Cumulative Cost Assessment on the EU Chemical Industry. SME Envoy Meeting

Transcription

1 Cumulative Cost Assessment on the EU Chemical Industry SME Envoy Meeting René van Sloten 30 March 2017

2 I. EU chemical sector and global position II. SMEs in the chemical sector III. CCA Results IV. CCA (Phase II)

3 EU Chemical Sector Profile companies, 96% SMEs 1.16 million of jobs 519 billion of revenues 14,7% of the world s chemical sales = key EU economic sector Source: Cefic Chemdata International - data for 2015 Page 3

4 Unique characteristics To be taken into account when looking at regulation & innovation: Globalised industry Long product development time, requiring stable and predictable policy framework Energy intensive Capital intensive - but investment in decline in EU Innovation driven - but stagnation Page 4

5 Unique role: the industry of industries as key enabler Sustainability challenges are business opportunities: e.g. Health & Nutrition, Energy & Resources, Construction & Housing, Mobility Process & product Innovation: the chemical sector is an essential enabler of innovation in numerous downstream industries through its products, materials and technologies (e.g. new materials, solution for circular economy) Page 5

6 Asia chemicals production outpaces other regions World chemicals sales: geographic breakdown Source: Cefic Chemdata International 2016 * Rest of Europe covers Switzerland, Norway, Turkey, Russia and Ukraine ** North American Free Trade Agreement *** Asia excluding China, India, Japan and South Korea Page 6

7 EU chemicals sales increase by nearly 60% in 20 years, while its world market share halves EU share of global chemicals market Source: Cefic Chemdata International 2016 Page 7

8 Trends in overall growth expected to continue EU share goes down Growth in world chemicals sales Source: Cefic Chemdata International 2016 * Rest of Europe covers Switzerland, Norway, Turkey, Russia and Ukraine ** North American Free Trade Agreement *** Asia excluding China and Japan Our industry has come under increased competitive pressure Page 8

9 I. EU chemical sector and global position II. SMEs in the chemical sector III. CCA Results IV. CCA (Phase II)

10 SME Definition (EU Commission)

11 Small and Medium Enterprises (SMEs) in the EU chemicals industry represents 1/3 of all companies Small (10-49), 23.1% Medium (50-249), 10.4% Between( 250 and 499), 2.1% Between (500 and 999), 1.1% or more, 0.7% Micro (1-9), 62.6% Data source: Eurostat SBS (2001) Number of companies: % of them are SMEs (1-249)

12 SMEs represent 96% of EU chemicals companies, accounting for 30% of sales and 37% of employment

13 A new SME definition since 2005: Am I an autonomous enterprise? Independency criteria A new SME definition since 2005: Four criteria should be taken into account, Number of employees, Turnover or, Balance sheet, AND autonomous You are autonomous if: You are totally independent, ie you have no participation in other enterprises and no enterprise has a participation in yours. You have a holding of less than 25% of the capital or voting rights (whichever is the higher) in one or more other enterprises and/or outsiders do not have a stake of 25% or more of the capital or voting rights (whichever is the higher) in your enterprise. If you are autonomous, it means that you are not a partner or linked to another enterprise. Source: the new SME Definition: (user guide and model declaration)

14 Cefic Analysis on Chemicals SMEs (2013) There are about producing chemical SMEs in the EU. EU chemical SMEs are mainly active in specialty chemicals (40.5%) and consumer chemicals (28.5%); Nearly 41% of EU chemicals SMEs are located in Spain, Poland and Italy. There are about totally independent SMEs (A+B, 44% of all), some degree of uncertainty regarding the other 6340 Criteria A: (Autonomous Companies), no shareholder with more than 25% of direct, or total ownership. Criteria B: (i) No shareholder recorded with more than 50% of direct, indirect or total ownership, (ii) one or more shareholders recorded with more than 25% of direct or total ownership. Page 14

15 I. EU chemical sector and global position II. SMEs in the chemical sector III. CCA Results IV. CCA (Phase II)

16 The Cumulative Cost Assessment (CCA) study on the EU chemical industry Unique exercice/opportunity Not a deregulation exercise but a tool to examine the impact of regulation on the competitiveness of our industry Ultimate goal: to identify where problems occur, and how these can be mitigated and remedied - without reducing levels of health, safety and environmental protection Cefic welcomed from the beginning the initiative of the Commission and participated actively in the successful implementation of the Project Page 16

17 Scope: EU Legislation packages examined Chemicals legislation Energy Industrial Emissions and process legislation Workers safety legislation Product specific legislation Customs and Trade Transport (i) All other horizontal legislation that impacts chemical industry is not included (ii) Regulatory costs in energy prices are not accounted for in quantitative terms (iii) Pending future regulation, such as ETS reform, is not yet considered Page 17

