Economic Study of the REACH Impact on Polish Chemical Industry

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1 REACH Economic Study of the REACH Impact on Polish Chemical Industry Workshop REACH chemical policy and its unintended impact on the metals and relevant industries Pałac ac Staszica,, Warszawa, Mirror Room 15 July 2005 Andrzej Krześlak Environmental Management Center for the Chemical Industry Industrial Chemistry Research Institute Polish Chamber of Chemical Industry Marcela Palczewska-Tuli Tulińska Izabela Ostrowska Group for Physicochemical Properties of the Technological Processes ses Industrial Chemistry Research Institute 1

2 Substances existing new EINECS European Inventory ventory of Existing Commercial Chemical hemical Substances; Substances of this list do not require notification procedure; List contains substances marketed in the period 1 January September 1981; Closed inventory containing records; Regulations 793/93 and 1488/94 risk assessment and control and measures for its evaluation. ELINCS European List of Notified otified Chemical Substances; Substances should be notified before marketing; List contains substances marketed since 18 September 1981 up-to to-date; Opened list containing currently ca records periodically updated; Assessment according to the Direktive 67/548/EWG and 92/32/EWG (VII( th Amendment). 2

3 Tonnage, time schedule, required procedures > 1000 tons annually + of concern > tons annually > tons annually Year 3 Year 5 Year 6 Year 9 Year 11 Registration (2,600) Evaluation (2,600) Registration (2,900) Evaluation (2,900) Registration (~25,000) Evaluation (?) No further concern or Authorization (Permits) or Restrictions in marketing and use or Other measures of risk management 3

4 Statistics industry s s feedback 78 completed questionnaires per over 1500 distributed; TYPE OF ACTIVITY LARGE > 250 employees MEDIUM > 50 - < 250 employees SMALL > 10 - < 50 employees MIKRO < 10 employees Production or import Distribution or services Employment: over people, including ca in SMEs. 4

5 Average increase of producer s price at the EU Specification Average price of 1 t of the product [ ][ Average additional costs [ ][ Average increase of the purchase price from the EU 1 10 t t t > 1000 t % 2.2% 1.1% 0.5% 5

6 Cost assumptions Increase of the raw materials purchase price paid by the Polish enterprises within the EU dependent on production level of the considered substance, but not on the purchase value; Pre-registration registration all applications (1000 per substance). 6

7 Registration costs (under assumption of single registration), [ ][ Specification 1 10 t t t > 1000 t Existing substances Registration sheet Chemical safety report In total Semi-products Semi-products on the company site New substances ubstances Costs of annual updating Source: SIRA 7

8 Tests (Maximum test costs per one substance for each tonnage band, ) Type of the cost 1 10 t t t > 1000 t Full testing costs of one substance Physicochemical properties Toxicological properties Ecotoxicological properties Indispensable testing costs of one substance Physicochemical properties (10%) (10%) (10%) 3355 (10%) Toxicological properties (36%) (38%) (30%) (17%) Ecotoxicological properties (28%) (36%) (15%) (7%) In total Additional testing costs for repeatable registrations [ ] Source: TNO 8

9 Cost assumptions cont. Authorization procedure ; MSDSs per one MSDS; Costs of tests for intermediates ; Risk assessment for unidentified uses (Source: SIRA). 9

10 Analysis performed in Poland in 2003 Total number of substances analysed: : 719 Priority lists: 59 substances 34% 8% 32% Annex I Dir. 67/548/EWG: 232 substances Existing, EINECS: 189 substances 26% 66% Exempted from the scope of REACH: 239 substances 10

11 Analysis performed in Poland in 2004 Total number of substances analysed will be subject of registration 23% 7% 28% Priority lists: 84 substances Annex I Dir. 67/548/EWG: 347 substances Existing, EINECS: 513 substances 42% Exempted from the scope of 77 % REACH: 288 substances 11

12 Number of identified substances vs. tonnage 1 10 t / a No. of substances from questionnaires: t / a No. of substances from questionnaires: t / a No. of substances from questionnaires: 187 > 1000 t / a No. of substances from questionnaires:

13 Estimated No. of f substances under REACH provisions Requirements Registration > Evaluation > 900 Authorization ca

14 REACH Direct costs REACH Type of costs (scenario) Optimistic scenario (OSOR in Poland) Realistic scenario (each substance registered two times in differentiated tonnage ranges) Pessimistic scenario (each company registers substances independently & individually) Costs borneb by importers of articles Costs 194 millions 234 millions 266 millions 150 millions Including in above mentioned costs: costs of registration, testing and authorization Including in above mentioned costs: SDS working out, their verification, intermediates registration, etc millions 30 millions Total millions 14

15 Impact on big companies Increase of the costs on the level of below 0.1% in respect to the manufacture costs for the companies with total annual turnover 1 2 billion (in case of the old EU ); In Poland big company has the annual turnover in the range of million - share of increased costs resulted from REACH generally is higher and oscillates in the range of %; On the chemical plants with low productivity - cost resulted from REACH may be very high; this might be main reason of decommissioning but very often these plants are key installations for the remaining production on the company site. 15

