State of play, main conclusions, outlook

The study on Cumulative cost assessment of the most relevant EU legislation for the EU glass and ceramics industries aims at identifying the cumulative regulatory costs stemming from the European legislation most relevant to the EU ceramics and glass industries.

Some 20 pieces of EU legislation were prioritised from over 60 acts and grouped in 8 areas based on their overarching and specific policy objectives (Internal Market; Energy; Climate; Environment; Waste, Consumer and Health legislation; Workers' safety and health). In addition, the role played by trade, competition and transport legislation was analysed without cost quantification.

Findings

The study found that among the European legislation, the 5 main drivers of regulatory costs are:

• Rules affecting electricity prices

• Environmental legislation regulating industrial emissions and processes

• Climate legislation

• Chemicals legislation including REACH and CLP (Classification, Labelling and Packaging)¹

• Workers' safety

The study found that the cumulative cost effects of European regulations are relatively small for some sub-sectors, compared to the benefits linked to the harmonisation of the internal market. This has been acknowledged by industry. Harmonisation of EU legislation has an overarching benefit for EU industry.

The data generated, which is particularly useful as it allows assessment at subsector level, will be used in the upcoming evaluations of the legislations screened by this exercise.

Estimated savings and benefits

Regulatory costs represent on average between 2.2% and 5.4% of production costs in these industries. However, they may rise up to between 10%-42,5% of earnings before interest, taxes, depreciation and amortisation (EBITDA) and 16,2%-78,3% of earnings before interest and taxes (EBIT). Apart in averages for 2006-2015, results are also available for the typical year i.e. the most representative year for the current functioning of most pieces of legislation, indicative of how the costs related might evolve in the future.

Since the study of 2017, the impact of regulations affecting electricity prices has become more and more important for the ceramics and glass industries under the effect of indirect carbon costs.

The implementation of the phase IV of ETS and the additional reduction of emissions by 55% by 2030 would also increase costs for these industries, particularly if renewable hydrogen of electricity are not sufficient available and while ceramics and glass are among the most impacted sectors by the current gas price crisis.

The REACH regulation has also an increased impact on the refractory ceramic sub-sector with the CoalTarPitch issue, subject to authorisation for intermediate use of substances.

The recent evaluation of the framework legislation on Food Contact Materials (Regulation (EC) 1935/2004) has shown that the rules do not sufficiently take into account the specificity of SMEs. Whereas larger industry players have the necessary resources to ensure compliance, SMEs do not have the capacity nor resources to implement the detailed technical rules relating to ensuring and demonstrating the safety of their materials. The ongoing revision will seek to develop rules proportionate to the size and means of SMEs, while ensuring consumer safety. Artisanal and traditional manufacturing of ceramics and glass products are included in this.

The proposal for a revised Construction Products Regulation (CPR) adopted on 30 March 2022, will create a harmonised framework to assess and communicate the environmental and climate performance of construction products including ceramics and glass used in buildings. Harmonised standards are essential for the smooth functioning of the EU single market in this area.

¹ Regulation (EC) No 1272/2008 on the classification, labelling and packaging of substances and mixtures (CLP Regulation)