The True Cost of Banning Chemicals Is?

 

How Much Do Chemical Bans Really Cost

Yesterday ECHA produced a report entitled “Estimating the abatement costs of hazardous chemicals. A review of the results of six case studies”.

The report looks at how to work out the cost of the substitution of hazardous chemicals.

The costs of substituting one chemical for another are a key issue in REACH. It is not new to EU product regulation. Working out the financial merits, or the lack of them, for phasing out the use of a chemical has been a fact of life for years under the RoHS Directive.

Is there a Perfect Model?

This report looks at whether there is a perfect model to use in working out these costs and savings. The answer is no.

The main conclusion of the report is that it is not straight forward and there is no simple method for working out the costs or the relative benefits/losses or the lack of them.

The study looks to estimate the cost of abatement for:

  • Nonylphenol (NP) and nonylphenolethoxylates (NPE) used primarily as surfactants in the textile sector;
  • Four phthalates (DEHP, DBP, BBP and DIBP) used as plasticisers in a wide range of processes and products;
  • 1,4 dichlorobenzene (DCB) used in air fresheners and toilet blocks;
  • Lead used for pellets in shotgun cartridges;
  • HBCDD, a brominated flame retardant used in polystyrene insulation material;
  • MDA for various uses, including polyimides and as a hardener in resins and adhesives

 

Guestimates

The aim of the work was to improve the capability in assessing the costs of producing the use, permissions or exposure of hazardous substances, to explore and develop some of the theoretical and methodological aspects specific to hazardous chemicals, and to understand what barriers there might be too useful estimation.

The authors of the report acknowledge from the beginning that the cost estimates are “subject to significant uncertainty”.  The need to do guestimates is touched on in the report. The reasons vary. Sometimes the producers have wanted to keep the information confidential. In other instances, the costs of switching from one substance to another have been overestimated, but in others under estimated.

There is a basic challenge of working out what the cost benefits in the “case of the use of hazardous substances the bad will generally be negative impacts on human health and the environment.”  The report notes the cost benefits of not using hazardous substances in reduced waste treatment and emission control costs is often not accounted for.

There appears to be a simple complexity to working out the costs for substituting hazardous chemical substances. The report notes that in some cases the higher costs never materialized.

 

Simplicity v Complexity

And, a simple cost comparison between and existing substance and a replacement does not provide an accurate measure of the real cost of substitution.  Just because one substance is cheaper than another can often fail to take into account reduced emission controls and waste treatment costs of the replacement.

There is an interesting debate about how to take into account replacing “sunk capital costs” when using a new substance. As the costs of the old capital are cost, some are of the view is that those costs of replacement should be excluded. The old machinery is a sunk cost and its only value is the value of being sold on or scrap. Others think that some account should be taken.

Interestingly, the report is not categorical on whether substituting substances leads to overall higher prices. Sometimes reducing the use of a substance might actually generate savings because the alternatives are cheap.

No Simple Answer

Working out the costs of benefits for substituting is not as clear cut as it is other areas like air pollution. The report concludes:

That complexity, especially compared with ‘more traditional’ abatement costing relating to, e.g., air pollution, is often related to the fact that hazardous substances, as well as potentially having negative impacts on human health and/or the environment, have quite particular functions which are the source of their value and the reasons why they are used in the first place. Abatement options, including substitution to alternative substances or technologies, often impair this functionality, which in turn implies reductions in value…

The challenge in estimating abatement costs in these circumstances is to account for these impacts on value and the costs of any mitigating actions which might be adopted as a response. This is a challenge because the value of the specific function in question is generally not observable in the prices of products and the costs of processes (which are essentially bundles of input characteristics each with their own value or cost). Differences in price between alternatives are an inaccurate measure in these situations since the price of a substance is only one input into the total cost of the process, and using a ‘cheaper’ alternative might involve incurring costs in other ways. Hence, the cost of reductions in value complementary inputs and/or mitigating actions associated with using alternatives are difficult to observe, measure and estimate, but knowledge of each is necessary to estimate abatement costs accurately” (p.13-14).

The report is a fair and objective look at the issue. There is no silver bullet and it is complex. But, just because it is complex does not mean the information is not useful.

 

Why Europe’s Taxpayers Should Not Fit the Bill for Fishing Boat Building

Fishing for the Future

On 6 February 2013, the European Parliament overwhelmingly voted in favour of an ambitious reform of the Common Fisheries Policy. 502 elected politicians embraced the future and backed an overhaul of a failed policy.

The voting was heavily along national lines.  Nearly every British MEPs backed reform. German Socialists and Christian Democrats voted together. A large number of German Christian Democrats ignored the voting instructions from their Spanish Conservative fisheries leads and pressed the button for reform.

