I thank the Chairman for this opportunity to make the business case in respect of the impact of the REACH regulation when it comes into force. I will go through my presentation as quickly as possible and cover the key points. With me is a representative of a specific industry, Intel, who I hope will relate in a practical sense the issues to which I am referring.
We accept the objectives of REACH. Previously, legislation in this area was unwieldy, with 40 items in total, and there was an absence of certain knowledge of chemicals and their effects on the environment and human health. It was necessary for the legislation to streamline the matter and provide the relevant information to allay public concerns re the environment and human health. Previously, national public authorities were responsible for carrying out risk assessments of these chemicals, but they found it unwieldy and time consuming. They believed the burden should be passed back to industry at a reduced responsibility. While any new material that entered the market after 1981 needed to be registered and the information placed on the market, there was a lack of information on approximately 30,000 existing substances, leaving gaps and concerns.
We agree on the need for information but the changes in respect of REACH are far-reaching. We are concerned that the regulation in its current format is unworkable. Previously, legislation related to the assessment of the hazard and the conveyance of hazard information as part of a label and data sheet. Once a person knew the impact or potential hazard a chemical would have, he or she would write it on the label and pass the information and the substance down the supply chain. The receiver would read the information and the data sheet and decide to use the substance in accordance with X, Y and Z. This process only took place when the substance was being placed on the market, but the new legislation requires this of anyone who manufactures, imports, distributes or uses the chemicals or articles that contain chemicals which are also covered by REACH. It requires more than the conveyancing of data because there is now a duty of care.
While the Irish chemical manufacturing industry will be affected, it will probably not be the most severely affected sector. Instead, downstream users will be the worst affected. If I am the manufacturer of a chemical and put it on the market, I must get all the information from the supply chain about how it is used, put it in a data sheet and safety report, relay that information and say that I am putting the chemical on the market and it can be used for X, Y and Z. I will give the information to 15 distributors who pass it to someone else who formulates it down the line. Trying to get this information back up the supply chain will be impossible.
I will give the committee a specific example of a man who spoke to me recently and to whom I was not able to give an answer. He supplies a material, copper sulphate, for animal feed, which has been excluded from the legislation. The man does not have a duty to do anything in that respect, but 5% of his material will be used in disinfectant foot baths. Is the man responsible for that use? I do not know. This matter relates to more than 1 tonne of a chemical placed on the market.
One of the slides in my submission depicts a person jumping out of a tiger's cage and into a pool of sharks. Essentially, this is where we have come from. It was bad, did not work and was quite dangerous but we are jumping into something that is as bad if not worse. The next slide, which I acquired from the Department of the Environment, Heritage and Local Government, lists industries that could be affected. Each sector imports or uses chemicals in its process or to produce its final product. In some shape or form, all these sectors will be affected by the legislation.
For those who are not well acquainted with REACH, including me, the legislation is 1,200 pages long, very scientific, highly technical and very confusing. Even the competent authority would agree. Within 18 months of the regulation entering into force in 2007, there is a requirement to put in place pre-registration, that is, to supply certain information on someone's materials and testing. Depending on tonnage and how dangerous the chemical is believed to be, if one is a manufacturer or importer, a highly technical dossier displaying what information exists must be put in place. If more than 10 tonnes of the material are on the market, there is a new requirement to put in place a safety assessment and report. The safety assessment report requires that every use and exposure of this material after entering the market must be assessed and that the chemical can only be abused in accordance with those uses. It makes sense and protects the environment but it does not work in practice. The competent authority will examine all of the data and assess the substance or the dossier to determine whether there is further information.
Our main concern relates to a process called authorisation. If a substance could be classed as having the potential to cause cancer or reproductive hazards or be mutagenic, the industry is required to use a substitute if available. A case cannot be made to use a chemical on the basis of its socioeconomic benefit, an issue that will be addressed through the Intel example. Doing this does not take account of risk. Everything is a hazard. The pen in my hand is a hazard. I could poke my eye out with it if I were not wearing glasses. A chemical could be a potential carcinogen — many carcinogens are used for cancer treatment — but if it is put in an article and not released, the article might be made stronger. By removing the chemical and putting in a substitute, that is not as good and one could be creating a greater risk. This is our main area of concern and the committee should examine it. The authorisation should be based on socioeconomic benefits, risk and whether it is adequately controlled. A chemical should not be removed on the basis of its hazards alone. Its risk assessment should be examined.
