficient parking policies, and these could also reduce general vehicle traffic (Litman, 2018[30]). Providing easy and cheap access to on-street parking incentivises car use and contributes additionally to congestion, since a part of the time of the travel is often dedicated to cruising for parking.

On-street parking is nearly free in Israel, thus there is wide room for manoeuvre in making use of parking fees and parking restrictions. The requirement for employers to provide free parking commodities to their employees in wage agreements could be reconsidered for instance. An option is to replace this advantage by an increase in wages, possibly with a bonus for employees using commuting modes other than private cars (e.g. public transport).

More generally, authorities could introduce different pricing zones to provide incentives to increase or decrease the availability and occupation of parking in diverse areas and for different time periods. In Lisbon, for example three parking pricing zones exist. Zoning is determined according to the availability of public transport services and to the density of parking sought for in the different areas. Red areas correspond to main transport corridors. In these areas relatively high parking prices and lower maximum parking duration limits (maximum 2 hours) are implemented. Contrastingly, in green zones, where there is relatively low public transport availability and where parking space is less scarce, parking prices are the lowest and time limits are larger (maximum 4 hours). Yellow areas are central areas of the cities that while not a transport corridor, have a relatively high availability of public transport. In these areas the price of parking is not as high as in red zones but still significantly higher than in green zones and the maximum time allowed for on-street parking is 4 hours (Lisboa, 2018[31]); (ELTIS, 2014[32]).

Copenhagen also has a three zone parking scheme that has the objective of discouraging car usage while promoting active transport modes such as biking in the city centre; parking prices in peripheral areas of the city are lower (Kodransky and Hermann, 2011[33]). Similarly, in Strasbourg a concentric three-zones parking pricing scheme imposes higher parking prices as well as lesser parking times on the city centre, as compared to the peripheries of the city. This policy has gone in hand with a replacement of on-street parking spaces in the city centre for cycling lanes and tram ways. This policy bundle seeks to reduce car usage on the city centre, as well as to concentrate long-term parking needs to park-and ride and other off-street parking facilities in more residential areas on the outskirts of the city (Paul-Dubois-Taine, 2013[34]). Cities in Israel could create a similar dynamics as various public transport projects will be developed in the short term. Israel could also opt for introducing smart parking meters with real-time fare adjustments, which in San Francisco for instance, have increased the effectiveness of variable-rate on-street parking pricing (OECD, 2015[35]).

Governments can also promote a more efficient use of private cars through incentivising off-peak commuting and shared trips. In Israel, the Ministry of Finance and the Ministry of transport are driving together a pilot project to reduce the congestion in Tel Aviv and increase the vehicle occupancy rate (as 80% of Israelis drive alone (Trajtenberg et al., 2018[9])). This scheme includes compensation for 100,000 volunteers travelling off-peak hours and a joint work with employers to foster shared journeys or teleworking (EcoTraders, 2019[36]). Enlarging collaboration with employers to upscale these type of projects will be important. While public funds channelled to this type of programmes should be assessed in the wider context of potential alternative investment for expanding and improving the public and active transport infrastructure, it is important that active policy increases vehicle occupancy, especially in the light of the development of automated cars (which will tend to be larger) (as discussed in Section 4.3.2).

Policies that improve road management (see below) can be effective for incentivising walking and cycling. An OECD study shows that the implementation of a congestion charge in Milan increased daily bike-sharing use by 5.8%, and extending the charging system to early evening increased bike-sharing by 12% in this time window. The main driver of this shift to greener transport mode is the decline of road congestion, which created safer conditions for bike use (Cornago, Dimitropoulos and Oueslati, 2019[37]).

4.4.2. Implementing congestion charging schemes in the short term

Congestion in Israel is a central issue for people’s well-being and the country’s economy and is a prominent issue in all the country’s big cities. Israel has, by far, the highest driving distance per kilometre of network of all OECD countries (see Figure 4.5) (OECD, 2015[35]). Traffic congestion causes an average loss of 60 minutes per road-user per day (IMF, 2018[38]) and (Trajtenberg et al., 2018[9]) estimates that the costs for the Israeli economy account for 2% of GDP (including the cost of extra gasoline lost in traffic jams and the value of time lost due to congestion), in contrast with 1% of the GDP in the European Union (Casullo et al., 2019[39]). It also brings other nuisances for residents, like a concentration of air pollutants and noise.

