The chemical industry has long been bound by some of the world’s most stringent regulations but there is a growing movement to regard them not as a necessary evil rather as an opportunity to promote innovation.
Among the organisations taking that view is Cefic, the European Chemical Industry Council, which has launched new proposals highlighting how the European Commission’s Better Regulation Agenda can better support growth and innovation in Europe. The Commission adopted its Better Regulation Agenda in 2015, comprising a package of reforms to improve openness and transparency in the EU decision-making process, improve the quality of new laws through better impact assessments and promote consistent review of existing laws. First Vice-President Frans Timmermans said: “We are listening to the concerns of citizens and businesses – especially SMEs – who worry that Brussels and its institutions don’t always deliver rules they can understand or apply.
“We want to restore their confidence in the EU’s ability to deliver high quality legislation. Better regulation is not about ‘more’ or ‘less’ EU rules, or undermining our high social and environmental standards, our health or our fundamental rights. Better regulation is about making sure we deliver on the ambitious policy goals we have set ourselves in the most efficient way.” Those comments found an echo in the views of Cefic, whose Director General Marco Mensink highlighted the fact that 96% of Cefic’s 29,000 member companies are SMEs and face a complex European patchwork of rules and procedures. He said: “Better regulation is in both our and the government’s interest. We need regulations that meet the political goals they implement and that support competitiveness and innovation.
“If we find opportunities to improve, this should be followed by concrete measures to address shortcomings.”
The European chemical industry proposes three steps to strengthen the Better Regulation Agenda:
Set tangible burden reduction targets – It says that the cumulative burden of existing legislation is significant and should be reduced. Cefic sees room for the same high levels of health and environmental protection but with fewer costs, enhancing competitiveness and growth. Improve the assessment of impacts on innovation – Cefic points out that the chemical industry is an enabler of innovation. It says that policy-makers and regulators should adequately consider impacts on innovation before taking decisions dealing with everything from investment in new technologies to the marketing of new products and processes in the EU. Extend best practices beyond traditional law-making – Better Regulation principles should also apply to EU rules outside the legislative procedure, from guidance documents to implementing and delegated acts, says Cefic.
Regulation that comes at a cost
Complying with regulation does come at a cost, though, and a new European Commission study shows that the cost of implementing major regulations for the European chemical industry doubled between 2004 and 2014. According to the study, Europe’s complex regulatory framework poses a significant burden on EU chemical companies, amounting to about 10 billion euro per year. The Commission’s Cumulative Cost Assessment shows that the total cost as a result of EU legislation borne by chemical companies in six sub-sectors between 2004–2014 amounts to 12% of the value added of the EU chemical industry, with variations ranging from nearly 3% for plastics to 23% for crop protection products.
Compared to Gross Operating Surplus, the additional cost reaches 30%, indicating that the cost of regulation is a significant factor shaping the profitability of the chemical industry. According to the report, the three main drivers of regulatory cost are regulations on industrial emissions, generating 33% of the cost, chemicals with 29% and worker safety with 24%. Energy legislation also contributes to the cost.
The chemical industry will face an increasing cost to comply with stricter emission limit values, with more ambitious CO2 emission reduction targets and energy efficiency objectives. Marco Mensink said: “The picture is very clear. Europe needs to focus on its competitiveness, of which the regulatory burden is a big factor. “Although the report indicates that costs almost doubled between 2004 and 2014, no firm conclusions about its impact on global competitiveness can yet be drawn. “In a second phase, the study will now compare these costs to other regions, shining a light on the impact of regulation on competitiveness on a broader scale. “Cefic will continue to explore with the EU institutions how the regulatory framework can be made more cost-effective and fit for purpose while upholding the same high level of safety, health and environmental protection.”
‘Re-think needed on endocrine disruptors proposal’
The UK-based Chemical Industries Association (CIA) has called for a re-think of the announcement by the European Commission on its proposal for the identification of endocrine disruptors. CIA has criticised the proposal for not providing the criteria necessary to distinguish between harmful and non-harmful substances.
Though CIA views the proposal to use the WHO/IPCS definition without potency (strength of substance) as a sensible starting point, it believes this single definition is not sufficient for regulatory purposes. The chemical industry supports the use of the WHO/ IPCS Definition with full hazard characterisation and risk assessment, saying that it will enable identification of chemicals which can potentially cause harm. It says that, without such an approach, many chemicals may unjustifiably be identified as endocrine disruptors, with potential proposals for stringent regulation including bans resulting in the unnecessary loss of many of the benefits they bring to society.
CIA encourages regulatory policy measures to be based on risk-based science and calls on the Commission and Member States to adopt this approach. Senior Health executive Dr Roger Pullin said “The chemical industry is fully committed to ensuring its products are handled and used safely so as to avoid harm to human health and the environment. This regulation will make that aim harder. I am calling on the Commission to work with industry and all stakeholders in order to take another look and develop appropriate regulation.”
