The potential benefits to business, consumers and the environment

from a new chemicals policy

Michael Warhurst

EU Chemicals Policy

WWF European Policy Office, Brussels

Outline

• The Current system• Costs• Future risks• Benefits

• The REACH system• Reality• A brief assessment• Costs• Benefits

• Costs of an inadequate reform• Looking to the future• Conclusions

• For more info see WWF/EEB report on Business Benefits [1]

Costs of the current system

• What is the cost of the increasing concentration of Penta in breast milk?• Or in wildlife?

• What is the cost of the contamination of humanity by PFOS and PFOA from 3M and others?• A simple cost may one day emerge from the

courts, but this will never be the full cost

• What is the cost of the disruption of intellectual development by PCBs?

• What will the cost be of the next problem chemical to emerge by chance?

Future risks:

1. Liability and new science• Liability has been difficult to prove.• However, science is now advancing rapidly

• Friends of the Earth's Crisis in Chemicals report, published in 2000, [2] predicted that:

• Over the next 5-10 years scientific advances arising from the Biomedical Revolution will make it easier:

• to demonstrate harm caused by chemicals

• to identify individuals who are genetically susceptible to harm from chemicals.

• and hence to establish causation for injuries

• This will leave industry increasingly vulnerable to both legal challenges and loss of reputation.

• Last year an update of this report [3] concluded that that science was moving rapidly, as predicted• huge progress is being made in the use of ‘expression

profiling’, a method of measuring what happens when cells are exposed to chemicals.

Future risks:2) Consumer confidence and reputational risk• Consumer confidence:

• Consumers don’t want to use chemicals which will contaminate their bodies, disrupt their hormones or cause an allergic reaction;

• Consumers think things have been tested for safety - and are not impressed if they haven’t been.

• New science and other concerns may generate new concerns - and highlight the inadequacies in regulation.

• Reputational risk:• Any company can potentially be damaged by

adverse publicity, e.g. if new safety concerns emerge about one of the chemicals they make or use.

Benefits of the existing system

• For some sectors of industry, the current system is very positive, for example:

• A company that produces many existing chemicals:• Producers of new chemicals are penalised• Producers of existing chemicals have minimal

costs

• Companies producing existing chemicals have clear economic benefit in the current system• Though they also have risks due to their

ignorance• But weak liability regimes in the EU reduce the

extent of this risk

Costs and benefits of REACH

• Important to work from the reality of the proposal• Reality of registration as test of industry

responsibility, with only a completeness check for all dossiers• Evaluation will only happen for a (as yet undefined)

percentage of registrations.

• Reality of authorisation, not the imaginative US version:

• “Examination of just four commercially important chemicals on the authorization list shows that $8.8 billion worth of downstream products are at risk for bans or severe restrictions under the new system.”US Government “non paper”, April (?) 2002

• Based on an American Chemistry Council paper, January 2002

• Assumes the EU will ban US computer imports due to the use of acrylamide in ABS plastic.

• Incorrect…• But extensively quoted by by the US Ambassador to EU

The REACH system overall

• WWF welcomes the REACH system, and considers that it provides a good basis for a new, more sustainable regulatory system:• Registration of safety data for all chemicals on

market >1 tpa (ignorance is not evidence)• Identification of chemicals of very high concern -

CMRs, vPvB, PBT, EDC• An authorisation procedure to deal with the use of

these chemicals of very high concern• Providing more information up and down the

supply chain

• WWF would like to see some improvements• Crucially, a consideration of the availability of

safer alternatives in all authorisation decisions• In addition increased openness, peer review of

industry data etc.

Costs of the REACH system (1)• There are many cost estimates around• Many claims are based on completely inaccurate

interpretations of the legalisation, e.g:• Animal testing of 30,000 chemicals is required

• In reality 20,000 are 1-10 tpa, so require in vitro data only. There is also already some data on the other 10,000, and REACH gives opportunities for grouping, read across and alternative methods.

