EU CHEMICAL INDUSTRY

RNCOS (2007) EU Chemical Industry Analysis Report, RNCOS Market Research Solutions. 

More directly and in the shorter term there will be consequences for employment. As a capital-intensive industry, the chlor-alkali sector itself does not employ large numbers of people. However, the indirect employment consequences of closure are much greater. Industry estimates may be seen as being too well informed and therefore unreliable, and instead it might take governmental estimates. The European Commission (DG-III, nowDG-Enterprise) has estimated that there would be a loss of 10 000 jobs in the EU chemical industry by the year 2010 - ignoring secondary effects [6]. The... 

The two most important aims of REACH are to improve the protection of human health and the environment from the risks of chemicals while enhancing the innovative capability and competitiveness of the EU chemicals industry. 

The EU Commission White Paper (CEC, 2001) says that chemicals bring about benefits on which modern society is entirely dependent, for example in food production, medicines, textiles, cars, etc (CEC, 2001, p4). The EU trade surplus in chemicals and the number of people employed directly and indirectly by the EU chemicals industry are also counted as benefits. These ideas of what counts as a benefit are critically examined in Chapter 8. 

The REACH system was initiated to improve the protection of human health and the environment from the risk that can be posed by chemicals, to enhance the competitiveness of the EU chemicals industry (a key sector for European economy), to promote alternative methods for the assessment of hazards of substances, and to ensure the free circulation of substances on the international market of the European Union. The regulation was formally enforced on 1 June 2007. However, according to the REACH schedule, the registration procedures started from 1 June 2008 [1, 2]. 

The REACH Regulation creates a single system for both existing and new substances. All substances are covered by this Regulation, unless explicitly exempted from its scope. The strategy of REACH is to ensure a high level of chemicals safety and a competitiveness of the EU chemicals industry.65 The benefits of the REACH system will come over time, as more and more substances are phased in. The objectives that were balanced within the overall framework of this sustainable development were... 

REACH came about as a result of the growing awareness that the former legislative framework governing chemical substances in the EU, which consisted of a patchwork of many different directives and regulations that had developed over the years, contained several serious flaws that risked jeopardising human health and the environment and hampering the competitiveness of the EU chemical industry. 

The previous system was also problematic for industry insofar as it stifled innovation by requiring that new chemicals be notified and tested starting from volumes as low as 10 kg per year (as compared to 1 tonne under REACH). This had the effect of discouraging research into new substances and alternatives, favouring the development and use of existing substances over new ones. The result was that the EU chemicals industry lagged behind its counterparts in the United States (US) and Japan in this regard. 

The EU chemicals industry is one of the EU s most international, competitive and successful industries, accounting for around 30% of the total world chemicals production. At the same time, the EU imports almost as many chemicals as it exports, and a sizeable number of European production facilities belong to non-EU multinational companies. It is therefore no surprise that the new EU chemicals Regulation, REACH, has caught the attention of such a vast range of stakeholders both within and beyond the EU. 

A great deal of controversy surrounds the business effects of REACH. Environmental NGO argue that the chemical industry is crying wolf over the potential negative effects that the regulation will have on EU businesses [283]. NGO support this assertion with the fact that the cost estimates for implementing the current REACH proposals represent only about 0.05 % of the annual turnover of the EU chemical industry (about 400 billion) [283]. The costs to downstream chemical users represent <1% of their total turnover of around 425 billion [283]. 

To promote international competitiveness of the EU chemical industry and encourage innovation, the REACH proposal ... 

Increasing international competition and poor public perceptions could jeopardise the sustainability of the EU chemical industry. REACH is a once-in-a-lifetime opportunity and the stakes are high. Whether REACH seals or opens the coffin for many EU chemical businesses will depend on the finer details of its implementation, which appears to be in the hands of the EU Member States, the European Commission and the new European Chemicals Agency. 

A key conclusion of the research project is that Germany may play an even larger part in EU decision-making and consequently exert a strong influence on the future of the EU chemical industry. This is the result of a complex mix of the following factors ... 

Information on the EU chemical industry, general information on petrochemicals and comparisons to the worldwide chemical industry is available from the European Chemical Industry Council, CEFIC at www.cefic.be... 

About 100,000 different chemical substances are registered in the EU, of which 10,000 are marketed in volumes of more than 10 tonnes and 20,000 marketed at volumes of between 1-10 tonnes. In 1998 world chemical production was estimated to be valued at 1,244 bilhon, of which the largest share (31 per cent) was produced by the EU chemical industry. It is Europe s diird largest manufacturing industry, employing 1.7 million people directly with a further 3 million jobs dependent on it. Although large multinational corporations are prominent in the industry, in Europe there are also 36,000 SMEs (over 95 per cent of the total number of chemical firms in Europe) that between them are responsible for 28 per cent of chemical production (CEC 2001). 

Quantifying long-term performance by monetary value can be difficult because of exchange rate considerations. CEEIC says that over the ten-year period from 1993 to 2003, including the difficult period mentioned above, the EU chemical industry grew by an average of 3.5% per annum, but its global market share fell from 32% to 28% and could almost halve over the next ten years. 

The European Commission proposed a new EU regulatory framework for the Registration, Evaluation and Authorisation of Chemicals (REACH) on 29 October 2003 [15]. The aim is to improve the protection of human health and the environment through the bettr and earlier identification of the properties of chemical substances. At the same time, innovative capability and competitiveness of the EU chemicals industry should be enhanced. The benefits of the REACH system will come gradually, as more and more substances are phased into REACH. 

Maintenance and enhancement of competitiveness of the EU chemical industry. The cost of chemical testing will be high. A base set of data will cost around 85 000 Euros whilst a full data set for high-tonnage or hazardous materials may cost over 325 000 Euros. Within this constraint, EU policy will also seek to encourage substitution of hazardous chemicals by less hazardous ones. The raising of the current threshold for base set testing will also allow more materials to be evaluated under controlled conditions. 

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