Yesterday’s EU ETS back loading vote sends the right signal to the rest of the world. We have a market-based system which will deliver the emission reductions it has committed to. Political intervention would have undermined what little investment certainty there is. 

Many of course have argued otherwise. Many negative comments in the press today suggest that the vote sends the wrong signal to the rest of the world. However, we would argue that the signal you would want to send to the rest of the world is that you can deliver on your low carbon goals whilst delivering on your growth ambitions. 

We should always remind ourselves, that the aim of the EU ETS is to reduce emissions at the least cost. Indeed, that is still a statement on the Commission's website.

Meddling in the EU carbon market would have sent a signal that the market was vulnerable to political interference and that makes it extremely difficult for investors. We need stability, predictability and long-term certainty to create the right conditions for investment in low carbon.

If we ask ourselves where our focus should be now, we should be taking a step back, looking to our future longer-term ambition and working back from that. The Commission and government are now considering the future of the EU ETS post 2020. We must make sure that this is designed correctly to achieve this vision.

EU ETS was designed to be expanded to other economic regions. So far this has achieved limited success, although there are signs that growing numbers of industrialised countries are interested in emissions trading. While most are at the design phase, let’s build on the experience and knowledge we have accumulated to creating an EU ETS for the future. Countries will only adopt EU ETS when it is shown to be effective and cost-effective. Furthermore, it must be a scheme which helps to transform internationally competitive industries rather than stifle them.

From the perspective process industries such as the steel sector, we should understand how we can reduce emissions from the sector, globally, rather than just here in the EU, to avoid seeing emissions pop-up elsewhere. 

Our efforts therefore should now be channelled on the future design of the EU ETS and in securing a 2015 international agreement which secures the level of global ambition required to tackle climate change.

Cerium, gallium, germanium, indium, lanthanum, yttrium: these speciality metals sound exotic, but they are in fact core ingredients to produce components for what we would now consider to be everyday objects - energy saving lamps, solar cells, mobile phones, flat screen televisions, computers and other technically sophisticated products.

Indeed, as advance manufacturing has expanded so has the basket of metals and minerals upon which it depends. These are available in sufficient quantities around the world. But increasing demand, the unequal distribution of these natural resources and the decreasing quality of these resources threaten stability of supply.

Governments of high-tech manufacturing nations, such as Germany, are increasingly looking for a sustainable concept to supply its industry with these economically important strategic resources.

So it was fitting that on a cold and snowy morning that I found myself in the mining town of Freiberg, close to Czech border. Until 1969, the town was dominated for around 800 years by the mining and smelting industries. In recent decades it has restructured into a high technology site in the fields of semiconductor manufacture and solar technology, part of Silicon Saxony.I was part of a delegation to visit one of the central planks of Germany’s strategic response to material security – the establishment of the Helmholtz Institute Freiberg for Resource Technology, one of the suite of actions the Germany government committed to in its 2010 raw material strategy.

Its objective is to find new ways to secure a stable supply of high tech metals against a backdrop of the challenging situation of raw materials supply. It is researching new ways to use global deposits better and access deposits more sustainably; assessing domestic geopotential and understanding how marine reserves may be mined in an environmentally sound way. It is also considering how to cost-effectively harvest these metals in the detritus around us - the tailing dams of old mines, in scrapyards and industrial wastes – despite their low concentrations and being finely dispersed.

The technical facilities and laboratories at the Institute are impressive: it has at its fingertips the entire range of methods and technologies needed for processing and metallurgical treatments both at lab and pilot plant scale. Field emission electron microprobe and a mineral liberation analyser enable academics to detect even minute levels of critical materials in samples. New novel bioleaching technologies promise to break new ground in raw material recovery. Further research effort is directed at exploring new approaches to improve the resilience and efficiency of existing materials. Furthermore, it is hungry for international collaboration, with European governments and industry based outside of Germany.

It’s just as well that UK industry might have an opportunity to draw from the expertise being developed in Germany. This is an academic field that had until recently become distinctly unfashionable. There is certainly nothing comparable in the UK.

As well as leading in efforts to ensure material security, Germany is also ahead in the support it offers to industry to use materials as efficiently as possible - what we would call resource efficiency and resource husbandry:

·         The German Mineral Resource Agency is tasked to support German industry, particularly (but not exclusively) those involved in mining or mineral processing, with intelligence of commodity markets, including demand forecasting, assessing global availability of materials and their mining potential.

