The command and control regulatory tools used in Israel today are economically inefficient and expanding their use is undesirable. Alternate regulation can help better clean the air at a reduced cost.  As such, this research recommends moving from command and control regulation to market-based tools. A framework for trading in pollutants would provide the regulated firms with clear incentives to reduce pollution and would allow a merger of society’s demand for environmental quality with business’ desire to maximize profits. An emissionstrading market can be the means of financing “clean” production, enhancing environmental infrastructure and developing green industries in Israel.