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Chemicals & Plastics: A Global Market Overview

Chemicals are embedded in practically every single manufactured good in the EU. On the one hand, chemicals play a key role in ensuring quality of life and offer new solutions to deliver the green and the digital transitions. On the other, our increasing reliance on chemicals leads to serious problems. From creating adverse health effects to contributing to the climate crisis, chemicals come with a cost — so much so that we have now exceeded the planetary boundary for chemical pollution.

The chemical industry is intrinsically bound to Europe’s production and consumption systems as an upstream supplier to all economic sectors; in particular, manufacturing, agriculture, energy and healthcare. Virtually all manufactured goods contain chemicals, with chemicals being key components of plastics, textiles, cosmetics, cleaning products, paints, glues and a broad range of other consumer products. Therefore, the chemical sector plays a key role in improving quality of life in Europe.

At the same time, chemical pollution in the environment continues to degrade biodiversity and jeopardises clean water, pollination and healthy soils. The pervasive use and release of chemicals means that today, the bodies of European citizens are contaminated with a large number of chemicals of concern — some at levels damaging to health. In terms of public awareness, 84% of Europeans are concerned about chemicals in everyday products impacting their health, and 90% are worried about their impact on the environment.

In terms of volume, EU production hit 271 million tonnes in 2020, while consumption (net import plus production) stood at 289 million tonnes. In contrast to the global trend, EU chemical production volume fell by 10% from 2004 to 2020. High energy costs in Europe reduce the competitiveness of the European chemical industry in relation to that of players in regions with more favourable energy prices. Nevertheless, the value of total EU chemical sales increased by 38% from €363 billion in 2000 to €499 billion in 2020.

The EU’s Regulation on the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) explicitly aims to ensure that the most hazardous substances are substituted with less dangerous ones via authorisation and restriction. A recent report from the European Chemicals Agency (ECHA) found that volumes of 59 substances of very high concern that were subject to authorisation under REACH and placed on the EU market fell by 45% in the EU between 2010 and 2021. For some substances, the decline was even steeper: the production and import of five phthalates and trichloroethylene decreased by more than 90% in roughly a decade. From 2004 to 2020, EU production of chemicals known to be hazardous to health fell by 12%; at the same time, production of chemicals that are carcinogenic, mutagenic and reprotoxic fell by 16%.

The chemical life cycle

The value chain of the chemical industry and the life cycle of any single chemical are typically complex. They span global to local levels, with chemical products traded across multiple countries along the chain and incorporated into complex manufactured products.

First, feedstocks — such as oil, natural gas and minerals — are processed into high-volume and low-value basic chemicals, including polymers, petrochemicals and basic inorganics. In the EU, basic chemicals account for 58% of production by value, with petrochemicals making up 26% of this. Higher value specialty chemicals include agricultural chemicals such as pesticides, fertilisers and biocides, as well as cosmetics, fragrances and flavourings. They also include plasticisers and inputs to consumer products, such as electronics, cars, textiles, cosmetics and toys. Some chemical mixtures are directly used by consumers, such as cleaning products, paints and glues. The production chains of the chemical industry are complex and interlinked, as the different types of chemicals are combined to form new ones.

This vast range of products is then used by consumers, business to business and professionals. The duration and nature of the ‘use’ phase vary greatly. While products such as washing powders and pharmaceuticals are consumed in one use, furniture, cars and building materials remain in use for decades. Certain chemical products, such as cleaning products, cosmetics and pharmaceuticals, are released down the drain and enter urban wastewater treatment plants. Even advanced treatment plants cannot remove certain chemicals, which often concentrate in sewage sludges or are released into surface waters. Other chemicals — including pesticides, biocides and fertilisers, as well as chemicals used in fracking and to disperse oil spills — are directly released into the environment upon use. ‘Unintentional’ release also occurs through the wear and tear of chemical-based products, such as tyres, paints and synthetic microfibres and textiles.

Following use, waste is sorted into recyclable material or items for reuse, or is channelled to end-of-life handling. For a very limited volume of chemicals, recycling closes the life cycle loop by returning some chemicals back to circulation, for example, through the recycling of plastic polymers. Chemical waste and materials may also find their way to the environment via consumer or professional spills and illegal waste dumping.

Chemical pollution as a barrier to circularity

Hazardous chemicals in material flows typically present a barrier to the circular economy, preventing products from being reused and/or recycled. Recycling products that contain hazardous chemicals is likely to contaminate flows of recycled materials, as it is more difficult to control the quality of recycled feedstock than virgin materials because of the cost of detecting and removing chemicals. In particular, recycling long-lasting products can contaminate material flows with hazardous chemicals that are today banned in Europe, known as ‘legacy chemicals’.

Examples include the transfer of bisphenols from thermal paper into a wider range of recycled paper products, including food packaging, and the transfer of lead and brominated flame retardants from waste electrical and electronic equipment into consumer goods such as kitchen utensils and toys. Research suggests that products made from recycled materials, such as recycled paper and construction materials, contain both higher concentrations of chemicals and a more diverse range of chemical labels.

To avoid human exposure not anticipated under the risk assessment completed for a first use cycle, multiple use cycles should be considered under chemical risk assessments. Making chemicals safe and sustainable by design and eliminating non-essential uses of hazardous chemicals could clean up material flows as Europe moves further towards circularity.