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Figure 4.5. Road traffic density per network length, 2014 or latest available year

Note: from (OECD, 2015[35]).

Source: Eurostat (2015), Transport Statistics (database); North American Transportation Statistics (2015), Statistics Online Database; UNECE (2015), “Transport”, UNECE Statistical

Database; and national sources.

 StatLink https://doi.org/10.1787/888934156219

With no specific measure taken to tackle congestion, this issue is likely to worsen as both car ownership and population grow. As stated above, the National Plan for Transport, a public transport plan designed by the government to reduce GHG emissions from transport and to reach the Paris Agreement goals, has the objective of limiting car mileage to 44.4 million vehicle-km, which is still higher than the 43.9 million vehicle-km in 2016. In this context, even compliance which such a plan will entail an increase in car use and thus very probably a further increase in congestion.

Further road expansion is unlikely to solve this issue, partly because there is a physical limit to expand roads. Adding road capacity also encourages movements by car, and, in the end, this induced demand might completely offset the congestion-reducing effect of a supplementary road capacity (see also Section 4.5.3) (IMF, 2018[38]) (Hymel, Small and Dender, 2010[40]).

Implementing congestion charging schemes in Israel’s big cities can be an effective solution in the short term. Congestion charging would have the advantage of pricing congestion explicitly and thus helping cope with a number of its negative externalities, reducing the numbers of vehicles that crowd the city centres. Past experiences in other metropoles have shown that the implementation of a charging toll immediately decreased traffic around the cordon by 20% in average and up to 60% in some arterial roads in the case of Stockholm (Eliasson, 2014[41]). The effect declines in the longer term but remains substantial (Börjesson and Kristoffersson, 2017[42]). For this reason, although road pricing schemes are not yet widely used, cities considering implementing such schemes are growing in number (ITF, 2019[43]). While using different types of pricing options, cities like London, Milan, Stockholm, and Singapore have congestion charging schemes that cover whole areas of their cities.

In Israel, the idea of implementing such scheme has been under examination since 2008. The Ministry of Finance brought for approval in the 2020 budget a congestion charge in the city of Tel Aviv, where 60% of the nation’s congestion costs are concentrated. The scheme is expected to become operational in 2021.In the longer-term, as discussed in the previous section, transitioning to a distance-based taxation scheme (differentiated by type of vehicle, time and space) would be most effective. In this case driving through more central and congested areas would already be taxed more severely, making a separate congestion charging scheme redundant.

There are several different ways to shape a congestion charge scheme, presented in Table 4.2. Ideally, the amount paid should reflect the external costs of congestion paid by the community and therefore, ideally, depend on the time and use of the car. London and Milan implemented an area charge, which is a charge for driving into or within an area, while the scheme for Stockholm has the characteristics of cordon charging, which is a charge for each crossing of a cordon (although there are a maximum number of times that a user can be charged per day). In the case of Singapore, the scheme is a combination of cordon charging and corridor charging (Charges for passing points along a corridor in a city), currently using electronic differentiated pricing. Other places like California, and Seoul, among others, apply road tolls to particular corridors only. (OECD/ITF, 2019[44]).

Cordon and area charges fail to effectively price the external costs of congestion. Contrastingly the ideal congestion charge scheme should be designed as a distance-based taxation i.e. modulated according to the real-time congestion pattern, hence the time and place of the driving (see supra). Founding taxation on the basis of crossing a line fails to mandate the right incentives to drivers who have no reason to limit their driving once the line is crossed. The potential mitigation effect is therefore weaker than in the case of a charging system based on the distance driven. It is even weaker in cases the charge is paid only once a day. Moreover, cordon and area charges should be carefully designed and regularly updated to avoid bottlenecks effects at the limit of the charged zone, as congestion can displace in another area.

