When do the regulationsstop? B Giordan DuPont Performance

C o a t i n g s ( U K ) L t d , F r e s h w a t e r R o a d , D a g e n h a m , E s s e x , R M 8 1RU, U n i t e d K i n g d o m

Introduction Environnmntal regulation is d e v e l o p i n g rapidly, controlling air, water a n d land pollution. A n d as w e absorb the implications of each n e w directive, a further initiative is launched, wtfich threatens further contrd. There has m be some e n d p o i n t to this process, b u t h o w should it be determined? The coatings industry today faces a daunting array of environmental rules, with the only certainty that there will b e m o r e to come. In each m e d i u m - air, water and land industry seems m be faced with the p r o s p e c t that, just as each reduction in permitted emissions is agreed, a n e w pro ject to reduce them further is started. This survey concentrates on the air quality agenda, b u t it should b e r e m e m b e r e d that there are equally important regulatory activities on water a n d land quality.

Emissions inventories For the coatings industry the m a i n - indeed, practically the only air quality c o n c e r n is with volatile organic c o m p o u n d s (VOCs). Large a m o u n t s of VOC are emitted from natural sources, for e x a m p l e p i n e forests, b u t emissions of a n t h r o p o g e n i c origin h a v e in recent years c o m e principally from transport. Vehicles emit a variety of pollutants: nitro g e n oxides, carbon m o n o x i d e , a n d particulates as well as VOCs, a n d m o r e VOCs are emitted during the distribution of fuel.

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As transport sources are increasingly controlled, however, solvent emissions from coating processes b e c o m e more sigifificant. For example, in Germany, w h e r e most progress has b e e n m a d e in the area of transport, coatings are n o w the single largest source of anttlropogenic VOC emissions. The action of sunlight o n nitrogen oxides and VOCs leads to the formation of ground level ozone, a secondary long range pollutant, which can impact o n rural areas at some distance from the original source of emission. Ozone can irritate the eyes and lungs, causing breathing difficulties, a n d may reduce resistance to infection. O z o n e can also damage some vegetation, crops and trees. High levels of o z o n e are normally o b s e r v e d o n still, sunny, summer days, w h e n the air is already polluted with nitrogen oxides and VOCs (eg urban areas with traffic). Because of the trine required for the chemical reactions to take place, o z o n e formation tends to b e d o w n w i n d of the pollution. The resulting smog m a y persist for several days and can be transported over long distances. 1,2 The starting point for air quality regulation in Europe was the 1979 Convention on Long-range Transboundary Air Pdlution,~ and specifically with its 1991 VOC Protocd.; This set a VOC emissions reduction target of 30% b y the end of the century. Although some states were early to act for example France 5 a n d Germany 6 - across Europe, overall, the Protocol target was not achieved (Figure 1). In the EU, only Denmark, Germany a n d the Netherlands were successful. Such success as was achieved, was except in the UK, due

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whether m o r e aggressive reduction targets will be agreed, but when, Perhaps better quality data will follow,

Figurel: Percentage change in V0C emission, 1987-1996

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Source:Environmenlin lie. EuropeanUnion (11Ihelurn of lhe (enlury, EuropeanEnvironmentAgenq,] 999 m o r e to transport controls, such as the implementation of catalytic converters, than to controls o n coatings emissions. By the late 1980s it became clear that the European Commission n e e d e d to provide some leadership in implementing the Protocd, Studies were also suggesting that the targets of both the VOC P r o t o c d and the parallel Nitrogen Protocol7 were not sufficient to achieve satisfactory air quali ty. As the Solvent Emissions Directive e (SED) developed, so in parallel a new, multi-pollutant P r o t o c d was developed, and eventually agreed last December in Gothenburg. 9 This n e w Protocol sets reduction targets for the EU15 of 50 to 60% in VOC emissions, For most countries, this will require fur ther restrictions b e y o n d those of the SED and the Integrated Pollution Prevention and Control (IPPC) Directive. ~~ The Protocol will n o w be i m p l e m e n t e d in Community law as the National Emissions Ceiling (NEC) Directive. For industry, the m a i n p r o b l e m with these ceiling con trols lies in the p o o r quality of the emissions data on which they are based, For example, Figure 2 compares official data with industry estimates for the vehicle refinishing sector. The official data comes from the RAINS n model, a n d industry data from sales statistics, The differences are so large that it is hard to avoid some scepticism about the conclusions. But the n e w Commissioner for the Environment, Margot Wallstrom, is on record as saying that the G o t h e n b u r g limits are insufficiently ambitious. The main question is n o t

figure 2: Percentage difference bel,#een RAINS and industry emissions estimales (Industry = 100) 100~

