Consultation on Restricting the Marketing and Use of Short Chain Chlorinated Paraffins (SCCPs) in Scotland: page 5


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Consultation on Restricting the Marketing and Use of Short Chain Chlorinated Paraffins (SCCPs) in Scotland

Annex III: Regulatory Impact Assessment (RIA)

Regulatory Impact Assessment for Controls on the Marketing and Use of Short Chain Length Chlorinated Paraffins (SCCPs)

1. Purpose and intended effect of the measure.

Issue

To introduce Europe-wide restriction on the marketing and use of short chain chlorinated paraffins (SCCP) in metal working and leather finishing.

Objective

The Directive and proposed regulations are intended to protect the environment from SCCPs which have been shown to be toxic to the aquatic environment and are persistent and bioaccumulative.

Implementation

These proposed regulations will apply to Scotland only. England & Wales, and Northern Ireland will be introducing their own regulations, as will other member states in the EU.

2. Options

During the consideration of the need for risk reduction action for SCCPs at EU level, a number of options were assessed. Please see below the five options that were identified.

1. A Voluntary Agreement
2. Classification and Labelling
3. Marketing and Use Restrictions
4. The Limit Value Option
5. Do Nothing

Option 1: Due to the diversity of use of SCCPs a voluntary agreement was considered likely to result in a random and unpredictable removal of SCCPs from the marketplace and all uses would not be eliminated.

Option 2: The labelling of products which contain SCCPs as "Dangerous For The Environment". This could lead to more responsible handling and disposal of the oils by industry. A preference for products which do not display ‘hazardous’ labelling may cause a switch away from the use of products which use SCCPs. However, no companies would stop manufacturing their product on the basis of labelling alone. Most larger companies would continue to use SCCPs and seek to take additional precautions, while most smaller companies would make no changes to their working practices.

Option 3: Restrictions on the marketing and/or use of SCCP based fluids in metal working and leather finishing under the EC Marketing and Use Directive 76/769/EEC. SCCPs would be totally or partially phased out and their concentration within some or all products restricted. Marketing and use restrictions based on a total phase out of SCCPs in metalworking and leatherworking would guarantee that the aquatic risks associated with their use and disposal are eliminated.

Option 4: Limit value on emissions. This option is aimed at directly limiting the discharge to water. The benefit would be to reduce emissions to the water environment to such a level that concentrations are below the lowest level of concern. However, there is no consensus on an appropriate level at which harm to the environment would be eliminated. The environmental impacts of this option would vary in accordance with varying discharge consents.

Option 5: Do nothing. This option has been discounted, as failure to transpose the Directive would result in legal action by the EC against the UK.

The adoption of Directive 2002/45/EC means that the Executive is now pursuing measures in line with option 3. The remainder of the RIA concentrates on implementing this option.

3. Benefits

There is no international consensus on the valuation of environmental effects and it has therefore not been possible to quantify, in monetary terms, the increased environmental benefits of implementing risk reduction options to enable comparison with anticipated costs to users. In the case of SCCPs it can be clearly established that a failure to address the risk will result in local aquatic ecosystems being jeopardised. The risk assessment identified that SCCPs bioconcentrate to a large extent in fish and molluscs and low concentrations of SCCPs were found to significantly increase mortality rates in aquatic species. There are also some international concerns that they have the potential to be mobile in the environment and transport over a wide area from the source of release. If left unabated, wider populations would be at risk. The proposed restrictions on marketing and use of SCCPs in the metalworking and leather processing industries will contribute to a reduction in these environmental risks. The environmental benefits of substituting SCCPs with Medium Chain Chlorinated Paraffins (MCCPs) may be limited as they have also been identified as chemicals of concern. Most benefit is likely to be derived where substitution is by chlorine-free fluids with lower environmental risks.

4. Compliance costs for Business

i) Business Sectors affected

SCCP producers
formulators/blenders
agents/retailers
customers or users (metalworking and leather finishing companies)

There are around 50,000 companies using metalworking fluids in the UK. This figure is based on a compliance cost assessment performed for the UK Government.

ii) Compliance costs for a typical business

In terms of a "typical" metalworking company, the only reliable cost data with which to estimate the impacts of the proposed Regulation are those relating to increased fluid prices. In order to estimate the costs of the Marketing and Use restrictions to a typical company, it is assumed that:

a typical metalworking company is medium sized;
metalworking companies currently using neat oils will move to MCCP based neat oils in the short term;
metalworking companies currently using emulsions will move to chlorine free emulsions; and
a metalworking company will use either emulsions or neat oils.

