FOCUS: Reach costs will hit smaller firms hardest

01 June 2007 09:22  [Source: ICIS news]

By Mark Watts

 

LONDON (ICIS news)--Ready or not, on Friday the European chemicals industry faces its biggest legislative milestone in recent years as Reach finally comes into force.

 

The new European Chemicals Agency (ECHA) in Helsinki, Finland, has begun the tricky and unenviable task of registering anything up to 70,000 substances used in chemical products.

 

Reach - the Registration, Evaluation and Authorisation of Chemicals -will improve the protection of human health and the environment through the better and earlier identification of the properties of chemical substances, says the European Commission.

 

But costs are likely to be high, and smaller companies with wide portfolios are expected to feel the largest financial impact.

 

European chemical major Akzo Nobel estimated its total group cost at around $100m to register 500 substances.

 

“We will be able to acquire the manpower and in-house expertise to ease the transition,” said head corporate regulatory affair manager Dave Buckland.

 

“Every company will have problems but the real impact will be felt in small and medium enterprises, (SMEs)” he added.

 

Energy giant BP has estimated a cost of $60,000 per product, whether made in Europe or sold on the European market – expenses which could make a serious dent in a small company’s accounts.

 

Shell Chemicals, which planned to register 100-150 substances, said direct costs would be incurred in four main channels – data generation, consortium administration costs, contractor and registration fees.

 

“The fees will be significant, as we may have to register our chemicals a number of times as site-specific legal entities,” said the company’s project manager for Reach implementation Carol Banner.

 

“For this reason, we are supportive of the principle of working through industry consortia to share data, cost and resources,” she added.

 

Europe’s largest chemical company BASF assured customers it would be fully prepared. It said it would offer a consulting service for SMEs struggling with the relevant expertise to implement the programme.

 

“With its networked and extensive product portfolio, BASF is one of the companies most heavily affected by Reach,” said head of the company’s environment, safety and energy competence centre Ernst Schwanhold.

 

“We are well ware of the changes it will bring, which prompted us to start preparing for Reach some three years ago,” he added.

 

However, some commentators were much less optimistic about European chemicals’ ability to cope with the huge new legislation.

 

President of the American Chemistry Council (ACC) Jack Gerard said Reach would undermine Europe’s chemicals sector and weaken global markets.

 

“We believe that investments in new products and new technology will decrease as company resources are more and more spent on Reach compliance,” Gerard told ICIS Chemical Business.

 

“This will not benefit Europe or the economies that have previously looked to Europe for trade and development,” he added.

 

After more than five years of political negotiation, Reach was formally adopted on 18 December 2006 by EU environment ministers after the European Parliament gave its backing to a revised version.

 

The ECHA has opened its doors with the task of managing the technical, scientific and administrative aspects of the Reach system, and ensuring consistency in decision making across the EU.

 

“We hope the chemical agency will be fully operational in a year’s time” said Werner Wenning, chief executive of Bayer and head of the German chemicals industry association VCI.

 

“The close dialogue with Helsinki will be critical if we are to cope with the huge challenge (of implementing Reach),” he added.

 

Chemical companies now have until June 2008 to pre-register their existing products and then three years to register chemicals produced in quantities of more than 1,000 tonnes/year.

 

By: Mark Watts
+44 20 8652 3214

< previous article(ICIS Chemical Business podcast November 2, 2009)

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