As highlighted in Section 0, distance-based taxation is an efficient tool to capture a broad number of externalities from car use: congestion charges can approach such scheme, applying the concept to a certain zone. A distance-based charging rate depends on real-time congestion inside the city, as in Singapore, integrates most external costs of congestion and appears as the most efficient system. In addition it provides a larger scope for adapting behaviour (e.g. shifting to off-peak travel appears as an option in addition to modal shift). In this case, no trip would be left unpriced and short trips would not be overcharged because the driver crossed a certain line. This requires that few exemptions should be allowed for private vehicles (for residents or taxis for instance), even though they might improve public acceptance, in order to implement the proper incentives.

This rate can also depend on the vehicle size. A usual method to estimate the charging rate is to estimate and price the time loss in traffic and consider the marginal cost of a supplementary car in the traffic. The UK Department for transport, estimates the marginal external cost of congestion from GBP 0.01 per vehicle km in rural area motorways to GBP 0.692 in 2015 (2010 prices23), adding up costs of time loss in congestion as well as operating costs.24

Needless to say, some precision of the scheme can be forgone at the benefit of clarity, as a high degree of differentiation is not always readable for drivers and car owners. Unclear schemes would make users less reactive to the price signal and would increase oppositions to the scheme. The differentiation should thus be made simple and clear In the case of Stockholm, traffic volumes decreased by 20-25% during the trial period of a congestion charge and the system gathered general support in a referendum, with a simpler system based on a cordon charge. Peak and off-peak prices are nonetheless an important feature of the scheme.

Following track of vehicles moves in the concerned zones is necessary when implementing a congestion charge; modulating it according to time and place requires some higher level of technology. Using GPS technology seems feasible, as long as privacy issues are carefully managed. (OECD/ITF, 2019[44]).

4.4.3. Gaining public support

Policies aiming at better managing roads will change the relative prices for transport users, namely making car use more expensive (ideally where and when it causes the highest external costs). Gaining public acceptability is challenging but crucial to make these type of measures more perennial and less dependent on political cycles. Guaranteeing access through alternative modes of transport is an important part of gaining public acceptability. This is also necessary to make the policy cost-effective, since only in this way can the new pricing trigger behavioural change instead of only imposing economic burden on segments of the population. In any case, careful assessment of negative distributional impacts is necessary to ensure that no group is overburdened as well as to prevent relevant opposition.

Congestion charges for instance may have some distributional impacts that should not be overlooked, as they increase the cost of private transport and may therefore deteriorate households’ purchasing power. (OECD/ITF, 2019[44]) In Israel, total private vehicle expenses constitute 15% of income for households’ in the lowest decile, while only 9% of income of households in the highest decile.25 This means that the implementation of a new charge could potentially be regressive. Even though the modulation of the taxation by time or distance has the potential to alleviate this effect, this is far from certain and should be assessed, as this depends on the possibility for people to change their daily commute and other trips.

Beside, differentiating zones inside the city might have an impact on housing prices, especially for instance if charging zones coincide with places concentrating jobs and thus make living in the area even more advantageous (since one could walk or bike instead of commuting by car). This could push poorer households out of the city centres and benefit people owning real estate in the charging zones. This effect on property prices inside the zones would probably be exacerbated if residents are exempted from charges and enjoy free on-street parking. The negative impact on commuters from outside the centre can also be significantly alleviated if commuting from outside is made easier, by the presence of accessible and good quality public transport as well alternative transport modes (biking, walking) to car use.

Strategies and policies adopted in Israel to reach climate and other well-being goals by improving road management should be carefully assessed in order to anticipate potential problems and ways to compensate for this and improve the acceptability of measures. Mattioli et al. (2017[46]) proposes to build a vulnerability index assessing three dimensions of vulnerability (cost burden of energy expenditures, households’ sensitivity, defined with their income, and their adaptive capacity, defined as access to jobs and selected services). Results are used to identify vulnerability to increases in fuel prices spatially across London, but the index could be used to assess other policies such as road pricing. The vulnerability index takes into account for each neighbourhood the cost burden of a measure for the population (as a share of income), their adaptive capacity and the access to jobs and selected services. The result showed that, in London, while the urban core tends to be less vulnerable to increases in fuel prices according to the vulnerability index, there are pockets of the city where there is very high vulnerability. The findings underline the need to assess policy effects with the use of disaggregated information rather than focusing on average users. They also highlight the importance of going beyond analysis of vertical equity (i.e. distributional impacts across income groups) to account for the wider context (e.g. access to alternatives) that places, or not, different population in a situation of vulnerability regarding a certain policy.

