NLG~
Cost Assessment of REACH Implementation
in the European Grease Industry
Andreas A. Dodos, Eldon’s SA Product Stewardship, Athens, Greece
–
Presented at NLGI’s 80th Annual Meeting, June, 2013, Tucson, Anzona, USA
1: Introduction
–
Legislation overview
The European legislation on chemicals known as
REACH (Registration, Evaluation and Authorization of
Chemicals) was proposed in 2004 and is a follow on
from the principle of “the polluter pays” that was estab
lished in the EU with the Integrated Pollution Prevention
and Control (IPPC) directive almost a decade earlier
and is underlined by the same general principles.
Previously the evaluation of chemicals applied to
new substances (ELINCS European List of Notified
Chemical Substances) as well as substances of very
high concern. This leff a very large number of existing
substances that had never truly been evaluated based
on the impact they have on humans and the environ
ment. REACH was passed as a law of the European
parliament in 2006 (EC 1907/2006) and has been
acknowledged as one of the most complex pieces
of legislation in the EU, with the regulation and its
Annexes being more than 800 pages long not including
numerous amendments and guidance documents that
have been published since.
From 2006 onwards an increasing number of
countries have adopted approaches similar to REACH
for the chemicals used within their boundaries. This
gave birth to regulations in China, Turkey and smaller
scale chemical safety evaluation programs initiated by
various US states.
Numerous studies have been performed trying to
estimate the cost of REACH implementation and the
overall burden to the industries affected. Such stud
ies have been commissioned by the industry but also
by non-governmental organizations and the European
Chemicals Agency (ECHA). The report that made the
most significant impact was the one commissioned by
the EU and performed by KPMG which predicted costs
of up to €1 .6M per substance registered.
–
Ii: The European REACH Grease
Thickener Consortium
In response to the above, the European grease industry
formed, under the supervision of the ELGI in 2006,
a working group with the aim of jointly completing
the necessary working programs required for compli
ance with the REACH regulation. This group initially
consisted of a limited number of manufacturers and
importers of greases. By 2008 it had transformed into
a separate entity (the ERGTC or European REACH
Grease Thickener Consortium), currently numbering
41 Member Companies.
Having such a large number of organizations
working together means that the complexity of the
work is significant. Currently over 500 substances
have been recorded by the Members for use as grease
thickeners. All of these substances are being or will
be evaluated either individually or within a category
of similar substances. The consortium is employing
suitable consultants with experience in the grease
and relevant industries (wca-environment Ltd
www.wca-environment.com and Caleb Management
Services Ltd www.calebgroup.net).
Another issue that the industry has had to deal with
is the fact that although lithium and calcium based
greases have in the past been thoroughly investigated
as part of the U.S. EPA High Production Volume (HPV)
Challenge Program or as part of other voluntary evalua
tion programs, or as part of corporate responsibility, all
work performed has been conducted on the formulated
grease, i.e. the thickener being incorporated in the
oil matrix with or without additives. According to the
REACH regulation each substance has to be studied
in a pure form wherever possible. A large number of
substances used as grease thickeners have never been
evaluated as such.
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VOLUME 77, NUMBER 6
NLG~
The legislator’s data requirements vary from physical
properties such as the flash point to multiple generation
reproductive screening studies. In order to reduce the
required resources as mentioned above, a category
approach is being used wherever possible, This is also
in line with the mandates of the regulation, in order to
keep in vivo tests to a minimum.
It has to be noted that none of the substances
under consideration are manufactured or imported into
the EU by any single legal entity in quantities above
1,000 MT per year, so 31 May 2013 was the initial reg
istration deadline for many of them.
€4.3 million in combined resources. It has to be noted
that 50% of this has been contributed in the period
from May 2011 to May 2013.
These resources can be split into the following broad
categories:
Testing Costs
This includes direct and indirect costs such as actual
study fees but also substance preparation, category
and testing plan development, dossier and submission
preparation costs.
