The real cost of Reach

25 November 2002 00:00  [Source: ICB]

While welcoming the overhaul of the European Commission's chemicals policy, Ren' van Sloten, director, international trade and competitiveness at Cefic, has highlighted the risks of the new legislation not being implemented correctly. Speaking at a meeting called by Karl Heinz Florenz, a European parliament member, in Brussels, Belgium, on 12 November, on how industry competitiveness can be reconciled with future legislation to protect the environment, he said: 'The new legislation risks not only the [European] chemical sector's global competitiveness and innovation capacity, but also that of the European manufacturing industry at large which depends on chemicals as raw material input.'

According to van Sloten, there is a misconception over how the new chemicals policy will affect only the chemicals industry. The industry supplies almost all sectors of the economy, he said, and 'the industry and chemistry as a science are crucial for the success and competitiveness of downstream sectors across the board'.

Reach pickings

A recent survey by the Federation of German Industries (BDI) indicates that the implementation of registration, evaluation and authorisation of chemicals (Reach) will cost between 0.4% and 6.4% in added value for the German economy - the exact magnitude depending on the legislation enforced (see box).

According to a study by UK consultancy RPA for the Commission, the cost of Reach may amount to up to E7bn ($7.05bn). Set against the overall size of the business (turnover in 2001 was estimated at E464bn) and a ten-year timescale, the burden may not be considered significant, said van Sloten, but 'in reality, the costs will fall predominantly on the fine and speciality chemicals sector which accounts for E100bn turnover'.

'Put simply,' he continued, 'it is this sector and these companies that account for roughly 20% of total chemicals industry manufacture and that will have to carry over 80% of the costs of testing and administration under Reach.'

The fine and speciality chemicals sector is made up of 'several thousands of small and medium-sized companies which produce the "building blocks" for European manufacturers,' he said, forming the 'industrial tissue' of the European Union. In many cases, he thought that the size and number of chemicals to deal with under new legislation will lead to a situation where the costs for small companies will equal their profits for some years.

Van Sloten added concern over the increased number of substances which may be 'deselected' ('up to 40% of all substances manufactured') when Reach-type legislation is introduced and that development of innovative new products may suffer as a consequence. This in turn may affect investment in R&D and reduce exports.

Implementation

Van Sloten concluded that, as the BDI and Cefic's own analyses demonstrate, much will depend on how Reachis implemented. If smaller volume chemicals, say under 1 tonne, were included it would greatly add to the burden of the system.

'In some cases, the increased costs are caused by the inclusion of substances that do not enter the public domain,' he added. This particularly applies to intermediates, many of which do not leave single sites or are shipped between sites under well controlled conditions.

Finally, he said: 'The chemicals industry has been working actively to help clarify and refine the concepts of the White Paper, so that a predictable, pragmatic and balanced chemical regulatory framework can be created and implemented successfully.'

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