Emerging regulations and implications for the vinyl industry

1. Emerging regulations and implications for the vinyl industry H. Leitner and A. Sevenster Fourth Andean Conference on PVC and Sustainability Bogota, Colombia, September 28, 2010

2. Contents • CO2 trading scheme in the EU • REACH • RoHS Directive in the EU and elsewhere • Waste management • Eco-label, public procurement

3. European Trading Scheme (ETS)Objectives: Reduction by 20% of CO2 emissions • The ETS Legislation covers CO2 emissions from energy-intensive industrial sectors • Phase I (2005 –2007) was a test period with nearly all emission allowances allocated for free. • Phase II (2008 –2012) introduced additional greenhouse gases, installations and activities • Revised ETS introduced many changes, as part of Phase III (post 2012) • New sectors covered, including “Production of bulk organic chemicals (…) with a production capacity exceeding 100 tonnes per day”

4. ETS Free CO2 emission allowances for which sectors? • It is recognised that certain industries run the risk of losing market to regions with less or no CO2-tax (“carbon leakage”) • Free allowances • Sectors exposed to significant risk of carbon leakage: 100% of benchmark from 2013 till 2020 • Non-exposed sectors: 80% of benchmark in 2013 progressively reduced to 30% in 2020 • Power sector: No free allowances => full auctioning , ie pay the price

5. ECVM benchmarking – EDC and VCM

6. Contents • CO2 trading scheme • REACH • RoHS Directive in the EU and elsewhere • Waste management • Eco-label, public procurement

7. What`s behind REACH? • REACH is EU Regulation 1907/2006/EC • Regulation on the Registration, Evaluation, Authorisation and Restriction of Chemical Substances (REACH) • REACH stipulates that all chemical substances placed on the EU market must be registered. • Exemptions: pesticides, food, pharmaceuticals, radioactive substances, waste • REACH also regulates the information exchange through the value chain, the authorisation and/or restriction of some substances • REACH came into force on 1.6.2007

8. REACH is substance-oriented Substances Mixtures (of substances) Articles with substances Substances intentionally released Article contains substances of very high concern Notification, authorisation, restrictions, information requ. Registration, evaluation, authorisation, restrictions, information requirements for supply chain Duties:

9. REACH: Registration • Deadline for registering substances > 1000 t/year or CMR > 1 t/year : 30 November 2010 Further deadlines: 2013 for substances > 100 t/year 2018 for those > 1 t/year • Vinyl Chloride Monomer - Registration by Consortium supported by ECVM • 24 members: ECVM + Dow Europe + EU representatives of some companies manufacturing PVC outside the EU • About 75 potential registrants outside the Consortium • Expected to purchase Letters of Access to the file prepared by the Consortium • VCM was registered by the “Lead Registrant” Ineos Vinyls late July 2010 • Like most polymers, PVC is not required to be registered as such • Phthalates DINP and DIDP registered in March 2010

10. REACH: Authorisation and restriction issues relevant for PVC • Authorisation applies to Substances of Very High Concern (SVHC), essentially • CMR (Carcinogenic, Mutagenic or toxic for reproduction) • PBT (Persistent, Bio-accumulative and Toxic) • Some SVHC selected in a ‘candidate list’ will be subject to authorisation • Use after a certain “sunset date” will require authorisation • Authorisations are granted for specific uses of SVHC and are subject to a time-limited review

11. REACH: Authorisation and restriction issues relevant for PVC DEHP, BBP, DIBP and DBP, as well as SCCP and lead chromate are among the 24 substances so far nominated to go forward for authorisation (“Candidate list”) VCM use as “intermediate” to manufacture PVC is not subject to authorisation Restrictions apply already to marketing and use of PVC additives based on cadmium and tin, on lead in paints, etc

12. Will other countries adopt legislations similar to REACH? • Helsinki Chemical Forum (May 2010) • REACH expected to lead to further convergence of global regulations, according to speakers at the Helsinki Chemicals Forum. • “Development of a global system would take decades. Convergence in legislation covering chemical risk assessment and management is likely to take place in developed countries and the emerging economies of Brazil, Russia, India and China, but the process would take much longer in developing countries”

13. Will other countries adopt legislations similar to REACH? Canada Agreement in May 2010 between the European Chemical Agency ECHA and Environment Canada to collaborate and share information regarding chemicals regulation The Head of ECHA said that the Canadian government’s legislation on chemicals is broadly similar to REACH USA ECHA is also discussing an information sharing agreement with the US, where the EPA is seeking a reform of the US Toxic Substances Control Act (TSCA). China A Chemical New Chemical Regulation will enter into force on 15 October 2010, requiring risk management for new chemicals based on hazard and exposure classification into general new chemicals or hazardous new chemicals tonnage-based notification. Principle: ‘higher volume, more data’.

14. Global Product Strategy (GPS) –Industry’s global contribution to SAICM Global Product Strategy (GPS)  • Voluntary initiatives • Responsible Care • ICCA HPV • Base Set of Information • OECD / SIDS • LRI • etc.   • Regulatory initiatives • EU REACH • US TSCA • US ChAMP • Canadian CMP • Japan CSRs • GHS • etc. • Cooperation • UNEP • UNIDO • OECD • NGOs • ICCA internal • etc.. Globally consistent approach that accommodates national, historical, cultural and regulatory differences SAICM =Strategic Approach to International Chemicals Management 14

15. Contents • CO2 trading scheme in the EU • REACH • RoHS Directive in the EU and elsewhere • Waste management • Eco-label, public procurement

16. Background about the EU RoHS Legislation • RoHS = Restriction of the use of certain Hazardous Substances in electrical and electronic equipment (Directive 2002/95/EC) • Objective: Reduce waste management problems linked to heavy metals and flame retardants present in Waste electrical and electronic equipment, especially risks to health or the environment. • Substances banned in the current RoHS (Annex IV): • Hg, Pb, Cd & Cr(VI) • Polybrominated biphenyls • Polybrominated diphenyl esters (Penta-, Octa- & DecaBDE)

17. Procedure for EU Directives European Commission Proposes legislation European Parliament discussion Elected by EU population from political groups Proposes amendments to Commission text Votes in Committee & Plenary European Council discussion Representatives of Member States Ministries Adoption of « Common Position » Need for agreement between Council & Parliamentfor legislation to be adopted.

