Europe’s SMEs told not to fear tightening REACH chemicals legislation

By Laura Syrett
Published: Thursday, 22 October 2015

The 2018 phase three deadline for registering chemicals made or imported into the EU in quantities of 1 tonne or more threatens to add administrative and financial costs to a layer of small companies, which until now have been below the REACH radar. However, policy experts say that the legislation will not unduly encumber Europe’s chemical competitiveness, Laura Syrett, Acting Editor, finds.

European manufacturers and importers of chemicals have been told they will not be unduly burdened by the third and final phase of substance registration under REACH, the regulation that covers chemical usage within the EU.

REACH, which abbreviates the EU’s Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals, entered into force on 1 June 2007. Phase three of REACH requires all chemicals made or imported into the EU in quantities of 1 tonne per year or more to be registered by a deadline of 1 June 2018. This tightens up on the requirements of the two previous phases. 

Phase one carried a 1 December 2010 deadline for registration of chemicals in volumes greater than 1,000, 100 and 1 tonnes per year, depending on hazard classification. Phase two, the deadline for which fell on 1 June 2013, covered all chemicals in volumes of or above 100 tonnes per year.

According to experts at the European Chemicals Agency (ECHA), the body which evaluates registrations for compliance, even though the third REACH deadline will apply to much smaller businesses than earlier phases (referred to as small and medium enterprises, or SMEs), the legislation is not designed to be onerous and has been introduced with acute sensitivity to the needs of the chemicals industry.

"REACH is not at all new," notes Kevin Pollard, head of dossier submission at the ECHA. "It has been a long-term exercise; the regulation came into force in 2007, but the initial proposal for REACH was back in 2000 and was followed by a seven year period of comment on the text of the legislation."

Chemicals are vital to a huge range of European industries, from steelmaking to cosmetics. But many consumers are oblivious to the substances that they come into contact with every day. Bromine compounds, for example, are added to the plastic casings of televisions, laptops and mobile phones to make them flame retardant; sodium carbonate, commonly referred to as soda ash, is used to make glass bottles and laundry detergents; and titanium dioxide (TiO2) is a white pigment found in most types of household paint.

This direct but generally unconscious contact between humans and chemical compounds was one of the key driving forces behind the introduction of REACH.  

"REACH is about understanding the hazards and uses of substances and ways of managing the related risk to protect human health and the environment," says Pollard. It also makes businesses responsible for demonstrating safe use, replacing the disjointed pre-REACH situation, which left assessment of chemical hazards in the hands of national authorities.

The third registration deadline will by its nature affect smaller companies operating in the EU and Pollard accepts that some of these may not be "fully up to speed" with REACH requirements.

Accordingly, businesses in this bracket have been given the longest notice period to review their supply chains and adjust to any extra expenses they may incur by complying with REACH. The cost of registration can range from a few hundred euros for small volume, non-hazardous chemicals (such as certain commodity fertilisers, for example), to tens or even hundreds of thousands of euros for large volume substances which may have large data gaps in terms of hazard information. 

REACH1  

Extending its REACH: Europe’s chemical producers are
preparing for the third and final phase of EU chemicals
registration (pictured: BASF’s headquarters in Ludwigshafen).
(Source: BASF)

SVHCs

Once registered, chemicals may be subject to a separate policy under REACH called authorisation. This applies to substances of very high concern – or SVHCs. The authorisation procedure aims to ensure that SVHCs – classified as carcinogenic, mutagenic, toxic for reproduction, and/or persistent, bioaccumulative and toxic – are properly controlled and progressively replaced with suitable alternatives.

SVHCs, once identified, are added to a candidate list before being prioritised to an authorisation list. If a substance is categorised as requiring authorisation, it cannot be placed on the market or used after a given date, unless an authorisation is granted for its specific use, or the use is exempted from authorisation.

"Companies have to decide whether to phase out the SVHC by a given deadline, or invest in developing a substitute," explains Pollard. He points out that this hard line policy is balanced by the early warning system entailed in the listing process.

Specially tailored provisions for areas including human and veterinary medicines, food additives, plant biocides and substances specifically required for research and development purposes have also been designed and implemented to troubleshoot potential limits on key industries.

One recent notable example of a chemical that fell within the SVHC remit is the brominated flame retardant chemical, hexabromocyclododecane (HBCD). This was the standard flame retardant used in expanded polystyrene (EPS) and extruded polystyrene (XPS) insulation foams, but after being flagged as a toxic substance following an EU risk assessment, HBCD was placed on the candidate list of SVHCs requiring authorisation in 2008.