16 Impact on SMEs Increase of the manufacturing costs: 1.1 >80%!!! Type of manufactured / imported substances very vital except productivity and production value; Dramatic increase of the manufacturing costs in case of additional tests or authorization procedure for only one substance in respect of the whole company s s operation; Registration and tests cost have to be absorbed by the lower tonnage band; Raw materials imported on the common market of the EU obligation of registration may result in import unprofitability; very often these raw materials are not manufactured within the EU such companies may withdraw from import and from production based on such raw materials; Specialized staff preparation of documentation; Unbalanced position of SMEs in consortia formation. 16

17 Tests vs. GLP requirements In In Poland only two o entities are certified in GLP system ; a few fulfill requirements resulted from the Parliament Act on tests and certification of 3 April 1993; All All issues connected with accreditation, authorisation and notification of goods as well as performing the tests by certified laboratories are regulated by the Parliament Act on system of compatibility assessment of 30 August 2002 (Polish Official Journal No. 166, item 1360), which entered into force on 1 January 2003; There There will be deficiency of authorized laboratories to carry out studies and tests in the framework of REACH system, laboratories, which would be accepted by the other EU Member States; Chemical companies in Poland wishing to place their products on the national and European markets will be forced to order the relevant tests to the certified laboratories operating abroad, bearing high costs,, or to abandon development. 17

18 Current national capacities Toxicological tests: annually ca. 50 products with tonnage > 1 ton and evaluation of 1 product with tonnage > 1000 tons (full range of required tests); Eco-toxicological tests: annually y ca. 20 products with tonnage > 10 tons and ca. 10 products with tonnage > 1000 tons (full range of required tests); GLP certification labour-,, financial resources- and time- consuming procedure. Number of laboratories sufficient for the national needs hardly achievable. Necessity of tests outside Poland may create additional costs as well as disappearance of selected Polish chemical companies from the EU common market; At least 10 laboratories with GLP accreditation should be created in Poland (investment and accreditation costs - ca. 3 millions ). 18

19 Threat of job losses In case of large companies - decommissioning of unprofitable (resulted from REACH) installations may lead to decrease of employment up to 3 %; In SMEs case there exists likelihood of considerable limitation of employment even up to 30%, because some of the companies will not be able to cope with burden resulted from REACH implementation; However SMEs may easier and faster change their production profile or domain of their activity and in this way to avoid the threat of unemployment. 19

20 Key elements influencing costs in Polish chemical industry vs. European chemical sector (EU-15) Lower and diversified production scale; Import / export unbalanced relation; Low level of innovation; Low level of knowledge (among other things availability of data on chemicals production and producers). 21

21 INDUSTRY vs. NGOs OUR GENERAL VIEW R DISADVANTAGES: HIGHER COSTS, JOB LOSSES H C A E NGOs ADVANTAGES RESULTED FROM HEALTH & ENVIRONMENTAL PROTECTION 30

22 SPORT* PROJECT The SPORT project, carried out in partnership with the European Commission, Industry and 9 EU Member States, confirms that workability improvements are needed to make REACH work in practice and be able to deliver health and environment benefits; The recommendations provide ideas to solve practicality issues and stress the need for further simplification; The industry proposals, and its risk-based prioritisation approach, would clearly contribute to a successful implementation of REACH. *) SPORT: Strategic Partnership On REACH Testing 22

23 Key recommendations resulted from SPORT Project REACH will not be workable without: Significant simplification of concepts and requirements; Clarity on the roles and responsibilities of all actors in the supply chain; Getting maximum uses of existing information; Tested and validated tools and guidance; General acceptance of the change of roles and responsibilities. 23

24 Key recommendations resulted from the SPORT Project cont. Guidance, tools, Agency and/or Member State helpdesks and learning curves alone may be not enough adjustments and clarifications in the legal text (including the annexes) are needed; Even those companies familiar with comprehensive risk assessment do not necessarily have the capacity (resources and skills) to operate a system with a much larger throughput of substances per unit of time; Simplification of requirements and simple procedures and tools are necessary to enable SMEs* * to meet the coming time, resource and expertise challenges; Pre-registration registration must facilitate cooperation among registrants; The process of gathering use and exposure information up the supply chain must be simplified. *) SMEs: Small and Medium sized Enterprises 24

25 Key recommendations resulted from the SPORT Project cont. The respective rights and duties must be clear to manufacturers, importers and downstream users; Some requirements in the legal text are still difficult to interpret for registrants and authorities. Beyond that the understanding of the REACH system as such is still quite different among the Member States and between companies and authorities; administrative burdens of hazard data sharing for a single company can be higher than the potential cost savings related to testing hence forming consortia is not always the most cost efficient way to share data; To make work in consortia easier, guidance from DG Competition regarding the possible application of competition law would be helpful. 25

26 Thank you for your attention Contact: Andrzej Krześlak Environmental Management Center for the Chemical Industry Industrial Chemistry Research Institute tel. (0-22) lub , fax: (0-22) Polish Chamber of Chemical Industry Marcela Palczewska-Tuli Tulińska Group for Physicochemical Properties of Technological Processes Industrial Chemistry Research Institute tel. (0-22) lub , fax: (0-22)

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