Reach: Total costs will be under Euro10bn - Nordic study

14 October 2004 12:22  [Source: ICIS news]

LONDON (CNI)--The cost of implementing the European Union’s (EU's) proposed new registration, evaluation and authorisation of chemicals (Reach) legislation are manageable and will represent only 0.06% of the chemical industry’s sales revenue, according to a new study* undertaken for the Nordic Council of Ministers.

 

The analysis of the economic impact of Reach, prepared by Tuft University in the US, indicates an estimated 11-year “total direct cost” of Euro3.5bn ($4.3bn). If a tougher ‘Reach plus’ variant of the legislation were adopted, the Tuft researchers suggest that total direct costs could rise to Euro4.0bn.

 

Two standard economic models imply that total (direct plus indirect) costs should be no more than 1.5 – 2.3 times the direct costs, they add.

 

“Economic analysis confirms that costs of this magnitude are unlikely to harm European industry, while several studies have suggested that the health and environmental benefits of Reach will be substantial,” they claim.

 

The latest Reach impact study is at odds with that aired last month from consultants Arthur D Little which the Taft researchers dismiss as “implausible”. Under the “storm” scenario in the Arthur D Little study, prepared for the German industry federation BDI, it was implied the Reach total costs could be as much as 650 times direct costs. The European Commission’s (EC’s) own estimates of direct costs (it has not estimated indirect costs) are lower (at Euro2bn) than those from the US researchers.

 

The Nordic research results were presented at a seminar at the European Parliament on Wednesday (13 October). Sweden’s minister for the environment, Lena Sommestad, said that the study and another presented at the meeting which put EU clean-up costs at Euro15bn to Euro75bn over the 1971 to 2018 period, suggest that Reach will bring about “enormous socio-economic benefits”. In addition, the new law will lead to less damage to people’s health, biological diversity and natural resources, she added.

 

One conclusion from the studies is that future instances of contamination, such as that from PCBs can be avoided by implementing Reach and by detecting risks at an early stage, she said. In the long run, Reach will help improve competitiveness and stimulate innovation, Sommestad said.

 

EU ministers meet later this month in the Netherlands to consider the latest Reach cost estimates.

 

*See: http://www.regeringen.se/content/1/c6/03/09/11/84de48ff.pdf

By: Nigel Davis
+44 20 8652 3214

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