There is a strong case for improving the taxation of transport in Israel, as heavy congestion in the bigger cities is a known problem. The reform proposed above (in Section 2) consists in improving the alignment of fuel taxes with their carbon contents, which would automatically raise diesel taxation (when 96% of vehicles are fuelled with petrol). It also recommends allowing the purchase tax to react more easily to technological change, which will probably not increase significantly the average cost for transport for households. However, the implementation of a congestion charge will probably increase transport costs more significantly, since it would put a price on what used to be free (i.e. the use of road space in congested areas). New fiscal measures may meet opposition. In October 2019, the Israeli Minister of Transport, M. Smotrich, publicly asserted his opposition to the congestion charge in Tel Aviv, following the steps of his predecessor.

A first option to gain public acceptance would be to recycle the revenues, so that the measure would not appear as a way for the government to levy revenues (OECD/ITF, 2019[44]). (Marten and van Dender, 2019[47]) identifies several options countries took to use their revenues from carbon pricing, such as using it to change the tax system (shifting from an labour income based taxation to a pollution-based one), for inter-governmental transfers, transport-related spending, green and energy-related spending and compensation to energy users. While that does not mean the tax income should be earmarked,26 a full disclosure of expenses allowed by the revenue could enhance the public acceptance for an increased tax burden.

In the case of Israel, there is a strong political case to recycle a large part of supplementary revenues in investments for transport (see section 4), even if the supplementary resources from congestion charges is likely to be low. A congestion charge entails heavy costs of monitoring and should not be expected to become a major source of revenue, nor should it be implemented with this objective as the main reason for doing so. For instance, the congestion charge and penalty charge notice fees (driving offences and parking fines) accounted for only 5% of TfL’s 2013 budget. (ITF, 2018[15]) Even so, transparent revenue recycling enhances public acceptance. In addition, recycling revenues can also be used in the case of charges other than congestion (e.g. parking charges, and fuel and purchase taxes). Investment in public transport and active modes would facilitate the reduction of car use by making households able to find alternatives to private cars, making the new charges both more acceptable and more efficient for climate.

Taking into consideration that the development of alternatives is key to making private transport taxation efficient and accepted by society, the timing of the development and improvement of alternatives is crucial. It seems more efficient to develop public transport before, or at the same time as, the fiscal measures are introduced. In the short term, buses can be developed and have their quality and regularity improved, all the more if a congestion charge improves traffic in the city centres. The Mayor of London took this option, improved bus routes and put additional buses into services by the time the congestion charge was introduced. As a result, the majority of the 30% of car trips foregone by cars were replaced by bus trips. More structural works (light trains, metro) can be initiated for the long term (Transport for London, 2004[48]).

Gaining public support for a supplementary tax on transport can be tricky, more particularly in Israel where transport charges are already high and public transport quality is subject to strong criticism. Initial support is key and can be reached by involving stakeholders, targeted consultation efforts and a strict timeline for engagement (OECD/ITF, 2019[44]). The State government of New York is planning to introduce congestion pricing for Manhattan’s central business district progressively, starting with taxis and for-hire vehicles. In Stockholm and Milan, the congestion charge was implemented after a referendum (in Stockholm, after an initial trial period) and the mayor of London had campaigned for it before being elected. However, experience showed that, once implemented, a congestion charge could reach a large political approval.

4.5.1. Israel made strong commitments to develop public transport

Public transport is key for Israel’s climate mitigation strategy in the transport sector. Assessing emission reduction potential in every sector in 2015, the government identified in a report that modal shift from private car to more sustainable transport alternatives (public transport and cycling) had the biggest mitigation potential in the transport sector. This report assessed that Israel could reduce its transport emissions by 21% by 2030, -12% could be reached by behavioural responses due to better public transport infrastructure, the rest being largely from technological improvement of vehicles. This scenario considers that the development of public transportation would reduce car uses by 25% relative to a business as usual scenario.

