The EU is set to ban thousands of chemicals used in industrial applications. In Sweden, the chemical sector estimates that the move will cause SEK 38 billion in lost sales and 7,000 job losses. “We’re losing competitiveness,” says Kristina Neimert Carne at Ikem.
The EU ban will hit the chemical industry and all those who use chemicals like a wrecking ball.
In the worst case scenario, more than 10,000 chemicals will be banned, amounting to some 40 per cent of all chemicals in terms of sales.
The aim of this raft of bans is to get rid of substances that are carcinogenic, endocrine-disrupting, environmentally damaging and toxic in other ways.
– We expect a potential market loss of 20 per cent if the strategy is introduced as currently planned. We can’t say where or who will be hit yet. But it’ll be extremely difficult for small businesses to navigate the maze of EU legislation, she adds.
The effect will of course be felt downstream in the value chain for all other industries where chemicals are or have been inputs, from manufacturers of shampoos and furniture to wind turbines and plastics.
Cefic supports the European Commission’s goals with the new chemicals strategy. But they are working with the European Commission in an effort to make the EU’s chemicals strategy more growth-friendly.
Threat to competitiveness
The Swedish chemical industry also supports the goals of the EU’s chemicals strategy. However, the sector wants to see a plan for investment in research and innovation to defend European competitiveness.
– If we also lose a large proportion of sales at the same time, much-needed investment will be crowded out. There’s a considerable risk that we will become less competitive than other regions of the world, Neimert Carne says.
Neimert Carne is an expert on chemical issues at industry organisation Ikem (Innovation and Chemical Industries), which represents the Swedish chemical industry.
At the end of April, the Commission presented a so-called roadmap for bans and other restrictions relating to between 5,000 and 7,000 chemicals. This is the first indication of which substances will be affected.
The strategy will redraft large parts of EU chemicals legislation, REACH. (REACH, established in 2007, stands for Registration, Evaluation, Authorisation and Restriction of Chemicals. Prior to REACH, the regulation of older and existing chemicals was weaker.)
Up to 12,000 substances may be affected by the proposals. This corresponds to 43 per cent of chemicals used by the EU chemical industry in terms of turnover. A more realistic assessment is that 28 per cent of sales will be affected, according to a report published last year by Ricardo Energy & Environment.
The legislation will not always entail an outright ban of every single substance. Other options are stricter restrictions on handling, quantity used and more.
The chemical industry wants differentiated rules. A dangerous substance may need to be banned for ordinary consumers, who do not always read instructions or wear protective gloves if needed.
But you can demand more from professional users with the right training. And in industrial applications, for example in closed systems, even more dangerous substances may be used if they have an important function, can be used safely and cannot be replaced, Cefic believes.
A detailed assessment of how chemicals are handled must be made by the European Chemicals Agency (ECHA) in Helsinki, with the support of national chemical inspections.
Loss of turnover in Sweden
Neimert Carne estimates that about 12 per cent of the chemicals could be banned without there being any reasonable alternatives to replace them. In such cases, this would result in an outright loss of turnover.
The consultancy report did not calculate the effect on Sweden. But Ikem believes that you could expect it to be about the average for Europe.
– A 12 per cent loss of turnover would then roughly mean SEK 38 billion or 7,000 jobs, says Neimert Carne.
Finding alternatives is not always easy. It is often precisely the characteristics of dangerous substances that make them so useful.
This process – from an idea in a lab to a finished product – can take between five and ten years, explains Sylvie Lemoine. Many attempts end in failure, of course. And customers have to accept the substitute, perhaps at a higher cost.
– The process of finding substitutes differs considerably between different value chains. A less dangerous alternative that is developed may not be effective and may not be accepted. An adhesive may not stick as well, or users think it smears too much, says Neimert Carne.
Minor exemptions are not the way forward
The Commission and ECHA are now trying to determine which chemicals are indispensable for granting temporary exemptions if they cannot be replaced. Applications in the aerospace industry may be considered more necessary than cosmetics.
– We don’t really want to work with exemptions. Exemptions for a certain period of time hamper planning, says Sylvie Lemoine.
In the midst of all this, the chemical industry – like everyone else – is struggling to reduce climate emissions and increase recycling. In addition, the war in Ukraine has triggered higher energy prices and a desire to stop using Russian energy.
With this in mind, the chemical industry wants as clear a message as possible to ensure predictability.
– We’ve asked for a plan to integrate climate policy, the circular economy and chemicals policy. We’re starting to see the beginning of a plan from the Commission. But we’re not there yet, says Lemoine.
Each chemical company would then need to absorb the information and develop its own plan.
– The big risk is that we lose competitiveness to other regions in the world. If progress on new green technologies slows in Europe, we’ll have to import substances, says Neimert Carne.
Both Ikem and Cefic want enforcement to be tightened so that the exacting requirements are maintained within the EU and on imports.
Starting this year, the Commission will present concrete legislative proposals banning and restricting a long list of chemicals. The proposals will then be negotiated in the usual way between the European Parliament, EU countries in the Council of Ministers, and the Commission.
The wrecking ball is swinging.EU