• Authorisation could restrict the import of US computers• Intermediates will need the same safety information as

marketed chemicals• The Commission proposes only available information, unless

transported at >1000 tpa, then non-animal only

• Low volume chemicals will be wiped out • yet 1-10 tpa only need in vitro data, with a deadline of 2016 - by

which time all these chemicals will have been on the market for over 35 years, and REACH assessment processes will be routine

• Chemical industry will stop producing chemicals even if there is a substantial downstream demand

• The economics of many studies is also very suspect, and many have been heavily criticised by economists.

Costs of the REACH system (2)

• Safest option could be Commission estimates• Direct cost assessment is published and reasonably

transparent• €3.6 billion for scenario 3. Thought to be best match for

current text.• >80% of cost is for safety data - “we know our chemicals

are safe”

• Indirect cost assessment (€14-26 billion over 11 years, spread over entire economy) is unpublished and untransparent

• Not clear what assumptions are, nor methodology• Currently not possible to gauge accuracy

• Cost of regulation - or other action/inaction- are always hard to evaluate

• In spite of this, other public policy decisions continue to be made, some of which are very expensive• Is it only environmental legislation that must prove its

financial virility?

Benefits (i) Health

• Calculating health benefits of this legislation is very difficult• What is the cost of penta contamination?

• May depend on how toxicity develops• Or a willingness to pay approach?

• What is the cost of the next chemical? PFOS perhaps?• What is the precise value of a life - or uncontaminated

foetus?

• The Environmental economist David Pearce has done a study for WWF UK [4]:• Estimates EU benefits of €230 billion by 2020, based on

health costs and productivity savings• No environmental benefits costed

• All studies have to ignore many benefits due to lack of data• wasn’t lack of information one reason for REACH?

Benefits (ii) - Environmental

• Currently totally ignored• Therefore viewed as Zero in the debate

• Clearly will be significant• E.g. Prevention of future contamination

• What is cost of polar bear loaded with brominated flame retardants?

• Environmental costs from chemicals are high• including ozone depletion and climate change

• Is it really acceptable to totally ignore these benefits?

Benefits (iii): To Business

• New markets for safer and more environmentally friendly products;

• Easier introduction of new chemicals onto the market will encourage development and innovation;• (This is the only benefit that has been calculated)

• A more predictable regulatory system will aid future long-term planning by industry;

• Safer products will reduce the risk of future liability lawsuits, which can result in enormous costs (as has happened with asbestos);

• Increased trust among consumers, employees, students, local communities and investors, leading to a more positive business environment; and

• Improved transparency and communication through the supply chain will lead to increased power and confidence for downstream users and SMEs.

Benefits (iv): To the wider world

• The new safety information will be available on the internet across the world

• This data will assist regulatory agencies across the world - particularly those in poorer countries

• REACH will encourage innovation to safer chemicals• The lure of the 500 million consumer EU market

will encourage companies outside Europe to join this innovation

• REACH will lead to the production and use of safer chemicals outside the EU

• No-one has tried to cost these benefits• To human health - workers and consumers• To the environment

Risks of an inadequate REACH

• A failure to regain public confidence• Regulators forced to allow continued use of worst

chemicals• Poor quality industry data• Lack of controls on imported products• A secretive system

• A lack of confidence from environmental and consumer NGOs• New campaigns on chemicals• Continued pressure for a trusted regulatory

system.

Checking of Registration data

• Registration dossiers• Only a completeness test

• Evaluation of dossiers looks like being more the exception than the rule• WWF believes that Member States should be

obliged to carry out sufficient evaluations (not just evaluations of test plans )

• If registration data is poor, all other parts of system will not work

• An independent peer review or audit is needed• The stock market doesn’t accept un-audited

accounts

Substitution of the worst chemicals• “An authorisation shall be granted if the risk

to human health and/or the environment from the use of a substance arising from the intrinsic properties specified in Annex XIII is adequately controlled.” • Article 57(2) in inter-service text; also in

consultation

• Will the public be confident in system that forces regulators to allow continued use of chemicals of very high concern?

