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Cumulative cost assessment (CCA) of the EU ceramics and glass industry published

Cumulative cost assessment (CCA) of the EU ceramics and glass industry published
Published on: 14/07/2017
The study aims at identifying the cumulative regulatory costs stemming from the European legislation most relevant to the EU ceramics and glass industries.

 

This study adopts a cumulative approach, by providing a quantitative assessment of:

i) direct costs (monetary obligations, capital expenditure, operating expenses and administrative burden)
ii) indirect costs (originating in the EU legislation most relevant for the ceramics and glass sectors).

This study does not assess the benefits of EU legislation and does not aim to provide insights related to the proportionality of costs and benefits of legislation, nor its efficiency or effectiveness.

Some 20 pieces of EU legislation were prioritised from over 60 acts and grouped in 8 areas. These included climate, energy (electricity, gas), environment, waste, worker's safety.

4 subsectors of ceramics (bricks and roof tiles, ceramics tiles, fired refractories and unfired shaped refractories) and 3 subsectors of glass (packaging glass, glass tableware and flat glass) were analysed over a period of 10 years (2006-2015).

Results

Overview

The ceramics and glass industries are regulated with policy objectives in mind: from the circulation of goods in the internal market to protecting citizens and environment. The cumulative cost effects of such 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 along the whole CCA process.  Harmonisation of EU legislation has an overarching benefit for EU industry.

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
• workers' safety

The study focused only on the costs of legislation. However, the results provide, for the first time, a clear picture of the cumulative effects of costs related to different pieces of legislation that apply to the ceramics and glass industries and identify their main drivers. This provides useful insights into the nature of such costs and their development over time.

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.

Quantitative results

Bricks and roof tiles

Total regulatory costs:

• 2.3-5.0 €/tonne of output on average (2006-2015)
• 3.2-5.4% of production costs (2006-2015)
• 5.4% of production costs (In typical year, 2015)
• 21.9% of EBITDA (In typical year, 2015)

Breakdown of 2015 regulatory costs by the 3 main EU legislative areas:

• electricity 45%
• environment 14.6%
• workers' safety 10.8%

Ceramic tiles

Total regulatory costs:

• 6.4-12.4 €/tonne of output on average (2006-2015)
• 1.8-2.8% of production costs (2006-2015)
• 2.7% of production costs (In typical year, 2015)
• 10% of EBITDA (In typical year, 2015)

Breakdown of 2015 regulatory costs by the 3 main EU legislative areas:

• electricity 46.7%
• waste 11.3%
• environment 10.1%

Fired Refractories

Total regulatory costs:

• 15.6-28.5 €/tonne of output on average (2006-2015)
• 2.1-2.7%  of production costs (2006-2015)
• 2.4% of production costs (In typical year, 2015)
• 18.5% of EBITDA (In typical year, 2015)

Breakdown of 2015 regulatory costs by the 3 main EU legislative areas:

• environment 39.2%
• electricity 24.8%
• workers' safety 11.1%

Unfired Shaped Refractories

Total regulatory costs:

• 7.0-14.77 €/tonne of output on average (2006-2015)
• 1.2-2.2% of production costs (2006-2015)
• 2.2% of production costs (In typical year, 2015)
• 42.5% of EBITDA (In typical year, 2015)

Breakdown of 2015 regulatory costs by the 3 main EU legislative areas:

• electricity 44%
• REACH/CLP 16.4%
• waste 15.3%

Packaging Glass

Total regulatory costs:

• 8.66-13.70 €/tonne of output on average (2006-2015)
• 3.2-4.7% of production costs (2006-2015)
• 3.9% of production costs (In typical year, 2015)
• 14.7% of EBITDA (In typical year, 2015)

Breakdown of 2015 regulatory costs by the 3 main EU legislative areas:

• electricity 27.6%
• environment 19.0%
• climate 18.2%

Glass Tableware

Total regulatory costs:

• 20.4-34.9 €/tonne of output on average (2006-2015)
• 1.5-2.4% of production costs (2006-2015)
• 2.1% of production costs (In typical year, 2014)
• 19.7% of EBITDA (In typical year, 2014)

Breakdown of 2015 regulatory costs by the 3 main EU legislative areas:

• climate 21.6%
• environment 20.3%
• electricity 16.9%

Flat Glass

Total regulatory costs:

• 5.6-10.3 €/tonne of output on average (2006-2015)
• 1.8-3.5% of production costs (2006-2015)
• 3.4% of production costs (In typical year, 2015)
• 31.1% of EBITDA (In typical year, 2015)

Breakdown of 2015 regulatory costs by the 3 main EU legislative areas:

• electricity 28.2%
• environment 19.5%
• gas 16.8%

These results were presented to EU countries on 22 May at the Council working party on industry, where industry representatives acknowledged the outcomes of the study.

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