The Israeli government chose to take a more conservative option than its report and set the objective of a 20% reduction of private car kilometres travailed by 2030. This amounts to an emission reduction of 2.2 million tons of CO_2eq relative to a business as usual scenario.

Accordingly, the government is developing a long-term strategy to boost public transport infrastructure investments with the Plan “Infrastructure 2030” and the Strategic Plan for the Development of Public Transportation in Israel. The latter, published by the Ministry of Transport in 2012, included an investment of ILS 250 billion over 25 years (around EUR 55 billion, taking 2012 exchange rates) to bridge the cumulative gap in public transportation infrastructure. It served as the basis for government to promote multi-year strategies and plans (until 2040-2050) for developing public transport in metropolitan areas and for Israel railways and allowed for specific infrastructure projects conceived to meet the national targets. The Ministry of Transport designed these plans and strategies in cooperation with local authorities. A particular focus was set on the expansion of public transport in metropolitan areas through the establishment of mass transit systems that use separate road space from private transportation, providing faster service over a larger area.

Israel’s strategy to develop public transport includes:

• A 2040 strategy for Israel railways launched in 2017 and developed by both the Ministry of Transport and the Ministry of Finance. This strategy, coordinated and integrated in metropolitan mass transit systems, includes national routes with higher speeds and very few stops, as well as regional routes with more stops and broader coverage. Since 2018, a high-speed train has been operating between Jerusalem and Ben Gurion airport near Tel Aviv. The connexion between Ben Gurion and Tel Aviv was inaugurated in December 2019. As the number of train passengers has been increasing for more than a decade in Israel (from 12.7 million 2000 to 64.6 million in 2017),27 due partly to an extension of the lines (+50% during the same period), the government aims to reach 250 million passengers in 2040.

• Public transport plans in the metropolitan areas of Tel Aviv, Jerusalem, Haifa and Be’er Sheva.

More particularly, the Tel Aviv mass transit plan, launched in 2016 by the government, aims to reach an objective of 40% of motorised trip by public transport, carrying 4 million passengers per day in 2040 (in 2016, public transport made up 20% of trips). As most of the public transport journeys are made by bus or suburban railways, the plan schedules the construction of metro lines, light train and bus rapid transit, the first light train run being due for 2021. This plan also has objectives for a better service, which implies an increased accessibility,28 a broad coverage of the population and a higher average speed.

Israel’s efforts to enhance the use of public transport has had some notable results, since trips in public transport have seen exponential growth for the last 30 years. Passenger train use has been increasing, going from 2.5 million passengers in 1990 to 12.7 million in 2000, 35.3 million in 2010 and 64.4 million in 2017 (see Figure 4.6). Bus use has also increased by 70% in 15 years. Moreover, important measures were implemented, like the Tel Aviv transport plan. A light train was opened in Jerusalem since 2011 and is expected to have all its five lines completed by 2024. The light train transports 130.000 people per day.

However, recourse to public transport is still very low relative to international standards. Perhaps surprisingly, therefore, half of the budget of the Strategic Plan is still unallocated. Further efforts are thus needed.

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Figure 4.6. Public transport use in Israel

Source: Statistical Yearbook of Israel, 2018.

 StatLink https://doi.org/10.1787/888934156238

4.5.2. Public transport and active modes in Israel have serious shortcomings

Public investment is particularly low in international terms. The IMF pointed out that the investment gap of Israel amounted to 20% relative to other countries, and that the level of investment for transport was particularly “inadequate” (IMF, 2018[38]). Figure 4.7 shows that this low investment also comes with a very low amount of public capital relative to other countries. Among 35 advanced economies, the average public capital stock amounts to 67% of GDP with average investment at 3.4%; as a contrast, these numbers are respectively 34% and 2.9% in Israel.

More particularly, public investment in transport is weak in Israel (1.3% in 2018), although the investment in public transport as a share of GDP has been notably enhanced (from 0.4% of GDP in 2014 to 0.7% in 2018, cf. Figure 4.8). The share of GDP allocated to investment in road infrastructures has been stable (around 0.6% of GDP between 2014 and 2018), although their use has escalated.