Chemicals Strategy for Sustainability

In 2020, the European Commission published the Chemicals Strategy for Sustainability, setting an ambitious and progressive roadmap for managing chemical risks in Europe. In line with the precautionary principle, the strategy aims to ban the most harmful chemicals in consumer products — allowing their use only when essential. Key elements in the strategy specifically aim to tackle the risks posed by high volumes and the diversity of chemicals in an efficient and timely manner. These elements will overcome the weaknesses of past time-consuming processes designed to assess and manage the risks related to single substances.

First, a broader application of a generic approach to risk management would make it simpler and faster to protect people from hazardous chemicals. This involves banning the use of specific chemicals due to their hazardous properties and the types of exposure they are associated with, such as widespread use or exposure to children. Proposed changes would ensure that consumer products — including food contact materials, toys, childcare articles, cosmetics, detergents, furniture and textiles — do not contain chemicals that cause cancers or gene mutations, affect the reproductive, endocrine, immune, neurological or respiratory systems, are toxic to a specific organ, or are persistent and bioaccumulative. Implementing a generic approach will require revising various pieces of existing EU legislation, including REACH, as well as the Food Contact Material Regulation, the Cosmetic Products Regulation and the Toy Safety Directive.

In the meantime, the European Commission has also committed to grouping chemicals for risk management (rather than regulating them one-by-one) to expedite protection. In 2022, the Commission published their Restrictions Roadmap under the Chemicals Strategy for Sustainability as a step towards this goal. To ensure the protection of both humans and the environment from chemical mixtures, a mixture assessment factor in chemical risk assessment is foreseen. This should be accompanied by provisions to account for mixture effects in other relevant policies, such as legislation on water, food additives, toys, food contact material, detergents and cosmetics.

Arguably, the most ambitious and important goals of the Chemical Strategy for Sustainability are transitioning to chemicals that are safe and sustainable by design and ensuring that the most harmful chemicals are only used when necessary by implementing the essential use concept. These upstream measures have the potential to drive a transition in how chemicals are produced and used across society and to support the zero pollution ambition of no harm to the environment and health by 2050.

The chemicals strategy for sustainability aims to establish Europe as a frontrunner in the transition to producing and consuming chemicals that are safe and sustainable by design. The objective is to harness the innovative capacity of the chemical industry to provide technologies, materials and products that are non-toxic, low-carbon and fit for circularity. Preventing chemical pollution upstream would reduce the need for downstream control on emissions along the chemical life cycle and reduce chemical pressures on ecosystems and health. It would, over time, eliminate hazardous chemicals from products and clean up material flows. Ensuring that material flows are non-toxic is key to scaling up the circular economy and ensuring safety for workers and consumers, in a context where hazardous chemicals in waste present a major barrier to mechanical recycling. Ensuring that chemicals are low carbon throughout the whole life cycle would profoundly challenge the current dependency between the chemical industry and the fossil fuel industry and demand significant innovation to identify alternative feedstocks and processes.

Industry will be a key player in the production and use of safe and sustainable chemicals. Implementing approaches that are safe and sustainable by design entails assessing product performance against requirements for safety and sustainability at the design phase of product development. During the design phase, product engineers have more flexibility to innovate to meet performance objectives for safety and sustainability — compared to evaluating and attempting to implement change once products are already finalised. The transition will take time, as there is a need to develop and harmonise methodologies, to provide training across industrial sectors, to finance implementation and not least to enable innovation for developing safe and sustainable chemicals and materials. The European Commission has recently established a Strategic Research and Innovation Plan for safe and sustainable Chemicals and Materials. The plan guides research and innovation funders and identifies priority areas in their fields to accelerate the transition to chemicals and materials that are safe and sustainable.

In terms of progress, a recent report from the Joint Research Centre presents a methodological framework for defining safe and sustainable by design criteria for chemicals and materials, and potential mechanisms for implementation. Stakeholders from the chemical industry (CEFIC, 2022b) and the NGO community (ChemSec, 2021b) have also proposed guidance and criteria. In tandem, the European Commission is running a multi-stakeholder process to define safe and sustainable by design criteria for chemicals and materials. The recent Commission recommendation establishing a European framework for ‘safe and sustainable by design’ chemicals and materials encourages innovation to replace hazardous substances in products and processes, develop new chemicals and materials, and optimise or redesign production processes and the use of substances currently on the market to improve safety and sustainability (EC, 2022b). To ensure a focus on use and a broad exploration of alternatives, one proposal is to marry the essential use concept with a functional substitution concept. This starts with the functional use of a chemical of concern, evaluates if the function is necessary for the application, and then examines whether a safer and more sustainable chemical, product, process or service exists that could fulfil that function. The aim is to encourage innovators to look beyond chemical substitution to other aspects of product design or service delivery. This raises the question of what level of performance should be fit for purposes, supposing that sometimes, lower levels of product performance may need to be accepted to deliver products that are safe and sustainable (Roy et al., 2022). Finally, the consideration of essential use is not a purely technical discussion, but should also consider societal perceptions of what uses and functions are essential.