SOCIO-ECONOMIC ANALYSIS Public Version

Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals

Submitted by: AkzoNobel Pulp and Performance Chemicals

Substance: Sodium dichromate

Use title: Use 1: Use of sodium dichromate as an additive for suppressing parasitic reactions and oxygen evolution, pH buffering and cathode corrosion protection in the electrolytic manufacture of sodium chlorate, with or without subsequent production of chlorine dioxide

Use 2: Use of sodium dichromate as an additive for suppressing parasitic reactions and oxygen evolution, pH buffering and cathode corrosion protection in the electrolytic manufacture of potassium chlorate.

Use number: 1 & 2 Disclaimer

This report has been prepared by Risk & Policy Analysts Ltd, with reasonable skill, care and diligence under a contract to the client and in accordance with the terms and provisions of the contract. Risk & Policy Analysis Ltd will accept no responsibility towards the client and third parties in respect of any matters outside the scope of the contract. This report has been prepared for the client and we accept no liability for any loss or damage arising out of the provision of the report to third parties. Any such party relies on the report at their own risk.

Note

This public version of the Socio-Economic Analysis includes some redacted text. The letters indicated within each piece of redacted text correspond to the type of justification for confidentiality claims which is included as an Annex (Section 6) in the complete version of the document. Table of Contents

1 Summary of Socio-Economic Analysis...... 1 1.1 Description of the use and importance of sodium dichromate...... 1 1.2 Requested review period...... 1 1.3 Human health impacts from the continued use of Sodium Dichromate...... 1 1.4 Economic and social benefits from the continued use of sodium dichromate ...... 2 2 Aims and scope of SEA...... 5 2.1 Introduction ...... 5 2.2 The applicant...... 6 2.3 The Supply Chain...... 8 2.4 Definition of the “applied-for-use” scenario ...... 18 2.5 Definition of “non-use” scenarios...... 20 2.6 Information for the length of the review period ...... 28 3 Analysis of impacts...... 31 3.1 Human Health Impacts ...... 31 3.2 Environmental impacts ...... 41 3.3 Economic impacts ...... 44 3.4 Social impacts...... 62 3.5 Wider economic impacts ...... 67 4 Combined Assessment of Impacts...... 73 4.1 Comparison of impacts ...... 73 4.2 Distributional impacts...... 75 4.3 Uncertainty analysis...... 77 5 Conclusions ...... 83 5.1 Socio-economic benefits of continued use...... 83 5.2 Residual risks to human health and the environment of continued use...... 83 5.3 Factors concerning operating conditions, risk management measures and monitoring arrangements...... 84 5.4 Factors relating to the duration of the review period...... 84 6 Annex – Justifications for confidentiality claims...... 85 7 Appendix 1 – Information Sources...... 87 8 Appendix 2 - Demographics ...... 89 8.1 Demographics of the areas associated with AkzoNobel’s Sites...... 89

Declaration

We, AkzoNobel Pulp and Performance Chemicals, request that the information blanked out in the “public version” of the Socio-Economic Analysis is not disclosed. We hereby declare that, to the best of our knowledge as of today 2015-10-21 the information is not publicly available, and in accordance with the due measures of protection that we have implemented, a member of the public should not be able to obtain access to this information without our consent or that of the third party whose commercial interests are at stake.

Bohus, 2015-10-21

Ingrid Brassart

Regulatory Affairs Manager

1 Summary of Socio-Economic Analysis

1.1 Description of the use and importance of sodium dichromate

Sodium dichromate (EC number: 234-190-3, CAS number: 10588-01-9 (anhydrous), 7789-12-0 (dihydrate)) is a process chemical used in the manufacture of sodium chlorate at AkzoNobel’s sites in Finland, France and Sweden. The chlorate process produces hydrogen that is used for a variety of purposes by the applicant, including the provision of municipal heating to the local communities. The chlorate producing sites also have other processes that rely on or benefit from integration to the sodium chlorate process. Some of these processes would not be able to proceed without the linkage to sodium chlorate and so it would not be possible to manufacture them under a non-use scenario for sodium dichromate.

The EU is currently almost 100% self-sufficient in the production of sodium chlorate, accounting for around 19% of global production. Sodium chlorate is used in the Elemental Chlorine Free (ECF) chemical bleaching process. The ECF process accounts for around 93% of all bleached chemical pulp in the EU. Roughly 73% of pulp in the EU is bleached. The remaining 7% of bleached pulp is produced via the Totally Chlorine Free (TCF) process. Both processes use hydrogen peroxide as a bleaching agent. Loss of EU sodium chlorate supplies would have a significant impact on the EU pulp and paper industry. As a minimum, costs of pulp bleaching would increase due to the need to transport sodium chlorate, a hazardous substance, long distances from South or North America – the two regions with the greatest current sodium chlorate production capacity. Furthermore, new investment will be required in other regions of the world to increase sodium chlorate production capacity in order to meet the loss of European supply. In the short term, it is therefore likely that prices of sodium chlorate would increase significantly on the global market, as a result of these two factors. Some smaller EU pulp producers may find themselves significantly disadvantaged compared to larger EU competitors and non-EU competitors due to more limited ability to absorb costs in the short term. 1.2 Requested review period

AkzoNobel currently knows of no technically feasible alternative that ensures the same high level of process safety and energy efficiency for the use of sodium dichromate in the production of sodium chlorate. The company believes that at least '''#A#'' ''''''''''' is required from 2017 in order to undertake the R&D necessary to develop an alternative and to prove this at the industrial level, for example to achieve the same cathode lifetime. Once a new viable technology has been identified, it will need to be piloted and scaled up to industrial production levels.

Therefore, the applicant submits this Application for Authorisation with a request for a review period of '''#A#'' '''''''''' to allow a viable replacement for sodium dichromate to be developed (see Section 2.6). 1.3 Human health impacts from the continued use of Sodium Dichromate

AkzoNobel employs '''#D#'''' people who may be exposed at very low levels to sodium dichromate in the production of the chlorate. All processes at the plant involving sodium dichromate are predominantly closed and mostly automated and all workers involved use appropriate personal protective equipment (PPE). The CSR explains that the dermal pathway is negligible in the context of

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 1 the total exposure, thus inhalation exposure is the only pathway considered in this SEA for workers (see Section 3.1.2).

Air monitoring data for the production of sodium chlorate are available from recent testing. The level of exposure has been found to be extremely low; as a result, detection required the use of new techniques to detect low nanogram per cubic metre levels of exposure. Chromium(III) is an essential nutrient and additional exposure through production of sodium chlorate would not be detectable given the low level of exposure. The extremely low levels of exposure together with the existence of Cr in our body as a micronutrient means that biomonitoring is not justifiable, since it will not detect any changes when compared with someone not working in the chlorate industry.

A combination of data from the air monitoring and modelling have been used for the characterisation of risk for each of the different groups of workers potentially exposed, with the value that gave the highest level of exposure used where both were available. The exposure level varies by the employee’s role. For shift workers, who operate the plant throughout the year, the time-weighted average level of exposure across their tasks is 1.23 nanograms per cubic metre (ng/m3). Day workers who carry out periodic maintenance and cleaning tasks receive an average exposure of 0.66 ng/m3. Laboratory workers are exposed at a time-weighted average level of 0.42 ng/m3.

As described above, the system is essentially a closed-loop, nevertheless EUSES modelled human- via-environment exposure of the general population on a local and regional scale have been taken into account using highly conservative estimates. Three pathways are considered for exposure to the general population: inhalation, drinking water and fish. Even with these included the aggregate level of cancer risk through inhalation, drinking water and fish consumption is very low at 2.5 × 10-7 at the local scale and 2.6 × 10-8 at the regional scale. Even this low level of risk is a gross overestimate as the EUSES model is severely limited for modelling of exposure to inorganic substances. Due to this, it is considered overly conservative but has nevertheless been taken into account in the sensitivity analysis of the overall benefit-cost ratio of continued use.

The RAC-published exposure-risk relationship for the carcinogenic effects of sodium dichromate for lung cancer has been used to estimate the risk of additional cancer cases that arising over the assessment period of ''''#A#' ''''''''' for workers. The estimated number of additional lung cancer cases is ''''''#D#' ''' '''''''''' among the worker population. These estimates are based on conservative assumptions, and include both worker exposures and exposures to man via the environment. Therefore, there is a very low statistical probability of the development of such cancers among the relevant worker population, as a result of the combination of very low numbers of affected workers and very tightly controlled exposure (see Section 3.1), or within the more general population.