18 Results: Total direct average annual cost estimated to 10 bn (i) Industrial emissions, (ii) chemicals and (iii) workers and safety legislations are the main drivers of total regulations costs (87%) Page 18

19 Results: High shares of regulatory costs in specialty chemicals and agrochemicals Page 19

20 Results: Regulatory costs* are steadily rising Major milestones: REACH (2007), CLP (2008), anticipation of the enforcement of Seveso III (2012) and ETS Phase 3 (2013) * source: CCA report, Cumulative Cost Assessment for the EU Chemical Industry, Dec. 2015, Technopolis Group Page 20

21 Learnings: high regulatory costs for EU chemical industry EU complex regulatory framework poses a significant burden on chemical companies, amounting to about 100 billion euro over the investigating period (10 years) Regulatory costs are in the same magnitude than total R&D expenditures of the Chemical industry Compared to Gross Operating Surplus, the additional cost reaches 30%: cost of regulation is a significant factor shaping the profitability of the chemical industry Company size seems to effect the impact of legislation, as cost s share in value added is higher for SMEs for almost all packages Page 21

22 Cumulative cost is higher for SMEs* for all packages, except for customs and trade SME in general incur higher costs compared to large structures because the costs to comply with legislation are not linear and cannot be amortized on large

23 I. EU chemical sector and global position II. SMEs in the chemical sector III. CCA Results IV. CCA (Phase II)

24 International Comparison of Cumulative Regulatory Costs in the Chemical Industry Study overview for chemical industry representatives DG GROW is now conducting the follow-up study of the CCA-EU, a comparative study on the cumulative regulatory costs for the chemical industry of four main actors on the international scene: China, India, the United States and the European Union. The overall objective of the new study is to understand the differences in regulatory frameworks and how these affect the competitiveness of the respective business sectors. The study has been awarded to Technopolis Group, Ricardo Energy & Environment and Reach24h Consulting Group. Both studies have been announced in the REFIT communication, the European Commission's Regulatory Fitness and Performance programme and in the Fitness Check Roadmap Page 24

25 Objectives and key tasks Task 1 Analyse the cost structure of the main international competitors and compare them with the EU chemical industry; Task 2 Identify the relevant chemicals-related legislation in selected third countries and assess, in a qualitative manner, cumulative costs effect it engenders in comparison to the EU Task 3 Carry out case studies on the cost effects of the most relevant chemicals-related legislation in selected third countries, i.e. China, India and the United States, and assess their potential impact on the international competitiveness of EU chemicals companies; Task 4 Validate the results from the study with relevant stakeholders. Page 25

26 Scope of analysis The study will cover the following case studies: Page 26

27 Thank you for your attention Page 27

28 Backup Slides Page 28

29 There are EU chemicals SMEs

30 EU chemical SMEs are mainly located in Spain, Poland and Italy

31 73% of EU chemical SMEs are active in consumer chemicals, other chemicals products, paints and plastics

32 EU chemical SMEs are mainly active in consumer chemicals and specialty chemicals

33 Cefic supports better regulation, not deregulation Need for EU regulation is indisputed High safety, environmental and social protection standards Solid expert knowledge supporting EU decision-making Internal market across 28 countries It is about quality and preserving the capability to grow, employ and invest: Evidence-based and transparent decision-making Stable, predictable and consistent regulations Policy objectives achieved at lowest cost Enable competitiveness & innovation Page 33

34 We need to draw lessons from the past before making choices for the future COM stock-taking report on regulatory fitness of chemicals legislation Future policy-making Fitness Check Chemical Legislation (2018) REACH REFIT Evaluation (2017) Crop Protection Evaluation and MRL (2018) Check of occupational health & safety rules (2016) Cumulative Costs and Benefits Page 34

35 Legislation is not an end to itself it is a means to deliver tangible benefits for European citizens Source: Commission communication, Better Regulation: Delivering better results for a stronger Union, How can we get better results? Page 35

36 By improving decisions on when and how we regulate Report on burden reduction targets Addressing regulatory impacts on Innovation (ex-ante/post) EU proposals on Conventions, Guidance, Comitology may also bear significant impacts Page 36

37 We support the Innovation Principle Council Conclusions on Better Regulation to strengthen competitiveness 26 May 2016 STRESSES that, when considering, developing or updating EU policy or regulatory measures, the 'Innovation Principle' should be applied, which entails taking into account the impact on research and innovation in the process of developing and reviewing regulation in all policy domains. CALLS on the Commission together with Member States, to further determine its use and to evaluate its potential impact The Council recalls the Precautionary Principle. Page 37