2017 Through the Rear-view Mirror
Part 9: Trump Rolls Back Environment Rules
Mergers and acquisitions, new petrochemical projects, the dismantling of US environmental regulations and a tussle over the hazards of pesticides in Europe, along with a protracted discussion over life after Brexit and a few changes in corporate top management echelons – these were all topics that occupied the attention of the international chemicals and pharmaceutical industry in 2017. As in every year of the past several decades, environmental protection issues were hotly debated. In the past year, the discussion over climate protection heated up, especially in the US, parallel to the increase in the earth’s temperature.
Though climate change was on most of the world’s collective conscience in 2017, the administration of newly sworn-in US President Donald Trump started its tenure by ignoring the issue. Out-of-sight out of mind? Significantly, one of its first acts was to remove the topic from the website of the Environmental Protection Agency (EPA). All year long, EPA administrator, Scott Pruitt, left no stone unturned in overturning – or trying to overturn –every single piece of legislation that was passed or updated during the administration of former president, Barack Obama.
In mid-December, the New York Times published a list of 60 environment-related actions undertaken by the new occupant of the White House, along with the Republican majority in Congress. Before 2018 dawned, a few more could have been added. Up to Dec. 15, according to a Times analysis based on research from Harvard Law School’s Environmental Regulation Rollback Tracker, Columbia Law School’s Climate Tracker and other sources, 29 US regulatory statutes had been overturned, 24 rollbacks were in progress, and seven were still in limbo. CHEManager International reported on many of them.
Among the “casualties” were a long-proposed and long-studied ban on the pesticide chlorpyrifos; the methane reporting requirement; offshore drilling restrictions; inclusion of greenhouse gas emissions in corporate environmental reviews; the calculation for the “social cost” of carbon; and the Obama administration’s updated Clean Power Plan. Emissions standards for power plants, fracking regulations on public land and the permitting process for air-polluting plants were others.
Due not least to court challenges, changes to seven regulations – including hazardous chemical facility regulation, methane emission limits at new oil and gas wells, limits on landfill emissions and a rule helping consumers by fuel-efficient tires – were not dealt with.
In free moments, the president found time to cash in on a promise to remove the US signature from the Paris Accord on climate change signed by 195 countries in December 2015 – to which the last two holdouts were added in 2017. Trump made the ad-hoc decision despite the urging of the American Chemistry Council and his sometimes-confidant Andrew Liveris, CEO of Dow Chemical.
While the US was left standing in the cold, or more aptly, the heat, Trump suggested the country might negotiate a better deal for itself. No one took up the chalice. Instead, many US states and NGOs sidestepped the administration and began cooperating directly with companies and organizations in other countries. The EU and the state of California, for example, are now developing prerequisites for a joint CO2 emissions trading market.
Chemical safety a hot-button topic
On another front, what some began to call the “rogue” EPA’s erratic plans for dealing – or not dealing with – issues of environmental protection and safety sowed confusion. A Trump pledge to eliminate the Chemical Safety Board (CSB), which reviews accidents at production facilities, stalled, or at least was not heard of for months. Simultaneously, the CSB faced a challenge from NGOs unhappy with its lack of progress in implementing existing rules.
There was also trouble last year with the freshly amended Toxic Substances Control Act (TCSA), now known as the Frank R. Lautenberg Chemical Safety for the 21st Century Act. Updating the legislation – for the first time in 25 years – had been a priority of the chemical industry to achieve regulatory clarity, and its final passage was greeted with much fanfare. Nevertheless, industry and environmental groups were never really on the same page as concerns all substances, and some in both camps decried the lengthy timetable for the substance review. Environmentalists feared the legislation would be rendered toothless, and some chemical producers feared it would be too restrictive.
At year’s end, the EPA announced it would “indefinitely” postpone a phase-out of certain uses of three controversial consumer chemicals: tricholorethylene (TCE), used in dry cleaning and degreasing applications, along with methylene chloride and N-methylpyrrolidone (NMP), used in paint strippers. The phase-outs were the first to be conceived under the revised act. In 2013, the environmental watchdog itself had declared TCE “carcinogenic to humans by all routes of exposure.”
In the US, as well as in Europe, concern was growing about the widespread use of dicamba, the active ingredient in herbicides produced and sold by Monsanto, BASF and DuPont. According to reports, the use of dicamba spiked across the US in 2016, after regulators approved it for crops already growing.
Temporary climax for Europe’s glyphosate debate
Compared with the US, the environmental debate in Europe was quieter in 2017, apart from the lack of consensus as to whether the herbicide active ingredient glyphosate should be labeled a carcinogen. Much of the European Commission’s year was devoted to trying to extend glyphosate’s EU-wide registration, which was due to expire on Dec. 15. The chemical is the key ingredient in Monsanto’s Roundup herbicide program. The US agrochemicals giant, much-hated in Europe, could further strengthen its stranglehold if its takeover by Bayer were to go ahead as planned, environmental advocates feared.