·         A National Resource Efficiency Network intends to pool, bundle and share know-how and experience within the economy, within science and within politics in respect to resource efficiency through production, products and management.

·         A German Material Efficiency Agency “Deutsche Materialeffizienzagentur” was founded to promote resource efficiency amongst the public and in industry. It works directly with SMEs, develops knowledge networks and runs a German Material Efficiency Prize to encourage innovation.

·         A Centre for Resource Efficiency aims to reduce resource consumption in German industries by promoting an integrated use of technologies, to minimise environmental impacts and preserve natural resources. This is done mainly through case studies and best-practice databases.

·         Finally, a German Resource Efficiency Programme (ProgRess) aims to decouple growth from resource use, reduce the environmental impacts of resource use and improve the sustainability and competitiveness of German Industry by considering the whole value chain – raw materials supply, production and product design, consumption and closed cycle management.

We’re not suggesting that the UK replicates this complicated ecosystem of Agencies, Centres and Institutes but it does help to underline that our calls for a strengthening of the Government's Resource Security Action Plan is not only desirable, but potentially critical to the future health of manufacturing in the UK.

The European Commission has this week published its Green Paper on a 2030 framework for climate and energy policies, launching the debate on a package of measures for 2030, a kin to the 20:20:20 package agreed more than five years ago.

We recognise and support the need for a 2030 carbon emissions target for Europe; this is not surprising as we support the UK’s longer term goal, through the climate change act, to reduce emissions by 2050, which staging posts along the way. However, this draws out two distinct points; should Europe’s timeframe not be much longer than simply a 2030 package. Then is a more focused emissions reduction target, the best way of achieving this 2030 and 2050 goal, rather than other conflicting targets?

In terms of the focus on the 2030 timeframe, we must be mindful that although it seems a long way off, even to 2050 represents only one or two investment cycles for some sectors. If these sectors are to meet the significant challenge of decarbonizing, immature technologies and technical solutions must be developed, demonstrated and made commercially available. The endeavor for technological innovation and break-through technologies is at a critical juncture, and a focus on 2030 may be too short for many sectors.

On the second point, it is clear that many in the Commission and indeed Connie Hedegaard herself will be pushing for another renewables target; we simply do not support this. Policies must be designed, which aim to provide the outcome and not prescribe the route. A strong decarbonisation target for Europe will be sufficient to provide the incentive to invest in the most cost effective decarbonisation strategy for each Member State and assist the transition from high carbon, through to low carbon on to no carbon.

The paper also highlights the option for a new energy saving target in the guise of an energy efficiency target, but again we have our reservations. Although the paper does suggest that this could be a relative target, matched to GDP, policy makers should be mindful of overestimating the benefits of energy efficiency by conflating it with energy reduction. Raising energy efficiency is an important policy objective which can help reduce the pressure that rising energy prices place on business competitiveness. However, there is little or no historical evidence to suggest that increasing energy efficiency will significantly reduce energy consumption.

Arguably, the reverse, that improvements in efficiency will stimulate demand for energy, is more likely. Improving efficiency makes using energy less expensive and encourages much needed economic growth, both of which tend to encourage energy consumption.

The paper also asks for views on the current policies, including EU Emissions Trading System. While many may agree that EU ETS is broken, views are divided on what the fix needs to be. Our view is that the significant structural problems with the EU ETS are best fixed in a full review that looks to Phase IV (post 2020), rather than short term fixes. A robust, global means of pricing carbon would be of significant benefit; however the EU ETS is in our view, no longer fit for purpose. This is particularly true for internationally traded sectors, such as steel. The EU ETS, in isolation, restricts growth in carbon efficient countries, inversely incentivising production in countries with no carbon standards and hence has little or no impact on global emissions.

We would call on the Commission to considering the case for moving trade-exposed, energy-intensive sectors to a single trading bubble under the EU ETS, where the cap is adjusted in line with the emergence of cost-effective abatement opportunities, particularly in the continued absence of a global deal on climate change.

There is also a question of what to do with the revenues from EU ETS we have recommended that the Commission adopt a technology-neutral approach when allocating further project finance through NER300. Currently it is solely focused on CCS and renewable energy projects. For consistency, it should adopt the same criteria for innovation investment as Horizon 2020.