Monetisation of these human health impacts results in present value costs (discounted at 4%) of '''#D#'''''' over a ''#A#''' year period. These are clearly extremely low compared to the costs that would be associated with a refused Authorisation (see Section 4). 1.4 Economic and social benefits from the continued use of sodium dichromate

Under the non-use scenario, AkzoNobel would be forced to shut the chlorate plants at four of its sites ''''''' '''#E#''''''' '''''' '''''''''''' ''''' ''''''''''' ''''''' ''''''''''''' ''''''' ''''''''''''''' ''''''' '''''''''''' '''''''' '''''''' ''''''''' '''''''''''' '''''''''''' '''''''''''''''. This is because there is currently no technically feasible alternative to the use of sodium dichromate in the manufacture of sodium chlorate, and the loss of this production would result in the loss of hydrogen as a co-product. The costs of running other operations would increase

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 2 significantly on an on-going basis and the applicant would incur one-off costs associated with dismantling of existing equipment and installation of new equipment to compensate for the loss of process integration.

Consequently, the continued use of sodium dichromate would allow the following benefits to be realised (see Section 3):

 AkzoNobel would maintain a projected turnover of '''#B#'''''''' billion over the ''''''#A# '''''''' period, with associated profits of €''''#B#'''''' million. AkzoNobel would also avoid a (one-off) decommissioning and remediation cost of around '''#B#''''' million, and would be able to earn a return on its recent investments at the plant aimed at increasing its efficiency.

 The current workforce of '''#D#''''' at the applicant’s sites would be retained. Additionally, direct contractors and other indirect jobs would be maintained.

 Pulp and paper mills in the EU (and outside) currently rely on the sodium chlorate produced at the applicant’s site would not have to face either: increased costs associated with the transport of sodium chlorate from outside the EU, as well as increased on-site storage costs to ensure security of supply, and potentially higher per unit prices for the chlorate due to global shortages in supply; or the costs of investing in TCF bleaching technology to enable a move away from the ECF process. The TCF process has higher costs of production and has lost market share, suggesting that these downstream pulp mills may find it more difficult to compete within a global market.

Overall, it can be demonstrated that the benefits of continued use of sodium dichromate greatly outweigh the risks to human health (and the environment) by a benefit to cost ratio of '''''''#E, F#'''''''''''

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 3 Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 4 2 Aims and scope of SEA

2.1 Introduction

This SEA assesses the benefits of the continued use of sodium dichromate against the socioeconomic impacts that would result from a refused Authorisation for its use in the production of sodium chlorate.

Sodium dichromate has been identified as a non-threshold CMR substance. Therefore Authorisation for its use can only be granted if, in-line with ECHA’s guidance for the preparation of an Application for Authorisation and Article 60(4) of the REACH regulation, the applicant demonstrates that:

 There are no suitable alternatives to the Annex XIV  The socio-economic benefits of use of the Annex XIV substance (for the uses for which have been applied) outweigh the risks to the environment and human health.

The AoA submitted alongside this SEA demonstrated that there are no non-chromate based alternatives for sodium dichromate in the production of sodium chlorate. It shows that no realistic alternative to the use of Cr(VI) exists that would become available in the foreseeable future. Based on the current state of the art in research and development of sodium chlorate manufacturing technology and the timeframes associated with design, financing and construction of process equipment, the applicant estimates that an alternative could only be a realistic prospect after ''''#A#'''''.

This SEA therefore describes the severe adverse socio-economic impacts that would be incurred by the applicant and along the supply chain from a refused Authorisation. It shows that the impacts would greatly outweigh any reduction in the risks to human health from the continued use of sodium dichromate in the manufacture of sodium chlorate.

Sodium chlorate is mainly used by downstream users within the pulp and paper sector. It is used to generate chlorine dioxide, which in turn is used to bleach wood pulp. The applicant sells the majority of the sodium chlorate produced to downstream users, however, they also use it themselves in products and processes. In addition to wood pulp, some other minor uses are relevant to the applicant’s downstream users of sodium chlorate.

The potassium chlorate produced by the applicant is used by downstream users for the production of pyrotechnics and matches. As described in the AoA, the applicant uses sodium dichromate in the production of potassium chlorate and it is not possible for the applicant to produce potassium chlorate without the production of sodium chlorate; this use is, therefore, considered integrated with the production of sodium chlorate and will be discussed as an ancillary operation in this SEA.

The applicant currently uses the equivalent of ''''#B#'''''''' tonnes of sodium dichromate each year, as described in the AoA, but annual consumption of sodium dichromate varies. This represents a very small fraction of the total tonnage of sodium dichromate used in the EU each year. Across all EU producers of sodium chlorate, less than 40 tonnes per year are used. This is a very modest quantity when compared to the total amount of sodium dichromate used per year for other uses in the EU. Sodium dichromate is currently registered in the 10,000 to 100,000 tonnes per year band. The use of

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 5 sodium dichromate in the production of sodium chlorate therefore represents well below 1% of the total tonnage used in the EU1.

The applicant is a member of the seven company task force that has cooperated in applying for authorisation for the continued use of sodium dichromate in the manufacture of sodium chlorate due to the lack of any alternatives.

This SEA supports the argument that no realistic alternative to the use of Cr(VI) exists that would become available in the foreseeable future. Based on the current state-of-the-art in research and development of sodium chlorate manufacturing technology and the timeframes associated with design, financing and construction of process equipment, the applicant estimates that an alternative could only be a realistic prospect in 15-20 years, and certainly not before '''#A#''''''. 2.2 The applicant

The applicant, AkzoNobel Pulp and Performance Chemicals (ANPPC), is part of the AkzoNobel group and markets its bleaching products with the Eka brand. The Business Unit ANPPC ’s headquarters is based in Gothenburg, Sweden with 2,400 employees located across 35 countries overall (AkzoNobel, 2015). In 2014, the group earned €14.3 billion in revenue and generated a profit of €546 million. The Pulp and Performance Chemicals sector accounted for €1,009 million (7%) of group revenue, of which 39% is in the EMEA region, 45% in the Americas and 16% in Asia Pacific.

This application concerns the production of sodium chlorate in four locations: Alby and Stockvik in Sweden, Oulu in Finland and Ambès in France. These business units are operated as separate legal entities, referred to collectively here as “the applicant”:

 Finland – Akzo Nobel Pulp and Performance Chemicals Oy  Sweden – Akzo Nobel Pulp and Performance Chemicals AB  France – Akzo Nobel Pulp and Performance Chemicals SAS

In addition, the AkzoNobel group has separate legal entities across the world involving in supplying sodium chlorate to the pulp production in Brazil, Canada, Russia, Chile and the United States.

The applicant’s production sites also have other processes that are directly or in-directly linked to the chlorate process'' ''''''''''''''''#C, E#'' ''' '''''''''''''''' ''''''''''''''' '''''''''''''''''' '''''''''''''''''' '''' ''' ''''''''' ''''''' in Europe.

Some of the sodium chlorate produced is used as an intermediate to manufacture potassium chlorate, which is used downstream in the manufacture of matches and pyrotechnics. According to the applicant, AkzoNobel is the only EU-based manufacturer of potassium chlorate the applicant is the only registered entity for the substance under REACH in the 1,000-10,000 tonnes per annum band2).

Sodium chlorate is produced by electrolysis of sodium chloride brine, yielding hydrogen gas as a co- product. The process is carried out in a closed loop with very small quantities of sodium dichromate used per tonne of sodium chlorate produced. The majority of the sodium dichromate used annually leaves the process as a very minor impurity in the sodium chlorate product at the parts per million

1 As listed on the ECHA registered substances database accessible at: http://echa.europa.eu/information-on- chemicals/registered-substances on 19 May 2015. 2 As listed on the ECHA registered substances database accessible at: http://echa.europa.eu/information-on- chemicals/registered-substances on 16 April 2015.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 6 level. The other losses of chromium from the process are due to periodic maintenance and removal of solid sludge. Sodium dichromate use is integral to the production of sodium chlorate in an industrial setting. Without the use of sodium dichromate, it is not possible to safely and efficiently manufacture sodium chlorate.

A typical process is illustrated in Figure 2-1. Additional details can be found in the AoA and CSR submitted as part of this AfA.

Figure 2-1: The Sodium Chlorate Process Showing Outputs and Emissions, adapted from Tilak & Chen (1999), Mendiratta & Duncan (2003) and IPPC (2007)

The applicant’s EU production capacity for sodium chlorate is ca. ''''''' ''#B#'' ''''' '''''''' of the total EU sodium chlorate production capacity (ca. 559 kt, see Table 2-1), and approximately ''#B#''''''' of the worldwide capacity (see Figure 2-2). Globally, the production facilities of the applicant account for approximately '''#B#''''' kt or '''#B#''''' of the worldwide capacity XXXXXXXXX#B#XXXXXXX' '''''''' ''''''''''''''''''' ''''''''' '''''''''''''''' '''' '''''''' ''''''''''' '''' '''' '''''''''' '''''''''''''''''''' '''''''' ''''''''' '''''''' '''' '''''' ''''''''''' ''''''''''''''' ''''''''''' '''' '''''''''''''''''''''''''''' ''''''''''' '''''' The EU is currently self-sufficient in sodium chlorate with material exported to non-EU, mainly Asian, countries by some producers, including the applicant.

