Enhesa - Global EHS & Product Compliance Assurance

Ask Enhesa Vol. 6

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Featuring contributions from Gabriela Troncoso, Katsiaryna Anoshka, Elise Saade, Kengo Okuda, Paige Samson, Caitlin O’Sullivan, Ruth White and Wassila Nabourema and Tjeerd Hendel-Blackford

You asked and we answered!

Enhesa’s team of multilingual regulatory analysts are committed to providing quality insight and analysis around the latest EHS news and developments via our Enhesa Flashwebinar series, and blog posts. In response, our team often receives a variety of questions regarding the broad realm of the EHS topics we cover. To meet this demand, we are pleased to announce “Ask Enhesa”, a new reoccurring blog series where our senior thought leaders will take the lead in answering all of your most relevant and topical EHS questions.

Let’s get started…

My organization is only office-based so we have less hazards than industrial operations – does Enhesa also cover regulations impacting my sector?

THB: Yes, absolutely! Enhesa has many clients that only have office-based operations and we can tailor the information provided in each case. We naturally understand that every company is different, which means that the regulations and requirements applicable to a given type of operation, and individual location, will very often vary. Enhesa offers various levels of tailoring to ensure that you receive the regulatory coverage that is applicable to your company across all its locations.

Enhesa’s Compliance Intelligence and Regulatory Forecaster services follow a standardized thematic structure, regardless of the jurisdiction in question. This means that we can easily apply applicability filtering or screening. A first level of applicability screening takes place at the contractual level through determination of the types of operation undertaken in each of your locations of concern. Enhesa offers three standard EHS regulatory thematic structure “packages” based on the following types of operations:

  • Industrial/Heavy Manufacturing
  • Warehouses/Light Manufacturing/R&D/Datacenters
  • Administrative Offices

Through responding to Enhesa’s simple Applicability Screening Questions, which form part of our Compliance Intelligence service, clients can further filter out irrelevant regulations and associated requirements. This allows the creation of jurisdictional or site-specific legal registers. Enhesa’s Expert Support Service team can also provide applicability screening support.

Please comment on the latest developments around the EU’s Emissions Trading Scheme (ETS) as well as the future of the scheme.

Katya: The EU ETS remains the world’s biggest emissions trading market, accounting for over three quarters of international carbon trading. However, the ETS continues to face a challenge in the form of a significant surplus of allowances, largely due to the economic crisis which has substantially depressed emissions. As a first step, the auctioning of 900 million allowances was postponed from 2013-2015 until 2019-2020. A more structural measure, a market stability reserve, was agreed in 2015. This reserve, which will start operating in January 2019, aims to neutralize the negative impacts of the existing allowance surplus and improve the system’s resilience to future shocks.

In July 2015, the European Commission presented a legislative proposal on the revision of the EU ETS for its next phase (2021-2030), in line with the EU’s 2030 climate and energy policy framework. The proposal aims to reduce EU greenhouse gas emissions by 43% compared to 2005.

Could you provide insight into carbon taxes in Mexico, USA, South Africa and Tunisia (for example)?

Wassila: In South Africa in 2015 the Government proposed two draft regulations to regulate carbon tax: The Draft Carbon Tax Bill, 2015, and the Draft Regulations on the Carbon Offset made in terms of clause 20(b) of the draft Carbon Tax Bill, 2015. Under the Draft Carbon Tax Bill, 2015, facilities whose activities generate GHG emissions will be required to pay a carbon tax to cover the negative externalities of their activities. The Draft Regulations on the Carbon Offsets would provide a mechanism allowing companies to use carbon offsets credits of up to 10% of their total GHG emissions to reduce their carbon tax liability.

However, although the Draft Carbon Tax Bill was supposed to take effect on 1 April 2017, to date, it still hasn’t been adopted. There is no concrete indication as to when this well be. In addition, there are several things that need to be implemented before the Government can begin enforcing the Carbon Tax. This includes: a program administrator, a registry, and verification system. So, it is on the horizon but hard to say when for certain.

Paige/Caitlin: In the U.S.A., there have been some interesting State level developments. For example, on 3 February 2017, the Rhode Island General Assembly introduced House Bill No. 5369, 'Energize Rhode Island: Clean Energy Investment and Carbon Pricing Act of 2017,' which would place a 15 USD fee on each ton of carbon dioxide or other greenhouse gases emitted from the burning of a fossil fuel that is sold in Rhode Island. Previously, Washington State proposed, but voters rejected, Ballot Initiative 732. The Washington initiative would also have imposed a tax on greenhouse gas emissions generated by fossil fuels. Like the bill in Rhode Island, the tax would have started at 15 USD per metric ton in 2017 and increased gradually over a few decades until emitters would have paid 100 USD a ton in 2016 dollars. While the initiative in Washington failed and the federal government is removing climate change policy from its agenda, Rhode Island and other states have indicated commitments to a low carbon future.