1 Step Forward – 2 Steps Backward

On Tuesday 22 October 2013, the European Parliament will vote on the European Maritime and Fisheries Fund, the European subsidies scheme for fisheries.

The total sum of the EMFF over 2014-2020 will be around 5 billion euro. From that, assistance to buy new nets to prevent discards and even buy lifejackets for the crew is meant to come from.  Now, that is quite a lot of money, especially for an industry where in many fishing nations the industry contributes less to the national economy than it costs to run and operate. That is, the fleet is a loss maker for Europe PLC.

If subsidies are going to be used for any industry, which personally I am circumspect should happen, at the very least the subsidies shall be used to support the implementation of this ambitious reform as adopted back in February.

Taxpayers Paying For Nice Big Boats

Now, MEPs on the fisheries committee think that spending money on adapting for the future is a very silly idea. Instead, the slight majority want to build new boats at taxpayers’ expense.

The idea that a company knows when and where to invest is a basic idea known to most people in Europe. For many MEPs it seems to be an unspeakable heresy.

 Corporate Welfare Cheques for the Rich

In the last reform, the EU scrapped subsidies to build fishing vessels. Now, the European Parliament wants to re-introduce them. Now, if you want to get a better idea of who really gets the money visit the site, Rich European Fishermen, and you’ll see Europe’s distant water fleet who fish Africa’s waters (at taxpayers’ expense) and whose boats were again in the main paid for in part by taxpayers.

Even the Marxists Would Blush

Now, the strange thing is that fishermen are very individualistic people. They are not the sort of people whose idea of fishing is fishing for state welfare cheques. I don’t think they are. The industry’s leaders put out pronouncements calling for more subsidies that would make even the most wild-eyed Marxist blush in shame.

And, you’d be amazed to find out most fishermen never touch the money. Fishermen in Estonia are doing very well growing the fish stock and being profitable. They even build new boats and modernise their existing vessels all at their own expense. This feat of personal responsibility is happening everywhere.  I guess that less than 10% of fishermen take 80% of the subsidy honey pot available today.

If MEPs wanted to face their voters with dignity in May 2014 in the next European Election they’d have the moral audacity to say they embraced a Europe of the future and not the ideals of a failed past.

Who Would Benefit

It will be interesting to see how the people react if they learn that their politicians vote through a huge gift of money for a very few people when most people in Europe are dealing with a painful recession. Only companies like Pescanova, the Spanish global fisheries giant, that recently collapsed in a mist of allegations of fraud and corruption,  would stand to gain to access to large piles of taxpayers’

Brazil’s lower house bans secret voting after protests – will Brussels follow?

Brazil’s Parliament has just voted to ban secret voting by Brazil’s Members of Parliament.

The BBC reported that the public became appalled at the wide spread secrecy of voting in Brazil’s Parliament. The public took to the streets in mass demonstrations again the widespread political corruption. One of their demands was to end secret voting by Parliamentarians.

Brussels Could Learn From Brazil

The EU is now a long way behind Brazil in terms of open and accountable law making.

In Brussels, how MEPs voted is in the main secret. How they voted in committee or on specific votes in the full Parliament is not as a general rule recorded and made public.

How your MEP voted on a report in a committee they sit is not automatically made public.

How they vote in the full parliament on specific issues is not automatically made public

But, how they vote on the final report is and can be tracked down by the useful Vote Watch.

Secrecy – Stopping People Know Where You Stand

Elected politicians (and non-elected officials acting as legislators) must like the idea of voting in secret. “The public have the right to vote in secret and so should they” they must think.

It stops the public knowing how their elected politicians voted most of the time.

You can watch the vote and have no idea how a MEP voted. How a MEP voted is not automatically recorded and no site exists to see if they voted in line with how they said they were going to vote.

There are good reasons to allow this secrecy. Politicians would be held accountable (by their Party or voters) if their votes were public. Their  flexibility of saying one thing and doing another would be restricted if they could be held accountable for their voting.

 Reform Blocked

When British Liberal Democrat, Andrew Duff MEP, tried to drag the European Parliament into the 21st century an unholy coalition of Christian Democrats and Socialists stopped in.

Andrew Duff  tabled an initiative  to record all votes in committee. This “roll call” vote can and is used but it is not automatic. The electronics exist to allow this happen, so why it is not used is a mystery to me.

Secret Law Making Goes Far Wider

The corrosive secrecy applies to most EU legislation.

The EU adopts most legislation by so called delegated legislation.

Under this procedure, the Commission publishes proposals in secret. They send the proposal to governments and the European Parliament, but the public has no right to know what is in the proposal until it becomes a law.

