Photo courtesy of Ink Systems.
Born in 1998 out of concerns about the impact of chemicals on health and environment, REACH underwent many compromises before its final adoption in 2004. The end result left neither business nor environmental groups completely satisfied.
The pre-registration phase is ongoing; companies have until November to register all of the required chemicals. After that, any unregistered chemicals can no longer be sold in the EU. The next phase will be registering each individual chemical, with expensive testing procedures required. It is certain that some raw material manufacturers will withdraw low-margin chemicals rather than pay for testing, and that companies will exit the market.
For the ink industry, the ultimate question regarding REACH is what the impact will be. The answers remain uncertain.
What is REACH?
The idea behind REACH is understandable – to provide a safer, healthier world.
“Every chemical marketed in an EU country must be registered for the intended use. The principle is ‘No data – no market,’” said Heiner Ringer, CEO of hubergroup. “For every chemical to be registered, a dossier must be submitted to the European Chemicals Authority (ECHA). For the dossier, a set of physical-chemical, toxicological and eco-toxicological data has to be collected and/or generated as well as a chemical safety report.
“The extent of the data set depends on the annual volume (> 1000 / 100 / 10 / 1 t/a), as does the timeline: the substances > 1000 t/a must be registered by the end of 2010, substances > 100 t/a by end-2013, > 1 t/a by mid-2018,” Mr. Ringer said. “Chemicals considered to be of particular risk will be subject to authorization.”
Dr. Jörg-Peter Langhammer, vice president corporate HSE + politics for Siegwerk, noted that every chemical substance must be registered at the European Chemicals Agency (ECHA), located in Helsinki, Finland, before being launched on the European market.
“The registration must include a detailed toxicological dossier in order to prove that the substance can be used safely for humans and the environment,” said Dr. Langhammer. “This process is initially aimed at better consumer protection, thereby shifting the burden of proof toward the industry.”
“The intention of REACH is to increase the knowledge of the substances (chemicals) placed on the European market, their manufacture and use,” said Chris Whitehead, product innovation director of Flint Group’s European Packaging Inks Division and member of the company’s REACH committee. “This is to ensure that there is a minimum impact of any of these substances on humans and the environment.”
Gary Andrzejewski, corporate vice president, environmental affairs, Sun Chemical, noted that prior to REACH, there was very little publicly available data demonstrating that human health and the environment were being protected with regards to existing chemical substances.
“While there was a list created by EINECS (European INventory of Existing Commercial chemical Substances) that describes over 100,000 chemicals used in Europe, there were no clear recommendations for use and handling from the suppliers,” said Mr. Andrzejewski. “In fact, under ELINCS (European LIst of Notified Chemical Substances), only 4,400 chemicals from this list have the technical information that would meet the REACH standard.
“REACH places all chemical substances in the same requirements for testing based upon the volumes manufactured or imported by a company,” Mr. Andrzejewski said. “In addition, based upon these testing results, the companies offering the chemical substances for sale will indicate acceptable uses through a chemical safety report (CSR) and provide information on the acceptable manner of handling exposure to humans and the environment.”
Preparing for REACH
The REACH legislation requires that products be pre-registered by the end of November 2008. Ink manufacturers and their suppliers have been preparing for REACH since its passage, and are ready for the initial steps.
Mr. Andrzejewski said that Sun Chemical has prepared for REACH by identifying all of the chemical substances that it manufactures in the European Union (EU) and those exported to the EU by Sun Chemical and its downstream users.
“From this analysis we have the basis for determining the substances that we will pre-register and the proposed tonnage bands for these substances,” Mr. Andrzejewski said. “Subsequently, we will use this information to identify the Substance Information Exchange Forum for each substance (SIEFs), and bring together all of the existing testing data, identify the data gaps, and propose a testing plan on how the data gaps will be filled.”
“Within the framework of a centrally coordinated REACH project in which Siegwerk’s corporate HSE department works closely with all involved internal partners, we investigate the pre-registration status for all raw materials purchased from our suppliers,” said Dr. Langhammer. “The results of these investigations are permanently collected in a status-monitoring system in order to ensure the highest possible level of transparency and legal compliance.”
Mr. Ringer noted that hubergroup has established a team of experts within its group of companies to compile an exhaustive inventory list of all raw materials currently used and break every material down into chemicals.
“Two groups of substances have been identified: those which we have to register ourselves – mostly chemicals that we import directly from non-EU countries – and those which will be registered by our suppliers,” Mr. Ringer said.
