Environment Ministry: Regulations match those of Western world, prioritize public health.

Israeli industry is gradually drifting outside the country’s borders and seeking refuge elsewhere, in response to the increasingly stringent environmental regulations the government is enforcing, a prominent environmental compliance attorney recently told The Jerusalem Post.

Arie Neiger has been providing environmental compliance advice to large industry players for the past three years, today focusing primarily on members of the Manufacturers Industry, which represents more than 70 percent of all industry in the country. During a meeting in his Tel Aviv office, he told the Post that homegrown industry was shrinking – in part due to the strict environmental regulations that the government has approved of late.

“Contrary to what most people believe, the environmental regulation is harsher here than in the EU and US,” he said.

In principle, Israel follows the same environmental regulations as the strictest in the European Union, but Israel does not design these regulations in the same cost-effective manner that the EU does, according to Neiger. Unlike the EU and US, Israel lacks any regulatory assessment mechanism independent of the country’s ministries, he explained.

“Nobody in Israel is tasked or assigned to do this job – to take the proposed regulation and find out how much it is going to cost,” he said.

As an example, he brought up the issue of cleaning up contaminated soil, eliminating toxic substances from the ground that can cause illness. The funds required to do so are extensive – just cleaning all the contaminated soil at army bases will cost about NIS 20 billion.

“How much health are we going to gain by that?” he asked. “How many lives are we going to save?”

For that same NIS 20b., he continued, the country could build hospitals and buy lifesaving medicines.

While he stressed that the government should, in fact, be cleaning contaminated soil, he argued that it should prioritize most crucial areas – such as land beneath kindergartens – and perhaps consider a slightly less stringent cleaning regimen.

Similar types of situations where cost-benefit analysis must be weighed include choosing between polluting but cheaper fuel oil and expensive diesel to operate a factory, and determining whether to maintain lower tax rates on small cars, which can, in turn, cause a Treasury deficit, according to Neiger.

In response, the Environmental Protection Ministry called the attorney’s suggestions “cheap demagoguery” and stressed that preventative efforts to maintain public health must be the highest priority.

“Instead of drinking toxic water, breathing the fumes of contaminated lands and afterward resorting to life-saving drugs and long medical treatments, the ministry believes that the correct solution is simply to prevent the pollution ahead of time, to treat hazards created over years and thereby prevent the suffering caused to residents,” read a ministry statement to the Post.

“Every shekel invested today in treating hazards saves at the same time dozens of years’ worth of shekels that would otherwise be used for medical treatment, output loss, compensation payments to victims, and ultimately also the treatment of the hazard itself or land purification.”

To handle cost-benefit analysis when creating regulations, the ministry said, the office has an internal economic and technology cluster that routinely performs in-depth economic analyses on the effects of environmental regulations on the economy.

However, Neiger argued, it is crucial to establish a separate office outside the ministry that objectively examines the cost of environmental regulations.

“If cost isn’t something you have to take into account, why not adopt the harshest measures available?” he asked. “The result will be the harshest environmental regulations in the world.”

The measures that continue to pass have directly resulted in industries moving out of Israel, he charged.

Among the most problematic regulations in his mind are those regarding air pollution.

Whereas in Europe, air pollution levels for factories are a bit more flexible, Israel mandates the strictest of standards, according to Neiger.

Europe follows a rule of thumb that factories are supposed to employ the Best Available Technology (BAT) when selecting emission filtration mechanisms. When dealing with particles and volatile compounds, the BAT rule there requires technology that leaves only between 5 mg. and 20 mg. per cubic meter in the air, he explained. Most of the technology available cannot perform any better than 10 mg. per cu.m., yet in Israel, such factories are required to use technology that filters down to 5 mg. per cu.m. – a demand for which technology is not readily available, according to Neiger.

Therefore, he said, Israeli industries are moving their factories to places in Europe, where the level is more flexible. “The difference between 20 and five is not even measurable. It’s just the principle,” he added.

Industry all over the world is shrinking, but in Western nations like Germany and France, governments are trying to draw industry back because they know that it is a great equalizer for employment, according to Neiger. In Israel, however, small factories are simply closing down because they cannot meet the new standards or even afford the fees required for an emissions permit, he said.

“A great number of them are closing, and nobody knows about it because it’s a manufacturing facility that employs 15-20 people,” he added.

One of his clients that has largely shifted its operations outside the country is Israel Chemicals, for which more than 50% of production now occurs abroad. An Israel Chemicals subsidiary, Bromine Compounds, has a facility in The Netherlands, and is debating whether to build its next facility there or in Israel.

“There’s one reason to do it in Israel, and that’s Zionism,” Neiger said. “[From] the moment you decide to go into the market [to] the moment you have a full manufacturing line in The Netherlands is 1.5 years. In Israel it is six years. In The Netherlands, you have much more reasonable environmental standards, certainly less harsh than in Israel.”

While he did not blame Environmental Protection Minister Gilad Erdan personally for what he sees as a trend of fleeing industries, he did criticize the minister for what he called “a scorched-earth policy,” charging that Erdan “runs” to implement all new regulations proposed.

“Give us European regulations that are acceptable and used all over Europe,” Neiger said. “This is a statement I can formally give you on behalf of Israeli industry. We can cope with all European regulations.”

Refuting Neiger’s statements, the ministry slammed him for what the office called “a collection of false claims” that he “makes every few months and whose purpose is to recruit additional customers to his office and show industrialists that he is taking care of them and protecting them.”

Emphasizing that Israel is one of the most crowded and smallest countries in the Western world, the ministry stressed that no piece of land could be spared.

“As for the claim that Israel’s industry is shrinking, the fact is that the ministry does not know of even one case in which a factory was closed because of the environmental revolution,” the ministry statement said. “Israel executes this revolution in recent years by means of processes and regulations that the Western world went through already years ago. This way, the ministry adopts international standards and regulations that are accepted in the most advanced countries.”

Without such internationally accepted regulations, which are economically feasible and beneficial to the Israeli market, goods manufactured in the country might not be able to retain its current export capacity or competitiveness throughout the world, according to the ministry. Messages such as Neiger’s can only worsen the relationship between Israeli industry and the country’s citizens, the ministry argued.

“The ministry sees industry as an essential cornerstone in Israeli society,” the statement said. “Its ambition is therefore to allow for industry to develop while minimizing the damage to the environment and public health, and to maintain the best standards of international practice.”