The triggering of the CCM under the UK ETS and ongoing consultations under UK Reach signal speedbumps in the transition process.

By Paul A. Davies, Michael D. Green, and James Bee

On 30 November 2021, the UK government’s Department of Business, Energy and Industrial Strategy (BEIS) updated its guidance on the UK Emissions Trading Scheme (UK ETS), the UK’s cap-and-trade-based system to reduce the country’s greenhouse gas (GHG) emissions. This update signalled that the cost containment mechanism (CCM) was triggered for December 2021, which is further indicative of the widespread impacts of increasing energy prices.

Under the UK ETS, the UK government sets a cap on the maximum level of emissions across certain sectors of the UK economy and creates allowances for each unit of emission up to the level of the cap. Certain companies are then allocated free allowances, and remaining allowances are auctioned off and can be subsequently traded by market participants. Emitters are required to surrender the amount of allowances equal to their total in scope emissions, meaning that heavy emitters are required to purchase allowances.

In the last few months, the well-documented issues relating to gas supply in Europe have led to certain emitters in the UK switching from gas generation to coal generation. This, among other factors, has increased GHG emissions and boosted demand for allowances under the UK ETS, which, in turn, has resulted in higher prices in the market-based system.

The framework represents China’s first comprehensive regulation of environmental risks from chemical substances.

By Paul A. Davies and R. Andrew Westgate

The Chinese Ministry of Ecology and Environment’s (MEE’s) draft Regulation on Environmental Risk Assessment and Control of Chemical Substances (Regulation) is likely to have broad implications for companies that manufacture, process, import, or export more than 100kg of any chemical substance in China. The framework represents China’s first comprehensive regulation of environmental risks from chemical substances.

Companies should be aware of MEE’s action plan for enforcing the Regulation, as well as those provisions that will impact their business activities.

China’s MEE is seeking comment on new chemical regulation framework, which includes a comprehensive environmental risk assessment.

Paul A. Davies, Ethan Prall, and R. Andrew Westgate

In January 2019, China’s Ministry of Ecology and Environment (MEE) issued a draft Regulation on Environmental Risk Assessment, and Control of Chemical Substances (the Chemical Substances Regulation or CSR) in conjunction with 20 other ministries and agencies, including the Supreme People’s Court, the National Development and Reform Commission, and the Ministry of Commerce. MEE is seeking comment on the draft regulation through February 20, 2019, which is available in Chinese only.

This draft regulation is significant because it represents China’s first comprehensive regulation of environmental risks from chemical substances, similar to the Toxic Substances Control Act in the United States or the Registration, Evaluation, Authorization, and Restriction of Chemicals Regulation (REACH) in the European Union. In the past, China’s chemical regulations, such as Order 7 issued by the former Ministry of Environmental Protection (also known as China REACH), have been more narrowly focused on requiring the registration of “new chemical substances” and on the import and export of toxic chemicals. As discussed below, the draft CSR incorporates not only most of the existing chemical registration requirements under Order 7, but would also introduce additional requirements creating a broader new chemical regulation framework.

Waste producers must comply with new criteria and procedures for objects and products to benefit from end of waste status.

By Paul Davies

The French government has developed many measures to foster circular economy approaches. Most recently, a Ministerial Order of 11 December 2018 (Order) sets out criteria and procedures to end the waste status of certain objects and chemical products, to encourage their preparation for re-use.

The French Code of the Environment[i] defines “preparing for re-use” as “checking, cleaning or repairing recovery operations, by which products or components of products that have become waste are prepared so that they can be re-used without any other pre-processing.”

The Order requires that the objects and products meet specific criteria in order to benefit from the end of waste status. The criteria relate to:

  • The nature of the object or product
  • Techniques and treatment processes
  • Qualities and properties of objects and products resulting from such treatments
  • Contractual conditions subject to which such objects and products will be sold
  • Operator’s obligations in relation thereto (traceability)

The new department will assume broad oversight responsibilities as part of a broader government restructuring.

By Paul A. Davies and R. Andrew Westgate

China’s Ministry of Emergency Management (MEM) has announced the establishment of a new department responsible for the safety, supervision, and management of hazardous chemicals. The MEM replaced the former State Administration of Work Safety (SAWS), and took over responsibility for product safety relating to fireworks, pharmaceuticals, and the chemical industry.

The creation of the new department reflects increasing focus on chemical safety after the 2015 explosion at the Port of Tianjin, which killed 173 people and injured 797. More recently, an explosion at a chemical factory in the city of Yibin, Sichuan province in July killed 19 people. These incidents highlight that hazardous material storage remains a challenge in China.

Zhang Xingkai, the president of the China Academy of Safety Science and Technology noted that in the four years between 2011 and 2015, approximately US$89.4 billion was lost due to workplace accidents. The MEM was established in March 2018 in order to respond more effectively to crises like the Tianjin and Yibin explosions. With overall responsibility for safe chemical production and work environments, the MEM will provide a unified system focused on disaster prevention.