REACH compliance: The why and the how

The structural shortages in recycled polymer supply in Europe has made the region a magnet for imports from far and wide. And these are no longer just simply bales of waste but an actual recycled product.

This raises many questions on quality, consistency, reliability of the material, but equally traceability of feedstocks for a range of reasons such as ensuring no breach in social responsibility by sourcing from sites that use child labour.

Most notably, those using recycled polymers in food contact applications require traceability on feedstocks as part of the European Food Safety Authority (EFSA) process application.

There are a number of regulations in relation to trade of recycled materials in Europe, such as food contact regulations, the Waste Framework Directive, WEE. One area of that is often not well understood by exporters or end-users of recycled products is REACH.

For the purpose of this article, we will look at REACH only.

What is REACH?

REACH - Registration, Evaluation, Authorisation and Restriction of Chemicals - is a European Union regulation implemented to protect human health and environment from any risk chemicals present, based on the principles of:

Restricting the use of the most hazardous chemicals through an authorisation process.
Companies must identify the risks linked to the chemicals they manufacture and sell into the EU market.
The companies must demonstrate to the European Chemicals Agency (ECHA) how the chemical substance can be used safely and communicate the risk management measures to any users.
The ECHA conducts regular audits to ensure compliance.

Ultimately REACH is not just about identifying the most hazardous chemicals but promoting the substitution of those chemicals with substances that have less impact on human health and the environment.

Is non-compliance an option?

Non-compliance will result in prosecution of the company buying in the material. Since 2008, companies cannot use substances without REACH registration. This was further enforced in 2018 when the regulations were finalised. Companies may use materials, under 1 tonne, without REACH registration.

There are of course different regulations for different jurisdictions, and with the UK now separate to the EU it is developing its own regulations. It is likely, however, that the UK will follow the same premise as the EU legislation but this is not yet confirmed.

REACH does not apply to waste material; waste is covered by the Waste Framework regulations. Bales are currently classed as waste and therefore trade in accordance with the Waste Framework.

Once the waste is converted it becomes a polymer. Any materials processed in a country outside of the EU, such as recycled polyethylene terephthalate (R-PET), recycled polyethylene (R-PE) or recycled polypropylene (R-PP) flake or pellet, is then classed as a polymer and therefore REACH registration is applicable to the monomers of that material.

REACH registration is for a particular site in a particular country. So, for example, company A with a site in Belgium and a site in Germany would have to have two separate registrations. This also means no company can use the REACH registration of another company for, either importing or exporting.

Who needs to register?

Any owner of the monomer (a substance), whether that is a producer or exporter, must register for REACH. Ultimately the responsibility lies with the buyer. The substance can be registered either under the buyer’s registration or the suppliers’ registration. Without a REACH registration, the product cannot be used in the EU, as it is non-compliant.

As a downstream user a company can register for REACH and can then import from suppliers of polymer materials covered by those registered monomers. However, a downstream user without REACH registration can only buy material for use in Europe if the supplier is registered. The potential approaches are as follows:

This applies only for the substance(s) that you have registered. In the example of PET imports, registration is required for PTA, IPA and MEG.

It then becomes a decision for each individual business; does a company that imports materials want to source from one company or a range of companies so they can gain any advantage in competitive deals or spread the risk of issues such as quality or delayed delivery across more than one supplier?

If the company is only going to buy from one supplier, it may not be worth the time and expense of registering its own company therefore it would only be able to source from those suppliers that are REACH registered. However, if a company is looking to use imports from outside the EU due to lower prices or higher quality – as we have seen in the European R-PET market over the past year– then REACH compliance is essential.

How to apply

Understanding what the monomers are in the polymers being brought into the EU is the first step. Generally, registration for more than one monomer will be required as typically these are multi monomer polymers. An expert, as explained below, is required to provide advice on the monomers that need to be registered, for EU use, to ensure the safety of the final product.

An EU person or legal entity is required to register as it is not possible to register as a non-EU company. To register as a non-EU company requires an Only Representative (OR) who will be based in the EU.

