Air pollution caused by the burning of various fuels costs us hundreds of millions of shekels annually. This situation can be improved, and perhaps faster than we think. TheMarker has learned of a bill being drafted by the Environment, Finance and Infrastructure Ministries to reduce emissions from motor vehicles that pollute the environment.

Most Israelis do not realize how far behind Western countries Israel lags in such legislation, which includes the promotion of alternative fuel products; "green taxation," banning the entry of polluting vehicles from city centers; turning old cars into scrap metal; and the switch by state institutions to use of environmentally friendly or "green" vehicles.

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The emission of pollutants from motor vehicles is a major cause of air pollution in this country. These pollutants endanger our health and contribute to global warming. Some of the measures that contribute to the reduction of greenhouse gases and toxic emissions have other positive effects, such as reducing the congestion on the roads, lowering the number of traffic accidents and lessening the economy's dependency on oil imports.

Several interministerial committees have been working on the issue of reducing vehicular air pollution for about four years, resulting in the new bill, which includes a host of revolutionary proposals. For example, is would stipulate that diesel-powered vehicles over five years old be banned from entering central Tel Aviv, unless they are equipped with devices that significantly reduce polluting emissions.

The bill also calls for the scrapping of cars over 20 years old, as is practiced in some other countries, such as Singapore. The owners of the old vehicles would be offered NIS 3,000 compensation for turning in their cars into scrap and for the recycling of metal parts. This proposal is supposed to cover its own cost, as old car owners will buy newer cars and the purchase taxes will return the compensation money to state coffers.

The government has decided to take the first step in reducing vehicular emissions from newer cars and is proposing to convert all cars in the civil service to more fuel efficient and environmentally friendly models (such as hybrids and electric vehicles) within five years. Government companies and affiliated bodies and state authorities, such as the police, the Israel Defense Forces, the Israel Prison Services and other institutions that receive significant government funding will also be ordered to change their vehicles accordingly.

The legislation in question includes significant financial incentives for promoting clean fuel products not derived from crude oil, and for diesel alternatives, in keeping with the decision of the interministerial committee dealing with "green" taxation, which is due to issue its conclusions in the very near future.

One alternative fuel that is gaining popularity around the world is biomass. This is energy produced from organic substances, including biodiesel and ethanol sources. The advantage of these fuels is that they are produced from renewable sources and generate very little air pollution, relative to fossil fuels. Biodiesel is environmentally friendly and is produced from vegetable oil. Europe already has biodiesel production plants with annual output of about 10 billion liters. Ethanol, another biomass fuel, is also starting to attract interest in Israel. In Brazil, for example, 40 percent of vehicles are already powered by this substance.

Another alternative energy field that is actually already being researched and developed locally is hydrogen fuel cells. Hydrogen is the most common element in the universe, and combines with oxygen to form water. It is therefore the cleanest and most efficient fuel nature has to offer, but separating hydrogen from water uses up more energy than it produces. Experimental hydrogen-powered vehicles have already been developed, and hydrogen-fueled power plants for producing electricity are in the advanced planning stages.

Hybrid vehicles offer a third alternative. These vehicles have two engines, one electric and the other gasoline-powered. Their big disadvantage is the price - even though taxes on them have been reduced (45 percent, compared to 95 percent for fossil fuel-powered vehicles).

Two other alternative fuels under consideration are compressed natural gas (CNG) and cooking gas, officially known as liquid petroleum gas, or LPG, which is the most commonly used alternative fuel in Israel.

One of the main obstacles to the use of these alternatives is their cost effectiveness, as the fuels are not yet sufficiently inexpensive, and incentives must be offered to encourage consumer use of them. This month the Israel Tax Authority is due to issue "green tax regulations" with respect to vehicles, that will detail the taxes on all the alternative fuels.

The new bill also calls for the institution of differential taxation on vehicles - to include licensing fees, purchase tax, VAT, etc. - that would help promote the use of environmentally friendly fuels.