On this basis, the cost to a medium sized user of neat oils is estimated at £1,500 per annum (estimated to be in the order of 0.2% of the annual turnover) while that to an emulsion user is estimated at £450 per annum. These figures are based on a compliance cost assessment prepared for the UK Government.

iii) Total Compliance Costs

The risk benefit analysis concluded that a ban on the use of SCCPs in all metal working fluids is expected to impact on 26,000 facilities in the UK which may incur additional annual costs of approximately £4m from increased fluid prices - although some of this may be absorbed by the formulators - but spread across a very diverse industry. The impacts on the leather industry will be minor. Costs to producers, formulators and retailers are also expected to be negligible as metalworking businesses will pursue substitution, meaning that reduction in sales of SCCPs will be matched by growth in the use of safer alternatives. In the UK only one tanner using SCCPs has been identified and the economic impacts of a ban will probably be less than £2K across the UK industry as a whole.

5. Impact on Small Firms

A significant proportion of small (and other sized) companies claimed not to know the make-up of the fluids they were using. In addition, no turnover figures were available relating to components produced using SCCP based or other fluids. The Compliance Cost Assessment that forms the basis for the figures used in this RIA is based on the findings from the companies questioned.

The estimated cost per business of £450 to £1500 is based on a medium sized enterprise. Small and micro businesses are considered unlikely to be using the most sophisticated metalworking processes where higher costs may be incurred.

6. Monitoring and Enforcement

The new regulations make it an offence to place short chain chlorinated paraffins on the market for use as substances, or as constituents of other substances or preparations, in concentrations higher than 1% either in metalworking or for fat liquoring of leather.

The Executive is working with Defra to develop regulations that will set out the monitoring and enforcement responsibilities of various authorities in relation to the full range of marketing and use controls. This will not affect compliance costs.

7. Summary

The attached table summarises the costs and benefits associated with introducing marketing and use controls, as measured against the baseline of a "do nothing" option.

In summary, the costs to UK industry have been estimated at approximately £4m. These costs are likely to have reduced since the RIA was conducted as businesses have taken action to phase out use of SCCPs in light of the forthcoming restrictions. The impact in Scotland is estimated to be proportionate to that in the rest of the UK — the cost of restrictions in Scotland is therefore estimated at approximately £400,000. The vast majority of costs will fall on the metalworking industry. The metalworking industry may incur higher costs to avoid using MCCPs as a substitute for SCCPs based on voluntary action or in anticipation of controls being introduced on this substance.