On its seventh try, the EU’s Standing Committee on Plants, Animals, Food and Feed at a meeting on Nov. 27 agreed to extend the glyphosate license for five more years. The Commission had initially sought a ten-year renewal. France’s ultimate proposal – as opposed to banning the chemical – was three years.
Member states were almost evenly divided in their approval or disapproval of the last-found compromise, with 18 in favor, nine against and one abstaining, More than a million EU citizens signed a petition calling for a ban on glyphosate. The tenuous consensus within the bloc looked somewhat shaky when it emerged that German agriculture minister, Christian Schmidt, had willfully voted for the extension over the objections of environment minister, Barbara Hendricks.
Germany’s governing Christian- and Social Democrat coalition had agreed on abstention throughout the renewal votes, but Schmidt apparently saw his hands as untied as the elected government turned into a caretaker regime after the country’s hung federal election in September 2017.
European climate debate heats up
The EU’s ongoing clean air and energy discussion was one of the few issues apart from glyphosate that occupied center-stage all year, though it drew far less attention. Also taking a back seat was the long-running debate over the role of neonicotinoid pesticides (neonics) in the decline of bee populations. Two large-scale studies examining the effects on bees published in the journal Science in June suggested that neonics may be harmful, but the data was not regarded as clear-cut enough to provide definitive answers. The topic will be key during 2018, when the EU’s existing moratorium on some uses comes up for renewal.
The potential hazards of bisphenol A (BPA), used to produce polycarbonate and epoxy resins, and the role that phthalates used in plasticisers may play in endocrine disruption mostly simmered on the back burner, too, while flaring up from time to time when kindled by Sweden or France.
On its own, the European Chemicals Agency (ECHA) unanimously voted to add BPA to the list of substances of very high concern (SVCH) under REACH, as the European Food Safety Authority (EFSA) continued to drag its feet. ECHA, the agency that administrates the EU’s chemicals legislation, also quietly labelled TiO2 a category 2 carcinogen.
Regarding a completely different topic, the UK public – through a series of television programs – last year became aware of the dangers carelessly discarding plastic packaging may pose to marine life. The newness of the topic to many Britons seemed surprising in view of the fact that the industry association PlasticsEurope and its member British Plastics Federation have been working on and promoting plastics waste reduction for years.
While the US withdrawal from Paris left Europe stunned, reports in autumn suggested that Donald Trump might not the only threat to achieving the ambitious climate targets, and maybe not even the biggest. Unveiling the results of an investigation, the British Broadcasting Company BBC warned that “potent, climate-warming gases are being emitted but not being recorded in official inventories.”
In its Counting Carbon program, the broadcaster pointed a finger at problems in the heart of Europe, as well as countries as far away as India and China. The BBC noted that air-sampling programs recording actual levels of gases “sometimes reveal errors and omissions, and some countries cheat.” Of note in 2017 was China’s announcement that it would start its own Emissions Trading Scheme in 2018.
As regards the EU’s Emissions Trading Scheme (ETS), the European Chemistry Council (CEFIC) continued to appeal to the Commission and the European Parliament to structure the scheme in a way that would not disadvantage European chemical producers in competition with players in other world regions. CEFIC called for a system that is “compatible with the principles of Better Regulation and the guidelines for evidence-based policy making” and against a two-tiered approach, in which industries are treated differently.
Speaking as president of the German chemical producers association Verband der Chemischen Industry (VCI) in December, BASF’s CEO Kurt Bock said Germany’s consideration of a tax on CO2 or a “hasty” exit from coal-fired energy generation would be “a step in the wrong direction.” Beyond Europe, the German industry favors expanding the ETS at least to the G20 countries. Bock said.
While Europe remained nervous over Britain’s nearing departure from the EU (Brexit), questions about the country’s future compliance with the rules of REACH were front and center. The UK faces the uncomfortable choice of either taking over all current REACH regulations as national law or designing an equivalent that would guarantee a continued seamless chemical trade with the EU27. The US has urged London to scrap REACH, which it regards as complex and burdensome, and align itself more with its former colony’s less stringent regulations.
To read more about the important events of 2017, click on the links below.
- Part 1: The Rocky Road to Mega-mergers
- Part 2: Chemical Producers Lead M&A Activity in 2017
- Part 3: Pharma M&A quieter in 2017
- Part 4: Distributors Proactive in M&A
- Part 5: New Projects
- Part 6: Shale Gas Fuels US Investment
- Part 7: Timid Awakening of European Investment
- Part 8: Asia sees ongoing investments