As can be seen from Figure 2-2 below, the majority (43%) of sodium chlorate is produced in North America (the United States and Canada). Europe is the next largest producer at 19%, with the rest of the world accounting for the remaining 41% (IHS, 2012). Recently, the shares of production for North America and Europe have decreased (from over 50% in North America and 20% in Europe in 2002) due to a growth in capacity of operators in South America, Russia and Asia.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 7 Figure 2-2: Worldwide production capacity (based on (Schlag & Mori, 2013))

2.3 The Supply Chain

2.3.1 Introduction

The applicant’s production of sodium chlorate is linked to various different processes at the four relevant production sites operated by the applicant. The vast majority of the applicant’s business relates to the pulp and paper industry’s use of sodium chlorate (see below) but also supports other business areas, either directly or indirectly, that would be affected under the “non-use” scenarios considered in this SEA.

Consequently, the supply chains considered for this SEA include the production of sodium chlorate but also those relating to the other processes and their downstream uses. These areas include:

 Upstream:

 Suppliers of electricity, sodium chloride and other raw materials  Providers of electrolysis technology – cells and electrodes

 Downstream:

 Pulp and Paper manufacturers  Potassium chlorate – for pyrotechnics, and production of Matches  Hydrogen peroxide –for pulp bleaching and fish farming

2.3.2 EU sodium chlorate production capacity

The applicant’s production capacity accounts for a significant percentage (ca. ''#B#'''''') of the European total of sodium chlorate production; the task force of companies co-operating in the preparation of applications for authorisation of sodium dichromate for the production of sodium chlorate accounts for all known EU production capacity.

The capacity data provided in Table 2-1 below indicates the potential production volume of operators in the EU but in reality not all of this capacity is used. Eurostat manufactured goods data is not collected for sodium chlorate alone and includes all chlorates and perchlorates; bromates and

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 8 perbromates; iodates and periodates (Prodcom 20133250). These data are shown in Table 2-2. Sodium chlorate accounts for the vast majority of the volume (tonnage) of these substances based on the combined tonnage of all members of the task force. Given this, the total EU-27 production volume has grown from around 455 kt in 2010 to 559 kt in 2013 while the value per tonne of sodium chlorate produced decreased from around €563 to €525.

Table 2-1: Western Europe production capacity (2002 data) Production volume 2013 (kt/year Country Number of companies Number of sites Capacity (kt/year) Eurostat, Prodcom 20133250) Finland 2 4 275 243 France 2 2 155 129 Italy 2 2 17 Not available Norway* 2 2 55 Portugal 1 1 21 Not available Spain 2 2 49 43 Sweden 1 2 115 Not available Total 7 (some companies operate 13 (excluding 632 (excluding in multiple countries and 559 (2013, EU-27) Norway) Norway) excluding Norway) Sources: (IPPC, 2007) *The chlorate production plant in Norway closed in 2009: http://www.lesprom.com/en/news/Eka_Chemicals_to_close_sodium_chlorate_production_plant_in_Mo_i_Ra na_Norway_37988/ Prodcom 20133250, Eurostat database accessible at: http://ec.europa.eu/eurostat/data/database, 2 April 2015. Note, this includes other chlorates, perchlorates etc. in addition to sodium chlorates

Imports and exports account for a relatively small tonnage of sodium chlorate produced and the EU is largely self-sufficient as regards its supply of sodium chlorate. ''''''' ''''''''''#B#''' ''''''''''''' '''''''''''''''''' ''''' '''''''''''''''''''''''''''' ''''''''''''''''''' '''' ''''''' ''''''''''''''''''''' ''''''''' ''''''''''''''''''''' ''''''' ''''''''''' '''''''''' '''''''''''''''' ''''''' '''''' '''''''''''' ''''''''''''''' ''''''' ''''''''''''''''''''''''''''' '''''''''''''' '''''''''''' '''' ''''''''''''' '''''''''''''' '''''''''''' The import and export value per tonne under this PRODCOM code indicates a vastly different price compared to that of the consumed value. This is probably due to the fact that the import/export volume accounts for substances other than sodium chlorate, owing to their greater price per tonne ''''''''' '#B#'''''''''''''' '''''''''''''' ''''''''''''''''''''' '''''' ''''''''''' '''' ''''''''''''''''''''' '''' '''''''''''''' ''''' '''''''''''''''' ''''''''''''''''''''' '''''''''''''' '''''' ''''''''''''''''''' ''''''''''''''''''''' '''''''' '''''''''''' '''''' '''''''''''''''''''' ''''''''''''''''''''''' '''

Table 2-2: EU-27 import/export and production volumes for all chlorates and perchlorates, bromates and perbromates, iodates and periodates (Eurostat) 2010 2011 2012 2013 Production volume (t) 455,228 533,304 530,186 559,154 Import volume (t) 3,473 13,976 9,427 8,127 Export volume (t) 6,116 4,559 5,130 5,838 Apparent consumption (t) 452,585 542,721 534,483 561,443 Value per ton produced (€ per t) 563 512 527 525 Value per ton import (€ per t) 5,043 2,270 3,491 4,499 Value per ton export (€ per t) 2,841 3,425 3,909 2,962 Prodcom 20133250, Eurostat database accessible at: http://ec.europa.eu/eurostat/data/database, 2 April 2015.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 9 2.3.3 Upstream

The number of upstream suppliers of the applicant are shown in Table 2-3. A major input to the production of sodium chlorate is electrical energy and the production sites represent major users of electricity in the areas where the sites are located. Due to electricity transmission infrastructure, changes in electricity consumption can have significant effects for the suppliers of electricity to the applicant. In addition, the production of sodium chlorate uses high-purity sodium chloride, sodium dichromate and small amounts of other salts.

Table 2-3: Upstream supply chain considered in this SEA Inputs Number of EU suppliers Number of Non-EU suppliers Sodium dichromate '#C#'' ''' Sodium chloride '' ''' Other salts ''' '''''''''''' ''''''' ''''''' ''''''''''''''''' '''''' '''''''''''''''''''''''' Energy ''' ''''''''' ''''''''''''''''' '''''''' ''''''''''''' ''''''''''''' ''''''''''''' ''''' ''''''''''''''

The majority ''#B#'''''''' of the value of the upstream supply chain is in the value of electricity supplied to the applicant for the electrolysis of brine (to produce sodium chlorate and potassium chlorate). The effect on electricity suppliers could be significant because the manufacture of sodium chlorate is a very energy intensive process. Currently the applicant’s production of sodium chlorate is responsible for the consumption of approximately '''#B#'''% of all electricity consumption in Sweden3, while the Oulu site uses approximately '''#B#'''% of Finnish electricity4.

The loss of sodium chlorate manufacture would also directly affect the upstream supply of sodium chloride and sodium dichromate. However, the effect on sodium dichromate, sodium chloride and suppliers of other materials could be expected to be minor, because the applicant accounts for only a relatively small tonnage of the total sold by the upstream suppliers.

The total value of the applicant’s purchases from the upstream supply chain is expected to be €'''''''#B#''''''' million per year by 2017. These costs take into account the materials required for the production of sodium chlorate and, potassium chlorate. The costs associated with other products are not included, such as ''''''''''''''''''' ''''''''''''''''''#B, C# '''''''''''''''''''' ''''''''''''''''''''''''' ''''''''' as these are minor by comparison.

3 Sweden used 135 TWh of electricity in total, see:https://www.energimyndigheten.se/Press/Pressmeddelanden/2014-blev-annu-ett-ar-med-lag- elanvandning-och-stor-elexport/ accessed 24 September 2015. 4 Finland consumed approximately 83.3 TWh in 2014, see: http://www.fingrid.fi/fi/ajankohtaista/tiedotteet/Sivut/Fingridin-vuosikertomus-2014-on-julkaistu.aspx accessed 24 September 2015.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 10 2.3.4 Downstream

Table 2-4: Downstream supply chain considered in this SEA Sector Number of EU customers Number of non-EU customers Pulp and paper mills '''''' ''''' Paper mills* ''''''''''' '''#C#''' '''' ''''''' '''''''''' '''''''' '''' '''''''' Converters '''''''' '''''''''''''''''' ''''''' '''''''''''''''''' Use by downstream users as ''' intermediate '''''''''' Use by downstream users as an ''' ''''' intermediate ''''''''''''''''''' ''''' ''''''''''''''''' ''' ''''''''''' '''''' '''''''' ''''''''''''' ''''''''' '''''''''''''''''''' '''' '''''' ''''' ''''''' ''''''''' '''''''''''''' ''''''''''' ''''''''''' '''''''' '''''' ''''''' ''''''''''''''' '''' '''''''''''' '''''''''''''''''' '''''''''' ''''''' ''''''''''''' ''''' '''''' ''''''. ''''''' '''''''''''''''' ''''''''''''''''' '''''''' '''''' ''''''' '''''''' '''''''' ''''''''''' ''''''''''''' '''''''' '''' ''''''''' '''''' '''''''''''' ''''''' ''''''

The applicant’s sites mainly supply sodium chlorate to EU pulp mills and to pulp and paper mills. There are 192 pulp mills in Europe, of which 93 produce chemical pulp. Some of these mills are supplied by more than one EU supplier of sodium chlorate. In 2014, the majority ''''#B#'''''' of the applicant’s sales volume of sodium chlorate was to EU customers. ''''''' '''' ''''''' ''''' ''''' ''''''''''''''''''''''' '''''''' '''''''''' '''''''''''''''' ''''' ''''''' ''''''''''''''''''' ''''' '''''''''' '''''''''''''' ''''''''''''''' '''' ''''''''' '''' ''#C#''''' '''''''''''''' '''''''''''''' ''''''''''''''''''' '''' ''''''' '''''''''''''''''''' ''''''''''''''' '''' ''''''' '''''' ''''' '''' '''''' '''''' ''''''''''''''''''''''''' '''''''''' '''''''''''''''''''''' '''''' ''''''''''''' '''''''''''''' ''''''' ''''''''' '''' '''''''' '''' '''''' ''''''''''''''' ''''''''''''''''.