18. RoHS revision • Studies in 2007 – 2008, including one by Öko Institut • Proposed banning 8 substances (or groups), including DEHP, BBP, DBP and PVC • Öko Institut itself concedes that “there can be no robust recommendation as to the need to restrict the use of substances according to the present state of knowledge…” • The European Commission issued a proposal in December 2008 • No new substances added in Annex IV (banned substances) • New Annex III of substances for priority review: • HBCDD • DEHP • BBP • DBP • Commission proposal is reviewed by the European Parliament & European Council who have to agree

19. RoHS revision: Latest developments and next steps • 2-3 June 2010: vote in ENVI Committee of the Parliament • No change in Annex IV (banned substances) • MEPs adopted inclusion of many new substances in Annex III (“Priority substances”) • The Commission proposal foresaw 4 priority substances • The ENVI Committee extended the list to almost 40 substances, including PVC ! • Council of environment ministers • Disagreement over Annex III • Some countries oppose such a list, because no clear methodology for deciding on substances • Others support the list • Member states will try to reach an agreement latest by 14 October • Plenary vote in Parliament scheduled in October 2010

20. RoHS clones • INDIA: Proposed E-waste (Management and Handling) Rules, 2010 • Chapter V, Rule 15 “Reduction in the use of hazardous materials in the manufacture of electrical and electronic equipment” • Required compliance with threshold limits as prescribed in Schedule III, to be achieved within 3 years • Schedule III “Threshold limits for use of certain hazardous substances”, Number 18 (PVC) • Substance risk: “As with any material containing chlorine, potential for forming dioxins and furans in case of uncontrolled burning. Liberation of HCL gas during combustion. Recent health/ environmental concerns have been raised about some additives used in PVC processing i.e. Heavy metals used as stabilizers and Phthalate plasticizers, although these have been used for more than 40 years without any measurable impact on health and environment. • No threshold limit mentioned • China • In October 2009, the Ministry of Industry and Information Technology (MIIT) released its initial list of products subject to lead, cadmium, hexavalent chromium, mercury, polybrominated biphenyls (PBBs) and polybrominated diphenyl ether (PBDE) restrictions • What about South America?

21. Contents • CO2 trading scheme in the EU • REACH • Recast of the Restriction of Hazardous Substances (RoHS) Directive • Waste management • Eco-label, public procurement

22. EU Waste Legislation • Framework legislation • Waste Framework Directive (WFD) 2008/98/EC, including former Hazardous Waste Directive • Waste shipment • Waste treatment operations • Waste incineration Directive 2000/76/EC • Landfill Directive 99/31/EC • Specific waste streams, e.g. • Packaging and Packaging Waste (PPW) Directive 2004/12/EC • End of Life Vehicles (ELV) Directive 2000/53/EC • Waste Electrical and Electronic Equipment (WEEE) Directive 2002/96/EC • Batteries and Accumulators 2006/66/EC • Mining waste, sewage sludge, etc.. • Revised WFD published in November 2008 • Mandatory recycling targets set for household and construction waste • By 2020, Member States must recycle a minimum of 50% by weight of household waste • By 2020, Member States must recycle a minimum of 70% by weight of non-hazardous construction and demolition waste

23. Reaching 50% will be a major challenge to a number of EU Member States

24. Waste Legislation Worldwide • Far too complex … • Extensive legislation in the EU and Japan • USA? South America? • E&E waste regulated in many countries • Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal • Into force since 1992 • 173 countries have signed • Conditions on import and export of hazardous waste

25. Contents • CO2 trading scheme in the EU • REACH • Recast of the Restriction of Hazardous Substances (RoHS) Directive • Waste management • Eco-label, public procurement

26. Recent developments in eco-labels • New EU eco-label Regulation • Regulation (EC) No 66/2010 on the EU Ecolabel • Higher environmental standards for products and services carrying the Flower label. For example, products containing substances that are carcinogenic, mutagenic or toxic for reproduction should not bear the EU label. • The European Commission aims to increase the number of product groups covered by the scheme to between 40 and 50 by 2015 • The scheme currently applies to 26 categories, developed since 1992, ranging from cleaning products to textiles. • Key concern: Link with public procurement

27. Globalisation of eco-labels • UNEP project : Enabling developing countries to seize ecolabel opportunities • Global Ecolabelling Network (GEN) • Ecolabelling projects of UNEP • Projects on footwear, textile, television appliances and paper are going on in major economies like China, India (textiles), Mexico (footwear), Brazil and South Africa. The EU ecolabel for footwear is the basis for the project in Mexico. • Projects on footwear are also set up in Kenya and Ethiopia. • More info at : • liazzat.rabbiosi@unep.org • http://www.globalecolabelling.net/ • http://www.uneptie.org/scp/events/details.asp?id=529 • http://www.cuts-international.org/documents/Projects@_Glance_September_2009.doc