This article is part of our special report Rio+20: Charting a green future?.
SPECIAL REPORT / Rattled in Europe by the REACH regulation and carbon dioxide emission curbs, international chemical companies are at the Rio Earth Summit determined to push for a global approach to environmental policy – but with a light regulatory touch.
Speaking ahead of the Rio summit, international chemical firms were keen to convey the message that environmental standards are better if they are implemented globally.
"I think globalisation of standards and definitions, common definitions are good," said Frank Sherman, president of AkzoNobel's North America branch.
The reasoning is simple and well-known. Rather than complying with a myriad of environmental laws in different countries, companies prefer dealing with a single set of globally harmonised rules.
"One thing that industry goes crazy about is having multiple directions, multiple rules, multiple definitions. And so we need some consistency," Sherman told reporters in a telephone briefing organised by the International Council of Chemical Associations (ICCA).
Soaring regulatory costs
Large international chemical groups like AkzoNobel and Dow have seen their regulatory compliance cost soar in recent years.
In Europe, the REACH regulation, adopted in 2006, has started a mammoth process of registering about 100,000 substances that are currently used in a wide range of consumer products, with the aim of gradually replacing the most harmful chemicals with safer ones.
BASF, the German chemical giant, says it has recruited 250 employees to prepare registration dossiers for submission to the European Chemicals Agency (ECHA) in Helsinki. "We expect around 5,000 BASF REACH dossiers," or approximately 70,000 pre-registrations, said Ronald Drews, vice president for chemical regulations and trade control at BASF.
Overall, BASF estimates that it will cost the company between €500 million and €550 million over 10 years to register the thousands of chemical substances it produces.
REACH: A global model for other countries to follow?
For an international chemical company like BASF, the colossal efforts it has deployed to comply with European legislation should not be wasted and could serve as a basis for a global chemical registration system.
"It would be very helpful if we could take our REACH dossier that we have registered at ECHA in Helsinki and give it to Chinese authorities" for registration there, said Ronald Drews from BASF. "That would be the easiest way."
Drews argues that "the REACH legislation is currently seen worldwide as the best in class regarding chemical law," and that other regions were trying to learn from Europe's experience. China and South Korea have already implemented "some elements of REACH" and discussions have begun in India to put in place what Drews described as "an Indian REACH".
But he cautioned about the temptation to simply roll-out REACH to countries where little or no chemical safety rules have existed so far, saying national administrations would quickly be overwhelmed.
Greg Bond, corporate director of Product Responsibility at Dow, the US chemical company, agrees. "I think there are a lot of advantages of REACH. But REACH is fairly complex, and not every developing country has the capability, the capacity to implement something that complex."
At AkzoNobel, Frank Sherman is not convinced that Europe's regulatory leadership should be imitated, saying "it's premature to say REACH is the proper standard" to be adopted globally. "Obviously, AkzoNobel's been very involved in REACH registrations. But I think the jury's still out to say that REACH is an effective standard."
Lighter regulatory touch preferred
In Europe, the chemical industry itself seems divided as to whether REACH should be promoted globally.
While BASF appears to favour this option, the European Chemical Industry Council (CEFIC), a trade group, warned about plans by New Delhi to adopt an "Indian REACH".
REACH is a “cumbersome” approach to regulate chemicals, CEFIC said in a letter to Indian authorities in April, arguing that the country “could achieve comparable or better protection of human health and the environment with a much simpler approach”, reported Chemical Watch, a specialised news service.
The ICCA believes a lighter type of regulation would be better suited to developing countries – the Global Product Strategy, or GPS, which it helped put in place.
"What we'd like to do is take maybe some of the best elements of REACH … which looks more like GPS, and help developing countries model legislation that looks like GPS," said Greg Bond from Dow.
CEFIC is of the same opinion. "We think GPS should be considered," said James Pieper, media relations manager at the trade group.
A key outcome for ICCA would be to strengthen the UN's 'Strategic Approach to International Chemicals Management" (SAICM) policy, adopted in 2006. But both Sherman and Bond insist that the UN programme should remain a "voluntary" and "flexible" policy framework, saying mandatory treaties take too long to ratify and create too much controversy.
A middle ground would be to go for mandatory reporting under SAICM. "We do need greater accountability to deliver against commitments, and so maybe mandatory reporting against voluntary commitments" could be the way forward, Bond said.
Despite differences over the best possible approach, chemical companies are in agreement over the need to promote global standards. And this, they argue, can only be done via a stronger mandate for the United Nations Environment Programme (UNEP).
EU representatives at the Rio summit are pushing for a similar outcome. One Brussels diplomat told EURACTIV that Europe's ambition at Rio was to give UNEP wider powers to watch over all existing environmental treaties such as the Kyoto Protocol, the Montreal Protocol and other international accords.
"There are 500 of them," the diplomat pointed out. "Not all have a secretariat but there are 500 legal bases and a large number of structures. So there should be more consistency between these various agreements."
Like EU diplomats, chemical companies support greater consistency in international environmental rules. "These various treaties sometimes appear confusing and sometimes even conflicting," Sherman said. "So I think UNEP can help a great deal in trying to align those treaties and make sure that we're headed in the same direction."
"ICCA supports strengthening UNEP to enable it to more effectively coordinate and address environmental issues," Sherman said.
UNEP has in fact already begun the process of streamlining some treaties relevant to the chemical sector – the Rotterdam Convention on Prior Informed Consent (PIC treaty), the Stockholm Convention on Persistent Organic Pollutants (POPs) and the Rotterdam Convention on waste.
But Dow's Greg Bond believes more can be done. "We would like to see the work that UNEP's doing today to coordinate on these three treaties, to accelerate that work and do more of that type of consolidation and looking for streamlining and efficiency."
Support for global carbon price
In fact, international chemical companies at ICCA would like to go a step further, saying the UN's involvement in policing environmental legislation should be extended to other areas than chemicals to cover carbon dioxide emissions.
"I think industry would very much like carbon pricing to be standardised, globally," Sherman said, adding that "you're going to have to support and resource an outfit like UNEP to help do that".
He conceded, however, that there was little hope that the Rio summit will make much progress on this given the US reluctance to regulate carbon dioxide emissions.
"Whether that translates to some kind of a global pricing or specific policy in the US, I'm doubtful that this is going to happen in the near term. But I think as an industry, eventually these costs will have to be monetised, and incorporated in our economy."
"There's a business case here."