Finally the debate on the future of climate change policy is likely to be a fractious one, with industry on one side and the Commission on the other. It is a shame that European politics is still dominated by this stark division. At a recent meeting between industry and Hedegraard, the Commissioner warned industry not to try and “water down” the Commission’s proposals. In the UK, we have an open and honest debate with government which is firmly grounded in evidence, and increasingly, we seek to find our common ground and discuss the areas where we have less agreement. This constructive, evidence based debate, has led to a number of significant policy changes such as the Energy Intensive Industry package, and Brussels should take note.

As we highlighted in our recent report, Tech for Growth, we know what the prize (the clean tech sector value) is, £880bn between now and 2050 for the UK, and we need to work together with the UK government and the Commission to avoid policies which create the market, but ensure that EU manufacturers are unable to compete in that market. What we need from the Commission and the UK, is a strong focus on innovation and the technologies which will deliver the solutions to climate change, both in Europe and beyond. With this in mind, we must understand what Europe’s vision for manufacturing is, not just what the top line climate policy will be. We need to imbed competitiveness at the heart of European policy making.  

ENDS

Chief amongst the proposals are new targets for 2030. The 20:20:20 package set a target for 2020 to reduce European emissions by 20% relative to 1990, to achieve a share of 20% for renewable energy sources in energy consumption, and a saving of 20% in energy consumption.

We heard last week that REACH was the most burdensome legislation for SMEs to manage.  What could the Commission do to help SMEs? Here are our top 5 recommendations:

·     Establish a mechanism to monitor the authorisation process.

A stakeholder group, similar to the Commissions Director’s Contact Group (set up to feed industry experience on registration straight to the Commission), should be established to feed in on-the-ground experience with for example the authorisation process into the Commission in a timely and systematic way. This should be combined with external reviews by consultants appointed by the Commission to provide credible, third-party assessment.

·     Set out how authorisation applications will be judged.
For SMEs using SVHCs in maybe niche (but promising) applications then the case for authorisation may not be clear cut. To help smaller companies understand whether they, or their supply chain, has a case for authorisation there should be stronger guidance on what would be a credible case for authorisation so smaller companies are in a better position to assess whether they should cut their losses and move on to other things without wasting time and money to develop an application which is doomed from the outset.

·     Outline how the competitiveness impacts of REACH will be monitored.

      This was announced in the REACH review but we are not sure yet what this actually means in practice. From our point of view this must entail a monitoring of REACH (authorisation, restriction etc.) as well as impacts on innovation activity, raw material costs and inward investment.

·     Outline a clear delivery plan for developing SME-friendly guidance.
We’ve been promised SME-friendly guidance but when, and how. We need to see the Commission and the European Chemical’s Agency spell out how it intends to roll this out and – importantly – how it will engage with SMEs to ensure it delivers to brief. We need guidance that genuinely meets the needs of SMEs, not scaled down versions of existing guidance.

·     Develop a methodology for implementing the Risk Management Options process.
It’s an approach that promises a more risk-based approach to REACH, but if the methodology is unclear how can you expect less experienced Member States to adopt it?

Last week it was revealed that REACH, the EU’s flagship chemicals Regulation, topped the list of the most burdensome legislative acts for SMEs.

The findings underline concerns raised by EEF is the past. We are genuinely worried about SMEs capacity to manage REACH effectively.

Our recent survey of members suggested the SMEs find it difficult to even monitor what’s going on.  As it is a piece of legislation which is still in the early stages of implementing its evaluation, authorisation and restriction elements, it is vital that companies assess which chemicals they are reliant on for their business to function and monitor REACH as new chemicals are brought into regulatory control.

You’ll find few in industry who’ll disagree with the aims of REACH: better protection of human health and the environment. We just want to see it work better.

That’s why - along with some of the proposals outlined by the Commission in the REACH review to help ease the burden on SMEs - we are genuinely excited by the Roadmap on Substances of Very High Concern (SVHCs), published by the Commission early February, just days after the REACH Review itself.

The Roadmap outlines how the Commission intends to manage the regulation of potential SVHCs between now and 2020. It has been published, in part, to help ECHA and Member States plan and to inject some predictability in REACH. However there is a distinct gap in the roadmap for where Industry has a role to play.

The roadmap signals the intention to get known SVHCs onto the Candidate List by 2020. New SVHC will also likely be identified through the evaluation of registration dossiers.

But significantly, it signals to the world a shift in approach: the Commission and Member States will to promote and employ a “risk management options” (RMO) approach. It should mean that Member States will be forced to consider the most appropriate form of regulatory intervention to manage risks posed by a particular substance, either using the regulatory tools provided by REACH (authorisation, restriction) or those outside of REACH (i.e. Water Framework Directive, worker exposure limits).