2: ERGTC Testing Programs
Admhistration Costs
The European REACH Grease Thickener Consortium
has carried out a number of detailed substance evalu
ation and grouping exercises. Substances are grouped
based on their physical, chemical, toxicological and
eco-toxicological properties with the aim being to make
the groups wide enough to provide a significant cost
saving, without risking the category being breached
during the evaluation stage by ECHA. Currently the
ERGTC has considered substances that can be
grouped into the following categories (Task Forces):
This includes all related activities that are linked to
issues that are of common interest to the consortium
or individual Task Forces as well as the management of
the legal entity that is the ERGTC Escrow Foundation.
The above also includes a significant amount of time
spent by the Members on consortium related activities
sweat equity.
Figure 1 shows the cumulative funds contributed
by the ERGTC Members to date as a reflection of the
annual budgets and the proposed testing programs
based on the overall administration and relevant Task
Force budgets.
Figure 2 shows the cost contributed by Consortium
Members to each Task Force up to the May 2013
registration deadline.
–
• Linear saturated and unsaturated fatty acid
(C12 C22) Lithium Salts
–
o
Linear saturated and unsaturated fatty acid
(Cl 2 C22) Calcium Salts
–
• Aluminium Salts
ERGTC Overall funds contributed
towards REACH Registration
• Polyurea thickeners
Borates
1.80
Details of the particular substances are
listed on the consortium website:
www.ergtc.co.uk.
The remaining substances, a significant
proportion of which fall within separate
categories, are in the process of being
reviewed for 2018 registration.
To date, having fulfilled the 2013 registra
tion requirements in the consortium, the
Members have contributed more than
1 .eo
Assembly
1.40
~ Task Force A
1.20
~~TaskForceB
1.00
fT’TaskForcec
0.80
Task Force D
0.60
Task Force 8
0.40
0.20
2007
Figure 1
—
2008
2009
2010
2011
2012
2013
Overall funds contributed by ERGTC Members on an annual basis
—
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NLGI SPOKESMAN, JANUARY/FEBRUARY 2014
~
w,
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7~
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Two points are noteworthy.
First, the overall cost for Task Force A is significantly
higher than Task Forces C and D. This is due to the
fact that Task Force A was formed much earlier as a
pilot for the whole project, and also because the cost is
split by a larger number of interested parties both inter
nally, in the consortium and externally, in the grease
industry.
Second, costs for Task Forces B and E seem dispro
portionately low. This is due to the fact that for these
substances, significant parts of the testing programs
have been acquired by the group through internal or
external Letters of Access, providing further cost
savings. These costs will have to be recovered at
later registration deadlines.
1.80
It has to be noted that the working programs
1.60
carried out using the consortium contributions
1.40
shown above will cover the regulators require
1.20
ments for the lower tier tonnage bands of 1 10
1.00
and 10 100 metric tons of each substance
0.80
per year Annex VII and VIII of the regulation
0.60
respectively.
0.40
On the other hand, the above mentioned
0.20
values are not final for registration of substances
produced in the 100 1000 MT per annum ton
nage band. A significant part of the required tests
Figure 2
under Annex IX of the regulation, are submitted
as a test proposal thus implying that further
costs may arise if ECHA requests the imple
mentation of this. Since these tests have not
yet been carried out, the consortium relies
100%
on published data to estimate the additional
costs per registration. These are costs that
80%
will be payable post registration both by the
Lead Registrant and the non lead Members
60%
that have submitted a dossier with Annex IX
requirements. In Figure 3, a preliminary non
40%
binding estimation is made for these as a
percentage of the current registration costs
of the complete proposed data set being
20%
required.
0%
2.1: Overall quantities of lubricating grease
affected by the REACH regulation~
The overall quantity of lubricating grease that was
affected by the REACH regulation has to be estab
lished. This will in fact be the sum of all affected sub
stances used as grease thickeners that are produced
as well as imported to the European Union.
