reach, a lever for a sustainable chemical industry: conditions and modalities conference of 11 and...

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REACH, a lever for a sustainable chemical

industry: conditions and modalities

Conference of 11 and 12 March 2005

Brussels

REACH, a lever for a sustainable chemical industry : conditions and modalities - 12 march 2005 - 12 march 2005


The CES study: content and rationale

The study seeks to … Extend existing thinking

• On issues concerning the impact and implementation of REACH

• On the identification of areas subject to further investigation Shift the perception

• Propose new insight on the REACH project in the light of current debates

And open up perspectives

… thanks to a content centred around three questions REACH’s compatibility with sustainable development The dynamic of innovation Dealing with the challenges of competition, particularly for SMEs


REACH as a lever for a sustainable chemical industry

c



1/3. A project in tune with sustainable development (SD) …

The characteristics of SD Integration of various dimensions (economic, environmental and

social ), … … of the various stakeholders … and managing tensions

From this point of view, REACH offers a number of guarantees

A dedicated agency: independence, expertise, transparency The determination to preserve the balance inherent in SD,

through a wide-ranging and prolonged consultation



… and with the development of CSR

CSR (corporate social responsibility) The contribution of businesses to sustainable development

From this point of view, it is logical that the burden of proof should be upon the businesses

REACH represents an opportunity for a visible implementation of the “Responsible Care Agreement” adopted by the chemical industry



2/3. The dynamic of REACH and the new competitive framework

REACH : an already rich dynamic … Long-term process of dialogue among the stakeholders Significant adaptations that take into account a number of

challenges (innovation, SMEs)

… that is being deployed in a societal context that is becoming increasingly sensitive to health and safety issues …

An increase in strategic risks• Accidents (AZF,…), multiplication of “scandals”: food

pharmaceuticals, … The development of multiple factor diseases Uncertainties as to the long-term impact of chemical products

on health



2/3. The dynamic of REACH and the new competitive framework

… marked by the inexorable increase in the pressures applied to the European chemical industry …

Downstream (consumers, retail distribution, producers of consumer products with high market value)

The countries with high environmental standards The non-European competitors who sooner or later will also

be applying the new standard

The emergence of a new competitive framework … A chemical industry placed “in the dock” by consumers and

citizens (cf. the very recent challenge to cosmetics in France)



2/3. The dynamic of REACH and the new competitive framework Emergence of new behaviour patterns among the players

• After an initial phase of frontal opposition …• … the players are beginning to position themselves in

relation the their special interests …• … in the face of a social (and therefore commercial)

demand that is going through a major upheaval

In such a context, REACH can make it possible to gain a competitive advantage

By an effort of transparency that is appreciated by the market

By giving new impetus to quality innovation having an HSE orientation



3/3. The key question: how is this to be implemented?

The uncertainties surrounding the effects of REACH …• Players’ strategies, the dynamics of competition, challenges

from outside the EU, complementarity with other European policies, …

… forces us to look for the conditions of effectiveness of the regulatory approach which will be best suited to:

Create an overall dynamic of the chemical industry Develop balances that are compatible with a policy of sustainable

development

Hence the necessity to focus the debate on the rules and conditions of implementation


REACH and innovation, a core issue

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1/3 R&D in the chemical industry, an essential but complex vector

An essential vector for success The Lisbon strategy Improving the environment and competitiveness at the same

time Finding substitutes for and improving existing products

A complex chemical context Favourable factors

– A sector historically rooted in innovation– Expertise in innovation under environmental constraints

Differentiated problem areas– By sector of activity– By geographical zone– By company size



2/3 An R&D that is not spontaneously in tune with REACH

Points requiring attention A weakening of Europe’s relative performance A tendency to segment R&D

Trends in the R&D effort that are at odds with REACH’s goal

The “financial/marketing” driver: concentration on the most profitable product lines; an orientation that is more downstream than upstream. Existence of investment cycles that need to be harmonised with the REACH timeline



