Transcript PPC Management in SMEs

Future Investment:
Learning from Safety and
Environmental Regulations
Janet Murfin
Regulatory Hot Topics, HCF, 18th July 2006
Background:
• Is this applicable to me?
– New investors in chemical industry
– Existing chemical businesses (current upturn)
• Does the speaker know what they’re talking about?
– Just finished environmental aspects of COMAH Top Tier safety
report; help SMEs keep out of COMAH
– Successful low-impact PPC permit last year; one permit
surrender accepted, two more in pipeline; three more PPC
applications due 31st August, various discussions/ projects
– Set up and run own business from scratch, used to discussing
business implications of these regulations
Regulatory Hot Topics, HCF, 18th July 2006
Being in any business…
• Is ultimately about the WILL to do it, and the MONEY to
make it happen
• Chemical industry has very long investment cycles: both
these qualities are absolutely essential for success
• Safety and Environmental Regulations will eat away at
your WILL to stay in business (“hassle factor”) as much
as your pocket
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Permits/ annual charges
Costs of waste and effluent disposal
Training and infrastructure compliance costs
Safety and environmental monitoring (sampling and lab costs!)
All the PAPERWORK and MEETINGS – time, effort, hassle
Regulatory Hot Topics, HCF, 18th July 2006
Traditional attitudes to safety and
environmental regulatory costs
• “world class” company metrics have lots of areas process
companies can improve on - generally ignore safety and
environmental costs eg waste disposal, PPC & COMAH permit costs
• But fastest growing costs are in this area - costings must show these
• Have worked with 2 chemical companies who didn’t realise they
needed PPC permits for new processes – Company A stopped
making the product, avoided prosecution; Company L reverted to
being an R & D company and stopped manufacture (800kgs a year
high value ester – full PPC permit, £12k to apply, £6k annual
charges – annual charges alone are £7.50 a kilo)
• Problem for existing processes too –Company R’s site in France,
had sudden product growth which overwhelmed effluent plant
capacity and led to problems in river – French regulators stepped in
– now pay for offsite effluent disposal (20 tankers per week)
Regulatory Hot Topics, HCF, 18th July 2006
What are the costs?
•
Licences to operate (can be closed/ prosecuted/ fined/ imprisoned
for failure to have these):
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–
–
–
•
Need these for p/
COMAH
permission on
IPPC
new build sites
Waste Management Licence
Planning Permission – for buildings, and Hazardous Substances
Ongoing annual licence and compliance costs
– All of the above except p/permission
•
Other environmental costs
–
–
–
–
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Solid waste recycling or disposal
Liquid waste recycling or treatment and disposal
Effluent treatment and disposal
Air emissions treatment (scrubber liquor, extraction wastes)
Unfortunately, these charges are a significant barrier to small
businesses – it’s only worthwhile for turnover of a certain size
Regulatory Hot Topics, HCF, 18th July 2006
Cost comparisons – licences
PPC
Low Impact
PPC
Full (lowest)
COMAH
Lower Tier*
COMAH
Top Tier*
Application
2,765
13,450
3,000
18,000
Annual fees
429
6,500
3,000
9,000
Estimate 1
year fees
3,194
19,950
6,000
27,000
Time costs
to apply
12,500
25,000
17,000
135,000
Costs in
Year 1
15,694
44,950
23,000
162,000
*Figures from HSE report, 2003, for new entrants. Improvement costs not included.
Regulatory Hot Topics, HCF, 18th July 2006
COMAH key business points (1):
• In business terms - if you can avoid COMAH, do so
• Inventory management is the key to avoiding COMAH/
keeping out of Top Tier
– Keep stocks of COMAH materials below overall and individual
thresholds (you really need computerised inventory for this)
– Just-In-Time techniques – discharge from a tanker directly into a
reaction vessel is often not included (but depends on the
material being discharged, and risks must be controlled very
well during discharge)
– Using 3rd party warehousing for raw materials and/or finished
products (but if the warehouse only work for you, you may still
have liability - example company C)
• As well as the HSE, COMAH is also a hassle because of
Hazardous Substances Planning Consent – councils
can be a problem (example - company J)
Regulatory Hot Topics, HCF, 18th July 2006
COMAH key business points (2):
•
Be aware of changing classifications which might put you into
COMAH unexpectedly:
– HSE have reclassified some substances as carcinogens (example Diethyl Sulphate)
– Environmental classifications have had COMAH limits lowered
– More substances are being classified as environmentally harmful
•
Companies are re-testing substances to get more accurate
environmental results
– There’s more lab standardisation, better QC/QA procedures
– Some substances are less environmentally harmful than we thought
– REACH will be a driver for more accurate testing, and may reduce
number of COMAH environmental substances
•
You can now be a Top Tier COMAH site with very little human risk,
but large environmental risk (EA become lead regulators) – should
there be a new class of COMAH site to reflect this?
