More Data = More Risk?

In a presentation at the ICIS/ELGI Industrial Lubricants Conference in Amsterdam in November, Baumgrtel explained that in 1967, about 600 substances were classified as dangerous. By 2010, more than 3,000 were classified as dangerous.

By 2018, he said, all substances (expected to be in excess of 50,000) on the European market will have been tested for their toxicity to humans and the environment. The number of dangerous substances very likely will be much higher than at present. But, Baumgrtel asked, Does anyone expect a significant reduction of risk?

He then reviewed the case of boron. Boron is essential for most creatures on earth. Traces of boric acid are found in coffee and fruits, Baumgrtel said. Toxicological data on humans even for workers in borax mines have shown no adverse effect on human health.

However, animal testing at dosages of up to 150 milligrams per kilogram body weight per day for 90 days showed boron to be toxic for reproduction, CMR Category 1B. Common handling and use was not considered.

Doing the calculation, Baumgrtel showed that for an 80-kg human, ingesting 150 mg/kg/day is equivalent to 12 g of boric acid per day. Since a typical metalworking fluid concentrate contains 5.5 percent boric acid, a person would have to drink about 2 liters of emulsion per day to consume the necessary amount of boric acid. Problem is, users try to avoid boron containing metalworking fluid, regardless of exposure.

Baumgrtel then explained that the Biocide Product Regulation (BPR), which was adopted about 15 years ago, anticipated several elements of REACH. The purpose of the BPR was to protect people and the environment, although only a very limited number of incidents involving biocides were known prior to its adoption.

In 1999, about 100 active substances were used as biocides in metalworking fluids. By 2015, only 27 supported biocides were on the market. Only 11 suppliers are left, and only two biocides are supported by more than one or two suppliers, Baumgrtel reported.

In addition, 12 of the 27 biocides are so-called formaldehyde releasers. In 2015, long after the registration process started, formaldehyde was classified as CMR Category 1B. As a result, customers are hesitant to use formaldehyde releasers, even though the actual formaldehyde concentration is far below the threshold value, Baumgrtel noted. This represents a significant loss in investment for companies that have already performed the testing necessary for registration.

As of September 2015, 13,441 substances were regarded as registered under REACH, and up to 140,370 preregistered substances are on the European market. About 130,000 mainly low volume substances are left to be registered; however, according to Baumgrtel, the true number of substance in the EU is between 30,000 and 50,000. Registration costs range from 50,000 to 2 million per substance, depending on volume and hazard level.

The main impact of REACH is that the number of substances available is decreasing due to standardization of products, and the development of more intermediates and polymers, Baumgrtel lamented. Suppliers increasingly focus on core products, and price increases are likely, he added

Industry is also innovating less because new substances must be registered before being placed on the market in volumes of 1 metric ton per year or more. This point was supported by a recent study issued by the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, which showed that companies feel research has been driven purely by the need to comply with legislation and has not led to increased competitiveness in terms of more or higher quality products or services that better meet customers needs. (See Page 42 for more details.)

Baumgrtel pointed out that because of REACH, more chemicals and mixtures are labeled as dangerous. Also, substances on the candidate list are frequently banned just because a risk is suspected, but has not been formally documented. Finally, he said, REACH has resulted in complex Safety Data Sheets that exclude some applications (for example, niche applications such as metalworking fluids) and uses such as spraying.

Predictions Pan Out

Baumgrtel related that this situation was predicted in a 2002 Arthur D. Little study that assessed the influence of REACH on the German market. It presented three scenarios – Clouds: 0.4 percent loss in gross value added; Storm: 2.4 percent loss in gross value added; and Hurricane: 6.4 percent loss in gross value added. The study painted a very pessimistic picture of fewer substances on the market, less innovation and lower investment.

Further, KPMG conducted a study in 2005 that estimated total registration costs at about 14,600 for substances produced at 1 to 10 tons per year, 163,000 for substances produced at 10 to 100 t/y, 280,000 for substances produced at 100 to 1,000 t/y and 325,000 for substances produced at more than 1,000 t/y. In fact, actual costs far exceed these estimates because the European Chemicals Agency requires additional tests. Costs are also higher because chemicals and procedures must be replaced to comply with REACH, and placement on the authorization/candidate list leads to some products being withdrawn from the market.

The KPMG study also found that the amount of money required for registration can be significant. Also, it will be difficult for small to medium enterprises to fund the direct costs. Whats more, formulators expressed uncertainty and concern about the availability of critical substances and the timing and likelihood of their withdrawal from the market. Substance withdrawal would require major efforts and costs to reformulate products.

The study predicted testing and registration would increase product costs by about 20 percent. KPMG opined that direct costs would get diluted down the value chain and that there would be no increase in R&D costs and limited diversion of R&D resources to implement REACH.

Baumgrtel then explained the results of a study conducted by VSI in 2012. It showed a cost increase of 5 to 35 percent for manufacturers and 5 to 30 percent for importers just to run the basic registration tests and no additional tests. Respondents were neutral to pessimistic concerning their loss of market share in the EU and the impact on production costs and final product costs.

However, Baumgrtel noted, A very high number of substances are still not registered. And it is unlikely that all substances currently in the market will be registered due to limited lab capacity and a short timeframe. We still have two more years to go, but the situation is still uncertain.

Effects on Trade

Baumgrtel concluded with some comments on various trade agreements, including the Transatlantic Trade and Investment Partnership (TTIP), the Transpacific Strategic Partnership (TPP), Globe Europe strategy with China, Japan and Korea, and the Canada and European Union Comprehensive Economic and Trade Agreement (CETA).

One goal of these agreements is to foster regulatory cooperation and, thereby, help eliminate trade barriers. Anticipated benefits include international division of labor, uniform markets, centralized production, improved competition, better quality, lower prices and synergies in R&D.

Trade in chemicals is the second largest sector, said Baumgrtel. One challenge in todays market is harmonizing the EUs REACH protocol with the U.S. Toxic Substances Control Act (TSCA). REACH is a risk-based system in which new substances are considered dangerous unless proven otherwise. Under TSCA, chemicals are not regarded as dangerous unless the supplier classifies them as such.

As a result, TSCA-listed chemicals cannot be imported into the EU without mandatory testing, creating a trade barrier. Baumgrtel outlined several scenarios that lead to harmonized systems, noting that there are signs of changes in legislation in the U.S.

Very likely, the U.S. and other regions (for example, Korea and Turkey) will adopt the principles of REACH on a long term basis, Baumgrtel concluded. A harmonized market provides a chance for global suppliers to market products in the EU.

The ABCs of REACH

E = Evaluation: All chemicals produced in or imported into the European Union must to be assessed for their risk based on their persistence, bioaccumulation and toxicity (PBT) as well as their carcinogenetic, mutagenicity and toxicity for reproduction (CMR).

R = Registration: The result of the investigation must be documented. The EU initially set up a program to investigate the 100 most dangerous substances (high risk and high volume), but failed to run the program within a reasonable timeframe. Therefore, it imposed upon industry to do so, but this time all substances were to be evaluated.

A = Authorization: PBT and CMR substances must be withdrawn from the market in medium time. All substances need to be approved by the EU, and their use is granted for a limited time (between 5 and 12 years) if they are safe and no alternatives are available or socioeconomic study supports the use. End users have the right to be informed about substances on the candidate list of substances to be added to the authorization list. But no consideration is made for professional or business-to-business use.

The result is that risks will be well assessed, but there will be no significant change in hazard assessment or hazard control. Extensive exposure scenarios are to be assessed to determine the conditions under which the substance is safe to handle, with the report consisting of some several hundred pages, depending on the substance and use.