Do Carrots or Sticks Expand Renewable Chemical Use? Part 1

When it comes to looking after the environment, the chemicals industry has a terrible reputation. News of chemical spills, chemical plant explosions, carcinogenic ingredients, fossil fuel based raw materials, and toxins found in everyday products overrides the many benefits the industry provides.

And there are plenty of positives; the chemical industry gives employment to 120 million people, adds $5.7 trillion to the global economy, and supplies all the benefits of modern living in the form of paints, plastics, dyes, cleaners, medicines, food preservatives, and so much more. Life without the chemical industry would be like living 200 years ago. Yet, its image is forever tarnished as one of the world’s biggest polluters.

To change this perception requires the chemical industry to take full membership of the circular economy. Providing all the goods that modern society needs, but in a sustainable and safe format … at no added cost.

But how can this environmentally friendly utopia be achieved? Does it take the beating stick of government legislation and taxes on non-renewable chemical products? Or is it sufficient to let consumer demand for eco-products drive the industry to greener pastures?

The Sticks

Banning Chemical Products

As with most government legislation, passing a law to ban specific chemical products takes a very long time. In depth studies on the potential damage caused, the opinions of environmental NGOs, reactions from chemical industry lobbyists, the attitude of the wider public, and political influence from whoever is the Minister of the Environment at that particular time, all combine to create a process that simply takes too long.

As an example, the case for banning Nonylphenol Ethoxylates (NPE) and Nonylphenols (NP) has been debated for decades. NPEs and NPs were discovered in the 1940s and provide a chemical feedstock for numerous goods, including lubricating oil additives, laundry and dish detergents, solubilizers, emulsifiers, and in the manufacture of antioxidants.

However, they are described by Julia Langer, the World Wildlife Foundation’s Director of Wildlife Toxicology as having, “… very subtle, long term effects. They don't kill you dead on the spot, [but] … they can act in very small concentrations.”

Adding that, “NPEs can disrupt the body's hormonal system by mimicking the female hormone estrogen, and high estrogen levels have been linked to birth defects, learning disabilities, even some forms of cancer. These chemicals are quite toxic, they aren’t biodegradable, and they can cause all sorts of problems. We think the industry should take precautionary action and stop using these compounds.”

They have already been banned in the EU and Canada, but are still legal in America, despite the US EPA stating that, “NP and NPEs have been found in environmental samples taken from freshwater, saltwater, groundwater, sediment, soil and aquatic biota. NP is … moderately bioaccumulative, and extremely toxic to aquatic organisms. NP has also been detected in human breast milk, blood, and urine and is associated with reproductive and developmental effects in rodents.”

The reason that they still permitted is bureaucratic. The EPA themselves have, “proposed a Significant New Use Rule [SNUR] to require Agency review before a manufacturer starts or resumes use of 15 nonylphenols (NPs) and nonylphenol ethoxylates (NPEs). This SNUR, when finalized, will provide EPA the opportunity to review and evaluate any intended new or resumed uses of these chemicals and, if necessary, take action to limit those uses.”

The SNUR was started in 2014. Five years later, and the finalisation of the ban is still on hold.

OECD data shows that a typical pesticide takes 2 years and 22 million Euros to be government approved.

This delay for any chemical, even those that will eventually be deemed environmentally safe, is unsustainable for modern business. Whether NPs or NPEs are banned or not, the interim uncertainty prevents the development of safer, greener alternatives, and restricts the expansion of the renewable chemical industry.

Taxing Chemical Products

To encourage use of non-fossil fuel chemicals requires a simple tax on those that pollute.

This thinking has led to the formation of the Climate Damages Tax Coalition. A lobbying body which recently published a report which stated that a ‘climate damages tax’ could annually generate up to $300bn (£237bn). Establishing a stated goal to create a tax system which companies must pay into for every tonne of CO2 they emit. Rates may even increase over time until fossil fuel use is phased out entirely by 2050.

As Julie-Anne Richards, an advisor to the Coalition explains, “The Climate Damages Tax is a practical way to address the injustice at the heart of climate change - that the fossil fuel industry makes hundreds of billions in profits whilst the true costs of their product are paid by the rest of society, particularly the poorest and most vulnerable.”

Naturally, chemical companies claim that they already pay sufficient tax, with an across the board examination of chemical companies’ tax payments by PricewaterhouseCoopershowing that over a three year period the effective tax rate of the 46 leading global chemicals companies analysed was 29.5%.

This rate would be much higher without the common tax policy of offering tax credits for the sums that chemical companies invest in R&D.  

Despite the enormous environmental benefits of much of this research, environmentalists believe that the chemical industry’s overall tax bill is too small in comparison to its environmental impact. NGO’s, such as the Climate Damages Tax Coalition, see R&D tax credits as loopholes, despite the fact that the wide range of new eco-friendly products that the chemical industry is creating.

To learn more about chemical industry R&D and the latest chemical products, follow this link to the AG CHEMI GROUP blog page.

The alternative to taxing polluting chemical products would be to remove subsidies paid to the fossil fuel industry which supplies non-renewable raw materials.

These subsidies add up to a considerable sum, as a recent IMF report states, “the world spent $4.7 trillion - or 6.3 percent of global GDP - in 2015 to subsidize fossil fuel use, a figure it estimated rose to $5.2 trillion in 2017. China, which is heavily reliant on coal and has major air-pollution problems, was the largest subsidizer by far, at $1.4 trillion in 2015. But the U.S. ranked second in the world.”

As such, when it comes to advancing the development and use of renewable chemicals, maybe it pays to first take a look at the non-renewable chemical industry’s business model.

Follow this link to read Do Carrots or Sticks Expand Renewable Chemical Use? Part 2

Photo credit: Ecofriend, Caldic, Biomassmagazine, UniverseToday, Cleanenergywire, Guardian, Globalcosmeticsnews, & Solarimpulse