The civil servants who sit and vote on the committees that adopts most of the EU’s law is secret. How each government voted is not made public, although the results of the overall vote are made public later on (see here for example ).

In high profile issues the press usually get a run down of how governments voted.

Rule of Law Ignored

The idea of secret law making by legislatures is a kick in the teeth to basic ideas of the rule of law. Law making should always be in public, how the people who vote on important and mundane matters should always be recorded and made public.

The late British Supreme Court Judge,  Tom Bingham, in “The Rule of Law”, considered the principle to mean:

“that all persons and authorities within the state, whether public or private, should be bound by and entitled to the benefit of laws publicly made, taking effect (generally) in the future and publicly administered in the courts.”

Surely, the EU fails at this very simple hurdle of laws publicly made? For most EU legislation, the public have no idea how their elected politicians or non-elected official  voted on specific issues.

If Europe wants to uphold its basic ideas of an organisation being based on the rule of law, it would follow Brazil’s politicians tomorrow.

 

Why Did Cod in the Baltic Grow Yet Collapse in the North Sea

Swim to the Baltic

Last night I landed up being very distracted.  The European Commission is recommending the TAC for western Baltic cod and to increase by 7% to 65,934 tonnes.

Surely, this was a mistake. In 2004, ICES, the scientists European and other governments ask to recommend how many fish can be caught from the sea, came up with a call for large cuts and a catch of less than 13,000 tonnes of cod.

Fisheries Ministers ignored the experts advice and backed a quota of 45,400 tonnes. And, ICES then had to report that actual landings were more like 68,000 tonnes.

Baltic Fishing Ministers Learn Long Term Perspective

But, over time something strange happened to the fishing ministers of the Baltic Sea. In 2009, they started following the advice of ICES.  In 2009, fishing ministers recommended that less than 48,600 tonnes of cod be caught. Ministers backed a quota of 49,380 tonnes, and 48,000 was landed!

Over time, the fishing Ministers have, more or less, followed the advice of the scientists. And, slowly but surely, cod stocks have grown and grown.

That Much Is Possible!

There is a way to go to when cod quotas will be back to the 1987 recommendation of 245,000 tonnes. But, cod seem to follow the law of compound interest, and could continue to grow.

Now, the fishing ministers of the Baltic now face a very short October fisheries council. I can’t think the whole affair takes more than an hour of rubber stamping the experts’ recommendations.

Short Sighted North Sea Politicians

On the other hand, the Baltic long-term perspective is not reflected by the story of cod in the North Sea.

The Unwise Monkeys?

In 2004, ICES recommended no cod be caught from the North Sea. Fishing Ministers ignored them and allowed a catch of 27,300 tonnes. From 2001 to 2007 the recommended catch as o and fishing ministers ignored scientific advice and listed to rigorous industry lobbying and set quotas from 48,600 (2001) to  20,000 tonnes (2011).

Things got so bad, and the health of the stock so depleted and subject to huge levels of often deliberate discarding, that in 2013 fishing ministers managed to set a catch limit of 26,500 tonnes which was similar to the recommended less than 25,441 tonnes.

Cod Migrating to Sweden

If cod could migrate, I guess the North Sea cod would be swimming as hard as they could to the Baltic.

What Can Happen In 10 years

In 2004, the North Sea was recommended to have no catch of cod and this was ignored and a quota of 27,300 tonnes was set. In 2013, a recommendation of 25,441 was proposed and 26,500 was set.

In the Baltic in 2004, things were not good. Cod catches in the eastern Baltic were recommend to be less than 13,000 tonnes. Ministers ignored it and called for catches to be 45,400 tonnes. But, over then net few years Ministers realised even they could not defy the laws of nature (even politicians are fallible) took a recommended catch of 65,900 tonnes and set that at 68,700 tonnes.

In 1987, the North Sea saw landings of 167,000 tonnes of cod, the Baltic Sea 207,000 tonnes.

The Baltic Sea is on the way to reaching the mid 1980s catch levels. The North Sea is not.

Follow the System

The reasons for this turn around are simple. Baltic fishing ministers went cold turkey. They listened to evidence and ignored the special pleading of fishermen who year on year contended that the Baltic was awash with cod. Baltic Ministers decided to clamp down on illegal fishing and took practical steps to deal with discards.

Has Anyone Been Fired?

Ministers from the North Sea could well copy the “system”. It works.

Any CEO who showed similar economic performance to the North Sea cod industry would be fired on the spot. This makes the performance of bankrupt banks look credible. Throwing away such a valuable and potentially valuable economic resource is economic stupidity. It is perplexing to understand why those responsible for such ineptitude are still at the helm.