Failure to develop appropriate risk management measures for chemicals under the EU’s REACH regulation could result in business disruption, as Susanne Baker explains.
Although reach initially sprang into life back in 2006, the focus has been squarely on registration. This saw clusters of chemical manufacturers working together to assess the hazards of the chemicals they make or import into the EU.
For the first time, chemical manufacturers were required to understand how their chemicals were being used so that appropriate risk management measures could be developed.
For some substances, this would have resulted in revised safety data sheets on how to handle and use chemicals. Downstream users have 12 months to implement any new risk management measures or communicate more effective practices to suppliers.
This activity was not insignificant. An estimated 30,000 substances need to be registered in three separate tranches. So far, we have dealt with the higher tonnage volume chemicals — the next, and final, deadline deals with those placed on the market between 1-10 tonnes.
Low awareness
This month, the Dutch government published a survey which revealed only a fifth of companies in the Netherlands were aware of their obligations under REACH.
At EEF, our surveys have revealed similar levels of ignorance: over half of UK manufacturers thought REACH didn’t affect them.
This is, potentially, a grave error of judgement. REACH has the potential to affect all professional users of chemicals in the UK and their supply chain and there are specific legal obligations that fall on the downstream users.
And it is future substances bans, which will prevent certain substances being used in the EU without authorisation, that present the most acute risks to business continuity.
The authorisation process
The intention of authorisation is difficult to contest. REACH recognises that some substances are substantially more dangerous to human beings and/or the environment than others.
Authorisation seeks to ensure that risks from these substances of very high concern (SVHCs) are properly controlled. The objective is that all such substances should be replaced where possible with less dangerous alternatives.
Companies will only be allowed to use substances subject to authorisation for essential uses or if its use is in accordance with conditions of an authorisation granted to somebody further up the supply chain. In short, if you or your supplier do not have authorisation, you can’t use the substance within your EU operations.
To obtain authorisation, it is necessary to demonstrate that the use of the substance is essential and that no satisfactory alternative exists.
In addition, authorisation will only be granted if it is shown that human beings or the environment are not exposed to the substance or that the socio-economic benefits to society from its use outweigh any subsequent risks resulting from exposure.
Which chemicals?
So far 22 substances have been earmarked for authorisation. Some are niche, barely used substances. Others are very common. For example, from 2016, companies will no longer be able to use trichloroethylene (TCE), commonly used in cleaning or degreasing metal parts, unless approval has been sought and obtained from the European Commission.
The first sunset date — the date when certain substances’ use will not be permitted without authorisation — is now just under a year away.
From the 21 August 2014, methylenedianiline (MDA) — which is used in some paints and coatings and in polyurethane manufacturing — and the fragrance musk xylene will be the first substances to be subject to authorisation. More substances have already had sunset dates set and more will inevitably follow.
Every year new chemicals are added to the ‘authorisation list’, or annex VXI, which means that companies have to actively monitor developments in order to avoid nasty surprises later.
It is worth explaining the process carefully. Member states and the European Commission are responsible for identifying SVHCs. These are substances that are carcinogenic, mutagenic or toxic for reproduction (CMR) category 1A or 1B; substances that are persistent, bio-accumulative and toxic (PBT); substances that are very persistent and very bio-accumulative; or substances of an equivalent level of concern — i.e. those with endocrine disrupting properties.
When a dossier is being developed to classify a substance as an SVHC, it is listed on the European Chemical Agency’s (ECHA) Registry of Intentions. Once published, the scientific basis for classifying the substance as an SVHC is consulted on.
If uncontested, it is added to the so-called ‘candidate list’ — essentially a shortlist of substances that will be routinely considered for authorisation. The candidate list is updated twice a year. It currently has 146 substances listed in it. The commission has indicated it wants all known SVHCs on the candidate list by 2020 — an estimated 1,500 substances.
A rapid process
Substances can move quickly from the candidate list into annex XIV (the authorisation list) so it is absolutely essential that companies are monitoring what is going on and assessing any potential impacts on the business.
