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Panel recommends closure of Haifa’s Bay’s oil refineries within a decade

Committee under national economic adviser Avi Simhon wants shuttering of Bazan, Kiryat Haim oil storage facility and transfer of Haifa Chemicals to Negev

Sue Surkes is The Times of Israel's environment reporter.

View of Haifa's oil refineries and other industrial areas, on May 5, 2017. (Yaniv Nadav/Flash90/File)
View of Haifa's oil refineries and other industrial areas, on May 5, 2017. (Yaniv Nadav/Flash90/File)

A top-level committee of officials set up within the Prime Minister’s Office recommended on Monday the closure “as soon as possible, and within no more than a decade,” of the polluting Bazan Group Oil Refineries in northern Israel’s Haifa Bay and its oil storage complex in nearby Kiryat Haim, as well as the transfer of Haifa Chemicals, a fertilizer plant, from there to the Negev desert in the south.

It issued its “draft government strategic plan” for public comment, before formally advising the government. It said that the closure of the plants had to be conditioned on maintaining the country’s energy security.

The committee, headed by Avi Simhon, leader of the National Economic Council within the PMO, proposed backing one of two plans for the residential, commercial and light industrial development of the bay, to be set within a large metropolitan park. The two plans vary in the amount of land earmarked for different functions.

Already last June, Simhon said that the Bazan petrochemical complex, owned by the Ofer family’s Israel Corporation, should be shut down within five years and replaced with a modern, green high-tech and residential hub.

Faced with significant air pollution and above-average incidences of cancer and respiratory disease, Haifa residents, backed by environmental activists, have been campaigning for years to to shut the complex down.

Environmental Protection Minister Gila Gamliel. (Environmental Protection Ministry)

Environmental Protection Minister Gila Gamliel, who pushed for the committee to be established in October with the prime minister’s backing, said, “This is another significant step toward reducing the State of Israel’s dependence on polluting fossil fuels [and…] realizing the vision of renewable energy.

She said there had been “sweeping” opposition from “wealthy individuals and various bodies that tried to torpedo the move,” and called on Finance Ministry officials and the Israel Land Authority to act in the public and environmental interest and to “ignore the pressures exerted on the committee members.”

Gamliel added that it was important to appoint and properly budget a directorate for the development of the Haifa Bay within the PMO.

The environmental advocacy organization Adam Teva V’Din called on the government to set a binding deadline for the plants’ shutdown and to ensure that the companies, and not the public, pay to repair the damage left after the evacuation.

It further stressed the need for a comprehensive examination of the entire economy, and particularly the refining industry, in light of the need to cut global-warming gases.

View of the former cooling towers at the Bazan Group oil refinery complex on June 12, 2020, hours after one of them collapsed. (Meir Vaknin/Flash90)

Bazan — one of whose iconic former cooling towers collapsed in June — occupies 526 acres (2,130 dunams) in Haifa Bay, close to the most heavily populated areas of northern Israel. Its refinery imports crude oil to make a range of refined products (distillates) for industry, transport and agriculture. Subsidiaries make products ranging from bitumen for road surfaces to waxes, oils, lubricants and polymers. ICL also owns a fertilizer plant.

A statement from Bazan, which has asked the National Planning Council to approve its own plans to expand its complex and build a gas-fired power station on the property, said, “Despite the attempt to set goals without any connection to the facts and to the contractual commitments of the state, members of the Simhon Committee understand the importance of ensuring operational continuity in the energy field and discussions with the industry.

“As the committee determined, there are long-term projects that constitute basic and initial conditions for any serious discussion, among them the establishment of storage facilities for fuel distillates and the construction of a new port in Haifa for [the import] of distillates. Bazan hopes that continuation of the government’s work on this subject will be professional and based on data and facts, while understanding the economic significance of meeting contractual obligations, with long-term thinking.”

Simhon, the government’s national economic adviser, set up an interministerial committee in 2018 to review the future of the Bazan factories, and employed the international management consultancy McKinsey, whose report on various options was finally released to the public last June, but with large chunks redacted.

National Economic Council chairman Prof. Avi Simhon addresses the Knesset committee on the natural resources sovereign wealth fund on August 11, 2020. (Adina Velman)

In the draft report issued Monday, the committee noted the 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 close to the industrial zone, the fact that the Bazan group has ‘led’ the list of the 10 factories with the most negative environmental impact in Israel for years, and its repeated violations of emissions permits and licenses — 150 times between 2017 and 2019 alone. It also noted the bay’s location on an active earthquake fault.

Of several analyses carried out for the committee, one indicated that, while the closures would lead to the loss of 1,795 jobs, many more would be created by the transformation of the bay area into a hive of development that takes advantage of Haifa’s location, its transport networks, and its proximity to centers of knowledge, such as the Technion — Israel Institute of Technology, the University of Haifa, and several hospitals.

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)

Implementation of the development plans for the Haifa Bay would bring significant sums into the coffers of the Israel Land Authority, mainly from the marketing of land for housing units and employment, the report said. On the other hand, major sums would need to be invested and it was important to hold a dialogue with those companies whose activities were to cease.

The committee is made up of the directors general of the PMO; the ministries of environmental protection, energy, economy and industry, interior, and defense; the head of the Finance Ministry’s Budgets Department; the heads of the National Security Council, National Economics Council, Israel Lands Authority and National Planning Council; and the attorney general.

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