The share of workers performing activities outside of their residential areas increased by 10 percentage points between 1990 and 2016 (from 43.9% to 53.9%) and an increasing proportion of them are using their private cars. As a result the share of commuting journeys by car increased to 60% in 2016, compared to 31% in 1983 and 48% in 1995 (Bleikh, 2018[6]). In parallel, journeys to work have been increasing and the duration of journeys to work increased by nearly 30% for people working outside their localities between 2005 and 2017(see Figure 4.8), which reflects the relevant sprawl in cities (see previous chapter).

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Figure 4.7. Public investment and public capital in Israel: Public capital stock and public investment, 2017

Source: IMF, Investment and Capital Stock Dataset, http://www.imf.org/external/np/fad/publicinvestment/.

 StatLink https://doi.org/10.1787/888934156257

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Figure 4.8. Evolution of the investments for transport and commuting in Israel

Source: Central Bureau of Statistics.

The public transport network is lagging behind commuting and general mobility patterns. First, public transport is unavailable, or has reduced frequency, during Shabbat (from Friday at sunset to Saturday after sunset) and Jewish holidays, which makes private vehicles indispensable for people traveling during these times. Besides, many employment sites are not accessible by public transport. (Suhoy and Sofer, 2019[3]) developed index that showed that the number of workplaces that can be reached by public transportation are less than half of the number of workplaces accessible by private vehicles, according to a majority of employees. This accessibility index is lower in peripheral localities, and particularly for Arab localities.

Furthermore, even where public transport is an option, it is not the first choice for most people for their daily journeys: as 92% of the population is connected to public transport, only 20% use them. As a result, most people using a bus do so because they cannot afford their own vehicle. Using a 2014 household survey, (Suhoy and Sofer, 2019[3]) show that employees with a low level of income and a relatively weak socioeconomic background are more inclined to use buses and employer-organised shuttles to go to work. It also shows that, although people have an accessible and regular bus service nearby, less than 35% of them would chose a bus to commute. Train seem to attract much more people than buses when available, however trains only makes up 2% of journeys to work, against 8% in other OECD countries (although this share has increased significantly in Israel).

Public transport limitations widen regional inequalities. Public transport accessibility is particularly low in peripheral areas (Suhoy and Sofer, 2019[3]), which increases the dependence on private transportation. In Jerusalem, Tel Aviv, Haifa and Be’er Sheva, around 50% of workers use their cars to go to work; in cities of less than 100.000 inhabitants, more than 60% do so, and 70% in rural areas (Bleikh, 2018[6]); the share of journeys by bus also decreases with the size of the city. The spatial differences in public transport accessibility have a strong social impact since access to public transport may define access to jobs. Even though private shuttles organised by employers flourish, they do not appear as a lasting satisfactory solution. A major issue is that such pattern may hinder competition and workers’ capacity to change employer. Moreover, people need transport services to perform a number of activities beyond jobs.

Arab populations are particularly affected. This is linked to the fact that they live in peripheral areas: 73% of Arab Israelis live in localities with fewer than 100.000 inhabitants (against half of Jewish Israelis). Moreover, Arab localities are particularly underequipped, even compared with Jewish localities of similar size. Comparing Jewish and Arab localities with fewer than 50.000 inhabitants, (Bleikh, 2018[6]) shows that Arab localities resort much less (5% against 11% in Jewish localities) to public transport and much more to private shuttles (19% against 8%). A recent study by the Bank of Israel showed that, the quality of bus service in large Arab localities (more than 20.000 inhabitants), which concentrate half of Arab Israeli that do not live in mixed areas, is lower by about a third than the level in Jewish localities with similar characteristics (Bank of Israel, 2019[49]). This poor quality in public services hinders access to jobs in regions already suffering from high poverty rates (Gal, Madhala and Bleikh, 2017[50]).

Arabs living in Arab localities are also the less satisfied population with the conditions of roads and sidewalks. This makes the development of public transport, specifically buses, more difficult as a regular bus service requires a good maintenance of road infrastructures and specific places for bus stops. A bus lane would also make this public transport more efficient and attractive.

