Inside Track

There has been a lot of coverage in the last week about the theft of approximately 475,000 EU ETS permits from a Czech Carbon Trader. What is interesting about this case is of course how it could happen in the first place, given that each and every EUA (carbon allowance) has its own unique serial number. How are these dodgy allowances sold, one can almost imagine a sub market, conducted in the shadows, where EUA are traded for brown packages full of Euros.

What is more interesting is how holding these stolen allowances in different parts of Europe will have a greater or lesser degree of risk attached to possession. It is only in cases like this do we remember that possession of stolen property is treated very differently, depending on which Member State you are in. For example, in the UK if you are found to have any of these allowances in your registry account, they are stolen goods and although you believed they were legitimate when you bought them, they could be confiscated without compensation. However, in Belgium (and other Member States), if you purchased the EUA in good faith, at a reasonable price, they are legally yours and you would not stand to lose money over the transaction. Even if they were taken off you, I understand you would be compensated for your loss.

This might go some way to explain the motivation for the theft in the first place, apart from money. It begs the question, if you are based in the UK, how do you know the allowances you have recently purchased are legitimate and how do you know assess the risk.

It appears the government is trying to make good on its manifesto pledge to increase the proportion of tax revenues accounted for by environmental taxes.

This week Treasury commenced a unique consultation exercise on environmental taxation. It held one of a number of workshops looking at how fiscal instruments can help shape behaviour change to meet environmental policy objectives. I say unique because Treasury rarely organise events of this ilk, which are commonplace in other departments. It is, to be honest, a breath of fresh air.

We were asked what would be a “fair” environmental tax. How effective are existing environmental taxes in changing behaviour? What existing taxes could be made “greener”? And what new “green taxes were introduced?

And we were treated to not one, but two government ministers:  Economic Secretary to the Treasury Justine Greening and Chief Secretary to the Treasury, Danny Alexander. The results, we were told, are to feed into a programme of work on environmental taxes which will influence the budget and policy making beyond.

Environmental taxes have proven to be effective provided they are visible, well-targeted and with a clear trajectory which provide time to plan and adapt. If designed correctly they could prove to be a powerful incentive for change, as argued in our climate report which calls for a carbon tax to replace layers and layers of poorly connected and over-designed and costly climate change policies.

But the government must be wise to growing cynicism amongst manufacturers. Before being elected in, the Conservatives promised that any additional revenue generated from new green taxes would be used to reduce the burden of taxation elsewhere. Yet anyone in the Carbon Reduction Commitment will roll their eyes at the latter. The decision not to recycle revenues generated from the scheme means an extra £1 billion for the Chancellor’s coffers. Not a bad haul for a scheme that was originally sold to us as being revenue neutral to business.

In light of this u-turn, it is therefore not surprising that there is a healthy degree of scepticism that this exercise is just a means for additional revenue-raising. So if government genuinely wants business buy-in on this agenda it must ensure – now more than ever – that it stays true to its promise to reduce the burden elsewhere. 

Let me know what you think.

We have just launched our latest annual member survey on health and safety.  This year we focussed on just a few key issues of current concern.  As ever, one of these was EU legislation.

 At a time when the UK government is seeking to refocus action on health and safety, to constrain unnecessary costs and to avoid legislation, the European Commission (EC) seems to still be moving in the opposite direction.  

 Our survey shows opposition to the current new EC proposals on musculoskeletal disorders (MSDs) and ionising radiations. Improvements in health and safety are more likely to come from consistent implementation of existing legislation across the EU than from further directives.

 The EC is working on a ‘simplification’ in this area, merging the Display Screen Equipment Directive and the Manual Handling Directive into a new MSDs Directive. Early working drafts proposed that the new directive should contain all the requirements of the existing legislation and add new ones. In particular, there is a proposal that psychosocial factors, such as stress and work pressure, be considered in risk assessments.

 Our survey found that almost three quarters of companies disagreed that consideration of psychosocial disorders should be a legal requirement.  As the graph below shows, opposition was strongest amongst smaller businesses.   

Considering psychosocial factors can be useful in managing the risks of MSDs, and we are happy to promote this as a best practice approach.  However assessment of them is by its nature very subjective and so not appropriate for regulation.  Read our policy brief on MSDs here.

There was an even stronger rejection of Commission proposals on work with ionising radiations.  The Commission is ‘simplifying’ five directives on the health and safety, environmental and medical aspects of work with ionising radiations into one new directive. However, again it proposes that all of the original requirements be maintained and that they be supplemented by new measures. This would impact on our domestic Ionising Radiations Regulations 1999.

 We asked those who work with ionising radiations whether the requirements of the Ionising radiation regulations should be made more stringent, less stringent or remain the same. As the chart below shows, there was very strong agreement that the current regulations are appropriate. 

This is unusually strong support for a piece of legislation.   It represents a definate vote of confidence in a well-considered and necessary piece of legislation.

 We and our European sister organisation, CEEMET, will be using these results from the survey to argue the case for a fresh approach to EU legislation that focuses on consistent application of existing legislation, instead of the imposition of new requirements.  Read our policy brief on EU health and safety legislation here.

I sometimes feel like the ubiquitous 'whinning Brit' arguing against the latest European Commission proposal for a health and safety directive.  Naturally business gets concerned about the effect of new regulation - particularly when we are still at a relatively fragile stage of recovery from a deep recession.  However there is a more fundamental issue at stake:  an emphasis on continued regulation, rather than improving consistency of compliance with existing requirements, will not reduce exposure to risk and may well actually increase it.  Here's the reasoning.