To us in the UK who have become familiar with risk-based regulation – targeting regulation where there are genuine risks – this probably doesn’t seem at all novel. However, under REACH this has the potential to strip out a significant source of unnecessary burden by targeting action to where it is genuinely needed.

This is particularly important when dealing with chemicals with significant socio-economic benefits despite their relative risks. When used under tightly controlled conditions, there are some really compelling examples of substances on the Candidate List which can enhance product safety and durability with significant resource efficiency benefits – reduced waste, reduced emissions and with associated reduced upstream and downstream environmental impacts. These arguments are particularly strong when there is little or no chance of the general public getting anywhere near these substances. Therefore there is a need to balance the legislative driver of REACH, safer handling of dangerous chemicals, with other desirable policy outcomes notably resource and energy efficiency.

To some Member States this may be quite a different way of working to what they are used to. So it is welcome news to see that the Commission has established RiME, a cross member state joint meeting of risk management experts to discuss technical and scientific issues and to enhance cooperation on screening and RMO assessment. It is also a welcome step forward to see that the Commission intends to disclose which substances will be assessed in any given year.

This doesn’t mean that substances won’t be subject to authorisation in future – the process where use of a substance is only permitted if authorisation is granted by the European Commission. But it should mean that the decision to prioritise a substance for authorisation has been routinely considered alongside other regulatory choices.

This is still a voluntary process. The RMO process has no legal basis and therefore it isn’t mandatory for member states to follow this process. That said, the Commission does has a mid-term objective of assessing 80 substances to the RMO process by the end of 2014 – so there will be a degree of political pressure to adopt this approach.

Of course the RMO brings up its own set of complications. It will be important that the RMO process is applied with the same degree of vigour across all Member States. Likewise, it is difficult to see how this process can operate effectively if consultation of stakeholders isn’t carried out. Consultation is left just to member state discretion. Best practice in RMO analysis should also be promoted and shared across the member states so learning and an informal standard is achieved that’s meets the needs of the SVHC Roadmap and Industry.

But if this approach is undertaken in a sensible and systematic way it could be a far more effective and, at the same time, a less burdensome piece of legislation for industry to manage.

It emerged today that a planned major review assessing issues around resource security and climate change failed to engage the Treasury – despite strong cross governmental support from BIS, DECC, Defra, the Foreign Office and Dfid.

Indeed, Treasury officials appear to have quashed the project citing a lack of resources and said any review presenting long-term, global analysis and UK policy and strategy growth would be too “speculative” for an independent review to get into.

Putting Treasury’s staffing issues aside, is Treasury right to consider any assessment to be too speculative in nature to be worth doing? Well for one, it would be just a review. Presumably if an independent expert was to conduct it isn’t it for them to determine whether that link is too speculative or not? Personally, I’m struggling to understand why we would not want a solid evidence base on which to base decisions – even if that decision ultimately is a “do nothing for now” recommendation.

The story has emerged following a Freedom of Information request made by Friends of the Earth which was reported today in the Financial Times.  We can be pretty certain about what was going to be explored as a draft terms of reference was included in the disclosed emails. It would have assessed:

·         The extent to which expected social, economic and demographic trends could result in changes to the global availability of resources, with specific consideration given to the implications of the economic convergence of emerging economies and the potential advances in the supply of resources.

·         To identify and present the macroeconomic consequences for the UK that could result from the risks identified above including the UK's potential for sustainable growth, its terms of trade, exposure to commodity price shocks and the security of resource supply

·         To investigate the global scope for improved resource efficiency and the linkages between increased resource efficiency and progress towards a low carbon economy acknowledging complementaries and trade-offs between the two outcomes

·         To identify the constraints that changes in resource availability may have on sectoral growth and also the opportunities for growth arising from resource efficiency and low carbon innovation (inc. which sectors have a competitive advantage, the barriers restricting take-up of growth opportunities and preventing sectors from overcoming constraints resulting from resource accessibility, the role of government in overcoming these barriers and the practical solutions for removing constraints and exploiting opportunities cost-effectively.