The applicant also supplies Asian mills from the EU and North America; some Asian mills rely not only on the applicant but also on other EU sodium chlorate manufacturers to operate. As all of the sodium chlorate manufacturers use sodium dichromate, the entire EU supply chain is considered relevant for this SEA.

As indicated earlier, the applicant produces several products related to sodium chlorate that are sold to downstream users. These products and the link to the sodium chlorate process are described in Table 2-5 below.

Table 2-5: Ancillary operations that are linked to the use of SD Ancillary operation/plant Location Description of link to/dependence on SD use and sodium chlorate

A Hydrogen peroxide Alby, Sweden Using as a raw material H2 that is generated by the manufacture in Alby Alby sodium chlorate plant B Potassium chlorate Alby, Sweden Using as a raw material sodium chlorate that is manufacture in Alby generated by the Alby sodium chlorate plant

C Manufacture of expandable Stockvik, Sweden Use of H2 from the sodium chlorate plant in microspheres in Stockvik Stockvik in steam generation

D Surface chemistry Stockvik, Sweden Use of H2 from the sodium chlorate plant in (hydrogenation) and heating Stockvik some equipment in Stockvik

E Production of intermediates in Stockvik, Sweden Using as a raw material H2 that is generated by the Stockvik for other AkzoNobel Stockvik sodium chlorate plant. This is used in units hydrogenation of hundreds of different products. G Manufacture of paper Ambès, France Shared resources between both plants chemical wet strength agent in Ambès

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 11 Table 2-5: Ancillary operations that are linked to the use of SD Ancillary operation/plant Location Description of link to/dependence on SD use and sodium chlorate H Pulp mill in Oulu (chlorine Oulu, Finland Chlorate plant is linked to a chlor-alkali plant dioxide generator) (making HCl) and integrated to a ClO2 plant which provides this to a linked pulp mill

I Sales of H2 Oulu, Finland H2 generated from the sodium chlorate plant in Oulu is sold to an external pulp mill as fuel replacement J '''''''''''''''''''''' '''' '''''''''''' '''''' '''''''' Stockvik, Sweden '''''''''''' ''' ''' '''''''''''' ''''' ''''''''''''' ''''''' '''''''''' ''''''' ''''' ''''''''''''''#C#''''' ''' '''''''''''''' ''''''''''''' ''''' '''''#C#''''' '' '''''''''''''''''''''' '''' '''''''''' '''' ''''''' '''''''''''''''''''''' '''' '''''''''''''' '''''''''''''''''''''''''' '''''''' ''' ''''''''''''''''' '''' ''''''''''' '''' ''''''' '''''''''''' ''''''''' ''''' ''''''' ''''''' ''''' '''''''''' '''''''' ''''''''''''''' '''''' '''''''''''''''' ''''' ''''''''''' '''''''''''''''''''''''' K Production of Polyaluminium Oulu, Finland PAC is produced from hydrochloric acid which Chloride (PAC) in Oulu comes from the chlor-alkali plant which is dependent from the NaClO3 hydrogen production. L ''''''''''''''''''''#C#''''' ''' '''''''''' ' '''''''''' '#C#''''' ''''''' '''''''''' ''' '''''''''''''''''''''' ''''' ''''''' ''''' '''''''''' ''''''' ''''''' '''''''''''''' ''''''''#C#''''' ''''' ''''''''''

In total, the applicant’s turnover related to the production of sodium chlorate and its co-products is currently €''''#B#'''''''' million (when also taking into account internal sales of chlorate), with €'''#B#''''' million in associated profits. Sodium chlorate alone accounts for €'''''#B#''''' million in turnover and €'''#B#'''''' million in profits across the four production sites. This is based on '''#B#'''' kt of sales of sodium chlorate to downstream users (''''''' ''' '''''''' ''''''''''''#B, C#''''' '''''''''''''' ''''''''' ''''''''''' ''''''' '''''''''''''''''''' '''''''''''''''''' '''''''''''''''''' ''''''' '''''''''''''''''''' '''' '''''''''''''''' ''''''''''''''' '''' '''''' '''''''''' ''''''''' ''''''').

As outlined above, these sales account for a significant percentage of all sodium chlorate trade in the EU, given that there is currently limited import and export activity for chlorates (according to Eurostat data). ''''' ''''''''''''' '''''''''''' '''''''''''''''''''''''''' ''''''' ''#B#'' '''''''''' ''''' ''''''' ''''''''' ''''''' '''''''''''' ''''''''''' ''''''' '''' ''''''' ''''' '''''''' '''''' '''''''' '''''''''''''''' ''''''''''''''' ''''''' '''''' '''''''''''''''' '''''''''' ''''''''''''''''''''''''''''''''' ''''''' '''''''''''' ''''''''''''''. Therefore, it could be expected that the EU-supply of chlorate is price competitive with the rest of the world and if the EU supply of sodium chlorate were to be disrupted, downstream users would not immediately be able to source sodium chlorate from other suppliers outside of the EU. Instead, the capacity of non-EU manufacturers would need to increase and downstream customers would be forced to absorb an increase in sodium chlorate prices due to transport and storage costs.

Pulp and paper

Sodium chlorate is used in the production of Elemental Chlorine Free (ECF) Kraft Pulp. For these pulp producers, sodium chlorate represents the largest chemical cost component in the production of pulp. ECF pulp requires 15-50 kg of sodium chlorate per tonne to produce (IPPC, 2015). Based on this and the applicant’s sales to pulp producers (including the applicant’s own chlorine dioxide generator in a pulp mill) of '''#B#'''' kt, the applicant is able to support the production of up to '''''''#B#'''''''''''''''''' kt of ECF pulp in the EU; this represents approximately '''#C#'''''''% out of the total pulp supported by EU chlorate manufacturers5.

5 Based on 559 kt of total EU chlorate manufacture and the use of 25-50 kg of sodium chlorate per tonne of ECF pulp produced, the maximum tonnage of pulp supported by EU chlorate manufacturers is 22,360 kt. This does not take into account imported chlorate and assumes that all sodium chlorate is used in the pulp and paper industry. It is therefore likely to be an over-estimate.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 12 The applicant estimates the size of the European Bleached Softwood Kraft Pulp (BSKP) and Bleached Hardwood Kraft Pulp (BHKP) production at ''''''''''''' '''' '''''''' '''''''''' '''' respectively in 2014. The combined value of these markets is estimated at '''''''''''' ''''''#C#''''' ''''' ''''''' ''''''''''' or approximately €'#B#''''''' per tonne. The applicant’s customers represent ''''''''''''''''''''''''''''' '''''''' ''''' '''''''' ''''''''''' of this amount.

It should be noted that approximately 73% of all chemical pulp is bleached (26% unbleached) and ECF pulp accounts for 93% of this. The remainder being bleached using Totally Chlorine Free (TCF) bleaching methods (e.g. hydrogen peroxide (H2O2) and ozone (O3) or peracetic acid) and a very small amount using other methods such as elemental chlorine. Bleached pulps are used in the production of writing and printing papers, tissues and speciality papers, while unbleached pulps are used in packaging (wrapping papers and board products) (IPPC, 2015).

The production of chlorine dioxide (ClO2) for ECF bleached chemical pulp relies on the supply of sodium chlorate. Without this material, no commercially relevant source of chlorine dioxide exists for pulp and paper producers (IPPC, 2013)6. The production of hydrogen peroxide uses hydrogen. This can be generated from a variety of sources, including as a co-product of sodium chlorate production (as described in the AoA accompanying this SEA) or steam reforming of fossil fuels. Chlorine based bleaching has been phased out in the EU, and ECF and TCF are considered the current state of the art (industry standard) production methods for pulp (IPPC, 2013).