Two sources have been used for this purpose. The
NLGI Annual Grease Production Survey and the global
grease consumption data available by Klein & Co. The
year 2011 data has been used for both surveys as
the basis for evaluation. Looking at the two surveys,
—
ERGTC Contributions per Task Force
–
–
–
–
—
Task Force A Task Force B Task Force C Task Force D Task Force E
Overall contributions by ERGTC Members per Task Force
between 2007 and 2013
—
Anexx IX additional Costs
(Complete data set)
—
Annex IX
~AnnexVII÷VIII
Task ForceA TaskForceB TaskForceC
Figure 3
—
Post registration cost requirements for completion of REACH
Annex IX requirements as compared to submitted dossier costs
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VOLUME 77, NUMBER 6
NLGU
Looking at approaches that have been adopted
one sees that the total amount of lubricating grease
by various trade organizations such as the Fatty Acid
produced in Europe is 186,337 metric tons, or 17% of
Consortium
and APAG, it is estimated that 30% of
global production. Similarly, from Klein & Go, Europe
organizations will take advantage of the registration
consumes 22% of the global market. Assuming that
exception.
A more representative figure for this will be
all grease produced is also consumed i.e. no accu
available after the registration process has been com
mulation, it is concluded that there is a 5% production
pleted. The effects of such exemption claims to the
deficit in Europe. Additionally European exports have
overall impact of REACH implementation is considered
to be considered. For ease it is assumed that this is
in the discussion section.
15% of all European production.
Considering all the above factors, the total amount
So, for the purpose of data evaluation an overall
of lubricating grease that is affected by REACH can be
factored value of 20% over the results generated by the
seen in Table 1.
NLGI Annual Grease Production Survey has been used
for all REACH affected grease types.
Overall Grease production affected by REACH
Not all grease types are affected by the
REACH regulation. Grease manufacturers or
120%
importers have to register substances in those
greases where during production a chemical
100%
reaction takes place to produce the thickener.
Such greases that require registration are
80%
conventional and complex soap type thicken
~ EU Exports
ers. On the other hand, greases that are for60%
EU imports
mulated using thickeners such as preformed
soaps, inorganic clay, silica, PTFE, or polymer
40%
~ 2011
and others are not subject to registration by
the grease maker but by the manufacturer
20%
or importers of these substances. For some
substances full registration exemption can be
0%
claimed for example polymers.
Production NLGI Consumption KLEIN
Furthermore, according to REACH Annex V Figure 4 Estimation of grease affected by REACH based on production
par. 9, fatty acid salts of Calcium (Ga),
and consumption studies.
Magnesium (Mg), Sodium (Na) and
Potassium (K) can be exempt if the fatty
Tablél
acid used is of natural origin and have
Calculation of overall quantity of lubricating
not been chemically modified. Long
grease affected by the REACH regulation
discussions have been held to define
Overall annual quantities based on 2011 data
Metric Tons
natural origin and different views have
Total Grease produced based on NLGI 2011
186 337
been adopted by different industrial
grease
production
survey
sectors and organizations. If a grease
manufacturer can demonstrate that
Minus all non-soap type thickeners including
—6 815
Clay
the raw materials used have not been
chemically modified, then an exemption Minus 30% of all Calcium (Ca) and Sodium
~ 657
can be claimed. The above has to be
(Na) Fatty Acid type soaps
considered when trying to establish
Total including 20% allowance for European
211 038
the cost of REACH implementation
production deficit and exports
for calcium and sodium greases.
~
–
–
—
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NLGI SPOKESMAN, JANUARY/FEBRUARY 2014
NLGII
Using the ERGTC costs as well as the factored
NLGI Grease Production Survey results, this produces
the average results listed in the Table 2. Table 3 lists
the above-mentioned limits as transformed into Metric
Tons of grease produced, using the same applied
assumptions.
As it can be seen, values vary significantly based
on the capacity of each manufacturer or importer. For
lower tonnage band manufacturers the cost per ton is
significantly higher and could affect market strategies.
The cost is, of course, an average and does not take
into consideration any other costs associated with the
REACH registration that the individual organization is
responsible for. An indicative, but in no way exhaustive
list is presented in Table 4. As a rule of thumb, 35%
2.2: Cost impact per grease type
As mentioned previously, the ERGTC is currently con
sidering over 500 substances used as grease thicken
ers, a number of which have been registered for 2013.