A chain of emails reveal that DECC’s chief economist had been gathering cross-governmental support. Successfully too. The disclosure shows that the proposal generated interest and good discussions. It also reveals that William Hague has a personal interest in the subject. DECC’s Economic Advisory Group, which includes academics Nick Stern, Dieter Helm and Cameron Hepburn as well as McKinsey's Jeremy Oppenhiem and Julian Allwood were also consulted . The topics and analysis “resonated well and provoked good discussion” – signalling wider support for the Review.

And there would be business support for a review. Far from the impacts being potentially speculative, we believe we are starting to see impacts already. As society explores more sustainable ways to produce energy, driven in part because of our climate change strategies, demand for biomass-based materials is already beginning to increase and is forecast to rocket. This diversion of material to energy production has implications for those industries currently using it in products, be it packaging, paper, chipboard or furniture. This is just one example of some of the trade-offs that are starting to emerge.

There is another important argument for doing this work. Our survey data is now consistently showing that access to materials features highly as a potential risk to growth (2013, 2012). This trend is mirrored in other surveys – the Global Agenda Survey, run by the World Economic Forum Network of Global Agenda Councils in preparation to this year’s Davos summit, asks businesses about the most important global trends likely to impact on the world’s economy, society and environment in the next 12-18 months. Business respondents ranked resource scarcity fourth, up from seventh in 2011. Interestingly it topped its “controversially” index – the issues that were most underestimated and most overestimated. It scored highly for both lists.

To me this underlines why a proper independent review is so desperately needed.

Furthermore, a major review would signal to businesses that their future success matters to the UK and that the government is committed to supporting a healthy, vibrant manufacturing base in the long-term.

www.iso.org/14001survey2013

Users of ISO 14001 and ISO 14004 are being asked to what extent the revised standards should consider resource efficiency, pollution prevention and organisational strategy. 

This survey represents a good opportunity to feedback the opinions of manufacturers and I urge you to complete it. 

ISO has identified a series of “future challenges” for environmental management systems (EMS) and the survey asks whether the next edition of the standards should address: accountability to stakeholders for environmental performance, life-cycle approaches in products and services, influence on value chains, resource efficiency and the “polluter pays” principle.

It also wants stakeholders’ views on whether the environment should be considered more strategically in business activities, as well as for feedback on how to improve annex A of 14001 and the guidance on implementing environment management systems included in 14004.

The survey closes on the 30^th April.  If you have any questions on the ISO14001 revision process and what the likely changes then please drop me an email.

Much has been made of the UK’s position as the sixth largest producer and provider of low-carbon goods and services in the world. But there are signs that the UK is faltering. Manufacturing, which accounts for the largest slice of activity in the sector, actually contracted in 2010/11 – by one percentage point on the previous year. While the UK stagnates, China, the States and others are experiencing rapid growth in this sector.

Yet there remains a real opportunity for UK plc. Real opportunities for UK manufacturers. We are especially well positioned to proper in sectors relating to energy technology where the opportunity could be as much as £189.5-877.5bn by 2050.  In our latest report, Tech for Growth: delivering green growth through technology we outline the steps we think government must take to realise the potential of low-carbon manufacturing and unlock investments in breakthrough technologies to help manufacturers decarbonise.

Here’s our seven-point plan for driving growth in the low-carbon economy:

