Growing poorer not greener

02 June 2003 00:00  [Source: PCE]

The European Commission's White Paper chemicals policy proposals have been published, but, as Nigel Davis reports, there are more unanswered questions than ever

The release of the draft of Europe's new chemicals legislation has done nothing to allay the fears of the region's fine and speciality chemicals producers. They are still expected to bear the brunt of the costs associated with the proposed registration, evaluation and assessment of chemicals system (Reach). Industry estimates that 20% of Europe's chemical companies will shoulder 80% of the Reach burden and continues to warn of the costs of implementing the new rules and their workability.

The European Commission has made some concessions to industry since it published its chemicals white paper two years ago. It has removed more than 70 000 chemicals from the over 100 000 substances originally expected to fall under Reach. Many intermediates and most polymers will be exempt from the new EU chemicals regulations. The Commission (and industry) believes there is a hard core of 30 000 substances that will have to be registered and evaluated, the first steps in the Reach system. Some 3000 chemicals will have to undergo full toxicology tests.

The Commission is putting the onus for registration and testing firmly on industry - no data, no market is the mantra heard in Brussels. But it is not clear on which body, or bodies, will evaluate Reach registrations and decide that full-blown tests will be required. The Commission is proposing the creation of a central chemicals agency to run Reach, probably based at the Commission's research institute at Ispra, but the centre's remit and powers are not yet decided. Indeed, a great deal in the proposed regulation - which runs to 1200 pages, including complex and obviously important annexes - is unclear.

One of the reasons industry supports the legislative re-think is that new and existing substance regulations do not work well. But it is disappointed that the proposed regulations do little to allay fears that the Commission is creating a bureaucratic behemoth that will heavily burden industry - and the European economy - while delivering little in the way of environmental, health or safety benefits.

Certainly, it is here that the crux of the argument still lies. The Commission has made estimates of the cost of Reach registrations and testing that have been countered by industry.

The Commission suggests direct costs of E3.6bn over a 20-year period. Industry says direct costs will be much higher than that. These costs will be a burden on producers who will have to decide whether they want to continue making a particular substance or whether it would be better made elsewhere, or not at all. The Commission's environment commissioner, Margot Walstr"m and enterprise commissioner, Erkki Liikanen, both say they expect Reach to stimulate innovation but that is often difficult to see.

The regulations as proposed, still will impose huge costs on Europe's manufacturing industry. The Commission has estimated a cost to users of chemicals in the manufacturing chain of something like E26bn by 2020. The suggestion is that the regulations will eliminate up to 5000 deaths from occupational cancer alone over a 30-year period - a potential cost saving to the European Union of as much as E54bn.

But industry has warned that the cost burden will be much higher and extend down the manufacturing chain. It wants to see the Commission conduct a full cost benefit analysis, which takes into account Reach impact costs across the economy.

As it stands, users and importers of chemicals and finished goods can be expected to pay the price of a system that drives business outside Europe or to the wall. Industry adheres to the thinking behind estimates made before the legislative draft was published, which pointed to costs to European industry running into tens of billions of euros and the significant negative impact of Reach on European economic growth.

The Commission wants to re-write the chemicals legislative rulebook by placing sustainability and the precautionary principle at the heart of its chemicals regulatory regime. It acknowledges the negative impact on Europe's chemicals industry but suggests that this is a price European citizens are prepared to pay for an ultimately cleaner, greener and more sustainable industrial base.

It also expects and hopes that other regions will follow its lead and help make the no data, no market approach to chemicals apply worldwide. What happens to European industry in the interim has not been assessed and remains to be seen.

The international competitive aspects of Reach are uncertain but from the European standpoint negative. How the Commission intends to police the import of chemicals and finished goods is unclear. How robust the new system will be under World Trade Organisation rules is not certain.

The draft new chemicals legislation is available on the Internet at http://europa. eu.int/comm/ enterprise/chemicals/index.htm and a mechanism is being created for stakeholders to have their say about what is being proposed. There is a lot of talk about timetables and the time it will ultimately take for these new rules to become law but there is a growing awareness that the legislators have to get this right.

The consequences of failure to introduce an efficient and workable system - to replace up to 40 pieces of legislation - could be disastrous for Europe, the negative economic impacts far outweighing any EHS improvements. Europe runs the risk of not creating a greener and more pleasant land but one that is poorer and devoid of important means for growth.

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