Washington Give and Take

Chemical makers have notched some key victories in Washington over the past two years, most notably on the plant security and natural gas fronts. However, activity in Washington last week, particularly concerning proposed energy legislation, demonstrates that a more challenging environment lies ahead.
Politicians are already gearing up for the 2008 presidential election in the U.S., which is likely to slow some legislative activity. Also, if a Democratic president is elected in 2008, industry could be put on the defensive on critical issues including natural gas and energy, security, and climate change legislations, the latter of which could look at hard carbon dioxide and greenhouse gas targets. Meanwhile, the European Union’s Reach legislation presents global challenges, particularly if it is exported to other countries.
Activity in the Senate over the energy bill last week shows how tough the environment has become for key industry issues. The Senate bill failed to do anything to increase domestic energy supply as efforts to allow natural gas exploration off the U.S. East Coast, a key goal for chemical and other manufacturers, were rejected. In the House, a bill sponsored by representatives John E. Peterson (R., PA) and Neil Abercrombie (D., HI) that would increase access to outer continental shelf resources was introduced last week. The bill’s prospects in the House, however, are doubtful, and its chances in the Senate are even slimmer. The Senate also rejected amendments that would have authorized incentives for coal-to-liquids fuel production. The bill passed by the Senate would require biofuel production to ramp up to 36 billion gals/year by 2022, a seven-fold increase over production last year. The package would also raise the corporate average fuel economy standards to 35 miles/gallon for passenger cars and light trucks produced by 2020. Meanwhile, EPA proposed a rule that would lower the current standard for ozone, a move that ACC says will further drive up already sky-high energy prices and reduce or restrict affordable energy choices for consumers and industrial users.
ACC president Jack Gerard acknowledged the challenges ahead at ACC’s annual membership meeting earlier this month. “The test for our organization will be to stay disciplined and focused and advocate on issues important to us,” he says.

ICI Rejects Takeover Bid From Akzo

The board of ICI has rejected a £7.2-billion ($14.2 billion) takeover bid by Akzo Nobel. Akzo approached ICI to discuss a possible cash offer for the company on June 4. ICI's board unanimously rejected the proposal "on the grounds that it significantly undervalues ICI," ICI says. "The Board is very confident in the group’s strategy and strong growth prospects," ICI says. Akzo says it "will continue to evaluate all strategic opportunities, including ICI, based on a disciplined and value-driven approach to earnings and returns over cost of capital." Akzo says, however, that there is "no certainty that any further proposal will be made to the board of ICI or that any offer or transaction will result."

ACC Members Upbeat Amid Favorable Industry Conditions

Favorable industry conditions and improved fortunes for ACC fostered an upbeat mood at the organization’s annual meeting, held late last week at the Greenbrier in White Sulphur Springs, WV. ACC has added more than 25 new members over the past two years, including Huntsman and Chevron Phillips Chemical, and has scored legislative victories on critical issues such as natural gas and chemical plant security. Companies are "more willing to invest precious CEO capital on issues that matter to industry," says Dow Chemical chairman and CEO Andrew Liveris, who also serves as ACC chairman. "Previously, the level of CEO turnout would not have been as robust." Senior industry executives say ACC has regained strength after turmoil and the defection of some key companies earlier this decade. "There is improved transparency, and better leadership and prioritization of issues," says Celanese chairman and CEO David Weidman, who also serves as ACC vice chairman. "There is greater confidence in the organization, which has increased involvement." U.S. Energy policy remains a critical priority, officials say. "You will see some changes in our natural gas advocacy in the coming months,” says ACC president and CEO Jack Gerard. "I’d expect some new fresh faces as co-sponsors [on upcoming legislation] who will surprise some people." Chemical makers need to stay focused on energy and climate change issues, Liveris says. "Energy is the issue of our time,” he says. "It’s not just a chemical industry issue. The challenge is finding ways to get higher value and lower emissions from energy resources, and our industry will be a key player."

Reach Comes into Force but Program is in Disarray

By Alex Scott (ChemicalWeek)
The European Union’s Registration, Evaluation, and Authorisation of Chemicals (Reach) program came into force on June 1, but the legislation remains incomplete with large chunks of crucial guidance on how the chemical industry can implement Reach still missing, industry sources say. Iuclid 5, the European Commission’s long-promised online database that will enable direct uploading of Reach data via the internet, has also not yet been launched. “Frankly, it’s impossible to have everything in place because the commission doesn’t have everything in place,” says David Buckland, head of corporate regulatory affairs at Akzo Nobel. “As well as the absence of Iuclid 5, there are very few of the technical guidance documents available that are going to tell us how to apply Reach,” Buckland says. The commission has indicated that some of the less urgent guidance documents will not be available until November. “They are running behind by several months, that is absolutely clear,” he says. “We feel we have [done] everything we can without the full package from the commission.” Akzo says it has been preparing for Reach for five years and that much of its efforts so far have been geared toward identifying the group’s product portfolio for the purposes of Reach. Akzo estimates that its direct costs from Reach, including registration fees for its products, will total about €100 million ($135 million). BASF, meanwhile, has unveiled a new service, dubbed Success, available to chemical importers and manufacturers, that includes support for all aspects of Reach pre-registration, registration, and approval.” We have bundled our expertise in the field of product safety into customized services,” says Ernst Schwanhold, head of BASF’s center for environment, safety and energy.