1. Establish a clear vision for manufacturing in a low-carbon economy.
   In the recent past, the language of government had often been disparaging about the role of certain manufacturing sectors in a low-carbon economy. This has undermined confidence in investing and has manifested itself in a confusing regulatory environment.  While the language of government has changed, the climate change regulatory environment has not. Government must outline a clear vision of the role of manufacturers in achieving its climate goals and this in turn should drive a coherent set of policies.
2. Fulfil our innovation potential.
   There are elements of our innovation landscape that is strong but we still struggle to develop and commercialise innovative ideas. The system could benefit from more aggressive funding at this stage of the innovation process. Furthermore, compared to our competitors, we are spending less of our R&D budgets on energy and environment. This gap needs to close. We also want to see clearer signposting of who is leading on what in low-carbon innovation and clear communication from government confirming where we, as a country, will focus our innovation effort on. We don’t have the resources to concentrate on everything, so let’s set out the portfolio of technologies which offers the most opportunity.
3. Address our eroding skills base.
   To innovate we need access to highly skilled workers. Half of all our members are expecting demand for staff with R&D skills to increase. Yet our sector is on the brink of a skills crisis with the sector experiencing real difficulties in recruiting skilled workers. We have long called for a demand-led approach to skills. We want to see more young people taking up higher-level apprenticeships.  We also want better career guidance. We know lots of young people are motivated by the environment. Do they really appreciate the key role that manufacturers play in delivering green growth?
4. Reduce regulatory complexity; establish stability.
   Interviews with our members reveal how the complex interaction of incentives, feed-in-tariffs, regulation and carbon pricing makes it incredibly complex and time consuming to calculate a compelling business case for investing in low-carbon technology. We need to make it as easy as possible for people and businesses to see the benefits of investment. Furthermore, instability in this policy area is also undermining confidence in investing. Government needs to strike a delicate balance between policy credibility, longevity and recognise that constant changes effects investments.
5. Bridge the finance gap.
   As with many sectors of society, many manufacturers are currently facing financial constraints and challenges. In the climate change area these are even more pronounced. Most manufacturers have already implemented technologies that deliver paybacks within the normal investment horizons. The low-hanging fruit has been plucked. Yet with continued expectations to continue to cut emissions, we now face having to make bigger investments on increasingly slimmer returns. This is likely to get increasingly acute as carbon budgets tighten.  We had hoped the Green Investment Bank may have been able to help manufacturers bridge this gap by unlocking investments in a new suite of technologies that payback beyond typical business investment horizons. But we are concerned it won’t address this market failure. We also need a proper review of the Capital Allowance system, including Enhanced Capital Allowances, to ensure it matches the economic reality of investment in modern machinery and is properly targeted. At the moment, we doubt it is working to its full potential.
6. Make electricity competitive.
   EEF has long argued that the cost of decarbonising our energy system must be central when designing our energy policy for the future. We have argued that without doing this we risk making the UK uncompetitive, put certain manufacturing sectors at risk and furthermore, risk isolating the public in activity to decarbonise. There is a further strand of concern. The government’s Carbon Plan anticipates that during the 2020s manufacturers will electrify more and more of their processes, in turn cutting emissions relating to the sector. This simply won’t happen unless electricity costs are competitive with alternative fuels. Again, we renew our calls to place affordability centre stage in energy deliberations.
7. Address our hard-to-treat sectors.
   Some manufacturing sectors are facing unique technical challenges in their efforts to decarbonise. This particularly affects those sectors which emit greenhouse gases as a result of their processes rather than their energy use. These sectors require very specific technological breakthrough solutions. The market won’t deliver this innovation because of the lack of scale and, in some cases, the high-capital costs involved. So far we have largely side-stepped how we deal with these “hard-to-treat” sectors. But this is clearly increasingly untenable. We need to understand what is expected of these sectors in the long-term and have a clear plan on how to address the challenges these sectors present. Clearly the UK , many cases, doesn’t have sufficient scale to justify intervention, so we need international collaboration. Let’s signpost much more clearly funding opportunities in the EU and make those funds more accessible for these sectors to explore technological, low-carbon alternatives. For trade-exposed, energy intensive sectors the EU emissions trading system will not deliver the decarbonisation that policy makers are looking for and an alternative model must be found. We need fresh thinking and we are committed to working with government to help explore credible alternatives.

After months of delay and procrastination, yesterday the European Commission published its long-awaited 5-year review of REACH, the EU’s flagship Regulation on the registration, evaluation and authorisation of chemicals.

We’ve been concerned about REACH for a while. There are some significant business risks associated with REACH and we’ve been trying to get the message out to our members that this is something they need to be monitoring closely. We are starting to see companies getting caught out because they have not been planning for the changes that REACH is ushering in. And when companies get caught out they could see certain business activities being stopped or run into serious operational issues. Monitoring and planning can minimise risks.  Read my earlier blog to find out more about the potential implications for manufacturers.

As well as manufacturers being more proactive, we have been arguing that there are things the Commission could do to minimise risks and improve the efficiency and functioning of REACH, from a downstream user’s perspective. We’ve been working hard over the last year to raise these issues with government and the Commission. So to what extent have our concerns been acted on?

In line with expectations, the Commission has shied away from recommending or proposing any changes to the text itself and instead has outlined a range of non-legislative measures to support more effective implementation. You can read the full review here - a short general report and a longer, more detailed staff working document. But here’s our quick stock-take of key issues for manufacturers

Positives

Issue: SMEs
EEF position: the cost and complexity of REACH presents unique challenges for SMEs. We need better targeted guidance, reduced costs and better support for our smaller companies.
Commission response: this proved to be one of the areas the Commission has acted most decisively with commitments to improve guidance, reduce costs and monitor potential impacts.