Once a year, the ECHA screens the candidate list and selects a number of substances that it intends to recommend that the commission prioritise for authorisation. A public consultation on the ECHA recommendations then opens a chance for industry to set out a case for exemption or highlight existing community legislation that already manages the risks posed by the substance in question.
The ECHA’s technical committees then consider consultation responses and submit a formal proposal to the European Commission.
Within a minimum of 90 days of receiving the recommendations, the European Commission is required to outline a proposal, a draft regulation which sets out exemptions, the ‘sunset date’ (the date by which use must cease unless authorisation has been granted to you or an actor in your supply chain) and a deadline for authorisation applications. The commission publishes its decision 180 days later.
The whole process can take a minimum of 420 days from initial recommendation to final decision.
How to respond?
Companies need to carefully consider how they respond. There are only really a number of limited options if a chemical you use or depend on becomes subject to authorisation:
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replace the substance with a suitable alternative (ideally a non-SVHC with suitable functionality) or a suitable technology;
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switch products to another that avoids the use of the substance in question. You can choose to import articles from outside the EU (but with the risk that a restriction can be brought in at any time);
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cease production (an option that the European Chemicals Agency thinks is a valid one); and consider authorisation.
Applicants for authorisation can be a chemical manufacturer, an importer, a downstream user or any combination of these. You can apply for authorisation for one or a group of substances and you can cover one or several uses.
Quite naturally, groups of companies, particularly SMEs, have established consortia to spread the effort and cost of developing applications. Where possible, companies have been asking chemical manufacturers and distributors to apply for an authorisation that covers their use.
But the first question you need to ask is what would happen to the business if the substance to be authorised is no longer available in the EU? This concerns your core business: commercial, technical, strategic implications — not just health and safety and environmental compliance. You must also consider the broader implications for your suppliers, your customers and the environment.
You may have a case for authorisation if the benefits of continued use outweigh the risks and/or the current risks are being tightly controlled.
Complex and costly
Let’s be clear: authorisations are not easy to obtain. The process of applying for authorisation is expensive, complex and uncertain. Indeed, the commission has made authorisation deliberately complex in order to incentivise substitution of dangerous chemicals with less harmful ones. This is working. A quarter of EEF members already claim to have substituted chemicals as a result of REACH.
Nevertheless, there will be cases where these chemicals are the best to carry out certain functions or more time is needed to test alternatives. In these cases companies, or indeed supply chains, will be forced to consider applying for authorisation, either alone or through industry consortia.
Article 55 of REACH sets out what you would need to include in your application. Applicants must analyse the availability of alternatives and consider the risks, and the technical and economic feasibility of substitution. A chemical safety report must be prepared covering the risks arising from the substances’ properties and demonstrating how those risks are adequately controlled. A substitution plan must outline the actions and timeline required to switch to alternative substances or technologies.
For carcinogenic, mutagenic or toxic to production (CMR)s 1 and 2, persistent bio-accumulative and toxic (PBT)s or very persistent and very bio-accumulative (vPvB) and non-threshold substances of equivalent concern, applicants must also prepare a socio-economic analysis which demonstrates that the socio-economic benefits of continued use outweigh the risks presented to human health and the environment from exposure.
The result is an expensive and time-consuming exercise, which is, as yet, untested. As well as an initial application fee, additional costs will creep in. Some companies have estimated that the cost of developing applications is between £100-500k. The process is also extremely uncertain. We really have no idea how the commission will judge applications. Furthermore, your authorisation will be reviewed after a specified time and may be amended or withdrawn. Authorisations can also be reviewed at any time if circumstances change.
Only one application for authorisation had been submitted so far, although the ECHA has been notified that a further eight will follow. This is really the beginning of the authorisation process. Things will no doubt become clearer once applications begin to work their way through the system and we gain a better understanding as to how the authorisation will work in practice.
But while there remains considerable uncertainty, what is clear is that those using chemicals in their processes and products will need to monitor the situation closely — and ensure their supply chain does as well.
Susanne Baker is a senior climate and environment policy advisor at the EEF.
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