Summary of Risks and Benefits of Marketing and Use Restrictions
Effects	Benefits	Costs and Risks
Producers and Formulators	If SCCPs are banned, there will be benefits to those formulators which have already developed effective SCCP-free fluids. A total ban on SCCP-based cutting fluids may drive R&D towards process modifications, whereby different tool materials may be used to render cutting fluids obsolete. This would benefit the companies involved in this R&D as costs could be passed onto (ex-)cutting fluid users.	Formulators will be driven to find alternative products and will incur associated R&D costs. The R&D costs for MCCP-based fluids are less than those for chlorine-free products. Although there are problems with differences in the chlorination/viscosity relationship for SCCPs and MCCPs, on the whole re-formulation costs for MCCPs would be minor. Replacement with chlorine-free additives is more complex. No one compound can replace SCCPs and many more, process-specific cutting fluids will probably need to be developed. Each will require identification of the best base-oil and associated additives. Evidence suggests that the favoured alternative for neat oils is MCCPs, while those for emulsions are chlorine free additives, especially sulphur and phosphorus. Users of neat oils may choose to avoid substitution using MCCPs in support of voluntary action or in anticipation of possible future legislative controls. In the short term, costs to those specialising in emulsion concentrates may be greater than for other formulators. Companies with larger R&D budgets and more flexible profit margins may be more able to provide suitable products. Thus, it may be the smaller, more specialised formulating companies which find the transition from SCCPs most costly.
Purchasing Costs		In moving to MCCP-based fluids an increase in fluid costs of around 5% could be expected (i.e. to around £1.85 per litre). Where chlorine-free fluids are available, purchase costs could be expected to increase by around £0.50 per litre (i.e. to around £2.25 per litre). It is estimated that around 25,000 UK metalworking companies would be affected by a total ban on the use of SCCPs. For a medium sized user of neat oils moving to MCCPs, increases in fluid price could cost around £1,500 per annum (of the order of 0.2% of annual turnover). The costs to the UK as a whole are estimated to be around £2 million per annum for a move to MCCPs in neat oils. Costs could double if only 20% of neat oils users moved to chlorine free fluids. For a medium sized user of emulsions moving to chlorine-free fluids, increases in fluid price could cost around £450 per annum (of the order of 0.05% of annual turnover). The costs to the UK as a whole are estimated to be around £2 million per annum for a move to chlorine-free EP additives in emulsions. UK costs for a ban on the use of SCCPs could be twice those for Germany and France together (for increased fluid costs alone).
Disposal	A move to chlorine-free fluids (but not to MCCPs) could result in reductions in disposal costs.	Sulphur-based products are reported to be highly odoured and difficult to dispose of.
Use and Production Aspects	A total ban on the use of SCCPs in metalworking fluids may drive R&D into the development of new fluids, processes or tools which may reduce production costs in the longer term.	Some replacements for SCCP-based products may be less efficacious. For MCCP-based fluids, this may be due to an inability to use highly chlorinated products (at 63% chlorination MCCPs become so solid as to be unusable). For processes where no efficacious products are available, costs to metalworkers will be associated with increased tooling management costs and reduced production. Management costs for tools at the top of the price range (e.g. broaching tools costing of the order of £5,000), are likely to be significant. For example, the costs of a 5% reduction in tool life are an order of magnitude higher than those associated with increased fluid costs (for all bar a move to chlorine-free neat oils where costs are three times greater). For emulsions, an across the board reduction in tool life of 5% could equal £2 million for the UK as a whole. The costs arising from reduced production could dwarf those associated with tool management. For example, one company undertaking drawing operations suffered reduced productivity of 75% in moving to a chlorine-free product. This resulted from forced reductions in metalworking speeds. The most severe processes, involving highly alloyed materials and requiring highly polished finishes could suffer most from a ban on the use of SCCPs. Where quality criteria cannot be met (in terms of surface smoothness for example), then business will be lost. Nine processes have been identified as having the potential to suffer greatly from a ban on the use of SCCPs: broaching, deep hole drilling and clearance, deformation, gear cutting, grinding processes, milling, reaming, rubbing and threadcutting.
Aquatic Environment	Banning the use of SCCPs will remove the risks to the aquatic environment associated with the use of this substance. A ban on use in neat oils alone should result in greater benefits than a ban in the use of emulsions alone. MCCPs are less bioaccumulative than SCCPs but there is also concern about their properties and other alternatives are likely to offer more benefit for the environment. Most sulphur-based products identified as alternative EP agents are slightly less toxic than SCCPs. Thus, movement to these products could result in slight reductions in aquatic risk. However, due to potential costs, it is safest to say that there is no net benefit to the aquatic environment associated with the use of sulphur. Movement to phosphorus may either reduce or increase risks to the aquatic environment, depending on the receiving waters.	MCCPs are more prolific in the aquatic environment than SCCPs and the consequences of increasing the MCCP load are currently unknown. Some sulphur-based formulations appear to be more toxic than SCCPs. Movement to phosphorus may either reduce or increase risks to the aquatic environment, depending on the receiving waters.
Human Health	There is contention over whether SCCPs or MCCPs are better for human health. Where chlorine-free fluids are used, sulphur and phosphorus may reduce human health risks. Overall, however, the change in benefits associated with a move to sulphur and phosphorus are unclear. In addition, where a total ban on the use of SCCPs drives the development of new process technologies, exposure to fluids may reduce in the longer term.	Movement to MCCP-based fluids may result in increases in the degree of chlorination in order to maintain the lubricating qualities of the fluid (where such increases are possible). The concentration of the MCCP-based additive may also increase. These alterations may have the potential to increase the health risks to metalworkers although there is scientific uncertainty over which agents in cutting fluids cause health problems. Where chlorine-free fluids are used, sulphur and phosphorus may worsen human health risks. In addition, chlorine-free fluids may require additional biocides and other additives which may have the potential to increase incidents of dermatitis and/or mutagenic and carcinogenic risks.

Small changes in the way we perform everyday tasks can have huge impacts on Scotland’s environment.
Walking short distances rather than using the car, or being careful not to overfill the kettle are just two positive steps we can all take.

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