Ref. Ares(2023)7894824 - 20/11/2023
Meeting with
(CEFIC),
12 October 2023, 11:00
BRIEFING NOTE (Commission Internal)
Scene setter and context
Recent geopolitical disruptions, higher energy prices and increasing regulatory
burden and uncertainty (e.g., REACH revision, the PFAS restriction) pose an
unprecedented challenge to the EU Chemical Industry and its green and digital
transition. During your previous meeting on 26/06 you discussed already
REACH revision and PFAS file. This meeting was initially intended to look more
at the pathway but as the REACH revision is stil ongoing it can also be an
opportunity to further gather insights in the light of actual developments.
Objectives
•
REACH revision: reassure CEFIC of the Commission’s objective to
continue working on a balanced and practical proposal.
Reassure that
the Commission is committed to make the twin transition of the EU
Chemical industry a business case and to support investments in safe
and sustainable chemicals. Regulatory predictability, policy coherence
and incentives to transform the EU Chemical Industry and secure its
competitiveness are part of the co-creation process by means of the
transition pathway..
•
Get opinions from CEFIC on key points stil under discussion, in particular
on:
o the
timing of the REACH revision proposal
o
polymer notification and registration; information requirements
for
low tonnage substances;
o link to
substitution planning/transition pathways.
Key messages
REACH revision
• We are continuing our work on the REACH revision, having in mind the need
to balance its
multiple objectives: increase protection of human health and
the environment, but also secure EU competitive advantages and innovation
(by promoting sustainable chemicals) and simplify the regulatory process.
• The main changes of the REACH revision include:
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o Fil ing
gaps in information requirements to enable identification and
regulation of certain chemicals, in particular endocrine disruptors,
persistent substances and – perhaps to an extent – polymers.
o Simplifying
authorisations and extending the generic risk management
approach for
restrictions. The implementation of these restrictions wil
be done in a staggered way according to a work plan.
o Introducing the
essential use concept, but complementary to the socio-
economic analysis for the specific assessment of risk.
o Improving
enforcement and compliance with REACH rules, especially for
imported products.
Questions to CEFIC:
What is your view about the best timing of the REACH revision?
We want to limit additional administrative burden to the minimum that is
necessary. What is your view about polymer notification and
registration? Are there any other requirements that you think could be
eliminated compared to the discussions so far (e.g. for low tonnage
substances)?
We think that substitution of the most harmful chemicals can overall
bring more benefits for investments in Europe than harming
competitiveness, providing that we set realistic timelines and give
planning security for the transition time. What is your view? Wil high
standards in Europe in terms of substituting the most harmful chemicals
help competitiveness or rather deter investments? What can we do to
attract investments?
Defensives on REACH revision
Q: How wil the REACH revision simplify and reduce burden on companies?
A: Authorisations are one of the most complex procedures in REACH and have
created a lot of legal uncertainty for EU companies. With the REACH revision
we wil make sure that the future authorisation system wil be more
manageable and faster.
Q: Wil the generic risk management approach be disproportionately costly
and disadvantage European companies?
A: Restrictions based on the generic risk management approach wil be
implemented in a staggered way through a work plan, to ensure predictability
and enough time to find alternatives. The restrictions wil be much more
limited than in the early projections that were reflected in CEFIC´s 2021 study
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analysing impacts. We will prioritise consumer uses and focus only on
professional uses with exposure patterns similar to those of consumers.
Moreover, wel planned substitution of the most hazardous chemicals wil
generate new business opportunities by safer and more sustainable chemicals
and solutions, create innovation in Europe and enhance long term
competitiveness.
Q: What will the Commission propose concerning the essential use concept?
A: We are preparing a Communication that provides guiding elements on the
implementation of the essential use concept across different pieces of
legislation. When it comes to REACH, we are stil finalising discussions on how
the concept wil be applied. However, for the specific risk management, we
envisage to make the essential use concept complementary to socio-economic
analysis.
Q: How the essential use concept can help simplifying authorisations and
restrictions?
A: We expect that the essential use concept wil help reaching quicker decisions
on clear essential (e.g. lithium batteries) and non-essential (e.g. plating of
lipstick case) uses.
Q: What wil the Commission do to ensure proper enforcement of REACH?
