04 October 2013 15:11 [Source: ICIS news]
MUNICH (ICIS)--Reach regulatory framework has had a negative impact on innovation, European Chemical Industry Council (Cefic) president and BASF CEO Kurt Bock said on Friday, as compliance costs have reduced the amount of funds available for research.
“Expenditure for Reach, especially for SMEs [small and medium-sized enterprises], has deprived them of additional funds to put into R&D, [so] the overall effect is negative,” Bock said, speaking at the Cefic general assembly in Munich, Germany.
“From our side, listening to those of the internal community, we haven’t heard a single example where Reach would have triggered innovation beyond a substitution process of chemical A for chemical B,” he added.
Geert Dancet, head of Reach administering body the European Chemicals Agency (ECHA), has claimed that the regulation has forced companies to become more competitive by examining their portfolio of chemicals and deciding which ones are the most profitable.
Speaking to ICIS earlier this year, Dancet said: “[Producers] can take earlier decisions to concentrate on the profitable part of the business, and thereby have a bigger overall survival of the companies.”
However, ECHA is not taking into account the impact on the development of brand new materials and technologies, according to Bock.
“Geert Dancet is [speaking from the perspective of] a regulator, and for them, innovation is replacing one chemical with another one in the market. When we talk about innovation, we are talking about something that hasn’t existed, be it a substance, process or technology,” he said.
The cost of regulatory compliance has also impacted on the margins of commodity chemical producers in the EU, according to a European Commission progress evaluation of Reach, raising questions over whether producers can compete with companies making similar materials in lower-cost regions.
However, Bock stated that Europe had been facing competition from lower-cost regions for decades without ceasing commodity chemicals production.
He said, “We have had competition from the Middle East - with extremely low energy costs - for many decades, and still we produce commodity chemicals in Europe, because there is a proven [track] record in terms of productivity and efficiency.
“It’s also part of the value chains [for many companies] which have been quite efficient and successful, so I don’t see a reason why Europe shouldn’t continue to produce commodity chemicals,” he added.
However, the case for developing new installed capacity for commodities in Europe is not as strong, he added.
“Are we the natural spot to put a new commodity chemical plant into operation if you look at the global landscape? Probably not,” Bock said.
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