Chemicals are used everywhere, from major industrial processes to pharmaceuticals and paint coatings. They form a two trillion dollar industry, with three quarters of the world’s chemicals produced in OECD countries. However, this proportion is set to drop to around 60% by 2030 as players like China, Brazil and Russia increase their share.
The American Chemistry Council expects world growth in chemicals production to average around 3.5% per year in the next decade, mainly in the Asia-Pacific region. China’s industry is now bigger than Germany’s by turnover, driven largely by US and Japanese investment. The OECD, whose projections are not far different, gives this rapid expansion a red warning light for urgent policy action, demanding more data, management and oversight as globalisation accelerates. Why?
Almost every man-made product contains chemicals and modern society relies on them. However, rather than being locked safely within the products, chemicals carry danger in several ways: they can leak into the environment during production, use or when goods are thrown away; their use can damage health; and their production emits CO2. The chemicals industry is a major user of fossil fuels too, alongside smelting and other heavy industries.
Then there are persistent organic pollutants (POPs). These remain intact in the environment for long periods, become widely distributed geographically, accumulate in the fatty tissue of living organisms and are toxic to humans and wildlife. For instance, polychlorinated biphenyls (PCBs) have been widely used in coolants, insulating fluids, flame retardants, adhesives, carbonless copy paper, etc. Dichlorodiphenyltrichloroethane (DDT) is a chlorinated hydrocarbon, once widely used as a pesticide in agriculture. The production and use of these substances have been banned internationally under a convention agreed in Stockholm in 2001, though DDT continues in limited use in some countries to control malaria-bearing mosquitoes.
No one would question that releases of certain substances, such as PCBs and DDT have caused serious damage to human and animal health, and the environment. Chemicals travel across borders, and affect marine life too. Some alkylphenols used to produce detergents, polymer additives, lubricants and the like have been found to cause endocrine disruption in fish.
Some trends in decreasing pollution by chemicals have been positive, with sharp drops in emissions of hazardous substances from chemical plants in the OECD area. In Japan, for instance, the chemicals industry reported a drop of 54% from 2000 to 2004 in the emissions of 354 substances listed in a national law. The EU has also noted sharp drops in the likes of acid rain and ozone depletion agents, while the US and Canada have recorded falls in the release and transfer of over 150 chemicals that are monitored by both countries.
How can such improvements be built on? The key is more information and more cooperation. Though we may be familiar with chemicals, it may seem surprising that there is still a lack of information on the health and environmental effects of many chemical substances on the market and on the products in which they are used. Several policy initiatives have been taken, such as the 2006 Dubai Declaration on International Chemicals Management and the so-called Overarching Policy Strategy.
Other UN agreements include the Basel Convention on Transboundary Movements of Hazardous Wastes, the Montreal Protocol on Substances that Deplete the Ozone Layer and the Stockholm Convention on Persistent Organic Pollutants. The OECD has led chemical policy work for four decades, with acts on accident prevention, preparedness and response, release and transfer registers and sound waste management, not to mention its testing guidelines that save governments and industry millions of dollars in safety testing costs.
There are several regulatory programmes in place in member countries too, on pesticides for instance, and on high volume chemicals, which represent the bulk of total production. We still need to better understand the sources of exposure and to manage the environmental effects of chemicals worldwide. One challenge is to extend the OECD’s seminal work on the Mutual Acceptance of Data (called MAD) to non-OECD countries, so that all countries monitoring and assessing the industry work from the OECD chemical safety benchmarks.
Other government policies for the chemical industry could include taxation on products to reflect their environmental impacts, and incentives to encourage research and adoption of more environmentally-friendly alternatives. Voluntary practices are also important, particularly exchange of information and communication between governments, industry and the public. While cultural and legal barriers make this harder than it sounds, voluntary industry approaches overseen by governments can achieve quite a lot. In Korea, for instance, some 160 companies have voluntarily agreed to reduce chemical releases by 30% by 2007 and 50% by 2009 from 2004 levels.
Rewarding innovation and encouraging better technology is also important. Policymakers can issue models which companies can use as a reference at design stage to help find more benign chemicals or other alternatives. Governments can also encourage chemical firms to use energy efficient technologies during production. New technology brings challenges too. Nanotechnologies for instance have proved valuable for industry, in lightweight materials, inks and protective coatings. But they may bring health and environmental hazards and so demand more monitoring, and this is another area where OECD has taken a lead.
The chemical industry’s rapid expansion both geographically and technologically underlines the need for more data and cooperation. This will be a major global policy challenge as the industry expands to emerging markets. As many investment projects are yet to unfold, the window to act in the interests of good practice is now.
Visit the OECD chemicals pages at www.oecd.org/env.
See American Chemistry Council at www.americanchemistry.com.
See Stockholm Convention on POPs at www.pops.int.©OECD Observer No 266 March 2008