Figure 2-3: Precursors of ECF pulp and TCF pulp and relative proportion of pulp types produced globally

Figure 2-4 below provides details of the world production trends for wood pulp7 between 1990 and 2013, by distinguishing chemical pulp and other kinds of pulps. In 1990, the world wood pulp production was about 155 million tonnes, in 2000 it increased to 171 million tonnes and, after a contraction in 2009 due to the economic crisis, the overall production in 2013 was 174 million tonnes. Moreover, most of the world production of pulp is chemical pulp. Between 2010 and 2013, for example, chemical pulp represented 75.3% of the total pulp production. Figure 2-4 also shows

6 Chlorine dioxide may also be generated in smaller amounts from sodium chlorite, and this is mainly used in water treatment application. 7 Most of the data used to conduct this analysis are provided by the FAO. Wood pulp is an aggregate comprising the followings: 1) Mechanical Pulp; 2) Semi-Chemical Pulp; and 3) Chemical Pulp. Chemical pulp is then defined as including: a) Unbleached Sulphite Pulp; b) Bleached Sulphite Pulp; c) Unbleached Sulphate Pulp; d) Bleached Sulphate+Soda Pulp. See the FAOSTAT Forestry section of the definitions: http://www.fao.org/forestry/statistics/80572/en/

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 13 that since 2000, the average share of chemical bleached pulp8 of total wood pulp has been around 54%. In other words, more than a half of the pulp produced in the world in 2013 (97 million tonnes) is relevant to the scope of this SEA, because it involves a bleaching process where sodium chlorate may be used.

Figure 2-4: Total World Production of Wood Pulp - by chemical and other pulp, 1990-2013 Note: Other Pulp includes: Mechanical Wood Pulp; Semi-Chemical Wood Pulp; and Dissolving Wood Pulp Source: elaboration based of FAOSTAT (2015)

With regard to the bleached chemical pulp sub-sector, it has grown in terms of its market share. In 1990, about 67 million tonnes of bleached pulp were produced. In 2000, the production was about 77 million tonnes, reaching a value of 97 million tonnes in 2013.

Figure 2-5 shows the production of chemical pulp in 2013 by main producing regions. North America is the market leader, as the USA produces 31.2% of the world chemical pulp, followed by the EU (20.3%) and South America (16.2%). In this respect, it should be noted that most of the South American production is from only two countries: Brazil and Chile. The Brazilian production of chemical pulp in particular represents the 68% of the South American production and 11% of world production.

8 As noted in footnote 4, chemical pulp includes both sulphite and sulphate bleached pulp. The production of chemical wood pulp is carried out by two technologies, the sulphate (Kraft) process and by the sulphite process. The Kraft process is the predominant technology, accounting for 80% of all pulp produced. The production of sulphite pulp is diminishing, account for around 10% of chemical pulp produced and no new sulphite mills have been commissioned in the last few decades. The Kraft process produces a stronger but lower initial brightness wood pulp than the sulphite process. The use of ECF bleaching is applicable for pulps produced by either Kraft or sulphite technologies. As a result, this SEA does not distinguish further between the pulp or paper products produced from sulphite or sulphate process.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 14 Figure 2-5: World Production of Chemical Pulp by region/country, 2013 Note: Chemical Pulp includes: Unbleached Sulphite pulp; Bleached Sulphite pulp; Unbleached Sulphate pulp; Bleached Sulphate pulp Source: elaboration based on FAOSTAT (2015)

Building on Figure 2-5 but focusing only on chemical pulp, a similar pattern can be observed when only the production of bleached pulp is considered for 2013. According to FAO statistics, 34% of bleached pulp was produced in North America (25.2% in the USA), followed by the European Union (20.6%) and South America (13% produced in Brazil).

Regarding the main European producers of chemical pulp, as shown in the Figure 2-6 below, Finland and Sweden together share the 54.9% of the European market, followed by Portugal (9.5%), France (8.2%), and Spain (7%)9.

Figure 2-6: EU 28: Main producers of Chemical Pulp, 2013 Note: Chemical Pulp includes: Unbleached Sulphite pulp; Bleached Sulphite pulp; Unbleached Sulphate pulp; Bleached Sulphate pulp Source: elaboration based on FAOSTAT (2015)

9 This pattern is confirmed even when only bleached chemical pulp is concerned: Finland and Sweden dominate the production market with a share of 58%, followed by Portugal (11.6%), and Spain (8.4%).

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 15 Use in the production of pyrotechnics and matches

The applicant manufactures ''''#B#'''''' tonnes of potassium chlorate. This is a relatively minor part of the applicant’s operation, accounting for €'''#B#''' million in turnover and €''#B#''''' million in profit in 2014. The applicant’s customers use potassium chlorate to produce matches. The applicant has ''#B#'''' customers of which '#B#'' are in the EU. Many of these companies are SMEs, and although they would be able to import potassium chlorate from outside of the EU, this would be at a higher cost due to the increased cost of delivery. '''' ''''''''''''''''' '''''''#B# '''''''''''''''' '''''''''''''''' '''''''' ''''''''' '''''''''' ''''''''''''' '''''''''''''''''''''''''''' ''''''''''''''''''''' '''''''''' ''''''''''''''''''''''''''

The matches market can be subdivided into two categories: safety matches, which can only be struck against a prepared surface, and light anywhere matches, for which any frictional surface can be used. Each match head contains 50% potassium chlorate (with the rest being made up of binding agent, fillers, pigment, moderators, or accelerants10) and each tonne of potassium chlorate can be used to make approximately 3 million boxes11. ''''''''''''''''''' ''''''' '''''#B#''''''''''' ''' ''' ''''''''''' '''''''''''''' '''' '''''''''''''''''' '''''''''''''''''' ''''''' '''' ''''''''' '''' ''''''''''''''' ''''''' '''''''''''''''''''''' ''''' ''''''''''''' ''''' ''''''''''''' ''''''''''' '''''''''' ''''''' ''''''''''

The EU is a significant manufacturer of matches worldwide. In 2013, the EU-27 manufactured 13,915 tonnes of matches with a total production value of € 51.4 million12. In the same year, total EU-27 exports of matches were equivalent to 5,898 tonnes amounting to a total value of € 18.2 million. In contrast, total imports were higher in quantity (6,648 tonnes) but lower in overall value (€ 13.4 million)13. The largest exporting country within the EU-27, in terms of quantity and value, was Sweden at 9,366 tonnes (€ 30 million). Sweden is home to the world’s largest match manufacturer (Swedish Match), supplies around 81.5 billion match sticks annually, or approx. 2 billion match boxes per year.

The global market is described as being highly fragmented with many small producers and local brands14. This may explain why detailed market data is generally missing across the literature. Nevertheless, some information is available on the relevant trends within different markets. For example, in the developed markets (e.g. Europe) there has been a long term downward trend in consumption15. Factors that may have driven this long term trend include the development of more

10 Neither potassium dichromate nor red lead oxide is used in the match head compositions, though this may remain the case outside of the EU, see http://www.sumeetimpex.com/. 11 330 kg of potassium chlorate is required to make 1 million match boxes. There are 40 matchsticks per box on average. This gives an estimated 75 mg of chlorate per match. 12 Eurostat, Sold production, exports and imports by PRODCOM list (NACE Rev.2) – annual data, NACE code: 20512000 Matches (excluding Bengal matches and other pyrotechnic products) 13 Ibid 14 Swedish Match, Annual Report 2005, accessed on 10/06/15 at: https://www.swedishmatch.com/Reports/Annual%20reports/2005_AnnualReport_EN.pdf 15 Swedish Match, Annual Report 2014, accessed on 10/06/15 at: http://www.swedishmatch.com/Reports/Annual%20reports/2014_Swedish%20MatchAnnualReport_EN.pd f

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 16 advanced lighter gadgets and a general decrease in the number of smokers16. In contrast, in developing markets, such as India, consumption is growing as a result of rapid population growth17.

At the global level, India is the largest exporter of safety matches, followed by Sweden. In the second quarter of 2014, total exports of safety matches in India were equivalent to $43.6 million18. While Indian producers have good supplies of wood, required to manufacture the splints for matches, they have to mostly import the other key raw material: potassium chlorate19. The three biggest Indian producers Standard Match Industries, Bell Match Company and Hind Matches Private Limited hold significant influence over the exports market with a combined market share of 40% (their shares in the global market range from 1-8%)20. Indian producers mostly cater for markets outside Europe with Nigeria accounting for more than a quarter of India’s total exports. Other key importers include Tanzania, Yemen and Sudan. In contrast, matches made in Sweden cater mostly for European markets with UK, Norway and Spain being its top three export destinations.

Other

The applicant’s Alby site provides local district heating for the local residents. The applicant is contracted to provide a (guaranteed) 20 years of supply of heat. This was co-funded by the applicant (7.3%), a local energy company (80.6%) and the EU Community (12.1%) at a total cost of 62 MSEK or approximately €6.8 million (using a conversion rate of 1 SEK = €0.11).