Elise: There is no carbon tax or pricing system in Tunisia currently and no such system has been proposed.

Gabriela T: In Mexico, a 2014 modification to the Law of Special Tax over Production and Services of 1980 established the 'carbon tax' on fossil fuels (propane, butane, gasoline, aviation fuels and other kerosene, diesel, coal, and petroleum coke, among other fossil fuels) for sales and imports by manufacturers, producers, and importers. The tax is imposed per ton for fossil fuels such as coal or petroleum coke; per liter for fossil fuels such as diesel, propane, butane, or aviation fuels; and per ton of carbon content in the case of other fossil fuels. For example, propane is subject to a tax rate of 6.50 cents per liter, petroleum coke to a rate of 17.15 Mexican Pesos (MXN) per ton and coal to a rate of 30.28 MXN per ton. Facilities importing (including those importing for their own consumption) or selling fossil fuels must pay the 'carbon tax' to the Service of Tax Administration

Are there any global regulatory or policy initiatives regarding PM2.5 (particulate matter)?

Particulate matter tends to be a strong focus of regulators around the world. We took a few examples from just a few countries to highlight this:

Kengo: Currently, in Japan, there are two committees under the Ministry of Environment that discusses about PM2.5, which are the Atmosphere, Noise and Vibration subcommittee of the Central Environment Council (中央環境審議会 大気・騒音振動部会) established in 2013 and the Particulate Matter Specialized Committee (微小粒子状物質等専門委員会) established in 2014. One of the reports by the subcommittee dated 31 March 2016, mentions the possible regulatory measures on soot and NOx from both stationary and mobile sources, as well as controlling automobile emissions, perhaps in the next couple of years.

Ruth: U.S. states with nonattainment areas under the National Ambient Air Quality Standards (NAAQS) have been working to incorporate the 2016 federal requirements for precursors of fine particulate matter (PM2.5), such as sulfur dioxide, nitrogen oxide, volatile organic compounds (VOCs) and ammonia to maintain approval of their State Implementation Plans (SIPs) by the U.S. Environmental Protection Agency (EPA). States have proposed or adopted revised emissions requirements, including reasonably available control technology (RACT) requirements. For facilities in many nonattainment areas, such as in Virginia, this means more stringent emissions limits.

Gabriela T: In Mexico, the Air Quality National Strategy 2017-2030 was recently issued. It aims at improving the air quality to prevent health problems in the population and to preserve ecosystems. Among the policy actions included in the Strategy is the updating of the regulatory legal framework regarding prevention and control of atmospheric contamination by revising and updating the Official Mexican Standards (Normas Oficiales Mexicanas - NOMs).

Regarding PM2.5, it is likely that the maximum level currently established in NOM-025-SSA1-2014 of 45 micrograms per cubic meter (μg/m3) would be changed to the one recommended by the World Health Organization, that is 25 μg/m3. The values provided correspond to the average value in 24 hours.

Katya: In the European Union, the European Commission adopted Directive EU/2016/2284 of 14 December 2016 on the reduction of national emissions of certain atmospheric pollutants, amending Directive 2003/35/EC and repealing the NEC Directive 2001/81/EC, effective of 31 December 2016. Directive EU/2016/2284 set binding national reduction objectives for 5 air pollutants (Sulphur dioxide (SO2), nitrogen oxides (NOx), non-methane volatile organic compounds (NMVOC), ammonia (NH3) and fine particulate matter (PM2.5)) to be to be met by 2020 and 2030 compared to 2005 levels. In addition to the pollutants covered previously by the NEC Directive, the adopted Directive introduced emissions ceilings for a new pollutant - PM2.5. For example, France must reduce its PM2.5 emissions by 4% for any year from 2020 to 2029 compared to the 2005 levels and Italy must reduce its PM2.5 emissions by 40% for any year from 2030. The addition implements a 2012 amendment to the 1999 Protocol to the 1979 Convention on Long-Range Transboundary Air Pollution to Abate Acidification, Eutrophication and Ground-level Ozone - Gothenburg Protocol.

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