Issue Date: July 25, 2016
EU laws cost chemical sector $12 billion per year
The European chemical sector paid out more than $12 billion annually between 2004 and 2014 to comply with European Union regulations, according to a study by the consulting firm Technopolis for the European Commission. The costs are equivalent to an average of 2% of sales, 12% of value added, or 30% of profits. The findings were based on a group of 31 chemical companies. More than two-thirds of the costs were from energy and environment laws and included the EU’s Emissions Trading Scheme and the Registration, Evaluation, Authorisation & Restriction of Chemicals (REACH) program. Costs affected subsectors in various ways. Producers of pesticides and agrochemicals were worst hit, with 23% of the value that the sector added wiped out by compliance costs. This was followed by 17% for producers of specialty chemicals, 12% for those making inorganic basic chemicals, and 11% for producers of soaps and detergents. Costs associated with REACH, energy, and biocide regulations are expected to rise in the coming years.
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