2.3.5 Geographic and Temporal boundaries

Geographic boundaries

This SEA concerns the EU-based production of sodium chlorate, which is primarily used within the EU but also exported to Asia. As indicated by Figure 2-2 above, the EU is a significant producer of sodium chlorate in terms of worldwide capacity, accounting for approximately 19%.

The use of sodium dichromate is the current “state-of-the-art” in sodium chlorate manufacture and so a theoretical “non-use” scenario affecting the applicant and all other EU manufacturers of sodium chlorate could have a significant impact on the worldwide economics of the sodium chlorate business, causing a reduction in worldwide sodium chlorate capacity. The precise impact on global prices in the event of the “non-use” scenario is difficult to estimate, due to a lack of up-to-date information regarding production capacities in Russian and the Asia-Pacific region. Nevertheless, it is clear that there is currently not enough unused capacity in the world to meet the EU demand for sodium chlorate. The situation might change by 2017 if there is significant investment in new non- EU capacity; however, it is unlikely that non-EU producers would have enough time between a refused authorisation and the Sunset Date to increase production sufficiently to meet total EU demand. In the event of the non-use of sodium dichromate, it is a real concern that downstream

16 The Dollar Business, Safety Matches – Lighting up the world, safely, accessed on 10/06/15 at: https://www.thedollarbusiness.com/safety-matches-lighting-up-the-world-safely/ 17 FAO, 4.0 case study two, the safety match industry in India, accessed on 10/06/15 at: http://www.fao.org/docrep/x5860e/x5860e05.htm 18 The Dollar Business, Safety Matches – Lighting up the world, safely, accessed on 10/06/15 at: https://www.thedollarbusiness.com/safety-matches-lighting-up-the-world-safely/ 19 Ibid 20 Ibid

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 17 users’ supply of sodium chlorate would be severely disrupted while the rest of the world increases its production capacities to supply the EU with imported sodium chlorate.

The applicant’s operations in Europe will be considered independently of its non-EU operations under this SEA. The applicant’s relevant legal entities are described above in Section 2.1.2. It is assumed that the European businesses will need to operate in a “stand-alone” manner and cannot act as loss leaders for the applicant’s non-EU business concerns.

Temporal boundaries

In setting the temporal boundaries for this SEA, several factors have been taken into account:

 The applicant has carried out decades of research and development work on the sodium chlorate process and as part of the search for alternatives to sodium dichromate (as described in the AoA)  This research has resulted in reductions in exposure to sodium dichromate but it has not been possible to eliminate its use  Further research is required for a fundamentally different way of producing sodium chlorate to be developed, this is likely to take at least 15-20 years in the opinion of the applicant  The applicant’s current facilities have an indefinite lifetime, provided that current levels of maintenance continue with a typical depreciation over ''#A#''' years.  The applicant is bound by contracts to supply heat energy to the local communities until 2033 (20 years from 2013)  The loss of EU production of sodium chlorate in the short term would lead to a global shortage of the chlorate as non-EU manufacturers increased their production capacity  Loss of sodium chlorate will make continued production of bleached Kraft pulp via the ECF method unviable, despite it being considered a state of the art method. Although pulp and pulp and paper mills could move away in the longer term to the TCF method, this will require significant investment and a shift in consumer demand for TCF bleached pulp (which has lost market share in the recent future).

Based on the above, the applicant is seeking a minimum of a '''''#A# ''''''' authorisation review period, although they would ideally wish to gain a longer period given the fact that investment in the plant has been undertaken on an annual basis to ensure its safety, as well as the fact that no feasible or suitable alternatives have been identified.

For the above reasons, this assessment is carried out over the period from the 2017 Sunset Date to '''#A# ''''''', assuming that an Authorisation would be granted for ''''#A# ' ''''''''''.

2.4 Definition of the “applied-for-use” scenario

2.4.1 The applicant

Under the applied for use scenario, the applicant would continue to produce sodium chlorate using chromium(III) chloride to replace the addition of sodium dichromate to the process. This process is described in detail in the AoA accompanying this AfA and would involve a marginally reduced level of exposure to Cr(VI) species, as has been described in the AoA. The applicant has already partially implemented this alternative and would continue to convert existing sites to the use of chromium(III) chloride under the applied for use scenario.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 18 Beyond the implementation of Cr(III) technology, the applicant does not foresee marked reductions in exposure as their own R&D in pilot plant indicates that a lower level of Cr(VI) cannot be tolerated in the process. Therefore, the applied-for-use scenario would involve exposure and emissions at the same levels as experienced with current process. The consumption rate of sodium dichromate is not expected to change significantly because the applicant has already reduced use as much as technically possible for their EU plants.

Beyond the Sunset Date, if the Authorisation is granted, the applicant expects to maintain the plants at full capacity ''''''''' ''''''' ''''''''''''''''' '''' '''''' ''''''''''''''' ''''''' ''''''''''''''''' ''''''''''' ''''''' '''''''''''''''''''''''''''' '''''''''''''''' ''''''''''''''''''''' ''''''''''' '''''' '''''''''''''''' '''' '''''''''' '''' #B#''''''' '''''''''''' ''''''''' '''''''''''' '''''''''''''''''' '''''' ''''''' '''''''''''''''' ''''''''''''''''' '''' ''''''' '''''''''''''' '''''' '''''''' '''''''''''''''''' '''''' '''''' ''''''''''''''''''''

Under the applied-for-use scenario, the applicant’s sodium dichromate related businesses (directly and indirectly affected) represent €'''#B#''''' million in turnover per year and €'''''#B#'''''' million in profits. When the ''''''''''''''' ''''''''''''''''#B#''''''''''''''''' ''''''''''''''' ''''''' ''''''' '''''''''''''''' '''''''''' ''''''''''''''''''''' '''''' ''''''' '''''''''' ''''''''' ''''''''''''''''' the relevant amounts under the applied-for-use scenario are €''''''' million in turnover and €'''''''#B#'''' million in profit for 2017. Over the assessment period, these represent a present value turnover of ''''''''#B#''''''' million and a profit of X'''#B#XXX million (discounted at 4% per year).

The plants operated by AkzoNobel in the four locations all produce sodium chlorate using Cr(VI) as an additive to produce the sodium dichromate needed for the chlorate production. However, the operations at these plants vary. Therefore, the non-use of sodium dichromate affects not only the production of sodium chlorate but also has adverse effects on other products and processes being carried out on the same sites. Table 2-5 provided a summary of the ancillary operations carried out at the four sites and that would continue under the applied for use scenario.

In addition, under the applied for use scenario, the applicant would continue to employ '''''''#D#'''''' FTE directly and ''''''#B#'''''' FTE as contractors to support its businesses linked to sodium chlorate manufacture. ''' '''''' '''''''''''''''''''' ''''''''''''#B#'''''''' '''''''''''''''''''''''' ''''' '''''' ''''' '''''''''''' '''' ''''''''''''''' '''''' '''''''''''''''''' '''''''''''''''''''' ''''''''''' ''''''''''''' '''' '''''''''' ''''''' '''''''' '''''''''' ''''''''''''''''''''''

The figures above represent all of the applicant’s employees involved in the broadest sense in the production of sodium chlorate and, therefore, the use of sodium dichromate. These include sales, managerial, and administrative staff who are not exposed to sodium dichromate, in addition to those involved in manufacture and maintenance of production equipment who may be exposed to Cr(VI). The applicant is planning on increasing their production of sodium chlorate and other products but, despite this, the number of employees required would remain the same. This is because the plant will require the same number of people to operate with only a modest increase in production volumes. The number of people potentially exposed to Cr(VI) under the applied for use will remain the same as the current situation.

2.4.2 The supply chain

Under the “applied for use” scenario, there would be an expansion of sodium chlorate production by the Applicant which will help ensure that the EU pulp and paper industry is able to source the chlorate needed for ECF bleaching of pulp from EU suppliers. In addition, it will also help ensure that there remain sufficient levels of hydrogen peroxide production for supply to TCF pulp producers, even though there are lower levels of demand for this type of pulp.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 19 ''''''' ''''''''''''''''' '''''' ''''''' '''''''' '''''''''''''''''''' ''''''''''' '''''''''''''''''''''''''''' '''''''''''''' ''''' ''''''' '''''''''''''''''' ''''''' ''''''''''' '''''''''''' '''' ''''''''''''''''' ''''''''''''' '''' ''''''''''''''''''' ''''''''''''''''' ''''' '''''''''''''''' ''''''' '''''' '''''''''''''' '''''''''''''''''''''' 2.5 Definition of “non-use” scenarios

2.5.1 Introduction

The AoA has shown that no technically or economically feasible alternatives to sodium dichromate exist that would avoid the use of Cr(VI) species to support the production of sodium chlorate and that this will continue to the case for the next 15-20 years. The AoA shows that it is not possible to safely and effectively produce sodium chlorate without sodium dichromate. This would lead to low current efficiency due to parasitic reaction and to the formation of an explosive gas mixture due to increased oxygen gas evolution alongside the production of hydrogen. Therefore, in the event of the applicant no longer being able to use sodium dichromate or other Cr(VI) species, the production of sodium chlorate would cease in the EU on the sunset date.