As a category approach has been adopted by the
consortium, even substances that don’t exceed the
100 MT per annum but fulfill the category’s chemical,
toxicological and eco toxicological criteria have been
considered. The relevant dossiers could be submitted
if requested by a consortium or SIEF member, as the
relevant testing programs have been completed.
As an example, the cost analysis below has been
included for substance categories that have been
registered by the consortium. This exercise has been
repeated for categories with different
numbers of reg~istrants in order to assist
Table 2
in highlighting the cost implications in
Task Force A Consortium related
the discussion section of this study.
costs for 2013 and 2018 registration
As the REACH regulation only con
€/MT of
Task Force A Consortium registration costs
siders the actual substance rather than
grease
produced1
based on annual EU manufacture/import
the whole grease, an average value for
Average based on factored 2011 NLGI report
16.6
the thickener has been considered for
Cost per Letter of Access for Upper threshold
33
simplicity. This value is 8 weight per
(1000 MT of substance per annum)
cent, and has been considered purely
Cost per Letter of Access for Lower threshold
33 2
for simplicity and reference purposes.
(100 MT of substance per annum)
For some grease types it is typical of
Cost per Letter of Access for Lower threshold
116
the soap content of an NLGI grade 2
(10
MT
of
substance
per
annum)*
grease. Respectively, as the thickener
content is reduced, the impact of imple ~a ~3%~oap ~op~ent has epDse~s e~r~~r1he~ca1CqJation.
TLoA~ost~rnex~Jt~ ~
~
menting the REACH regulation will also
~ ~e~1Ø~ est1~pe~e~
—~— ~reduce, and vice versa. This has to be
considered for each individual case.
Table 3
Task Force A Consortium related costs based
2.2.1: Worked Examples
on metric tons of grease produced I imported
Task Force A
€/MT of
Task Force A Consortium registration costs
grease
produced1
based
on
annual
EU
manufacture/import
To date around forty companies have
expressed an interest in registering
16.6
Average based on factored 2011 NLGI report
substances included in this particular
Cost per Letter of Access for Upper threshold
3.3
Task Force under the 100 1000 and
(12,500 MT of grease per year)
10 100 MT per year tonnage bands.
Cost per Letter of Access for Lower threshold
33.2
Twenty-six of these companies had, by
(1,250 MT of grease per year)
the end of May 2013, registered at least
Cost per Letter of Access for Lower threshold
116.3
one substance from Task Force A.
(125 MT of grease per year)*
–
–
–
–
–
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VOLUME 77, NUMBER 6
NLGI
has to be added for the higher tonnage bands and
Task Force can be summed up in the statements below:
50% for lower tonnage bands to cover these costs.
a. When designing and executing this testing program,
The majority of REACH related costs are one-off
a lot of experience had been obtained from the
costs. This means that all the above mentioned work
Task Force A category, used as a pilot. This meant
has to be completed, prior to registration. The access
reduced administration costs.
rights to the consortium work and the ECHA registra
tion fee is paid prior to the respective deadline of now
b. Significantly fewer organizations had an active
May 2018.
interest in these particular substances. This meant
For consortium Members costs are gradually cov
increased costs allocated per potential registrant.
ered as work progresses in each Task Force. In the
Again, using a similar approach as to Task Force A, the
case of the ERGTC 2013 registrations, this was done
2011 NLGI Grease Production Survey has been used
over a six year period. For non consortium
Members the Letter of Access has to be
Table 4
paid immediately prior to registration,
Indicative internal company costs
thus the bulk of the costs are accounted
Company Specific Activity
Premium as % of
for in a single budgeting period.
Consortium costs
Since production is ongoing, REACH
ECHA registration fee (EU 254/2013)
15 30
related costs will be split over multiple
5 10
budgeting periods, turning it into a cash- Company internal inventory review
flow issue. Obviously the reduction in
Sameness testing
1 5
the sales margin if such a strategy is
Exposure Scenarios development2
5 8
nominated is real and has to be taken
Dossier development
into account.