Finally, the development of new housing projects might increase the shortage of public transport investment. Faced with a housing shortage that brought hundreds of thousands Israeli in the street in 2011, the government implemented a housing plan to comply with the immediate need. As the easiest option is to build on state-owned land, most often in peri-urban fringe, and where the prices of lands are the lowest, more and more people might be located in areas where access to public transport is not guaranteed (see the discussion in Chapter 3).

4.5.3. Adopting accessibility-based planning and investment frameworks

In order to build a sustainable transport sector, the focus behind policy decisions and investment should be shifted from following mobility demand (passenger and tonne-kilometres) and increasing speed to improving accessibility (OECD, 2019[1]), i.e. the ease of reaching destinations for goods, services, jobs and other activities (Litman, 2019[2]). Target 11.229 of the UN Sustainable Development goals explicitly calls for better accessibility, with a particular focus on public transport.

There are important opportunities for generating two-way alignment between climate change mitigation action, and broader well-being and sustainable development objectives in the transport sector, if focusing on accessibility instead of mobility. The link between enhanced access to opportunities and well-being outcomes (including climate) is much stronger than that of physical movement. Focusing on accessibility makes the role of public and active modes, which have high social and environmental value, more central. This in turn increases feasibility and effectiveness of policies focused on better pricing car use externalities, including by improving road management and allocation. An accessibility-based approach also makes more evident the centrality of enhancing proximity through better land-use and housing policy (see chapter 2) – which is a key enabler for moving towards sustainable transport systems (OECD, 2019[1]).

In order to unlock these opportunities, Israel would need to mainstream accessibility into policy, planning and investment decision-making. Using accessibility indicators to set criteria is central to making this happen. Certain principles are necessary to ensure that accessibility-based frameworks effectively promote policies supporting sustainable development. Among these are using accessibility indicators that can: a) track accessibility needs for different transport users; b) reflect multiple modes of transport and their relative performance (specifically including sustainable modes like cycling, walking and public transport); and c) account for territorial differences (e.g.  urban vs. non-urban territories), particularly acknowledging the neighbourhood scale (ITF-OECD, 2019[51]).

Analysis using accessibility indicators are available for Israel but now they need to be used to set specific objectives for policies and to identify accessibility gaps so that expansion and upgrades to the system can bridge them. (Suhoy and Sofer, 2019[3]), for instance assessed employees’ commuting patterns and jobs’ accessibility, providing precise information on the capacity of people to access to public transport and, more broadly to goods, services, and opportunities, using their localisation. In London, for instance the Public Transport Accessibility Level (PTAL) indicator is used for planning the system, as well as to implement mechanisms that explicitly link land-use and housing decision with transport accessibility criteria (see previous chapter).

Other useful indicators can be vulnerability indexes that incorporate income criteria to an accessibility index, in order to account for the cost burden imposed by current transport conditions on populations according to their level of income, as well as adaptive capacity in case a certain mode (e.g. cars ) becomes more expensive. Such analysis could help identify areas where populations both suffer from a poor access to public transports and a level of income that makes the accession to private vehicles difficult. Monitoring changes and climate policies with these types of indicators would help to avoid potential trade-offs when implementing certain policies (e.g. carbon or congestion pricing) (ITF-OECD, 2018[45]) (see Section 4.4.3).

Accessibility needs also to be mainstreamed into appraisal methodologies to ensure that this is the rationale behind investment (see next subsection). This will allow shifting away from a “predict-and-provide” approach, which predicts demand and plans road expansion, ultimately creating additional traffic and not solving for congestion, pollution or GHG emissions. Instead, appraisal methodologies that can incorporate accessibility criteria can make a stronger case for channelling investment towards sustainable transport modes.

4.5.4. Widening financial capacity to ensure sustainable transport budgets

4.5.5. Adapting governance: building metropolitan transport authorities and developing a national policy for metropolitan and urban transport

In Israel regulation and planning of public transport services is done by the central government, through the Public Transport Division of the Ministry of Transport (MOT). Past reforms have allowed progressive improvements in the the governance of public transport. For instance, a reform in 2000 opened bus services (which represented 18% of total trips in 2016 (Bleikh, 2018[6])) to a competitive tendering process, allowing to increase competitiveness in the sector. By 2012 35% of bus services (bus-kilometres) were operated by eight new actors. This was an important change, since before the reform activities were mostly concentrated in only two bus cooperatives. On the one hand, the lack of a competitive process provided little information for the authority to benchmark services and incentivise competitiveness. On the other hand, it created high dependence of the system in the two main companies, which limited the authorities‘ regulatory capacity (Ida and Talit, 2017[58]). The reform resulted in quality improvements in parallel to cost (and in some cases fare) reductions (Ida and Talit, 2017[58]).