“Communication ‘upstream’ with raw material suppliers – whether they intend to register – and ‘downstream’ with customers is a rather time-consuming exercise,” Mr. Ringer added. “The next task will be the pre-registration procedure itself, which entitles us to continue to use the chemicals until the registration process is completed.”
Mr. Whitehead noted that Flint Group established a committee in 2006 to supervise all Flint Group REACH activities
“This working group is assessing the materials we use, identifying any imports, and contacting all our raw material suppliers to ascertain their intention to pre-register and ultimately register when the designated registration period arrives,” Mr. Whitehead said. “We have identified materials where there is a technical criticality in order to set out any relevant technical programs which may be required should they be withdrawn from the market.”
Mr. Whitehead said that it is important that ink companies keep their customers informed about REACH.
“To answer our customers’ questions regarding REACH, and to help them to understand what REACH is about and what it means for them, we have prepared information material and given presentations on REACH requirements and duties to both customers and customer associations,” Mr. Whitehead noted. “We have also intensified cooperation with several national downstream users associations for evaluation of exposure scenarios and risk assessments.”
Impact on Raw Materials
At this point in the REACH process, companies are pre-registering chemicals, a necessary step in order to keep selling into the EU market. There is no cost to pre-registration.
However, within the next few years, depending upon the size of the market for each raw material, registration will be required, which will require significant expenditures. At that time, some manufacturers may leave the market. For ink manufacturers, this will require new formulations.
“The main goal of our REACH project is to keep the impact of REACH on our product portfolio as low as possible,” said Dr. Langhammer. “However, the main challenges will arise when the registration of substances will become mandatory. For substances in the highest tonnage band (> 1,000 tons per year) this will apply as of December 1, 2010. The last registration phase, which applies to low volume substances of less than 100 tons per year, ends on June 1, 2018.
“Considerable efforts for the registration of substances along with the high registration costs may lead to a scenario where some raw materials may not be supported any more,” said Dr. Langhammer. “However, it’s too early for an accurate assessment of the situation.”
“We expect that a limited number of low-volume chemicals will disappear from the market due to inadequate cost/benefit ratio,” Mr. Ringer said. “As small amounts of chemicals may nonetheless be important for ink performance, e. g. as components of additives, we prepare for quite a lot of reformulation work to be done during the next 10 years.”
“We do not believe there will be an immediate direct impact on the supply of chemical substances available in the market,” Mr. Andrzejewski said. “There may be cases where a specific supplier will decide that they may not wish to supply certain chemical substances, which may lead to a shift to alternate suppliers.
“As the results of the test plans become available and the registrations are prepared, there may be impacts,” Mr. Andrzejewski said. “Based upon the likelihood that adverse test results will occur, suppliers or downstream users may determine that certain chemical substances are not suitable for specific applications and this will lead to a need to reformulate products or develop new chemicals. This will promote innovation and development work leading to products that are considered to provide proper protection to human health and the environment.”
Mr. Whitehead said there is no doubt that materials will be withdrawn from the market, and some already have been. He anticipates that 2013 will bring the first major impact to the ink industry.
“At this moment we expect that until the middle of 2013 we will be able to continue to supply the majority of products without significant difficulty,” Mr. Whitehead said. “Inevitably there will be a need to substitute one material which has been withdrawn for a known alternative. In most cases these are likely to be imported materials being replaced by EU manufactured substances, and this, together with a reduced supplier base, is likely to increase costs.”
Mr. Whitehead said that there are companies that have pre-registered their products but do not intend on spending the money necessary to register those products.
“From June 2013 onwards we expect that a number of materials will be withdrawn, though we have no precise knowledge as to which specific ones will vanish from the market,” Mr. Whitehead noted. “This statement is based on the fact that a number of suppliers have confirmed that, while they will pre-register all their substances, they will not actually register them all. The reason behind the dates set out, is that after June 2013 the smaller volume additives come into registration scope, and it is these where the cost of registration and related testing will either be very much greater than the actual cost of the raw material, or would make them economically non-viable.”
Estimated Costs of REACH
What, then, are the estimated costs for products affected by REACH, and how will these costs be shared? This is a question whose answer is not yet apparent.
“At the present time, costs are hard to capture,” Mr. Andrzejewski said. “Costs will be controlled by using existing data that many companies have in their archives and through using grouping to ‘read across’ to other structurally similar chemical substances. This information will be shared between suppliers.