Regulatory Hot Topics, HCF, 18th July 2006
IPPC key business points (1):
• If you manufacture ie have a reaction, you will be under
PPC
• Biodiesel is definitely in PPC
• If you don’t have a reaction, you can only be under PPC
if you put hazardous substances (basically the old Red
List) to groundwater, surface water or sewer
• If you can get low impact, do it
– Similar application indirect costs (ie consultants/ management
time)
– Big savings on application, annual and surrender fees
– But you do need to justify why still LI every year
– And don’t try to pull the wool over the EA’s eyes – it won’t work
• Watch out for your boiler company having to make a
separate application
Regulatory Hot Topics, HCF, 18th July 2006
IPPC key business points (2):
• Once you’re under PPC, investment and growth brings
its own problems
– If you’re Low Impact, you might get to Full size
– If you’re already Full PPC, may alter EP-OPRA
• Full PPC problems
– Change in chemistry/ very large size change will need “major
change” permit application – time, hassle, cost, on top of
planning the changes
– Same chemistry, but increase in production (not a “major
change” can still increase your EP-OPRA score – eg tipping you
up a notch on your product volumes; or increasing your wastes
• Make sure your product costing includes these “hidden”
costs, and you can still charge enough to make a profit
Regulatory Hot Topics, HCF, 18th July 2006
IPPC key low impact points:
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•
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•
•
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Low Impact limits have just changed - http://www.environmentagency.gov.uk/commondata/acrobat/ippc_rgs7_v3_0606_509888.p
df
Waste water has increased from 20 cu m/ day to 50 cu m/ day
If you extract dust and fumes, describe them as LEVs for COSHH
purposes – they’re not abatement equipment, because they don’t
scrub
Defining the installation can be important if you have a site where
you also do non-PPC operations – keep PPC separate, otherwise
whole site can be brought in
COMAH substances must be not more than 10% of lower tier
threshold (up from 5%)
Hazardous waste threshold can be quite tight (10kg/day over 1 yr, ie
3.65 tonnes) – see next slide!
Regulatory Hot Topics, HCF, 18th July 2006
Wastes key business points:
•
Correct waste classification is vital these days
– Don’t assume your waste contractors are correct - read the small print
on the EWC http://publications.environmentagency.gov.uk/pdf/GEHO0603BIRB-e-e.pdf
– As well as immediate costs, getting it wrong can take you out of Low
Impact (example Company C)
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•
•
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If you produce hazardous waste, you need to register with the EA as
a producer, and RENEW your permit every year
http://www.environmentagency.gov.uk/subjects/waste/1019330/1217981/1218079/
Review your consent to discharge to foul sewer regularly
Re-use, recycling and composting are much cheaper than disposal
Check whether you need to apply for a free waste exemption eg for
using waste oils for biodiesel; or washing out containers for re-use
http://www.environmentagency.gov.uk/subjects/waste/1019330/1087290/1329426/?version
=1&lang=_e
Regulatory Hot Topics, HCF, 18th July 2006
Infrastructure key business points:
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•
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Infrastructure is vital for environmental protection – bunds,
hardstanding, drainage systems, effluent systems etc
Can cost significant amounts of money – “right first time” is best
Beware of “off-the-shelf” industrial units – pollution prevention
standards are higher for chemical businesses. Avoid:
– Emissions to groundwater eg soakaways
– Emissions to surface water eg car parks draining into rivers (even via
interceptors) (example - Company L)
– Surface water drains in areas where chemicals are handled
– Making your bunds too small (consider business growth)
– Storage of chemicals on or near open ground
•
•
Guidance at http://www.environmentagency.gov.uk/business/444251/444731/ppg/?lang=_e
Watch out for the storage and segregation rules – they keep
changing, you may need to alter your current arrangements
Regulatory Hot Topics, HCF, 18th July 2006
Relationships with Regulators
• Build relationships as you would with a key supplier (or your bank
manager)
• Regulators are human beings too! Coffee and conversation helps
• Don’t fall out – it’s not their fault the regulations are complicated.
• The person on the ground has more power than you think –their
good opinion of you may be the difference between Low Impact or
full PPC
• Use their experience to help your project – it’s not all “business
prevention”, a good regulator will help you find your way through the
red tape
• Once you’re inside the COMAH/PPC envelopes, don’t make
investments unless they agree it’s appropriate (this advice is direct
from the EA – people are wasting £10s of thousands)
• If you change what you’re doing, let them know in advance – it’s
polite, and may be able to negotiate no “major change” charges
Regulatory Hot Topics, HCF, 18th July 2006
Further information on whether
these regulations apply to you
• For COMAH, HSE website at
http://www.hse.gov.uk/comah/
• For PPC, EA website at
http://www.environmentagency.gov.uk/commondata/acrobat/ippcrg
sno4v2_412508.pdf , and also ring up
08708 506 506 for copy of “Chemicals CD”
Regulatory Hot Topics, HCF, 18th July 2006
Don’t finalise that investment
unless you’re sure that:
• You know what licences and permits are needed
• You understand the upfront costs of these, and
the ongoing fees and compliance costs
• You have an idea of the limits of your capacity;
when you go into a higher permit, of if permit
costs increase; when your infrastructure can’t
cope etc
• You understand your wastes and effluent costs,
and what would happen if these costs increased
Regulatory Hot Topics, HCF, 18th July 2006
Do:
• Let regulators know your plans early on
(and request confidentiality if necessary)
• Keep up to date with latest requirements
via EA and HSE websites
• Talk to people in industry for advice
• If using consultants, get them in sooner
rather than later (particularly on new build)
Regulatory Hot Topics, HCF, 18th July 2006
Biodiesel summary page
• Biodiesel is definitely in PPC: http://www.environmentagency.gov.uk/yourenv/857406/1173616/?version=1&lan
g=_e
• You MUST have a buyer for your glycerine by-product,
otherwise the permit might not be granted (and you
certainly won’t get Low Impact for PPC)
• If you’re buying a going concern, or a site with a “live”
PPC permit, arrange for this to be transferred to you –
costs £4,400, but saves at least a year plus all other
costs for making a new application and getting it passed
by the EA
• Make sure you hire people with recent experience of the
chemical industry – regulations are changing rapidly
Regulatory Hot Topics, HCF, 18th July 2006
And finally – Murfin’s Law
(business version)
It always costs more than you think
and it always takes longer than you think
Regulatory Hot Topics, HCF, 18th July 2006
Thank you very much
• Any questions?
• Presentation available at
www.ttenvironmental.co.uk/library.htm
• Contact tel: 01274 870306
• Email: [email protected]
Regulatory Hot Topics, HCF, 18th July 2006