While these improvements are relevant, two particular features of the public transport governance structure in Israel are worthy of revision: the regulation of services by the central rather than the local level of government, and the central role of the private sector in the regulation of services. As said before, the regulation of public transport in Israel is led by the central government. This presents shortcomings as local level governments tend to better placed to address local particular transport needs (ITF, 2018[15]). Israel also developed a New Public Management approach, in which private consulting companies (chosen through tendering) perform a number of regulatory, planning and supervisory activities (Ida and Talit, 2017[58]). An important shortcoming of this arrangement is that as these activities are outsourced, the development of technical expertise within the government is limited.

The development of metropolitan transport authorities (MTAs) would be a good way of shifting towards local level regulation and planning, while building high level in-house technical expertise. As shown by their success in other countries, these authorities could also help Israel and the sector to advance in pending issues, which are key for transport to meet climate and other well-being goals, such as strategic level and integrated planning (ITF, 2018[15]). These entities are not only valuable in the case of large metropolis. Rather, they are a good framework for supporting a variety of other urban areas (e.g. small urban areas and regions where several small cities and rural areas form a single economic unit). In some countries (e.g. France) forming MTAs has been a requisite for municipalities to be able to leverage funding (e.g. the Versement Transport tax discussed in the previous section), with the aim of fostering coordinated decisions and investment.

Presently, metropolitan planning bodies exist in the case of large metropolitan areas in Israel. This is the case of the JTMT (Jerusalem Transportation Masterplan Team) in Jerusalem, which is a body supported by both MOT and the city of Jerusalem that is involved in all public transport planning activities. In Tel Aviv, Ayalon Highways is a planning governmental body that manages planning for most of the large infrastructure projects. Projects involving this type of entities are also coordinated with municipalities. In smaller cities and other areas, cooperation also exists but depends on the local authority's ability or willingness to promote public transport. While, the creation of these bodies shows an improvement in getting local governments involved in the provision of transport, these are far from being fully functional MTAs. The creation of such entities would ensure local entities have a prominent and balanced role in the decision-making process, while maintaining cohesion and coherence at metropolitan level (ITF, 2018[15]). Box 4.2 describes the elements that are necessary for an institution to be qualified as a fully functional MTA.

Being the existence of dedicated and highly skilled staff one of the necessary elements for these institutions to be fully functional, MTAs can also be an important vehicle to build planning and regulatory capacity within the public sector in Israel. In addition international experience suggests that assigning power and responsibilities to these institutions that go well beyond public transport (e.g. to include active modes, road-safety, traffic and parking management) is an asset. This should be taken into account if the decision is to develop such entities. Finally, while being public these institutions need to be technical bodies, independent of the political cycle.

Given the centralised nature of Israel, the development of MTAs would need to be embedded in a process of decentralisation (also see precedent chapter), where responsibility over transport service delivery (among others), along with financial and decision capacity would progressively be transferred to local entities. As highlighted in Box 4.2, transfer of responsibilities needs to be accompanied by the transfer of funding and/or fiscal authority at local level. In this context, the new framework could be designed to allow MTAs to concentrate some of the new responsibilities and funds, avoiding excessive fragmentation of responsibilities and decision-making that could lead to a lack of coordination between local entities that are part of the same metropolitan area. MTAs can also facilitate coordination between central and local governments. All of this is relevant as already now (before a decentralisation process) the lack of coordination between different authorities has hampered transport projects, such as the reorganisation of the Tel Aviv bus network in 2009 (Oecd, 2018[59]). Different types of governance structures, i.e. voting and representation rules, can be chosen for MTAs, but as highlighted in Box 4.2, sub-national authorities need to have a predominant role in the decision making process.