3/3 The challenge: creating a dynamic of innovation in HSE

Through REACH … Favourable provisions …

• 5-year substance exemption in R&D• Application to existing substances• Withdrawal of hazardous substances = an incentive for

innovation• Raising the exemption threshold (from 10 kg to 1 T)• A long lead-time and significant breakthroughs that are

an incentive for innovation

… and special attention given to the diversity of situations

Through the R&D policies of the EU


cThe vital issue of the

uncertainties of the economic effects of REACH



1/3. Differences …

Small causes, big effects? Low overall direct costs, from 0.05% to 0.2% per year over 10

years Yet certain macro-economic effects that could be potentially

devastating

Discriminating parameters on global costs The number of products stopped (for HSE or economic reasons) The real scope of cascading effects on the business lines, in

particular for employment

Two underlying models Two concepts of competitiveness Two concepts of implementation



Bottom-upBottom-up30% of products 30% of products

recalledrecalledCascade effectsCascade effects

Top-downTop-down2 to 3% of products 2 to 3% of products

recalledrecalledVery limited indirect Very limited indirect

costscosts

CompetitivenessCompetitivenessDifferentiationDifferentiation

Transparency: Transparency: high social valuehigh social valueHSE innovation HSE innovation

Appreciated by the marketAppreciated by the market

CompetitivenessCompetitivenessCostsCosts

The additional costs ofThe additional costs ofde REACH de REACH

are going to penalise are going to penalise the industrythe industry

« pro-REACH »« pro-REACH »

« anti-REACH »« anti-REACH »

2/3 … that reflect a confrontation between models …



3/3. … with particularly critical issues for SMEs

Significant potential impact Cost of recording data:

– Double disadvantage: many substances, in small quantities– Larger number of tests and greater difficulty to absorb the costs,

because of low volumes

Indirect impact because of input disparities for the users of chemical substances

A problem of implementation, more than of regulation REACH includes provisions for adapting the regulation…

– Reduced recording costs – Test mutualisation (consortia)– Authorisation provisions that include economic elements

… but they may be insufficient


Conclusions : uncertainties and support provisions

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1/3 The stakes of the implementation process

Guarantee a fair balance between the economic, social and environmental components

Ensure there is a representation of the various stakeholders:

To be able to appraise situations of uncertainty To articulate the public and private dimensions of R&D

Set up provisions and procedures providing support in the face of an uncertain dynamic



2/3 An implementation that has yet to be coordinated with politics

R&D: what place for REACH in the 7th PCR? The 7th framework programme cadre chemical technology

platform: the challenge to make a place for REACH The major challenges (REACH is a revealer)

• Decompartmentalize economic and social/societal innovations

SMEs: a transverse issue for European industrial policy

Participation of SMEs in the framework programme for research (15% of the budget)

Cooperation programmes among SMEs But a compartmentalisation of policies leading to a

splintering of actions



3/3 Two implementation issues that still need to be considered: regulating intra-sector disparities …

What level of adjustment? Limited informal adjustment, left up to the initiative of the

players : the current status of REACH A comprehensive and centralised adjustment of the

recording costs• economically possible (0.07% of turnover)• but could damage the principle of the burden of proof

An intermediate adjustment: • tax on chemical products, supplying a fund destined to

facilitate the financing of of the recording studies of low volume/low value products (to be explored)



… et building on the potential of the REACH effort

An pro-active SD policy: a label REACH? Interest

– Transform the recording and authorisation obligation … into an opportunity for differentiating and leveraging the products on the worldwide market

– Impose the European reference system as a standard

– Reinforce innovation policies and in fine competitiveness

Compatibility of the current provisions of the project– The agency as a certification body: expertise

– Independence and neutrality of the certifying body

– Transparency

Institutional and practical uncertainties remain to be lifted in order to guarantee the effectiveness of the certification / labelling process

reach, a lever for a sustainable chemical industry: conditions and modalities conference of 11 and...

Documents

chemical industry slide

dynamic of reach

businesses reach

reach project

implementation of reach

sustainable development

health slide

smes slide