In-house
2 10
Needless to say, if thickeners of this
Outsource
3 5
type that fall outside the defined cat
Dossier maintenance costs
1 2
egory are used, cost will be increased.
2 6
Similarly, if an organization uses a larger Risk premium
–
–
–
–
–
–
–
–
–
~
–
number of individual substances to
produce their greases and these fall
under the REACH definition of separate
substances, again the overall organiza
tional compliance cost will be increased
according to the REACH definition
of one registration per substance per
legal entity.
2.2~2: Worked Example
Task Force C
–
Task Force C consists mostly of thicken
ers that are used in premium greases.
In order to support the category
justification, a similar testing program to
Task Force A was developed. The differ
ences between this and the previous
Table 5
Task Force C Consortium related
costs for 2013 and 2018 registration
Task Force C Consortium registration costs
€/MT of
based on annual EU manufacture/import
grease produced3
Average based on factored 2011 NLGI report
72.6
Cost per Letter of Access for Upper threshold
58
(1000 MT of substance per annum)
Cost per Letter of Access for Lower threshold
581
(100 MT of substance per annum)
Cost per Letter of Access for Lower threshold
232
(10 MT of substance per annum)*
–
~
—21
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NLGI SPOKESMAN, JANUARY/FEBRUARY 2014
NLGI
2.2.4: Remaining ERGTC categories
to evaluate costs. To date around ten companies have
expressed an interest in registering this particular sub
stance under the 100 1000 and 10 100 MT per year
tonnage bands, only two of which by May 2013. Using
the ERGTC costs, this produces the average results
listed in Table 5.
As for Task Force A, this breakdown only includes
the ERGTC related costs, and does not consider any
costs that the organization has to carry internally, or the
ECHA registration fees.
From the above it can be noticed that although Task
Force C greases are considered to be premium prod
ucts for the industry, and customers will pay a premium
price for them, the available margin could be signifi
cantly affected by the cost of REACH implementation.
–
The ERGTC has considered two additional categories
of grease thickeners for registration in 2013. Both of
these categories contain company-specific information,
and are limited to a small number of potential regis
trants that have worked closely together in order to
maximize the cost benefits. Due to the reduced number
of possible Letter of Access applicants for these cat
egories, the unit cost (REACH related cost per MT of
grease produced) will be significantly higher than for the
three cases previously discussed.
–
2.3: Discussion
The worked examples presented above show the cost
impact in three very different thickener categories. The
consortium related cost impact is presented in Figure 5.
It can be derived that the overall cost burden per
metric ton of product is insignificant in the higher ton
nage bands. On the other hand, for all organizations
that are producing and/or importing grease in quanti
ties above and close to 125 MT per year containing
a particular thickener, the cost can be significant. In
fact it can be a significant percentage of the product
profit margin even if the cost is split over a number of
operating years.
2.2.3: Worked Examples Task Force D
Task Force C consists mostly of thickeners that are
–
used in low-cost greases.
The ERGTC Task Force D is closely linked to other
substance Task Forces within the consortium. This
means that significant read across has been possible
and thus a reduction of the overall cost of substance
registration.
To date around twenty five companies have
expressed an interest in registering this particular
substance under the 100 1000 metric tons
and 10 100 metric tons per year tonnage
bands. Using the ERGTC costs, this produces
350.00
the average results listed in Table 6.
As with Task Force A, all other costs, direct
300.00
and indirect, indicated in Table 2 have to be
250.00
added to the above to produce an accurate
200.00
result.
150.00
In this particular Task Force it is interest
100.00
ing to see that the average cost based on
the 2011 NLGI factored data is much higher
50.00
than the lower threshold cost for 100 MT of
substance per year. This implies that there
10 MTI
1000 MT/
100 MT/
Production
are many more producers that form the lower
year
year
year
based Average
tonnage bands (below 100 MT per year). This
Task Force C ~ Task Force D
~Task Force A
could in effect be a market force that could
drive prices upwards for this particular cat
Figure 5 Cost impact of REACH implementation in different Thickener
Categories
egory of thickeners.
