Within a decade at most, the petrochemicals era in Haifa Bay will end. This was decided by the committee of ministry directors general appointed by the government to formulate recommendations for the future of the petrochemicals industry in Haifa Bay. The committee has not, however, set a specific date, and has left the government room to decide, which could help it from a legal point of view if that becomes necessary. The cessation of oil refining in the area will take place subject to meeting targets required for maintain stability in the energy sector, for which a special administration will be responsible.
Intensive industrial activity is concentrated In Haifa Bay, adjacent to densely populated areas. It includes petrochemicals plants (Bazan-Oil Refineries), a large chemicals industry zone, and crude oil storage. This activity, along with two seaports and a third under construction, makes Haifa Bay one of the worst environmental pollution zones in Israel.
The directors general committee was formed in October last year on the basis of agreements reached between Prime Minister Benjamin Netanyahu and Minister of Environmental Protection Gila Gamliel. It has submitted its recommendations two months late, after its members encountered difficulty in reaching agreement on the date by which the petrochemicals plants should be evacuated and the outlines of a decision. Now that the committee's conclusions have been submitted, they will be open to public comment for two weeks, after which they will go to the government for review.
The recommendations state that in accordance with progress in planning and in rezoning land in such a way as to facilitate sustainable development of the Haifa Bay area and its transformation into an area for residential and commercial use, the government will set a target whereby within a decade all the relevant government agencies will complete their preparations and petrochemicals activity Haifa Bay will cease. This is subject to meeting requirements for ensuring continuity in the energy economy after activity in Haifa Bay is halted.
If the relevant agencies manage to complete their work within a shorter period of time, it will be possible to end petrochemicals activity in Haifa Bay earlier.
According to the document formulated by the directors general committee, the Haifa metropolitan area is in decline in relation to other districts in Israel in a range of measures of regional development, among them population movement in and out, and economic development, especially employment. Surveys carried out in recent years show that the public's fears of the effects of the petrochemicals industry have led to a net outflow of people from the area. In addition, the area is not attractive for commercial activity. Haifa has seen the lowest rate of construction of office space in Israel in the past decade. In Ashkelon, for example, three times as much office space has been built as in Haifa.
Government ministries hope that rezoning the area such that fossil fuel refining will no longer be permitted will enable the large Haifa metropolis, which is bigger than Givatayim and Ramat Gan combined, to develop and advance. In order to complete the process of rezoning the land, all the relevant government agencies will have to act towards the construction of a new distillates port in Haifa. They will also have to find a solution for condensates - fuels produced as a by-product of natural gas production from the Leviathan gas reservoir, currently used by Bazan in oil refining. Even before that, in order to rezone the land currently leased to Bazan the state will have to enter into negotiations with the company. A government team will be formed to negotiate with Bazan and with ICL (Israel Chemicals) with the aim of reaching agreement on change in the use of the land, taking into account as far as possible the interests of the companies and their employees.
Constructing the complex infrastructure of a fuels port will take a long time, even though such a port is already in the planning stages.
National Economic Council head Avi Simhon believes, however, that it will be possible to close Bazan before the end of the decade. "The 'within a decade' target is the maximum. I'm certain that with determined action by the government of Israel, refining can be ended within the next five to six years."
The Ministry of Finance Budgets Division opposes the plan, and has been joined in its opposition by the Israel Land Authority, which until recently sponsored the Bay of Innovation plan for Haifa. When Yaakov Kvint took up his post as chairperson of the Authority, he decided to adopt the Ministry of Finance's stance, despite the professional work done at the Israel Land Authority over three years, and determined that evacuating the petrochemicals plants was not economically viable. This is the opposite of the conclusion reached by consulting firm McKinsey and other professional teams in recent years.
How far are the current stances opposed? According to sources involved in the committee's discussions, the National Economic Council's position, based on the report by McKinsey and external consultants and surveyors, is that the Bay of Innovation plan, and evacuation of the petrochemicals plants, will result in a surplus of NIS 2 billion for the public purse. The Ministry of Finance Budgets Division sees the plan resulting in a deficit of NIS 8 billion.
Employment potential
The directors general committee finds that the Haifa Bay area's advantages are: knowledge intensive industry, seaports and logistics, clean manufacturing industries, and leisure and tourism. The committee says that on this basis there is great potential for employment in the area, and that the Bay of Innovation plan and will generate more jobs than currently exist there. Bazan and ICL Fertilizers currently employ about 1,700 people, but government ministries believe that evacuating the petrochemicals industries will make the area attractive for tens of thousands of workers and for businesses.
Among the committee's proposals are government action to attract a strategic "anchor enterprise" to the area, oriented to technological innovation and employing at least 500 people; a package of environmental measures, including reduced emissions from public transport and a switch to electric vehicles; reducing pollution from ships through the promotion of a "green ports" plan; and a national plan for a switch from liquefied petroleum gas (LPG) to natural gas and electricity for large industrial consumers and for households.
Minister of Environmental Protection Gila Gamliel said of the recommendations, "Our stance, as expressed to the committee, is that it is vital to set a date for the cessation of petrochemicals and fertilizers activity in order to create the right motivation for progress on all the actions required for the closure to come about. Closing these plants is in our environmental and health interests, and also in our economic interests. Removing the hazardous materials and ending the emission of pollutants will lead to the opening of many new businesses, to the setting up of green industries, and to immigration into the area.
"We bear the responsibility for ensuring that the large amount of public money that will be invested in this plan will not only bring relief to the residents of the area from air pollution and hazards, but will set a direction for the economy towards investment in clean technologies and becoming weaned off the use of fossil fuels."
Bazan stated in response: "Despite the attempt to mark targets regardless of the facts and the state's contractual obligations, the members of the Simhon committee understand the implications of ensuring continuity in the energy economy and dialogue with the industry.
"As the committee states, there are long-term projects that represent basic initial conditions for any serious discussion, among them constructing storage sites for distillates and a new distillates port in Haifa. Bazan hopes that subsequent government work will be professional, based on facts and figures, informed by understanding of the economic significance of abiding by contractual obligations, with long-term thinking."
Hanan Sontag, chairperson of the Bazan workers committee, and Doron Nisan, chairperson of the Bazan workers council, stated in response that they would not agree to any decision made without the workers' participation. "The workers representative body will not remain indifferent to unilateral decisions by the government, and will use every means at its disposal to ensure the workers' future," they said.
Published by Globes, Israel business news - en.globes.co.il - on April 27, 2021
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