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Does this m e a n ttmt the coatings industry faces pressure to reduce emissions, until the zero p o i n t is reached? Regulators both in the commission a n d in national authorities w o u l d p r o b a b l y say no the regulations will be b a s e d o n BAT. But BAT can be a trickier concept that it appears. It is defined in the IPPC Directive as follows: (Article 2(11)), 'Best' means most effective for the envi r o n m e n t as a whole. 'Available' means already d e v e l o p e d and possible to i m p l e m e n t u n d e r economically and technically viable conditions, 'Techniques' includes b o t h equip m e n t and operational procedures. This definition seems to cover adequately the questions both of the availability and of the economic viability of the techniques, But availability in one sector does n o t m e a n practicality in another, or possibly only with very hea W capital expenditure. For example, cars and light vans are prod u c e d on large scale production lines, whereas heavy c a m mercial vehicles and trailers are mainly p r o d u c e d b y smaller, specialist constructors. Electrodeposition is standard practice for cars and light vans should it b e standard practice for hea W commercial vehicles a n d trailers? It could be economically feasible if the scale were big enough. Some p e o p l e thff~k it is BAT b u t they then must b e p r e p a r e d to accept a wholesale restructuring of the commercial vehicle construc tion sector. This w o u l d entail the closure of large numbers of small enterprises, with the consequential costs to society of unemployment. Is this w h a t society wants? This type of a r g u m e n t shows that the a s s e s s m e n t of the e c o n o m i c viability of a process requires w i d e r recognition of costs than those directly i n v o l v e d in the manufacturing process. T h e r e are costs that society beam, b o t h if an enterprise is active, o r if it is s u p p r e s s e d b y e n v i r o n m e n t a l regulation,

Social costs These social, or external, costs represent the b u r d e n o n soci ety of running a process. Thus the costs of air pollution arising from VOC emissions include adverse effects on h u m a n health, reduction in crop yields, the accelerated deteriora tion of materials, and damage to ecosystems. The quantifiable effects on h u m a n health include b o t h premature death mortality a n d hospital a&nissions due to conditions like asthma - morbidity. To be of any value, these costs have to be e x p r e s s e d in a c o m m o n currency - a n d in fact only monetary valuation of the effects allows us to compare apples and pears. The m e t h o d d o g y for this challenging task has b e e n d e v e l o p e d b y the ExternE programme. This started in 1991 as a joint project b e t w e e n the European Commission a n d the US Department of Energy. It was initially aimed at the external costs of energy generation. However, its scope has certainly e x p a n d e d b e y o n d this original task, a n d the latest m e t h o d o l o g y update n for the project contains a n e w chaptar on the quantification of o z o n e damage. While it stresses the large uncertainties that are involved in the calculation, the conclusion is that the damage costs for average VOC emissions in Europe are a r o u n d 930 Euros/tonne, of which around three quarters relates to h u m a n health. It stresses that the m e t h o d o l o g y for o z o n e damage estimation n e e d s to

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be further refined. This is partly because of the very substantial spatial variation in ozone concentrations, a n d partly because of the nonlinearity of ozone formation and destruction a n increase of nitrogen oxides emissions can actually reduce ozone formation locally. The argument o n costs has b e e n taken a significant step further by a recent study. 13 This demonstrates that benefits from the Protocol for all pollutants taken together exceed the costs of compliance. And it contains a couple of com ments that should make industry think hard: 9 9

'there exists widespread opinion that the costs data are likely to be exaggerated' 'there is a strong tendency for ex-ante estimates of cost to be far higher than the real costs that arise.., represen tatives of industry tend to take a different view~