–
—
Cost Impact (€IIMT)
–
—
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VOLUME 77, NUMBER 6
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of REACH is that it could prohibit the development of
new products incorporating new chemistries within the
EU. The reason for this would be the increased compli
ance costs associated with REACH. The approach
chosen by the ERGTC will allow for new soaps that fit a
category approach to use the same core dataset, with
minimal or no testing requirements.
If company specific and Annex IX costs are added
onto the consortium related values presented in Figure 5,
the overall impact of the REACH implementation for
the various Task Forces can be shown.
Another point that is noteworthy is the fact that the
cost impact for products that are considered as low
cost fighting grade products, is more significant than
for commodity or premium products. This needs to be
considered particularly when evaluating the viability of a
certain product type with limited production.
2.3.2: Other REACH related costs
affecting the grease industry
The aim of this paper is to concentrate on the grease
thickener related REACH costs. In order to complete
the impact of REACH to the industry, base oils and
additives used also have to be considered.
With regard to the base oils, for EU based suppliers
or for suppliers who depend on the European mar
ket, this will not be a significant issue, as most likely
they will have completed the required registration in
2010 for substances produced or imported in quanti
ties over 1,000 MT per year. Furthermore, due to the
larger volumes of base oils, and the fact that through
CONCAWE (CONservation of Clean Air and Water in
Europe a group established by the leading oil com
panies), substantial parts of the required testing was
already available prior to REACH, the actual cost per
unit of base oil is very low, and often carried completely
by the supplier.
2.3.1: Advantages of the category approach
The use of the category approach has significantly
reduced the overall burden on the industry. The use
of justified read-across and waiving has allowed for a
large number of substances to be registered using
only a small fraction of the data set for each. To date
this includes over 70 substances in the 5 categories
considered.
Looking at published testing costs and in particular
quoted laboratory costs as listed by Fleischer, the reg
istration of a non classified substance in the 10-100 MT
tonnage band as a single substance would be around
€320K. In the ERGTC Task Force A, this approach has
allowed for over twenty substances to be registered at
a cost of approximately €1 .6 million, offering an overall
saving in the region of 80%. The cost benefit is even
more significant for the other considered categories
as more substances are included and
the total Task Force cost is significantly
lower than that of Task Force A.
Also, significant savings have been
made in terms of administration costs.
€/MT of
Task Force D Consortium registration costs
As each category is considered a single based on annual EU manufacture/import
grease produced2
substance, when it comes to preparing
Average based on factored 2011 NLGI report
90.7
the submission of a registration, only
Cost per Letter of Access for Upper threshold
26
one generic dossier is needed to
(1000 MT of substance per annum)
register multiple substances.
Cost per Letter of Access for Lower threshold
26
Probably one of the more significant
(100 MT of substance per annum)
benefits of the category approach is
Cost per Letter of Access for Lowwer threshold
182
the fact that it can be flexible enough
(10 MT of substance per annum)*
to allow for the inclusion of soaps that
~aB%~soap
content ba~ b~ên ~
have thus far not been developed. One
9bø~ LoAvost for Anne)c Vift ~strat~orIs ha~hoty~t b~en published duelothe yet
un1~no~vn nurpber of applicarits~ Tb abov~Ugwe 18a9 ~stirp~tef
of the long discussed disadvantages
–
–
~-~-~-
—23—
NLGI SPOKESMAN, JANUARY/FEBRUARY 2014
NLGI
-4,
Even so, for any product entering the EU market,
REACH compliance has to be demonstrated for all
constituents, and this will create a market entry prob
lem for any grease manufacturer that chooses to use
a non-registered base oil, possibly due to the region
where manufacturing occurs.
With regarding to the additives, the issues are similar
to those of the actual grease thickener. Apart from the
direct cost that is being inevitably carried over to the
grease manufacturer by the supplier, hidden costs such
as inventory/formulation review and data record main
tenance will carry a real cost. To date there is limited
evidence of grease additives being discontinued due
to REACH but some might be replaced in the EU or in
other regions due to the high cost of registration not
only under REACH but also other similar schemes.
