EPCA: Striking a balance with environmental legislation

27 September 2013 11:04  [Source: ICB]

Does environmental legislation in Europe aid industry competitiveness or does it destroy value? A straightforward question, yet the answer is anything but. Not surprisingly, the chemical industry has mixed views in that it can be both a help and a hindrance at the same time, depending on its scope, cost burden and the benefits gained.

Peter Holicki, EPCA vice president and vice president of operations for Europe, Middle East & Africa at Dow Chemical, says: “The petrochemicals industry fully recognises and supports the need for environmental legislation. Such legislation must, however, seek to balance environmental and health protection with economic competitiveness, growth, job creation and innovation – the latter being key to building a sustainable and competitive economy.”

EU building Rex Features

Rex Features

The European Commission plays the key role in bringing forward legislation

European competitiveness is a hot topic at the moment as the region begins to emerge from a lingering economic recession. It is also facing a double headwind of rising energy and feedstock costs as well as renewed competition from the US where petrochemicals production is reaping the rewards of cheaper shale gas. Any legislation that adds to the cost of production, or reduces innovation, will only further undermine Europe’s competitive position, and force companies to relocate to competing, lower-cost regions.

To reinforce this point, Holicki cites the 
example of climate legislation where the rest of the world has not followed the EU’s 
approach of establishing high cost burdens. He states: “Not only does this create competitive disadvantages for European producers it also offsets any beneficial impact on the environment as this simply encourages production to shift to other, more carbon-intensive areas of the world.”

For Richard Northcote, communications and public affairs director at Bayer Material-Science, another unhelpful aspect of current legislation is that it limits the development of chemical parks. He says this damages any potential for further investment at existing, older sites across Europe, which he believes will have a profound effect on competitiveness in the future.

“What the legislators have to realise is that initiatives such as Responsible Care have brought the industry to new levels of safety and our chemical parks no longer pose the threats associated with them some 30 years ago.”

Holicki maintains the EU should continue setting high standards, for example, in household products and cars, where the benefits in energy and greenhouse gas efficiency are sufficiently valued by customers to pay for the extra performance. “This will allow industry to generate advantages that the market is willing to pay for,” he says.

Hans-Joerg Bertschi, EPCA treasurer and CEO of Swiss logistics company Bertschi, says despite the additional costs and work required to meet stricter rules, environmental regulation can enforce Europe’s position in the world as an attractive place to live and work in. “These efforts have a cost tag, but they will pay off in the long run. The average length of life and standard of living in Europe is high, and this will attract the best talent from all over the world,” he comments.

Undoubtedly, legislation can help give competitive advantage, but only if it is sensibly applied and takes true costs into account. Holicki says when legislation drives high-performance standards for end-products such as household appliances this can render competitive advantage as it can set global standards and boost the export of EU goods.

Holicki would like to see more incentives to use the most effective technologies and operating processes wherever new investments are made. “If we can achieve a broader, global consensus on environmental policies that would enable a global, level playing field, then more ambitious policies can be put in place in Europe without a negative effect on competitiveness.”

Industry opinion may be split on the help or hindrance conundrum, but it is united on one aspect: legislators must develop appropriate regulation that can be applied sensibly to ensure Europe remains competitive in the global market.

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