Early EU health and safety directives were well-judged and set the right approach.  As well as establishing a clear set of rights and responsibilities, The structure established by, for example the Health and Safety Framework Directive 1989, requires that risks presented by a workplace are identified, assessed and acted upon together in a holistic fashion.  The European Commission and Parliament deserve credit for establishing this.  That may not be a fashionable view, but I strongly believe it is true.

A holistic approach is essential; risks present in a workplace be assessed, prioritised and acted upon in a joined-up manner.  This allows the employer to identify synergies or tensions between the risks or indeed between the proposed control measures.  If risks are assessed in isolation a measure to reduce one may inadvertently increase another.  A holistic approach is also essential in prioritising actions appropriately so that the highest risks receive attention first.  

However, in recent years we have seen the adoption of a number of hazard-specific directives.  Initially these focussed upon hazards that contributed very significantly to workplace ill health and injury, for example abestos and moving machinery safety.  Recently they have focussed on risks that make very small contributions to the overall statistics, such as optical radiation and electromagnetic fields.

Directives are based around the same essential structure, but each tends to set out its own, slightly different criteria and process for risk assessment and control.  That is a problem for two reasons.  Firstly it tends to fragment the holistic approach to risk so that synergies and tensions are missed and prioritisation is poor.  Secondly it results in unnecessary time and money being spent upon the process of assessment, when this could be better spent upon effective controls; it’s a well-used adage, but on it’s own paperwork never saved a single life.  

So if new legislation is not the answer to improving management of risk, what is?  I believe that the European Parliament and Commission need to direct their attention to ensuring that the original structure is effective in practice.  That means that implementation – including enforcement of existing requirements needs to be effective and consistent across all member states.  Enforcement activity should be risk-based, directing activity to higher risk sectors and those who are managing risks and thus putting workers at serious risk.

There also needs to be much better promotion of, and practical support for, duty holders.  That is not just down to the European Commission or even member governments - employers groups, trade unions and others have a key role to play.  Many are also contributing, EEF for example last year published detailed guidance on metalworking fluids and a tool for board monitoring of meaningful objectives.  And we will very shortly be publishing case-study guidance on solutions to common musculoskeletal disorders.  

There is more we can do and we are keen to play our part – particularly if we are not occupied fighting well-intentioned but poorly thought-through legislation that will do nothing to improve protection in practice.

The Industrial Emissions Directive (IED) entered into force today.  The Directive which consolidates the Industrial Pollution Prevention and Control Directive (IPPC) and six other existing Directives related to industrial installations was designed with the aim of providing a single clear and coherent legislative instrument for controlling pollution from industrial operations.

 The Industrial Emissions Directive was the outcome of a difficult and, at times, protracted lobbying campaign, but resulted in a workable and pragmatic outcome for industry and which ensures an improving level of environmental protection from sources of industrial pollution.  EEF was actively engaged on this campaign issue from the outset.

 At the core of the new Directive are the provisions to include an operating lifetime extension for large combustion plants and the continuation of derogations for operators from Best Available Technique (BAT) where justified. 

 The UK government (DEFRA) and regulator (Environment Agency) will begin working closely with stakeholders on how to implement the new requirements of IED.  The UK (and other Member States) has until 6 January 2013 to transpose the requirements of IED into national legislation (i.e. 2 years from 'entry into force'). In England & Wales this is likely to be via the Environmental Permitting Regulations.

Other important IED dates which are noteworthy are:

• From the 6 January 2013 IED will apply to all new installations
• From 6 January 2014 IED will apply to existing installations that previously were subject to IPPC, WID, SED and TiO2 directives (but not LCPs).
• From 6 July 2015 IED will apply to existing installations operating newly prescribed activities (e.g. specified waste recovery activities, wood preservation. 
• From 1 January 2016 LCPs must meet the specific requirements set out in Chapter III and Annex V of the IED

The IED builds upon the IPPC Directive, which is liked by industry for its risk-based approach to determining environmental permitting decisions.  It is now important that the Directive is successfully transposed into UK law.  EEF will be working as a key stakeholder in future government discussions to ensure this is the case.

Data estimates for commercial and industrial (C&I) waste arisings in England show a 29% reduction over the last six years.  These results, released as part of a DEFRA survey, demonstrate the efforts taken by businesses to improve resource efficiency despite a floundering national waste policy.

In 2009 48 million tonnes of C&I waste was produced in England.  This compares to 68 million tonnes in 2002/03, the last time the survey was carried out.  The results also show greater levels of recycling of C&I waste (up 10% over period) and a reduction (12%) in volume of waste sent to landfill.

Whilst DEFRA is keen to show evidence that its policies are decoupling economic growth from waste production it has remained tight-lipped on C&I performance.  This is, in part, due to the fact that the method for data collection is reliant on a number of estimates, and with changes to waste classifications the results are not entirely comparable with earlier surveys in 1998/99 and 2002/03.  Equally, DEFRA remains unclear over the effect the recession has had on waste arisings. 

There is, however, common acceptance that waste is reducing and that this trend is reflected across all waste types with the exception of “discarded equipment” (i.e. waste electrical and electronic equipment).  Yet without confidence in the data it remains difficult to judge overall performance and to ensure that policies are delivering on their objectives and to time.

The survey data will undoubtedly be used to shape the government’s Waste Review which is expected in April.  However, to get a full understanding of waste trends in England the Government must get a proper grip on waste data to ensure its policies facilitate further reductions which help not hinder business.  Until this is achieved the goal of a ‘zero waste economy’ seems a long way off.