REACH - a perspective from the inorganic and downstream user sector
Despite its misleading name, the Registration, Evaluation and Authorisation of Chemicals (REACH) Regulation will not just impact upon the chemicals sector. There are also implications for those manufacturing and importing a wide variety of other substances within the EU, as well as the responsibilities placed upon downstream users of substances.
Under the original commission REACH proposal, 'inorganic' industries such as glass, paper, cement and metals would have to register many of their naturally occurring raw materials such as minerals and ores. Such industries also make use of recycling wastes as their main feedstocks for manufacturing new material, e.g. scrap in the steel industry.
As REACH was originally drafted, these materials would also have to be registered as 'substances', and as such this would present a significant barrier to recycling. This seems to run counter to current pro-recycling environmental legislation. However, after significant industry lobbying activity, exemptions were put forward by both the European Council and the Parliament for minerals, ores and waste during first reading of the proposal. Although nothing is certain until the political process is over, it seems this area is one in which the concerns of such industries may have been recognised. However, issues remain unresolved in relation to other parts of the dossier.
Hazardous substances are not necessarily a risk
REACH is based on the premise that hazardous substances are 'bad' per se and should be phased out without taking into account the actual risk that using a particular substance poses. This is illustrated by the converging position being taken by the Council and Parliament in relation to authorisation of substances. Under REACH, 'hazardous' substances (CMRs, PBTs, vPvB's) will require an authorisation for use.
Whilst the original Commission proposal allowed the granting of an authorisation where the risks of using such a substance could be shown to be adequately controlled, both the Council and the Parliament would like to move the proposal towards mandatory substitution of hazardous substances. This would require all authorisable substances to be substituted, even if the risks of using such a substance could be shown to be adequately controlled. This overly hazard-based approach requires research and investment by companies to replace substances for no apparent benefit to human health or the environment.
Such a philosophy makes no sense when applied to the metals industry. Small amounts of some 'hazardous' substances are used in the production of metallic alloys. Once within the alloy, these substances take on different properties and cannot, in normal use, be separated from the parent material and therefore pose a negligible risk. Yet REACH may require the testing, authorisation and potential replacement of these materials. The debate on authorisation and substitution is likely to be the main focus of second reading.
The impact upon business
The results of Business Impact studies carried out by KPMG last year were interpreted by some as proof that REACH will not have a negative impact on business. However, the methodology used for the studies failed to take account of many indirect costs, and demonstrates quite clearly that significant difficulties exist in interpretation of the legal text, particularly for those who fall outside the traditional chemicals industry.
REACH currently includes a five-year exemption for the registration of substances used for research and development purposes. This exemption applies to manufacturers and importers of substances only and does not extend to downstream users of substances. Many high-technology industries such as the mobile phone industry operate in a fast-moving market with constant demand for new and better technology. Research and development therefore has to take place within a very tight profit margin and very short timescale - usually around six months.
Time-consuming registrations and authorisations for substances are also likely to add costs, and will certainly slow such R&D processes down. Unless an exemption for registering substances used in research and development is granted throughout the supply chain, REACH will slow the process of innovation down and possibly force such activities outside the EU. Such factors have not been taken into account in any of the impact studies to date.
There will be many businesses covered by the regulation as downstream users (DU). The Commission believe that the views of SMEs have been taken on board e.g. by reducing the registration burden for substances in the 1 - 10 tonne bracket. However, these 'improvements' will largely benefit SME producers of substances, rather than downstream users. None of the impact studies have so far have looked at the true cost of REACH to downstream users embedded in a supply chain. There is little doubt that these companies will have the costs of registration passed onto them by their upstream suppliers. Many crucial issues are also still unresolved that make it difficult to fully assess the impact of REACH on DUs. The definition of 'use and exposure scenarios' is one such issue. These will determine when a DU must register a substance or when their supplier has already done this for them.
REACH is an extremely complex piece of legislation. Education and raising awareness amongst all the businesses involved will be a big challenge. REACH has been built around the concept of an overly simplistic 'model' supply chain i.e. a manufacturer or importer supplying directly to a customer (downstream user). In reality, substances arrive at an end user through a complex international chain of manufacturers, importers, blenders, re-processors and distributors.
Tracing the parties responsible for registration and working out whether a particular substance has been registered for their 'use' will be an uphill struggle for many end users. In addition, the challenge of educating companies about their responsibilities under REACH and its implications could simply mean that REACH is simply missed by many.
In conclusion, it is right that REACH should be used to assess and control the impact of those substances that pose a serious risk. The way it is presented currently however, means there is a risk that REACH will end up as just another confusing and expensive paperwork exercise. EEF will continue to campaign to make REACH more workable for the companies within its membership.
EEF - The Manufacturers' Organisation