The analysis presented in this SEA considers three “non-use” scenarios:

 Non-use scenario 1 – The applicant attempts to implement an alternative technology that has been found to be infeasible in the AoA. The alternative that was identified as being available and suitable from a reduced risk of exposure to Cr(VI) compounds was two- compartment electrolytic technologies. This scenario describes the situation where the applicant’s chlorate plant is replaced with a yet to be developed two-compartment electrolytic chlorate plant

 Non-use Scenario 2 - Stop production of sodium chlorate in the EU. The applicant would attempt to replace the tonnage of sodium chlorate used for ancillary operations and replace the use of hydrogen using fossil fuels. This would enable the applicant to minimise impacts on its profit stream and limit downstream user impacts. For wider economic impacts, it is assumed that all other EU-based chlorate manufactures also stop production in the EU and the EU pulp industry would be wholly dependent on imported chlorate

 Non-use Scenario 3 - Stop production and sales of sodium chlorate in the EU. The applicant’s sites would shut due to increased operating costs for the remaining ancillary operations. For wider economic impacts, it is assumed that all other EU-based chlorate manufactures also stop production in the EU and the EU pulp industry would be wholly dependent on imported chlorate.

2.5.2 Non-use scenario 1

This scenario assumes that the applicant attempts to operate beyond the Sunset Date using an alternative technology. As described previously, the AoA did not identify any alternative that would be technically feasible and so this scenario cannot be considered realistic. Even if the technical shortcomings of the alternatives are ignored and the use of an alternative technology is assessed in terms of its possible economic feasibility, availability and reduction of overall risk to human and environmental health only, then this scenario remains unrealistic.

The AoA found that out of the four alternatives assessed, only chromium(III) chloride would be technically feasible, but would not entirely avoid the risk of exposure to Cr(VI) compounds and so would also require Authorisation. Sodium molybdate and molybdenum-based coatings are based on early stage research and are not technically feasible due to increased oxygen generation, amongst

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 20 other issues. These technologies would not be available before the Sunset Date as they have not yet been commercialised so cannot be considered a realistic alternatives. The remaining alternative is two-compartment electrolytic systems such as those used for existing chlor-alkali production. As described in the AoA, this technology is not technically feasible in its current form and it is estimated that it would take many years for this technology to be developed to the extent that it may become feasible. However, two-compartment electrolytic systems are considered the most feasible of the potential alternatives.

This non-use scenario hypothetically assumes that the applicant is able to construct an additional chlor-alkali type plant that is re-purposed to replace the existing chlorate plant before the sunset date. Even if this was possible, and the cost of building new facilities (approximately €'#E#'''''' million, see AoA Appendix 3) is ignored, the applicant’s energy consumption would increase, significantly impacting on profits. This loss in profitability is particularly problematic because there would be a need to see a return on the costs of the investment in constructing a new plant. It is not considered at all likely that the applicant would be able to raise the required investment and to construct a new plant before the Sunset Date, particularly for an unproven technology. This would mean that the applicant would be required to cease production of sodium chlorate on the Sunset Date. Therefore, this scenario is not considered further in the analysis.

2.5.3 Non-use Scenario 2

Under non-use scenario 2, the applicant would close all of their sodium chlorate plants. It is assumed though that the applicant would seek to maintain their EU chlorate market share and would support their ancillary operations by importing sodium chlorate produced by the company outside of the EU (as these are able to continue using Cr(VI) technologies). This would involve stopping sodium chlorate production in the EU and transferring equipment to locations outside the EU, in order to increase non-EU production capacity. The intention would be to enable the applicant to import sodium chlorate into the EU to meet the demands of the EU pulp and paper industry, as well as their own internal demands.

Impacts on upstream suppliers

The applicant would no longer need to purchase sodium chloride, potassium chloride, other raw materials (HCl and NaOH), electrical energy or sodium dichromate to support the production of sodium chlorate and potassium chlorate in the EU. The companies supplying the applicant with these raw materials would be adversely affected under non-use scenario 2 (as well as under non-use scenario 3) but to differing degrees.

The generation and transportation of electrical energy is dependent on the fixed infrastructure of the countries and regions where the production sites are located. Under any non-use scenario, there would be a significant reduction in the electrical energy consumed by the applicant’s sites, even if the ancillary processes were to continue. This means that the existing upstream infrastructure that supports the use of a large amount of electrical energy would become surplus to requirement. ''''''' '''#B#'''''''''''''' ''''''''''''''''' '''''' '''''''' ''''''''' '''''''''''''''' '''''''' '''' ''''''''''''''''' '''''''' '''''''' ''''''''''''' '''''''''''' '''' ''''''''''''''''' '''' ''''''''''''''''''' The annual lost sales for the upstream supply chain is valued in excess of €'''#B#''' million. These are detailed in Section 3.

Impacts on the applicant company

This scenario involves the stoppage of production of sodium chlorate in the EU, leading to adverse effects on the applicant’s other operations:

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 21  Integrated chlor-alkali plant and pulp mill – the chlorate, chlor-alkali and pulp mill operations at Oulu are intimately linked. Therefore, the loss of one would affect the others. Without the production of chlorate the chlor-alkali plant would shut and the pulp mill would require imported sodium chlorate and modifications to continue operation. '''' ''''''''''''''''' ''' ''''''' '''''''''''''''''''''''''''''' '''''''''''''' '''''#B#'''' '''' ''''''''' '''' ''''''' '''''''''''''''''' ''''''' ''''''''''' ''''''' ''''''''''' ''''''''''''''''''''' '''' ''''''' '''' '''''''''''''''''''' ''''' '''''' '''''' ''''''''' ''''''' ''''''''''''''''''' ''''''''''''

 The production of potassium chlorate at Alby would also cease. ''''''' '''' ''''''''''''''' ''''''' '''''''''''''''''''''' ''''' '''''''''''''''''' '''''''''''''''' ''''''''''''' '''' ''' ''''''''''''' ''''' ''''''' ''''''''''''''' '''''''' ''''''' '''''''''''''''' ''''''' '''''''''' ''''''''''''''''''' ''''''''' '''' '''''''''''''''''''''' '''''''#B#'''''''''''''''' '''' ''''''''''''''''' ''' ''''''''''''' '''''' ''''' '''''''''''''' ''''' ''''''''''''' ''''''''''''''' '''''''''''''''''' ''''''''''''''' '''''''''''''''' '''''''' ''''''''''''''''''' '''''''''''''' ''''''''' ''''''''''''''''''''' '''''''''''''''' '''' '''' '''''''''''' '''''''''''' '''' ''''''''''''''''''''' '''' ''''''''' '''''''''''''''' '''' ''''''''''' ''''''''''''''''''' ''''''''''''''' '''''''''''''''' ''''''' '''''''''''''' '''''''''''''' '''''''' '''''''''''' ''''' ''''''''''''''''''''''''' '''' '''''''''''' '''''' ''''''''''''''''''''''''' '''''''''''''''' ''''''' '''''' ''''' ''''''''''''''''''''' '''''''''''' ''''''' '''''''''''''' '''' '''''' ''''''''''''''''' '''''''''''''''' ''''''' ''''''''''''''' It is of note that the applicant is the only EU producer of potassium chlorate.

 The loss of hydrogen co-production at all four sites would impact on several ancillary operations:

 Although the applicant would be able to replace the use of hydrogen using fossil fuels for heat energy generation, replacing its use as a feedstock would not be as simple,  Steam reforming or another method of generating hydrogen would be required to produce hydrogen for use in hydrogenation and other processes.

The affected operations are summarised are listed in the table below and described in Section 3.

Table 2-6: Fate of industrial units under “non-use scenario 2 Operations Locations/sites affected Closed Units Sodium chlorate – direct effect Alby, Stockvik, Ambès, Oulu Hydrogen sales or use – direct effect Alby, Stockvik, Ambès, Oulu Potassium chlorate – direct effect Alby Chlor-alkali – indirect effect Oulu Poly aluminium chloride – indirect effect linked to loss of Oulu chlor-alkali unit Units continuing operations (but affected)

Pulp mill (ClO2 generator) Oulu Hydrogen peroxide (hydrogen) Alby Hydrogenation/surface chemistry (hydrogen and heat) Stockvik – producing for other plants Microspheres (heat) Stockvik

The loss of these operations in the EU would result in a series of costs for the applicant associated:

 Loss of profits from the sale of the sodium chlorate  Loss of revenue and profits from sales of hydrogen, potassium chlorate  Increased cost of production of hydrogen peroxide, expandable microspheres and hydrogenation/surface chemistry product lines.  Potential increase in per unit operating costs on other activities due to an inability to spread shared costs (e.g. maintenance, contractors) across the same range of production activities  Dismantling of plant equipment  Site remediation of contaminated land, and

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 22  Increased cost of logistics – increased cost of transport

Although closure in the EU would lead to reduced costs of operations (energy, materials, employee costs) within the EU, these will just be redistributed to overseas sites. In addition, although it may be possible to transfer/sell equipment to non-EU facilities, no data are available on the residual value of the equipment and what the costs of moving it and reinstalling it elsewhere might be.