In 2011, the chemical was included in Annex XIV of substances for authorisation under REACH, with a "sunset" date of 21 August 2015. After this date, only companies that have applied for, and have been granted, authorisation can continue to use HBCD for an agreed period.

In 2013, HBCD was included as persistent organic pollutant (POP) in annex A of the UN Stockholm Convention on POPs with exemptions for EPS and XPS in buildings. This means that parties to the convention can request an extension of up to five years for using HBCD in these applications.

The designation of HBCD as an SVHC spurred manufacturers of the chemical to develop less harmful alternatives. Tel Aviv-based Israel Chemicals Ltd (ICL), which operates a number of chemical production operations in EU countries, created a replacement flame retardant called FR-122P through its specialist Industrial Products (IP) arm. According to the company, the new chemical provides the same level of fire protection as HBCD but with a "significantly improved" environmental profile.

"ICL-IP produces FR-122P under a licence agreement signed by Bromine Compounds Ltd (BCL), a business unit of ICL-IP, with Dow Global Technologies in January 2012," explains Anantha Desikan, vice president for flame retardants at ICL.

In August last year, ICL established a joint venture with US bromine producer Albemarle Corp. to make ICL’s FR-122P and Albemarle’s own polymeric alternative to HBCD, known as GreenCrest, at manufacturing sites in Israel (10,000 tpa) and the Netherlands (2,400 tpa).

Desikan says that the new chemical has been commercially accepted by ICL’s customers and that both the Israeli and Dutch plants are now fully operational.

"Based on feedback from the market, compacted material for both EPS and XPS will be available in 2016. Both speciality grades of the compacted polymeric FR products were developed in accordance with application requirements, to optimise their performance and flame retardant needs," notes Desikan.

REACH2  

The classification of some chemicals as SVHCs has spurred
the development of new substances with improved environmental
profiles, however such R&D can be costly for SMEs.
(Source: BASF)

Counting the cost

Aside from protecting people and the environment from the effects of hazardous chemicals, REACH registration aims to allow free movement of approved substances within the EU market and is intended to promote innovation and competitiveness.

These laudable goals notwithstanding, there have been fears that the cost and administrative encumbrances associated with registration could force some businesses to up sticks and relocate their operations outside EU borders. 

Pollard says that since REACH came into force in 2007, the ECHA has not seen any strong evidence of companies choosing to relocate in order to avoid registration. Ahead of the 2010 registration deadline, there were "quite a lot of politics" around the concern that downstream consumers of chemicals would leave the EU. "But," says Pollard, "that didn’t happen."

Others are worried that the financial and bureaucratic burdens of registering low volume substances will curb growth in some business areas, particularly in the SME sector.

Tom Bowtell, CEO of the British Coatings Federation (BCF), notes that REACH was "voted the most burdensome regulation in the EU by SMEs", according to the results of a European Commission poll conducted in 2012.

The BCF is one of a number of industry bodies working to increase the visibility of how REACH will affect the competitiveness of the chemicals and related industries in the UK.

"The BCF welcomes the intentions behind REACH in eliminating very hazardous substances, and appreciates that ECHA’s 2018 deadline gives time for SMEs to prepare," says Bowtell. "However, SMEs will find it almost commercially impossible to recover the costs incurred by REACH when registering substances between 1 and 5 tonnes, regardless of the Phase 3 deadline."

Bowtell points out that many of the BCF’s members impacted by REACH are those which work with niche, high value applications in small quantities and that the regulation will hamper advances in the sector. "REACH will stunt innovation and growth opportunities for SMEs in Europe because they cannot be sure of being able to obtain the chemicals they want to." 

ICL is more forbearing about the regulation’s impact, although as a global company with the funding and resources to facilitate compliance with REACH with relative ease, this is perhaps not surprising. "In general, of course REACH regulation has an effect on many aspects of operational and supply activity in the EU and actions need to be taken to ensure that only REACH-compliant products are being manufactured or imported into the EU," says Desikan.

"For our FR-122P product, both production sources – the EU and Israel – are in compliance with REACH regulation. Being a polymeric product, FR-122P is exempt from REACH and (…) the relevant raw monomers are REACH registered."

For its part, the European Chemical Industry Council (CEFIC) has conceded that the fallout from phase three registration remains uncertain. "There are still quite a large number of companies who haven’t really decided what they intend to do – whether to register (…), or remain just below the 1 tonne level," says Erwin Annys, the CEFIC’s director of REACH/chemicals policy.

"At the end of the day, it is of course a purely commercial decision-making process as to whether you can still make money on these chemicals."