• What is “adequate control”?• WWF believes that authorisations should

only be granted if the use is necessary and there is no safer alternative.

Imported articles• The current text will allow articles to be imported into

Europe containing unregistered chemicals.• “A producer or importer of articles shall notify the

Agency of any substance contained in those articles in accordance with paragraph 3, if:

• it is present in those articles in quantities totalling over 1t per producer or importer per year; and

• it meets the criteria for classification as dangerous in accordance with Directive 67/548/EEC; and

• the producer or importer knows, or is made known, that the substance is likely to be released during normal and reasonably foreseeable conditions of use, even though this release is not an intended function of the article; and

• the quantity of the substance released may adversely affect human health or the environment.” Article 71(2)

• WWF supports a system where articles should only contain registered chemicals, being used in accordance with any authorisations and restrictions.

Confidentiality• “The following shall be considered as confidential, even if

no request in accordance with paragraph 1 is made:

• (a) the name and address of the registrant, downstream user, applicant, manufacturer or importer;”

• Article 116(4) - new in inter-service text

• Will this really create a more trusted system?• This would make REACH more secretive than current system• Against the trend of EU and Member State regulation

• If this information is really commercially in confidence:• Competitors must not be informed of identities of producers• Participants in consortia and substance information exchange

fora must not be aware of identity of other members

• Not opposed to all confidentiality• Should be system where industry must apply to regulator, but

other Competent authorities and/or Agency can challenge decisions (only challenge at the moment is from industry)

Looking to the future (1)

• Do we want REACH to be the reform that sets out a sustainable solution?• A trusted system, allowing downstream users to

innovate in safety?

• Or do we want to wait until the next reform?• After the regulatory system has failed to deal with

new problem chemicals?• After more chemical by chemical campaigning?

Looking to the future (2)

Forward-looking companies needed• Do you want your company to be forward-

looking, innovating to safer products?• Within a system that provides quality safety

information, and encourages the market to move towards these safer products

• Or do you want to focus on defending problem chemicals, as their uses get chipped away?• Within a system that has failed to get to grips with

the need for proper regulation of chemicals

• Which option is going to create consumer confidence in your company?

• Which option will your investors, staff and insurers prefer?

Conclusions• The new EU chemicals legislation has great potential:

• To ensure that there is safety information on “all” chemicals• ending the scandal of ignorance about existing chemicals• bringing chemicals regulation into line with other regulatory

systems

• To make it more difficult to use the worst chemicals• But would be more effective if it enforced a substitution approach

on such chemicals

• To improve information flow up and down the supply chain - and around the world

• The cost/benefit debate is currently unbalanced towards - frequently exaggerated - cost assessments.• Many concerns are based on inaccurate information• All studies ignore important benefits

• We need a better quality debate on this crucial issue• And rapid movement towards the new system.

• REACH is necessary for a sustainable industry in Europe

http://www.panda.org/epo/toxics

References

1. WWF and EEB, A new chemicals policy in Europe - New opportunities for industry. 2003: Brussels, Belgium. http://www.panda.org/downloads/europe/wwfeebreachnewopforindustry.pdf

2. Warhurst, A.M., Crisis in Chemicals: The threat posed by the 'Biomedical Revolution' to the profits, liabilities, and regulation of industries making and using chemicals, 2000, Friends of the Earth, London, UK. http://www.foe.co.uk/resource/reports/crisis_chemicals.pdf

3. Warhurst, A.M., Crisis in Chemicals Update, 2002, Friends of the Earth, London, UK. http://www.foe.co.uk/resource/reports/crisis_chemicals_update.pdf

4. Pearce, D. and P. Koundouri, The Social Cost of Chemicals: The cost and benefits of future chemicals policy in the European Union. 2003, WWF UK. http://www.wwf.org.uk/news/n_0000000934.asp