"I see my future in the civil service, Ministry of Environmental Protection director general Alona Sheffer-Karo told "Globes" in an interview. "I have had the privilege of working for [Minister of Environmental Protection Gilad] Erdan, and if we've succeeded in doing in two years what hasn’t been accomplished in twenty - the credit is mostly his."
Sheffer-Karo first met Erdan in 2009, when she was the executive director of Life and Environment Umbrella Organization Promoting the Quality of Life and Environment in Israel, and submitted the organization's proposals for curbing greenhouse gas emissions to the 100 Days team that Prime Minister Benjamin Netanyahu had set up ahead of the establishment of his government. Erdan, a member of the team, was convinced, and persuaded her to become his chief of staff. 18 months later, in February 2011, he appointed her director general of the ministry.
Earlier this week, Erdan called on Netanyahu to review the use of Israel's natural resources, including mineral water, marine sand, phosphates, and salt produced at the Red Sea. The initiative followed Erdan's harsh criticism of the new royalties agreement between the Ministry of Finance and Israel Chemicals Ltd. (TASE: ICL).
"Globes": There is a feeling that an anti-business attitude has overcome the public sector today.
Sheffer-Karo: "I think a lot about this claim. We see the importance of strong industry, because only strong industry has the means to comply with standards and promote green growth. I came to the ministry to promote water, energy, and food. This is an equilateral triangle that is Israel's great opportunity. We want industry to adapt and understand what it is not. Water and sand are limited resources that carry a price. On the other hand, we want industry to treat the environment as a leverage for business development, and to our great delight, this has happened. Israel Chemicals' greatest breakthrough product today is a product that reduces mercury emissions at coal-fired power stations. Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) has entered the water desalination industry, and Shikun u'Binui Holdings Ltd. (TASE: SKBN) has entered the thermosolar industry. These are just a couple of prominent examples."
Draining the Yam Tethys reservoir
Erdan has greatly increased the Ministry of Environmental Protection's involvement in the energy industry, especially following of the suspension of natural gas deliveries from Egypt. Energy industry sources are highly critical of this involvement, arguing that the ministry's insistence on environmental principals is causing severe economic damage. In the past few days senior Ministry of Energy and Water Resources officials have claimed that the Erdan's refusal to allow Israel Electric Corporation (IEC) (TASE: ELEC.B22) to use heavy industrial oil and diesel at its power stations is responsible for the over pumping of Yam Tethy's Mari B natural gas reservoir, currently IEC's only source of natural gas.
In February-April 2011, pumping from the reservoir was more than doubled, causing the reservoir's gas pressure to fall to a level requiring the use of compressors to extract the gas. "They've simply slaughtered the reservoir," a senior Ministry of Energy official told "Globes".
"We are responsible for the environmental interest, not for the management of the gas market," says Sheffer-Karo. "The moment the problems with Egypt's gas began, we agreed to a flexible system for the operation of power stations, and approved exceptions to emissions standards. Exceeding environmental standards is our red line, because it means harming the public's health. Obviously, there will be problems, and it's going to be a tough year."
2012 will not be the only tough year. Israeli electricity consumers will pay an extra NIS 10 billion over the next three years. The entire economy faces the threat of initiated blackouts, warns IEC's CEO, due to the acute shortage of natural gas caused by the suspension of Egyptian gas deliveries. The gas shortage will only end when the Tamar reservoir comes online, which will not happen before early 2013.
The original plan called for linking Tamar to the gas pipeline network in February 2012 through a terminal built at Dor, near Hadera. But the National Planning and Building Commission rejected that plan in the summer of 2010, due to the aggressive campaign against it by environmental organizations and local residents. No one anticipated a natural gas crisis at the time, and even now Sheffer-Karo fully supports the use of diesel as back-up.
"We still oppose the plan to build the terminal," says Sheffer-Karo. "We think that the entire process was flawed because the plan was handed over to the developer. If everyone now understands that planning by the developer mostly serves its economic interests and harms the public trust in the system - the credit belongs to Erdan."
The media depicted the fight against the Dor gas terminal as an environmental battle against the gas tycoons. In reality, the driving force behind the campaign were local residents in Caesarea, Zichron Yaakov, Hadera, and other communities who feared loss of property values. In other words, this was a case of NIMBY (not in my backyard).
"It's true that there was a lot of NIMBY in the fights against gas terminals and power stations at sites such as Beer Tuvia," confirms Sheffer-Karo. "The residents have legitimate concerns, and their only remedy is a transparent and orderly planning process that forces the developer to choose the least environmentally damaging alternative. Some ministries treat the public as a threat and lacking in logic. I came from environmental organizations, and I'm not afraid of the public - I think that it's a good thing.
"When you dump on the public all kinds of directives without explanation, the public is not fooled. The fact is that in the case of the gas terminal, they [the special interests] tried to pull a fast one and failed. We were told that it was only possible to deliver the gas by the fastest pipeline to the coast and that the terminal had to be on the coastline. They are now talking about building the terminal away from the shoreline. It's true that this costs the developers more, but when the planning is done by the state, things look different. It suddenly becomes apparent that there are dozens of alternatives."
So you will support the plan this time?
"That depends on where the terminal will be built. If a site is chosen that causes the minimal environmental damage in terms of vistas and proximity to residents, and the process for lowering the gas pressure is carried out at sea, the profit is huge. We all have an interest in bringing in the gas as fast as possible. I am pleased that the Energy Ministry realizes that environmental planning is a fundamental issue, and work with us on key projects, such on the government's gas economy policy committee."
Billions in damage
Last month, Ministry of Environmental Protection coastal protection department director Rani Amir instructed all offshore oil and gas exploration license holders to provide detailed information about their sewage discharges into the sea. This was the ministry's first step in supervising the rigs, most of which operate outside Israel's territorial waters, but within its exclusive economic zone. Sheffer-Karo says that the ministry is gravely worried out these discharges, and is worried about an environmental catastrophe, such as the oil blowout in the Gulf of Mexico in 2010.
"If there is a disaster at a rig, there will be a catastrophe here," says Sheffer-Karo. "Gas fields may also contain oil in lower strata, and the pollution can cause immense damage. There is almost no expertise on the issue, or any equipment. We're mainly relying on volunteers and we're barely able to able to respond to oil spills from ships.
"We've warned the Ministry of Finance that we're not ready to carry out the supervision needed and we lack the equipment, manpower, and resources. When the Sheshinski law was under discussion, we said that we wanted to link royalties revenue to emergency preparation, and they didn’t want to listen. Everyone was focused on the profits that the wells could generate, while we were saying that we were repeating the mistakes made when granting Israel Chemicals its concession at the Dead Sea, and that the government again risked facing billions of shekels in damage."
The Energy Ministry intends to supervise the rigs.
"The Energy Ministry has finally realized that they should handle the issue. The problem is that there isn't enough expertise, which is why we published an international tender for a consultant, and held a workshop in the US for officials from all the relevant ministries. We should supervise and the Energy Ministry should be the regulator."
The Ministry of Energy and Water Resources said in response, "The requirements for offshore drilling are being formulated. This week, the Ministry of Energy and Water Resources published a summary of the staff work, which included comments from other ministries. This document is intended to regularize Israel's oil and natural gas industry, bringing the country in line with the developed countries in the world and ensuring that activities derived from oil and natural gas exploration and production operations are carried out at the highest level, while using the best safety and control methods."
Published by Globes [online], Israel business news - www.globes-online.com - on January 12, 2012
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