Panel reaffirms call to shut down Haifa Bay’s oil refineries within a decade

But in a sign of possible hurdles ahead, finance and energy ministries express reservations about the committee’s recommendations

Sue Surkes is The Times of Israel's environment reporter

Activists take part at a protest calling for the closure the oil refineries in the Haifa Bay in northern Israel, June 24, 2019. (Meir Vaknin/Flash90)
Activists take part at a protest calling for the closure the oil refineries in the Haifa Bay in northern Israel, June 24, 2019. (Meir Vaknin/Flash90)

A top-level committee of officials set up within the Prime Minister’s Office presented its final recommendations Monday on the future of Haifa Bay in northern Israel, with a call to halt all petrochemical activity within a decade, at most, to allow for the creation of new housing, eco-friendly jobs and a park.

The timetable is conditioned upon “maintaining the minimal needs of the energy industry.”

Environmental Protection Minister Gila Gamliel, who has pushed hard to shut the polluting industries down, welcomed the report, saying that Haifa residents deserved a “green and innovative bay.”

But in a sign of the difficulties likely to lie ahead, the Finance Ministry expressed its reservations in a report while the Energy Ministry sided with the Bazan petrochemical complex, owned by the Ofer family’s Israel Corporation. Both attacked the committee for what they said was unprofessional work.

The committee was established as part of Government Resolution 472 on October 25, 2020. Headed by Avi Simhon, leader of the National Economic Council within the Prime Minister’s Office, it comprises the: directors-general of the PMO; ministries of environmental protection, energy, economy and industry, interior, and defense; head of the Finance Ministry’s Budgets Department; heads of the National Security Council, National Economics Council, Israel Lands Authority and National Planning Council; and the attorney general.

It was not immediately clear whether the representatives of the finance and energy ministries inside the committee had opposed the report themselves.

The 85-page report (in Hebrew), packed with diagrams and graphs, notes that the bay, home to heavy industry, has great potential for development thanks to the presence of advanced industry in the area, proximity to leading higher education institutions such as the Technion — Israel Institute of Technology, the University of Haifa and several hospitals, as well as transport connectivity and a diverse population.

Plans for a new ‘Bay of Innovation’ in the northern city of Haifa after the removal of the polluting oil refinery industry, June 29, 2020. (Screenshot, Knesset Internal Affairs and Environment Committee)

As in its draft report issued for public comment in April, it notes stagnation experienced by Haifa — Israel’s third-largest city — in general and the bay area in particular over recent decades, the abnormal quantities of carcinogenic benzene and other chemicals in the air, and the excess levels of cancer seen close to the industrial zone. In addition, it cites the fact that the Bazan Group has led the list of factories with the most negative environmental impact in Israel for years, having repeatedly violated emissions permits and licenses — 150 times between 2017 and 2019 alone. It also stressed the bay’s location on an active earthquake fault.

Urging the start of government talks with Bazan to examine the possibility of moving toward cleaner types of industry, the report said the committee had found alternative solutions which could be implemented over the coming decade for providing the Israeli economy with fuel distillates, liquified petroleum gas, bitumen and condensate.

It also urged reaching an agreement with the KKL-JNF Jewish National Fund to finance and develop a metropolitan park.

Both the energy and finance ministries took issue with the committee’s opinions on the Haifa area’s stagnation, asserting that the report was not balanced.

Israeli Minister of Energy Yuval Steinitz during a discussion on a bill to dissolve the parliament, at the Knesset, in Jerusalem on May 29, 2019. (Hadas Parush/Flash90)

The Energy Ministry charged that the petrochemical industry’s contribution to pollution was “very small,” amounting to 10 percent, compared with other sources of pollution such as marine and road transport. It criticized using statistics on cancer from the past as a basis for future predictions and asserted that it would be more polluting to import benzene than to let local production of a lighter version continue. Along with the Finance Ministry, the Energy Ministry slammed a public opinion poll carried out as part of the committee’s work as slanted to disadvantage Bazan.

Haifa Bay’s industrial area, May 5, 2017. (Yaniv Nadav/Flash90)

Denying that it opposes developing Haifa Bay, the Finance Ministry expressed support for eventually shutting down the petrochemical industry. But it said that a 10-year timescale was unrealistic from either an economic or a planning standpoint, instead recommending a slower, more considered approach, without a deadline at this stage.

It called for the creation of a smaller committee that by the end of 2023 would come up with a deadline for the closure of the petrochemical industries. The deadline would leave time for planning a replacement energy infrastructure and for designing a financial framework that would be economically worthwhile. The shutdown would only take place once the country’s need for refining no longer justified the massive infrastructure that exists in the bay, the ministry wrote.

Over the next couple of years, Bazan would not be helped to expand and would be invited to government negotiations on compensation. The storage of imported fuels would also be more properly explored.

In the shorter term, the Treasury recommended transferring Bazan’s oil storage complex — which is close to homes in nearby Kiryat Haim — to the Bazan site in the bay, moving a bay fertilizer plant owned by Haifa Chemicals and moving an existing flight school to open up the seafront to the public.

The Bazen Group stated in its response that “the recommendations published by the prime minister’s adviser contradict the professional position of government ministries, including economists from the Finance Ministry and the heads of the Energy Ministry.

View of the water cooling towers at the Haifa oil refinery on June 12, 2020, after one of them collapsed (Meir Vaknin/Flash90)

“The attempt by the premier’s adviser to publish recommendations at the present time which are not acceptable to the professional echelon raise serious questions about ulterior motives,” the company said.

It claimed the aim of closing the petrochemical industries appeared to have been “marked from the start, without connection to figures, facts or the situation on the ground,” charging that requests to discuss other options for developing the bay were rejected.

Meanwhile, the committee’s calculations were wrong and unprofessional, the statement alleged. In similar projects, the “development costs were higher by tens of percentages than those used in the National Economic Committee’s calculations,” it claimed, while income calculations — and estimates for a compensation deal with Bazan — were far too low.

Bazan called on whichever government is formed to hold a “professional” discussion “based on facts and data and not on slogans,” while taking into account property rights and contracts signed by the government, and while ensuring the continued and uninterrupted functioning of the energy sector.

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