Care needs to be exercised during the selection of
additives as, similarly to base oils, if the supplier has
not registered the product under REACH, entry into the
EU market will be prohibited.
2.3.3: Registration strategies
Lessons from 2013
–
the cumulative work of a consortium, namely the
ERGTC, or through a Letter of Access at the end of
the process. By definition, in both cases the cost will
effectively be the same as all costs are split in a fair and
transparent manner between all registrants. The differ
ence is the degree to which an organization can control
the process this is important for substances that
form part of a company’s core business and the way
resources (in both time and money) are committed.
In Figure 7 the annual cost split over the last six
years of work within the consortium can be seen
compared to the Letter of Access fee paid by a nonconsortium member prior to the registration deadline.
Splitting the cost over a longer period of time makes
the burden more manageable allowing for easier bud
geting. It could be argued that, in effect, working within
a consortium allows for the lowest cost at the time of
registration. Additionally, when a Letter of Access is
issued, each consortium Member gets compensated
for the proportion of the costs it has contributed
towards. This justifies the negative cost impact for con
sortium Members at the year of registration.
It is particularly important for companies with a
larger number of substances with a 2018 deadline to
ensure that not all registrations coincide, as this will
create an increased financial burden close to registra
–
–
Summarizing the previous finds, it is clear that each
organization needs to formulate the strategy that best
suits it.
One of the downsides of REACH that has
been extensively discussed is the phase out of
Total cost Impact €1 MT of Grease
substances within the chemical industry due
to the increased compliance costs. Although
350.00
to date there has been no hint towards this
300.00
direction from the grease industry, this could
250.00
well be the case as some of the listed sub
200.00
stances are removed as the 2018 registration
deadline approaches. As with all product line
150.00
rationalization and concentration towards core 100.00
business, this would mean the loss of some
50.00
business, which in turn could create new
niche markets for those organizations brave
125 MT
12,500 MT
1,250 MT
Production
enough to embrace them. It is simply a case
per year
per year based Average per year
of turning a disadvantage to an advantage.
H Task Force A Total
Task Force C Total ~ Task Force D Total
Having decided on the substances that
remain crucial, the organization needs to
Figure 6— Total cost impact of REACH implementation in different Thickener
Categories
decide whether to pursue registration through
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VOLUME 77, NUMBER 6
NLG~
in the economy that was not predicted by the legislator.
Organizations need to plan carefully in order to make
this burden bearable, by spreading out the costs over
longer periods of time and concentrating on their core
business.
The next registration deadline is scheduled for
May 2018 and will include all substances produced or
imported to the EU in quantities between 1 100 MT
per year by legal entity. The testing and thus overall
cost requirements for each substance registered in
2018 are lower compared to those of 2013 but one has
to keep in mind the following factors.
tion. For this reason a stepwise approach can be ben
eficial. For example, a company with 10 substances to
be registered by May 2018, may find it easier to regis
ter two substances annually and avoid the cash rush at
the end, even though there is no regulatory requirement
to register early.
There are some other benefits to early registration:
–
a. In March 2013 ECHA increased the registration fees
for the first time. This could also be the case in the
future, so an early registration could mean a lower
registration fee.
–
–
a. Significantly more substances will need to be regis
tered by 2018. From the substances considered by
the ERGTC, only eight have had a 2013 deadline.
This leaves over 490 substances to be registered
by 201 8.
b. Market forces. It might be more cost effective to
demonstrate compliance to customers or local
authorities, than to explain why compliance is not
yet required, particularly for larger organizations.
On a larger scale REACH has created and will inevitably
continue to create issues related to market entry. For
smaller companies or for low volume chemicals under
going the first step of REACH implementation in 2008,
these were overcome by the low cost pre-registration
process. Such an option is not available when it comes
to the actual registration and unfortunately, any com
pany that does not carry out its core business in the
EU has to either go through this resource intensive
process or find an alternative way of dealing with their
EU customers.
b). The use of a large number of the remaining sub
stances is limited to less than 3 companies, which
means that even it categories can be developed to
share costs, a higher actual share of the base set
tests of Annex VII of the regulation will need to be
contributed by each interested party.