The OR should provide an estimate of all the requirements and timeframe involved in the registration process. The timetable of the registration will depend on each of the steps, such as gaining permission to register (from ECHA), and application for the letter of access to the data (relevant to the monomer) required to complete the registration, which must come from SIEF (Substance Information Exchange Forum) or from a consortium. Consortia are made up of companies that have come together to apply for REACH regulation for a substance or substances they all use. The consortia often form organically, are open to adding new members and able to help with the process of registration.

Other steps include agreeing the OR fee, completing the necessary agreement for access to data from SIEF, receiving and paying an invoice and receiving the registration details and token. As an example, if the invoice is paid immediately rather than after full term, say 90 days, this would shorten the timeframe. Equally a company may take a view on when to take a registration forward, based on financial or strategic reasons.

For each substance, or monomer, there is a charge which is put in place by ECHA. The charge depends on the tonnage band that is being registered under. There are minimum percentage requirements for each of the monomers that fall into different tonnage bands, as described below. These bands are used to calculate the registration fee. The highest band, as an example, is €25,000.

Remaining with the PET example, approximately PET is 63% PTA, 2% IPA and 35% MEG. Importing 1,000 tonnes, the registration would need to be 650t PTA which falls into the 100-1,000 band, 20t of IPA would fall into 10-100 band and 350t of MEG into the 100-1,000 band.

Another cost that needs to be applied is that of the OR. The OR can provide a range of services. It can be purchasing a letter of access or providing the registration details for that individual application, so that the company can then register itself.

If the monomer has not been registered before it requires an OR (or party) to generate the data for the application (obtained from SIEF), build the IUCLID format for the ECHA report and Chemical Safety Report (CSR), which generates a much higher fee. The costs can be mitigated by how many companies are in the application, as the cost is spread across all applicants.

OR fees are ongoing, as they need to record and report (following registration) the volumes that are imported and report to ECHA that annual volume.

Use of materials in the UK must comply with UK REACH as it is a separate jurisdiction. The same principles apply if there is registration required in any other jurisdiction. This does add to the costs, although the costs may be negotiable as some consortium will offer a deal where others have a fixed price. The ideal is that all jurisdictions use the same data across those jurisdictions to standardise the industry, and most parties agree and are working towards this.

There is no public list of approved intermediaries / consultants that companies can source. Sites such as Chemical Watch do feature a consortia directory, other service providers and other sites are available. An Only Representative Organisation is available to those that want to look further into this.

How is this regulation enforced?

It is the users of the substances who, through their Product Stewardship processes, should ask to see the REACH registrations from suppliers. Companies may not use nonregistered substances, and if proof of registration cannot be provided then the buyers should not order from that supplier.

REACH registrations are subject to a government audit, the regularity of which is decided by individual governments. The exception being if there is a reported breach, then this will trigger an audit.

It is fair to say most compliance is self-managed by industry itself, but government can always check.

There are financial penalties for non-compliance, which are dependent on the level of non-compliance, but can be substantial. Examples at one end of the scale have been penalties equal to 25% of the company’s sales revenue for that year.

Breaches do occur, how commonplace is currently unknown, and can range in severity with a form of breach being late applications at one end of the scale, to deliberate repeated breaches at the other. Enforcement may not be as robust as it ought to be, but industry stewardship is high, and the use of non-registered material is not a risk most would want to take.

How does CLP fit with REACH?

Classification, labelling and packaging of substances and mixtures (CLP) regulation (Regulation (EC) No 1272/2008) is an integral part of REACH. As part of REACH, the same classification of labelling must be used by all registrants, thereby preventing jurisdictions from querying labelling from other jurisdictions.

And what of EFSA evaluations, are these linked to REACH?

There is an evaluation of safety of substances in food contact applications included in the dossier required by EFSA. The data requirement leads to a connection with REACH. In the REACH dossier there is sufficient data for EFSA to evaluate the safety of the substance in that application. So, while the two processes are separate, there is a link between the two, namely the synergy in the data. The application for data for REACH (and the costs involved in generating that data) may be used for the evaluation by EFSA.