Issue: awareness of REACH amongst professional and commercial users of chemicals
EEF position: downstream users have poor awareness that REACH applies to them. EEF surveys have shown 20% of manufacturers think it didn’t apply to them and a further 30% said it wasn’t a significant issue for their business.
Commission response: the Commission recognised that awareness is low, particularly amongst SMEs and has made a commitment to do more to raise awareness of REACH.

Issue: guidance
EEF position: we need better guidance on cost-sharing within industry consortia and clearer guidance on the use of business sensitive information within REACH.
Commission response: the Commission has agreed and has asked the European Chemicals Agency to bridge this gap.

Issue: poor quality extended Safety Data Sheets
EEF position: the quality of eSDS needs to be urgently improved
Commission response: the Commission has outlined a number of recommendations to ECHA to improve eSDS clarity and consistency.

Negatives

Issue: authorisation
EEF position: there are significant risks faced by manufacturers as a result of the authorisation process. We need greater clarity of what is expected by applicants including transparency over the criteria that will be used to judge authorisation applications.
Commission response:  the Commission has not really addressed this, partly because in its view it is too early to judge the authorisation process. It made only a commitment to “facilitate the understanding of the authorisation process amongst all actors, including downstream users.”

Issue: impact on competitiveness and innovation
EEF position:  we have called on the Commission to properly consider the impact of REACH on the competitiveness of professional and commercial users of chemicals, inward investment and on innovation activity.
Commission response: focus of analysis predominately on the chemicals industry. However there is a commitment to monitor the situation for downstream users in future.

Issue: treatment of nanomaterials
EEF position: we want clarity on how nanomaterials are to be treated under REACH
Commission response: some REACH annexes will be amended – but we don’t know which and to what end.

In conclusion, there has been some progress by the Commission to make REACH more workable. But there remain some enormous challenges. We will have to closely monitor the situation with our members and relay the experience from the ground back to policy makers and regulators. We will need to ensure that guidance is fit for purpose and meets the needs of the business community and we need to carefully ensure that our competitiveness, and our ability to innovation, isn’t being detrimentally eroded.

If you are not monitoring REACH you could make a good start by signing up to our free substance alert service. You may even consider REACH training or a compliance audit by one of our consultants.

Last week in Sweden Gothenburg,  I attended the second full meeting of the ISO Technical Committee to develop guidance for implementing EMS based on the revised ISO14001 standard.  This meeting followed on from that held in Rochester, USA.  As a recap, ISO14001 is being revised with an expected publication date in early 2015.  What we already know is that ISO14001 will be one of the first management system standards to be based on the ISO High Level Structure.  We therefore know what the main conceptual changes in ISO14001 will be, even if there is much ‘wordsmithing’ to do.  The main changes will be:

- Understanding the context of the organisation both internal (e.g. corporate governance and organisational structure) and external (e.g. political system, education, natural conditions) and how these may affect the ability of the organisation to achieve the intended outcomes of its EMS.  Determining the interested parties relevant to the EMS of an organisation and their needs and expectations.  Both of these requirements should be taken account of when defining the scope of the EMS, but also when evaluating aspects.  

- An external communication strategy must be developed, stating what who and when information will be communicated.  Although the strategy could say no communication will take place, the principle of continual improvement will require the communication strategy to improve with time.

- The EMS must be incorporated in the strategy of the organisation, through the context described above, but also by strengthening the role of the leaders within the organisation

- Consider the affect the external environment has on the organisation.  This will be an important part of ISO14001 going forward (particularly as one has to remember this revision will be used well into the 2020s) as the risk of the environment curtailing an organisation will increase with climate change and resource scarcity.

The area which I drafted guidance text for prior to the meeting was the clause relating to the needs and expectations of interested parties.  The draft guidance developed thus far has a strong leaning towards the good work already established under the heading of stakeholder engagement, particularly the Accountability standard.  However, we will stop far short of requiring organisations to undertake stakeholder engagement, rather in the first instance this clause could be met through a desk top exercise of interested parties and their needs and expectations, although as the EMS improves so will the methods used to determine interested parties.  I would be very keen to hear from those companies that have ISO14001 but also undertake stakeholder engagement, so please get in touch to help me ensure that the guidance is practical and useful.

EEF will present on the ISO14001 revision process at the next H&S and Environment update sessions held across the country in May.  For more information and to book your place please click here.