“The authorities have indicated that certain models may be used to predict end-points, eliminating the need for some of the testing,” Mr. Andrzejewski said. “After the completion of the pre-registration and formation of the SIEFs, it will be clear how many companies will be sharing the testing cost for existing or newly created test data.
“Another opportunity for potentially reducing cost will be through joint registrations by those companies with an interest in the same chemical substance,” Mr. Andrzejewski added.
“Nobody can exactly answer this question today because this is a completely new situation,” said Dr. Langhammer. “The required toxicological tests for substances can cost hundreds of thousands of euros per substance, depending on the tonnages of the substance to be placed on the market and the number of parties joining in for the registration of the same substance.”
Mr. Ringer discussed the fees, and noted that ultimately, the consumers will have to pay the costs.
“Pre-registration is free, registration fees are up to €31,000 for a single high-volume substance, to be paid by every single registrant,” Mr. Ringer said. “Lower fares apply for lower-volume chemicals and smaller companies. Cost of generation of physical, tox and ecotox data is difficult to estimate at this point in time. It may exceed €500,000 per high-volume substance if no existing data are available. This cost will be shared in a SIEF (Substance Information Exchange Forum).
“All these expenses as well as the cost of the regulatory work, the reformulation work and the higher cost of raw materials from our suppliers will be passed on through the whole supply chain,” Mr. Ringer added. “Finally, the end-consumer has to pay the cost of such increased safety.”
“Whilst the registration costs are known, and are not excessive, the true costs are in the expense of carrying out the necessary testing,” Mr. Whitehead said. “These costs will be shared by the manufacturers and importers of the substances who have pre-registered the materials, since they will be part of a SIEF (Substance Information Exchange Forum). Inevitably these costs will be passed down the chain.
“At this stage it is not possible to have a definite knowledge of the cost impact, but various business impact assessments have been carried out and have conservatively estimated that – over the life of the introduction of REACH (i.e. up until June 2018) – an increase of 25 percent on the cost of an ink could be anticipated,” Mr. Whitehead added. “This increase is in addition to any increase resulting from normal pressures such as inflation, oil price etc. Also, we had to invest considerable resources, an investment which is still on-going, to allow us to inform our customers, to ensure continuity of supply despite some raw materials possibly being withdrawn from the market, and simply to work through the REACH Regulation – comprising thousands of pages – and to take necessary actions in time. For example the latest guidance on “REACH Implementation Programm” (RIP 3.2.2) – which concerns chemical safety assessments, exposure scenarios and related issues – is more than 2,000 pages long, and this is only one of a number of publications which need to be studied and assessed. These implementation costs are affecting us already today, independent from the registration process itself.”
Impact on the Ink Industry
Ultimately, the question is what the REACH legislation’s impact will be on European ink manufacturers, both small and large, and the worldwide ink industry as a whole.
“The costs will increase noticeably in Europe, and the materials available will decrease,” Mr. Whitehead said. “This certainly is a challenge for the European ink makers and importers.”
Mr. Whitehead added that it is difficult to predict what the overall impact and the consequences for the ink manufacturers and the printing industry might be.
“We would rather not speculate but act and concentrate on our efforts in minimizing any possible negative impact for our customers and ourselves,” Mr. Whitehead said. “Having started early with our preparations for REACH, we feel up to this challenge.”
Dr. Langhammer said that REACH will undoubtedly be a concern for all European ink manufacturers.
“This will apply especially to companies with a huge raw material portfolio and small turnover because this situation will lead to a considerable administrative burden,” noted Dr. Langhammer. “On a global scale, the impact on the import of printed articles manufactured outside the European Union will increase. These articles do not fall under the scope of REACH and thus can be imported without restrictions regardless if the used printing inks are REACH-compliant or not.”
Mr. Andrzejewski believes that REACH will lead to new developments.
“Just as the introduction of restrictions on off-gases have led to more environmentally favorable ways of formulating ink and printing, the impact of REACH will spur development of new approaches to meeting our customers’ requirements,” Mr. Andrzejewski said. “Additionally, as the same requirements apply to both EU manufacturers and exporters to the EU, the playing ground will be even.”
Mr. Ringer sees the larger ink companies having an advantage due to fewer formulations and lean product portfolios.
“Larger ink manufacturers will have an advantage,” Mr. Ringer said. “On a global basis, there certainly will be an increased cost disparity between European ink makers and non-European ink makers, and finally and hopefully the European ink industry will draw a competitive advantage.”
Mr. Ringer concluded that the goal of product safety is ultimately a benefit to all.