The author has n o t f o u n d any attempt to estimate the costs to society arising from restructuring of industry, resulting from environmental regulation. Although a difficult task, it does n o t seem m u c h more challenging than putting a cost o n the loss of life expectancy in the population. It is understandable, though, that it may n o t be very politically correct to study such issues at present. Intervention in the workings of the free market is not, after all, very fashionable. Perhaps one will have to wait for the effects of this restructuring to work through before one can quantify its costs. Although ExtemE is the leading European p r o g r a m m e in this field (the 1998 m e t h o d o l o g y u p d a t e has contributions from 15 universities a n d institutions), o n e other inter esting approach to the estimation of social costs should b e mentioned. Davidson 1~ describes the Shadow Price m e t h o d for calculating the m o n e t a r y value of the emissions reduction achieved with competing technologies. Unlike ExternE, which starts with models of the health a n d environmental impact of pollution, Shadow Pricing works indi rectly from the targets - here the air quality targets - which are set b y political decision. If a technology leads to a reduction in emissions, it makes it cheaper for the region to m e e t its air quality target. This is used as a starting p o i n t for the calculation of the economic value of emission reduction. But the chosen technique will p r o b a b l y also impose intrinsic costs, so the task for society is to determine the o p t i m u m balance b e t w e e n the two. This is an attractive approach, because it seems to a c k n o w l e d g e that there is such a n optimum, b e y o n d which society faces a n e t cost from further emissions restriction. It also recognises at the outset that the decision as to w h e r e to strike this b a l a n c e is f u n d a m e n t a l l y political. Industry clearly faces some significant challenges. We must engage in a constructive dialogue o n emission invento ties. In m a n y fields, industry sales data is the best starting point for inventory studies we have to make this available to the relevant g o v e r n m e n t groups. And we must learn to use the concepts of social cost in our assessment of BAT, a n d not just look at processes from the point in view of their internal costs. Not least, we must ensure that the arguments are well f o u n d e d o n facts, so that we can refute accusations of wilful exaggeration. Only w h e n we do these things will we ensure that we get a fair deal from regulations.

2. World Health Organisation: Air Quality Guidelines for Europe. WHO Regional Publications, European Series No 23 Copenhagen: World Health Organisation 1998. 3.

Convention on Long-Range Transbomldary Air Pollution to Abate Acidification, Eutrophication and Ground Level Ozone, adopted in Geneva on 13 November 1979 (see http://www.unece, org/env/ktap/).

4.

Protocol concerning the Control of Emissions of Volatile Organic Compounds or their Transboundary Flmces, adopted at Geneva on 18 November 1991.

5.

Loi no. 764563 du 19 juillet 1976 relative aux installations class&es pour la protection de l'envirommment.

6. Btmdes-Immissionsschutzgesetzes, ongmally of 15th March 1974, and subsequently revised; TA Luft (Tectmische Ailleimng zur Reinhalmng der Luft) 1986. 7.

Protocol concerning the Control of Nitrogen Oxides or their Transbotmdary Fluxes, adopted at Sofia on 31 October 1988.

8.

Council Directive 99/13/EC of 11 March 1999 on the limitation of emissions of volatile organic compounds due to the use of organic solvents in certain activities and installations.

9.

Protocol to Abate Acidification, Eutrophication and Grounddevel Ozone, adopted in Gothenburg December 1999.

10.

Council Directive 96/61/EC of 24 September 1996 concerning integrated pollution prevention and control.

11.

'Regional Air Pollution Information and Simulation' - see the IIASA web site at

http://www.tiasa.ac.at/Research/TAP/rains_europe/index. html. 12.

ExternE Externalities of Energy, vol. 7 Methodology 1998 Update, European Commission 1999.

13.

Cost-benefit analysis for the [Gothenburg] Protocol, MR Holland, D Forster and K King (AEAT), VROM report no. 133, November 1999.

14.

Davidson MD, Shadow Pnce method for balancing envirormmntal and economic aspects of BAT, in the Proceedings of the Workshop on Economic Aspects of BAT, Brussels, February 2000.

References 1. Report of the expert panel on air quality standards, Stationery Office London, 29th October 1998.

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