Authorisation procedure leads to competition disadvantage for European companies

©Dr_Martin_Hostalek

Interview with Dr Martin Hostalek, Merck KGaA, on regulation of substances of very high concern under REACH

Dr Hostalek, so far those affected by REACH have mainly had registration in their sights. Further regulatory elements of REACH are now progressively becoming more acute in practice. Alongside evaluation, the focus of interest currently is on the authorisation procedure. In your view, what problems can be expected here?

Through the REACH regulation, the authorisation procedure has been introduced as a new procedure for regulating certain substances of very high concern (SVHC). The preparatory step of listing these substances on the candidate list has already been applicable for some time. What we have here is the effect of a broad stigmatisation of the substances listed there explicitly desired by the legislator. The process is now moving forward and companies are already feeling massive implications for their business activity. The consequences can range from a sometimes considerably more costly substance through to elimination of the substance.

What are the consequences of the procedure for companies?

An enormous effort is generated for companies to prepare authorisation applications for the different uses. Authorisation fees and the production of supporting documentation constitute a not inconsiderable cost factor. For many substances, the authorisation obligation means the end if an authorisation application makes no financial sense for a company. In addition, numerous substances whose use will in future require an authorisation will be needed for the production of other products and in research and development. Uncertainty about whether these substances will still be available in the future is therefore also a given for the entire downstream value added chain. But even for substances where an authorisation application is worth it, the authorisation requirement leads to great planning uncertainty for the companies affected since an application can also be rejected. And even if an authorisation is granted, the uncertainty remains because authorisations are valid for a specified period. Moreover, the proposed review frequencies averaging 7 years and 12 years at most are too short to activate new investments. It is true that the authorisation can be renewed under certain circumstances, but this requires a fresh application to be prepared and the outcome is one again uncertain.

Does the authorisation procedure have consequences on an international comparison, in particular for the competitiveness of European companies?

The authorisation procedure leads to a competitive disadvantage for European companies. Imported products are not subject to the authorisation requirement if they no longer comprise substances requiring authorisation. In other words, products whose production uses substances requiring authorisation can be imported into the EU without the need for an authorisation. Yet, if European companies want to produce the same product following the same procedural route, they need an authorisation – clearly, with the associated high costs and absence of planning and investment certainty.

For which chemical substances does your sector seem to be particularly strongly affected?

For the sector which I represent, regulatory pressure has recently been acutely burdensome particularly on the aprotic solvent substance group since these are often CMR substances and therefore face an authorisation procedure. However, they are essential for many industrial processes, e.g. certain chemical syntheses.

In which areas is this class of solvents used? What is the technical and economic importance of these application areas?

Polar aprotic solvents are used as a process tool in the chemicals industry and in downstream industrial processes. Examples for such solvents are N,N-dimethylacetamide (DMAc), N,N-dimethylformamide (DMF) or N-methyl-2-pyrrolidon (NMP). Among other things, they are used for the production of plant protection agents, active substances in pharmaceuticals, chemical fibres or lacquers. Thanks to their good solubility properties, they are often used for reactions which would not be possible or produce much reduced results in other, less polar solvents. Examples in the pharmaceuticals industry are the production of medicines including membranes for special filters for pharmaceuticals production, in display technology this would be displays and lighting using LCD or OLED, in medical technology the production of filters for blood plasma and infusion solutions and in the textile industry fibre production. In other words, what would be affected is a wide spectrum of very important and in addition highly innovative products in several sectors. A survey of eight European pharmaceuticals companies on the use of aprotic solvents in medicine production in January 2013 showed that more than one hundred synthesis precursors and more than fifty active pharmaceuticals substances on the EU market depend on the use of aprotic solvents. Furthermore, the said aprotic solvents are relevant for more than seventy active pharmaceutical substances in development. Similar dependencies on the use of aprotic solvents exist in other industrial processes such as the production of plant protection agents, chemical fibres or lacquers. Production and supply chains are very complex so that these dependencies not be quantified only conditionally. Thus, polar aprotic solvents such as DMF, DMAc and NMP are used in the production of numerous products.

How are these substances handled in an industrial context? What risks have to be managed?

These solvents are handled safety in the above-mentioned industrial processes in large-scale technical installations, often in closed systems, and only used for the industrial production process such as chemical synthesis or the production of a product. Closed installations are opened only for cleaning or maintenance purposes or for samples to be taken. The consumer or the environment do not come into contact with the solvents since they are no longer contained in the end products. The substances are only used by trained personnel under strict conditions concerning health and safety, protection against emissions and installation authorisation. In this regard, EU-wide workplace and emission limit values are observed. A workplace limit value defines a value at which no danger to a worker’s health can be expected. At the end of the production process the process solvents are distilled out, burnt as waste or recycled and, apart from traces of impurity, are no longer contained in the end product. In addition, protection against emissions and further laws rule out any indirect exposure of the population. Hence, the risks for employee and environment are under control when these solvents are used in industrial processes.

The authorisation has the explicit objective of substituting SVHC. In this respect, what are the possibilities for aprotic solvents?

Aprotic solvents are used for chemical processes because of their physical and chemical properties, and a substitution is possible only under certain conditions and by solvents with a very similar property profile. Each solvent has its own profile, which makes substitution by another solvent difficult or even impossible. Aprotic solvents of medium polarity have properties which makes them valuable tools. They can be mixed both with other organic solvents and with water, they dissolve both water- and fat-soluble substances and can be separated out following a production step through distillation thanks to their boiling point. Moreover, the choice of solvent can have an influence on the characteristics and quality of the product in the subsequent production steps, e.g. for the production of chemical fibres or membranes.

In your view, what should therefore be done in concrete terms to strike a responsible balance between risks and opportunities in these important production areas?

When decisions are taken on an authorisation requirement or an exemption within the meaning of article 58 paragraph 2 of the REACH regulation, existing legislation must be taken into consideration. Hence, the purely industrial use of aprotic solvents in closed installations under controlled conditions is already comprehensively regulated through EU legislative provisions. Industry meets the requirements and complies with the statutory provisions, with verification by supervisory authorities. As a result, an exemption from the authorisation requirement does not create a regulatory gap which needs to be closed by the authorities. For this reason, it is absolutely essential that use is made of the exemption provision in accordance with article 58 (2) for uses which are already adequately regulated.