“We have always been committed to outstanding product safety within our policy of responsible care,” Mr. Riner added. “We regard the administrative and financial challenge as an investment into a long lasting product advantage, to the benefit of our customers and the final consumers. It will upset the market for a while, however the fact will remain, that ink cost basically are not critical for the final consumer price of any printed matter, be it publication or packaging.”
“We see this regulation as a step to increased product safety,” Mr. Ringer added. “Whether one considers the measures too far going for printing inks is a matter of opinion. One has to live with it, it has become a fact.”
Disclosure of Information and the Impact on Formulations
One of the critical concerns regarding REACH throughout industry is that REACH requires that companies disclose formulations. For ink manufacturers, this is seen as a threat to innovation.
“In our view, the IT tools (‘REACH-IT,’ provided by the ECHA) involve some potential risks of disclosing confidential information since access to this tool is not restricted,” said Dr. Langhammer. “This could indeed be critical for innovation and may lead to commoditization of products.”
“The requirement to show the registration number of substances in preparations in principal can lead to a disclosure of the recipe,” Mr. Whitehead said. “This does not necessarily prevent further innovations but it can make protection of proprietary knowledge more difficult and – thinking about protection through patent rights – also more expensive. However, with the likelihood of materials being withdrawn from the market, this probably will result in a reduced palette of materials from which inks can be formulated, and this could well lead to a decrease in the innovations coming from ink makers.”
“The primary requirement is that all of the chemical substances in a product be properly registered for the tonnage band supplied and the uses that are registered,” Mr. Andrzejewski said. “There are provisions for confidential information to be masked, but each of these requests will have specific requirements and costs associated with them. Even complete disclosure of the chemical constituents of a product does not directly allow that confidentiality will be lost; for example, a component of your product may be a modified polyester, the sequencing of the reaction may be what defines the behavior and not the general chemical identity. For those of us involved with formulating products, we frequently see that even now a specific pigment type from your favorite supplier may not be readily used in all of your applications.”
Mr. Ringer is not concerned about disclosure.
“There is no mandate to disclose formulations,” Mr. Ringer said. “Suppliers must disclose only to ECHA. Communication with ECHA and also between SIEF members is confidential. You can be represented by a third party in the SIEF, so even your identity won't be disclosed, if desired. Also, the greater part of raw materials we use comes from European manufacturers or importers. We are ‘downstream users’ of these chemicals and not obliged to register them ourselves.
Indeed, Mr. Ringer anticipates that REACH will drive innovation, as ink companies seek to develop new formulations despite the limitations.
“The development of new products using a reduced number of raw materials is challenging, as is continuous reformulation of products to maintain high quality,” Mr. Ringer said. “However, there will be innovation going on, as there is lots of creativity and imagination in the hubergroup laboratories.”
Working Together Through SIEFs
The costs of testing substances will be substantial, and for single companies to undergo testing for each of its products, it would probably be financially impossible. To try to share the costs of testing, Substance Information Exchange Forums, or SIEFs, are being formed.
According to the European Chemicals Agency, a SIEF will be formed for each pre-registered substance with the same identity. The participants in a SIEF are all pre-registrants. A SIEF has no prescribed legal form, but is a forum to share data and other information on a given substance. Participants in a SIEF are free to organize themselves in consortia or other forms of agreements as they see fit to carry out their obligations under REACH.
After Jan. 1, 2009 a SIEF is formed when pre-registrants have agreed in a pre-SIEF that they manufacture or import the same substance. They will share and assess data and prepare common parts of the registration (joint submission). Compensation for sharing data is agreed among the respective SIEF members.
For rink manufacturers, the debate will be whether it is worthwhile to share data.
“All applicants for one specific chemical will meet in the respective SIEF,” Mr. Ringer said. “We expect that most of the participants will be interested in data and cost sharing. Ink manufacturers will also be part of several SIEFs as many of them are also importers or manufacturers of selected chemicals.”
“Our expectation is that cost sharing opportunities will be available to share resources with other companies,” Mr. Andrzejewski said. “The one exception to this might be for certain niche markets where the supplier may not wish to support in their registration that particular use. In these special cases, discussions between the supplier and downstream users may result in a cost sharing agreement to support the additional testing that may be required to support these uses.”
“Where ink makers import similar materials, be they preparations or substances, it may well be that – possibly through the trade associations – they may work together in a SIEF in order to minimize the ultimate cost impact,” Mr. Whitehead said.