Netanyahu doesn't want a two-state solution. Since the founding of Israel, the position has pretty much been that there is already a Palestinian state--Jordan. The problem is that the land acquired from Jordan due to conquest in 1967 was not empty--it's full of Palestinians. Israel cannot assimilate these residents without losing its character as a Jewish state. For security reasons, it cannot give the conquered land back.
Ethnic cleansing is a solution, a la the mass re-alignment of Muslims and Hindus in Pakistan/India at the time of partition. But Israel cannot force this, the Palestinians do not want to leave their lands (though they are happy to emigrate to the US/Canada) and Jordan won't take them anyway. Condominium is a possible solution but neither Egypt (Gaza) nor Jordan (West Bank) are interested. A new Palestinian state would not be self-sufficient and, protestations to the contrary, would militarize against Israel.
The conclusion is that there is no solution. Nothing that Kerry says will lead to a solution. The Israelis and everyone else in the region know he's on his way out. Netanyahu has no solution either. The Palestinian Prisoners proposal (probably authored by Barghouti) was a step in the right direction, but no current Palestinian or Israeli leader can make a lasting peace. The last two leaders who might have made peace were Ariel Sharon and Arafat. Sharon had a stroke and Arafat was killed.
Israel's only hope is that demographics and the natural growth of the Jewish population of Israel will improve its position. But there are risks here too. The haredim are just as fanatical as jihadi Islamists and will eventually be in the majority, changing the nature of the secular Israeli state. Israelis increasingly vote with their feet, seeking emigration, ironically, in the same places favorited by the Palestinians. There is nothing that can be done now, so there really is no point in even discussing the matter. Table the discussion for a half century. In the meantime, maybe leaders will arise who can make peace. Otherwise, the lands of Israel will continue to experience a cycle of mindless violence and repression leading to a place that no one wants to live in.