OECD rules forcing Israel's industrial polluters to improve
More than 100 major industrial firms will participate in the pollution curbing program by the end of 2012, at which point they will be subject to OECD requirements.
The cabinet's ratification last week of Israel's membership in the OECD, the Organization for Economic Cooperation and Development, was a happy occasion, especially for those who care about the environment. This is because the international organization representing the world's developed economies requires member states to enact legislation on a range of environmental standards.
Although some factories in Israel have been dragging their feet over implementation of pollution limits, more than 100 major industrial firms in the country will be participating in the pollution curbing program by the end of 2012, at which point they will be subject to OECD rules on the subject.
The bad news is that medium-sized and smaller plants are not prepared for the process, and bringing them into the program will require more time and money.
The Israel Manufacturers Association is asking the government for NIS 200 million in financial assistance to help these smaller companies comply with OECD requirements.
"We're passed the time when companies can live in conflict with the environment," said Asher Grinbaum, executive vice president at Israel Chemicals, which in the past has taken it on the chin for its part in the damage caused to the Dead Sea, but is now a corporate standard-bearer for the environment.
As with other large industrial companies with substantial activity abroad, Israel Chemicals has grasped the fact that its economic achievements are increasingly conditioned on respect for the environment.
More and more customers are judging the quality of a company's products by the carbon footprint required to produce and ship them, meaning how much greenhouse gas was emitted in the process.
Reducing air pollution has become a factor in making companies more competitive, Grinbaum said.
"Just as the number of calories and amount of fat is listed on every product at the supermarket, the world is heading in the same direction on the subject of pollution," he said.
If two manufacturers are charging the same price, industrial customers prefer to go with the one with the smaller carbon footprint because this reduces the carbon footprint of their products as well, creating a market advantage.
The OECD, whose policies emphasize cooperation and uniform regulation, has accorded tremendous importance to environmental issues. Among 220 legal standards that it has developed, 70 relate to the environment.
In addition to pollution standards for individual businesses, the criteria also address issues including vehicle emissions and adjusting electricity rates to reflect the cost of the pollution caused in production.
The guiding principle behind it all is that the polluter should bear the cost of reducing pollution and that the price of a product should reflect the price of the pollution caused during its manufacturing process. This is also designed to guide consumers toward less dirty products, since they should be less expensive.
The organization, however, opposes providing incentives for polluters, other than in exceptional circumstances.
Because the OECD is an economic organization, its policy is geared toward fair competition among companies from various countries. A government's failure to force a local company to meet pollution limits is considered to be giving the firm an unfair competitive advantage, and such a shortcoming also tars the entire local industry with a reputation as being environmentally irresponsible.
Israel has begun implementing its OECD obligations in three industry-related fields: creating transparency regarding the pollution produced by each plant through Pollution Release and Transfer Registers; creating Integrated Pollution Prevention and Control permits, which take into account all sources of pollution from each plant; and carrying out surveys tracking the presence of dangerous chemicals.
The implementation process is expected to last until 2017.
The OECD led the Environmental Protection Ministry to discontinue its policy of letting factories receive separate permits for air and ground pollution and to develop an integrated pollution registry. New air pollution legislation will come into effect in Israel next year as a result.
The ministry's director general, Yossi Inbar, said Israeli industry will be spending billions of shekels to jump-start the environmental protection effort. There has been a drastic improvement among local firms in this realm, he said.
"It hasn't come voluntarily, but rather because they have no choice," he said. Industry has been motivated to take action because his ministry has enforcement authority over not only the corporation but also key corporate figures such as the CEO and chairman.
"It's not nice to be accused of a criminal offense," Inbar said.
Nir Kantor of the Manufacturers Association welcomed the influence of OECD regulations.
"In general, industry views the process as an economic opportunity," he said. "In the environmental field, this will create order in the regulatory mess that changed every few years, and it will provide certainty in the long term."
However, that the process is much more advanced among large Israeli companies that do business internationally, he said.
"The small and medium-sized companies are not there, because they have less awareness of these fields. We expect the state to assist them in investing [in the environment], because we are talking about substantial sums that they will have to spend in a limited time frame."
He said there has been discussion of NIS 200 million in grants in addition to tax benefits.
A spokesman for the Finance Ministry said the Treasury is unaware of such a request.
Kantor said Israeli industry produces only 4% of the country's greenhouse gases, and another 34% if energy consumption is factored in.
"The rest of the emissions come from transportation, the residential sector and agriculture," he said.
Amit Bracha, the director of the Israel Union for Environmental Defense (Adam, Teva V'Din in Hebrew ), said implementation of OECD pollution standards could be accelerated, and that even large companies have not fully grasped environmental concerns.