Why are European recyclers able to register for REACH?

Recyclers in Europe were exempt from the requirement to register for REACH due to the fact they were working with EU sourced materials. As all polymers used in the EU are registered, it in effect allowed some traceability.

Any flake/pellet imported from outside the EU must be separately registered as there is no registration of the polymers used in those products. Imported material must be dealt with through the OR process, the registering process cannot be omitted.

Is every company registered that should be?

By the end of 2018 all EU companies that were required to register for REACH had done so. But applications continue to be submitted by companies of non-EU jurisdictions as they seek to trade into the region.

There is no official registration of applications that is publicly available from ECHA. However, there is an overall registration list (an extract below) that profiles registrations by type etc.

The view from consortiums, purely anecdotal, is that requests for data have increased. For example, over 400 requests for quotes of fees to gain a letter to access for PTA applications with over 120 completed registrations, means there are over 300 applications potentially in progress.

Another example by a consortium is that, of the 300+ applications for purchasing letters to access registration since 2018, the majority have not come to fruition. These examples indicate a high level of activity in the initial stages of registration but the final commitment to register is not necessarily taking place.

Companies cannot do business with the EU without complying with regulations, such as REACH, and this is driving its adoption. As such REACH is moving into other areas, such as Turkey, Korea, Taiwan, and China. There may be a view held by many that REACH can be avoided but it is less likely that they can.

REACH registration: costs vs value

Overall REACH registration can cost anywhere from €750,000 to €8-10million. It is all dependent on data requirements for registration as discussed above. There is a base cost for doing the work, and a legal requirement to register REACH using the same data under the joint submission process. Simply put, one company cannot try to register separategly or more cheaply, for the same substance.

REACH appears to be expensive, but the cost of registration is balanced against the number of registrants in the joint submission. It should also be balanced against the added registration cost to sales of the substance over a period of 1-2 years minimum. Therefore, if there are high numbers of registrants in the same application those costs could become very low. Relative sales volumes also spread the registration costs. Conversely, if the number of registrants is low and sales are low for a high value application, the costs could be more expensive.

For instance, if the cost of registration is €1m but 10 companies are in the joint submission the cost is €100,000 each. If sales are 100,000 tonnes/year then the registration cost is €1. If only 5 companies are in that joint submission, then the cost is €200,000 for each. For 100,000 tonnes/year sales then the cost per tonne is €2 (for only one year).

The number of registrants can impact the cost of the dossier as demonstrated above. But companies can also manage that cost, either paying in full in the first year or spreading it across sales over a number of years.

After completion of a REACH registration the process is not necessarily finished. ECHA do re-evaluate substances from time to time, and if find they data gaps or information missing, they legally require those gaps to be filled. Potentially this could lead to a lengthy (and costly) study, the costs of which can be spread across those in the SIEF. Reconciliation of the evaluation can see additional costs applied, but also rebates. Once part of a SIEF, companies cannot back out. Basically, costs of registration are ongoing, but not necessarily very high.

Europe is a highly regulated market, and some may debate that this is restrictive to trade, or raises costs for domestic producers, or indeed could be managed in a different and potentially more efficient manner. However, overall, it is understood that such measures ensure the safety of chemicals used in the market, and thereby offers some protection to the industry that delivers them.

Author:

Helen McGeough is Senior Analyst and Team Lead on Plastics Recycling for ICIS, with extensive experience of the recycling industry and business having worked in the sector for over 18 years. She specialises in recycled PET (R-PET) with in-depth knowledge and analysis in this commodity plastic. Helen leads market analysis and research for global recycled polymer markets, working with contacts across the supply chain from collection, reclamation through to end users. She has experience in developing supply demand database for R-PET markets, including forecasts for collection, reclamation and end use of R-PET products. Helen is the author of the RPET Europe Analytics Service, including price discovery and forecasting, analysis of market developments and regulatory developments. Helen has delivered multiple custom studies in the recycling area, assisting investment and strategy development for parties within the recycle supply chain. Helen has a Degree in Business Studies from Nottingham Trent University, UK.