From the above it can be deducted that REACH imple
mentation for the grease industry as a whole is by no
means over. The 2013 deadline dealt with well-known
3: Future work
Task Force A
The REACH regulation is in more ways
than one a learning curve that all indus
tries have to travel. It is the responsible
approach that provides the opportunity,
especially to small and medium size
organizations, to obtain an insight on
the products they manufacture that was
never before possible. It helps create a
safer working place and environment by
identifying threats that had remained
undiscovered.
On the other hand it adds an extra
financial burden to all products in the sup
ply chain. This coincided with a downturn
40,000.00
35,000.00
30,000.00
25,000.00
20,000.00
ERGTC
15,000.00
10,000.00
—
L0A
5,000.00
2008
—5,000.00
.—
2009
—
2010
—
I
2011
2012
—.
I
ERGTC
Figure 7
—
Net cost spread between 2008 and 2013 for the registration of a
single substance in Task Force A in the 100 – 1000 MT tonnage
band for ERGTC Members versus non-Members
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NLGI SPOKESMAN, JANUARY/FEBRUARY 2014
NLGN
substances that are widely used within the industry.
By 2018 the funds contributed by grease manufactur
ers and importers will increase significantly and also
important decisions will have to be made on the viabil
ity of particular grease thickeners, making the market
that much more competitive.
8. “Concerning integrated pollution prevention and
control” EU COUNCIL DIRECTIVE 96/61/EC of
24 September 1996
9. “Response to Concerns: Draft Guidance Document
Annex V (COMMISSION REGULATION (EC)
No 987/2008 of 8 October 2008, amendThg
Regulation (EC) No 1907/2006)”APAG, 30 May 2010
–
References
10. “Testmg Costs and Testing Capacity Accordmg to
1. “The True Costs of REACH” Frank Ackerman
and Rachel Massey, Global Development and
Environment Institute, Tufts University, 2004
the REACH Requirements Results of a Survey
of Independent and Corporate GLP Laboratories
in the EU and Switzerland” Manfred Fleischer,
Journal of Business Chemistry Vol. 4, Issue 3
September 2007
—
2. “REACH in Brief’, EU REACH and U.S. Regulation
of Chemicals and Chemical Users, 2007
3. “EU REACH and U.S. Regulation of Chemicals and
Chemical Users”, NEMA, 2008
4. “Grease Production Survey Report For the calendar
years 2071”, NLGI 2012
ABOUT THE AUTHOR
5. www.ergtc.co.uk
Andreas A. Dodos
6. “Modest Growth Forecast for Greases”, Milind
Phadke {Kline and Company’s Energy Practice},
Lubes’n’Greases June 2012 “REACH further work
on impact assessment A case study approach Final
report”, KPMG, July 2005
Dodos received his MEng in Chemical
Engineering from the University of
—
ELDON’S SA
—
Manchester/UMIST and has spent 12
years at Eldon’s, with duties mainly
focused on industrial lubricant and grease
development. Since 2007, he has also
been involved in product stewardship and
regulatory issues implementation. Andreas
has been participating in the ELGI since
1998, taking a more active role in various working groups, such
as food grade, test methods and bio-based in the last five years.
Since 2010, he has been chairman of the European REACH
Grease Thickener Consortium (ERGTC). He remains involved in
a number of national bodies such as the Hellenic Maintenance
Forum, National Tribology Centre, and the Hellenic Association of
Chemical Industries.
–
7. “REGULATION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL concerning the Registration,
Evaluation, Authorization and Restrictions of
Chemicals (REACH), establishing a European
Chemicals Agency and amending Directive 1999/45/
EC and Regulation (EC) (on Persistent Organic
Pollutants}” COMMISSION OF THE EUROPEAN
COMMUNITIES, 2003
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