It is a problem for the manufacturer to handle registration. It can cost up to €500,000 to have a test package carried out and, in some cases, more than €1 million. Competent toxicologists, ecotoxicologists and so on will be needed to assess the data before the chemical is passed but there is a shortage of this competence within Europe. Many companies such as Intel may import materials from outside Europe, manufacture their own materials, be the downstream users and incorporate some of these chemicals into articles. Therefore, they are caught by each string of the legislation. If it goes ahead in its current form, it may be easier for companies to produce outside the EU.
The European Commission has a number of companies attempting a pilot exercise but the legislation itself should be piloted because there is confusion about whether people are affected. Food ingredient producers are not affected but those who use the ingredients are. The matter is complex and difficult to understand. When we believe we understand it, we realise that there are other factors. Costs in Europe are estimated to reach €1 billion. A Forfás study indicated that the cost to Ireland's main registrants would be approximately €180 million over ten years but the cost for downstream users could be much more — €300 million. This factor has been underestimated. The overall cost will include testing and administrative costs and the necessity of certain resources. Many small volume substances of low profit margins will be removed from the market as people will not be able to cover their costs. If a producer is on a tight, low profit margin, the product would not be worth the cost. This means the final product will be more expensive.
There is a considerable problem of confidentiality within the legislation. Previously, everything was confidential. I worked for the competent authority where we put everything into a vault. However, everything will now be shared in the public arena, which gives competitors an advantage. There will be a problem with the constancy of raw material supplies. They will move elsewhere, which will affect many Irish industries that are under competitive external threats. We work in a global economy, not just in Europe.
Other chemical agents legislation could deal with these matters. There is a requirement to carry out a risk assessment when anyone uses a chemical in a workplace. This legislation should pass information on the chemical to its user so that he or she can use it safely rather than make me, as the main producer, responsible for everything that occurs down the line. Who will enforce compliance? The resources needed to address this are phenomenal. There is also a reluctance to comply with the requirement to share information with other registrants. It will not reduce costs, as has been suggested. Administrative costs of sharing data have been shown to outweigh the savings made on testing.
Another main concern is the amount of information one must collate in drawing up a safety report to show the risk to human health. If my organisation is having difficulty finding the competence for this, how will small manufacturers manage? I will address any specific matters through questions from committee members. IBEC information seminars have identified the key concerns for Irish industry. These include the matter of who will provide the expertise. The legislation consists of 1,200 pages and I do not understand it. Companies want to know if the legislation applies to them. How will safety reports be produced? Where will companies seek this information? How will this information be communicated up and down the supply chain? If I sell a product I usually deal with a sales director who has no technical competence. One company suggested engaging the services of a teacher with a science background, but this is not adequate. The health and safety at work legislation requires a person with competence. Therefore the person must have competence in legislation and scientific matters. We do not know where we will find these people.
Downstream users do not believe chemical legislation will affect anyone but chemical manufacturers. We have tried to inform these people but they do not see how the legislation is relevant to them. They are unaware of the information they must pass up the supply chain to ensure the safety assessment can be completed. Where do the roles of REACH, chemical agents and the Environmental Protection Agency's integrated pollution control converge? There is total confusion on this point.
What will be removed from the market in respect of authorisation? I received a query on this and consulted the competent authority which will revert to me. The query concerned a plastics manufacturer who cannot produce any more polymers without adding a new material. Polymer additives are potentially toxic but once added to the polymer they do not pose a problem. Polymers are outside the scope of registration requirements but if the manufacturer adds a potentially toxic material to the polymer, does the plastics manufacturer become a chemical manufacturer who is therefore subject to registration? Neither I nor the competent authority could answer the question and the manufacturer has no idea. The legislation will come into effect in 2007. We have one and a half years to prepare but we do not know how to do so and we cannot estimate the cost.
We would appreciate if this committee could approach the EU to request that this legislation be made workable. We do not know if sufficient resources are available to enforce this. If we cannot adjust REACH to make it workable, it is a fast-moving train coming down the track. If we cannot stop the train, can someone provide us with resources to buy a ticket for the train when it arrives? Ms Fiona Lyons of Intel can give a practical example of the problems REACH poses.