A: We plan to improve the tools for customs authorities to enforce REACH, e.g.
by improving the access of customs authorities to chemicals databases. We
also want to clarify responsibilities for compliance of products sold through
online platforms such as Amazon.
Q: What wil the Commission do to avoid negative impacts on Green Deal
objectives due to the PFAS restriction?
A: We know the upcoming PFAS restriction causes a lot of nervousness. In view
of the investment uncertainty that the long-running process of the planned
restriction can create, the Commission intends to prevent unduly upsetting the
markets and discouraging investments key for the twin transition and strategic
autonomy by envisaging a balanced restriction of PFAS that takes into account
all EU policy objectives holistically.. Moreover, the Commission is also
exploring means to simplify and accelerate the procedure, having regard,
for example, to different degrees of risk or of use criticality.
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The Transition Pathway for the Chemical Industry
• I welcome your active participation and involvement in this process.
• Fol owing the publication of the Pathway in January of this year, we are
holding several discussions with stakeholders on the co-implementation.
As part of this process, we also launched a call for Transition Initiatives
this summer.
• The call provides companies, public administrations, and other
organisations with the opportunity to inform us about their current and
future projects for a greener and more digital EU Chemical industry.
• This call is fundamental to understanding how the EU Chemical Industry
is progressing towards its twin transition, what has been achieved and
what needs to be done. Therefore, we encourage participation.
• In addition, we intend to publish an Annual Progress Report in Q1 2024
to better outline where we stand with the co-implementation.
• In the meantime, we are committed to considering how relevant
Commission’s policies and legislative proposals wil relate to the co-
implementation process.
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Background
The Transition Pathway aims to solve the two-fold chal enge of the EU
Chemical Industry: sustainability and competitiveness. It provides a wel -
defined action plan to start increasing the resilience of the EU Chemical
Industry and make its twin transition a business case. We need to work hand in
hand with the EU Chemical Industry, Member States and al stakeholders to
build upon the Pathway to ensure a predictable and conducive business
environment for investments in safe and sustainable chemicals.
Key figures
•
EU 27 Chemicals output declined by 11.9% in the first seven months of
2023 compared to the same period of the same year.
• In parallel,
EU 27 chemical sales displayed a decline of 13.8%, whereas
chemical selling prices were down by about 2% in Jan-July 2023 vs the
same period of 2022.
Source: Eurostat and Cefic Analysis (2023)
• In terms of output,
the chemical industry experienced the largest
decline among several EU manufacturing sectors (e.g. paper, basic
metals, textiles) in Jan-July 2023 vs the same period in 2022.
• Moreover, both
EU 27 exports and imports went down by 7% and 13%
respectively (in Jan-June 2023 compared to the same period in 2022).
Source: Eurostat and Cefic Analysis (2023)
• On the cost side,
natural gas prices in Europe stood at 35 EUR/MWh in
August 2023,
85% below the 2022’s level (239.9 EUR/MWh) and 30%
lower than in 2021. Gas prices in Europe are
stil 3.5 times higher than in
the US (35 vs 9.9 EUR/MWh). Although European gas prices have eased
significantly, they are 60% above their average 2015-19 level
1.
• At sub-sector level, a downturn in production was recorded for
petrochemicals (-18%),
polymers (-15.2%), basic inorganics (-11.4%) and
specialty chemicals (-7.5%) (Jan-July 2023 vs 2022)
. Instead, consumer
chemicals (including soaps, detergents and cosmetics) are performing
well compared to other sub-sectors.
• At country level
, Germany, Poland, and the Netherlands were amongst
the EU 27 countries showing the highest output declines in Jan-July 23
compared to the same period of the previous year.
Source: Eurostat and Cefic Analysis (2023)
• At company level,
the top 12 (by turnover) EU headquartered chemical
companies show in most cases double-digit reductions of sales and
profits in H1 2023 compared to the same period in 2022.
1Source: https://cefic.org/app/uploads/2023/09/EU27-Chemicals-Business-Monthly-Briefings-Sep-2023.pdf
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polymers business.
Note: The discrepancy that between the dynamic of sales in value terms and the combined dynamic of volumes and prices is explainable by the
existence of other effects, namely exchange rate and portfolio (primarily, changes in the product structure of sales), which are less relevant.
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