Relocation of capacity to supply sodium chlorate from outside EU

The applicant’s parent group, AkzoNobel, manufactures sodium chlorate in North and South America as well as in Europe. As described in the applied for use scenario, the applicant expects to sell '''#C#'''''''''''' tonnes of sodium chlorate in the EU market beyond 2017. XXXX#E#XXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXX XXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXxXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXX

AkzoNobel’s '''''#C#''''''''' non-EU capacity in sodium chlorate production would be able to be imported into the EU to act as a source of supply; however, import of '''''#C#''' '''' of sodium chlorate would face considerable difficulties in terms of the logistics involved, including:

 Increased length of time for shipping (7-19 days) of sodium chlorate to Europe.  Transport from port to downstream user  Storage of sodium chlorate stock while awaiting use  Unpacking and dissolution of sodium chlorate to feed into the process  Disposal of packaging materials – these would be classed as hazardous waste as sodium chlorate is an oxidiser and the plastic packaging could act as a fuel. This could act as an explosive mixture, if not handled appropriately.

The cost of transportation alone would be significant in comparison to the current cost of sodium chlorate. The applicant estimates that the additional cost of transportation would be between €207- 232 per tonne of sodium chlorate, taking into account the non-EU road transportation, shipping and packaging. Even when considering the lower market price of X'''''#E#XX per tonne of sodium chlorate outside of the EU and current average sale price of X'''''#E#XX, it would be unacceptable for the applicant to absorb this cost as it would exceed the profit. Therefore the applicant would pass this cost to the downstream users. It is also likely that the applicant would be unable to maintain the same level of profit as currently obtained. These costs are described in full in Section 3.

Impacts on the downstream supply chain

Table 2-7 summarises the impacts on EU chlorate production capacity and the pulp and paper downstream sector. These impacts would occur under both of the remaining non-use scenarios (2 and 3), provided that the pulp and paper industry remains in the EU, a refused Authorisation would trigger an increase in the production of sodium chlorate outside of the EU to meet the demand both inside and outside of the EU. This SEA assumes that SDAC members would be either all be granted or all refused Authorisation. Therefore, in the event of a non-use scenario for sodium dichromate, the loss of EU capacity will mean that the entire worldwide sodium chlorate production would be impacted by a reduction of approximately 19%, resulting in a shortage of supply in the short term while the production capacity outside the EU is increased. Should some companies be granted Authorisation and others refused, the impacts on downstream users would be more limited.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 23 Table 2-7: Impacts of non-use on pulp and paper market sector Timeframe Impacts Short (0-4 year) Medium (7 years) Long (12+) Chlorate Capacity Very limited ability to Major non-EU chlorate Sufficient timeframe for replace EU chlorate producers capacity grows large and small chlorate capacity by non-EU to meet some of demand producers to raise chlorate producers finance and complete investment projects Chlorate Supply Severe shortage of Larger EU mills may be As above, leading to chlorate –Lack of SEVESO able to secure chlorate stable supply chains storage sites imports in required volume Price Chlorate Drastic increase in price Price volatility due to Price expected stabilise of chlorate due to global competition for at higher than present shortage in supply chlorate supplies day values due to increased transport cost Price of ECF pulp Paper price increase can Limited paper price be passed onto EU increase can be passed Prices stabilised consumers onto EU consumers Pulp mills ECF production Surviving paper mills still compromised - risk of face strong non-EU Uncertain mill shutdowns across EU competition Key: Very Severe Significant Limited Very limited

With the increase in sodium chlorate production capacity outside of the EU, there will continue to be worker exposures to sodium dichromate as this is the only known production technology. As the EU is the technology leader in the development of sodium chlorate production technology, it is possible that the exposure outside of the EU by non-applicant companies may be higher than the current levels by EU producers.

This non-use scenario involves the import by the applicant of sodium chlorate to the EU from North and South American sites and, under this scenario, downstream users are forced to accept a price increase in sodium chlorate.

The impacts on downstream users and the wider economy would be greater under this non-use scenario than non-use scenario 2:

 Reduced number of suppliers of sodium chlorate to the EU-market, with the market dependent on import (as it is assumed that this non-use scenario is shared by all applicants for the continued use of sodium dichromate in the production of sodium chlorate)  Reduced worldwide chlorate capacity which could cause temporary restriction of supply  Reliance on imports, and a likely increased purchase price when including delivery  Increased production cost of pulp, leading to impacts on paper prices and, ultimately, on EU consumers  The need for import of potassium chlorate due to the loss of the only EU production, with this potentially impacting on the production of matches in the EU.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 24 The increased cost of transport for sodium chlorate has been described above. In this scenario, these costs are passed onto the pulp and paper downstream users.

 Increased complexity (delivery cost, timing, storage requirements) of logistics  Reduced worldwide chlorate capacity which could cause temporary restriction of supply  Reliance on imports, potentially increased sale price (not including delivery)  Increased production cost of pulp, leading to impacts on paper prices and, ultimately, on EU consumers  The need for import of potassium chlorate due to the loss of the only EU production, with this potentially impacting on the production of matches in the EU.

Outcome of non-use scenario 2

Out of the two non-use scenarios considered, this scenario results in the smallest loss of net profits for the applicant’s overall group and it is therefore considered to be the most realistic scenario. However, there is considerable uncertainty and it is not known if the applicant would be able to continue sales of sodium chlorate in the EU. This situation is described by Non-use Scenario 3.

2.5.4 Non-use Scenario 3

As indicated above for non-use scenario 2, under non-use scenario 3 it is assumed that all EU-based sodium chlorate manufacture ceases because all manufacturers use sodium dichromate in their processes (and the assumption is that either all or none of the sodium chlorate manufacturers will be granted authorisation for their use of sodium dichromate).

Impacts on upstream suppliers

The impacts on upstream suppliers would be identical to non-use scenario 2 because the applicant would no longer be required to buy materials to support the production of sodium chlorate in the EU.

Impacts on the applicant company

As is the case for non-use scenario 2, the applicant would be required to decommission and remediate all four of its EU sodium chlorate plants but unlike non-use scenario 1, the applicant would lose all revenue from sales of sodium chlorate. Therefore, the one-off impacts for the applicant under this scenario are the same as for non-use scenario 1 but the profit and turnover are significantly lower. For ancillary operations, the continued cost would be the same as for non-use scenario 2.

Impacts on the downstream supply chain

As for non-use scenario 2, EU-based pulp and paper producers would be forced to either import their sodium chlorate from outside of the EU, relocate their plants to outside of the EU or switch to totally chlorine free bleaching technology (e.g. H2O2 or unbleached). The cost of converting a pulp mill to the use a TCF technology has been estimated at approximately €10-30 million per pulp mill (Greenpeace (2001) and IPPC (2015)). Assuming that all 93 of the EU sulphate and sulphite pulp mills produce ECF pulp and that it costs €10 million to convert a single mill, the cost of conversion would be in the region of €930 million for the EU pulp and paper sector. Faced with this possibility, it would be reasonable to assume that the downstream users of sodium chlorate would be willing to accept a small per tonne price increase in the production cost of pulp, at least in the short term. In

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 25 addition, the non-use scenario would result in reduced European hydrogen peroxide production capacity. As this substance is also required by the pulp and paper sector for both ECF and TCF bleached pulps, they will be simultaneously impacted by possible shortages of two separate raw materials, sodium chlorate and hydrogen peroxide.

It is uncertain how the global market will react and to what extent pulp mills in the EU will be able to operate in the short-term following the Sunset Date in either scenario. For example, the initial disruption in supply of sodium chlorate could trigger the pulp and paper sector to reduce their EU capacity due to concerns over security of supply, due to the high level of global competition that exists in the pulp and paper market, and to reduce future cost increases associated with transport. In the longer term, it could be expected that the uncertainties in supply would lead to increased investment in TCF technologies by pulp mills, assuming that these volumes are available in the market and that they are able to encourage consumers to buy TCF based paper products.

If this occurs, the applicant and other global sodium chlorate manufacturers would stop supplying sodium chlorate for the European market, resulting in loss of sales for the applicant’s company group and very significant costs to the downstream users in the pulp and paper sector who are unable to switch to TCF technologies.

Outcome of non-use scenario 3

Under non-use scenario 3, the non-authorised use of sodium dichromate would lead to the applicant ceasing production of sodium chlorate production and withdraw from the sales of sodium chlorate in the EU market. This scenario would occur should the applicant be unable to make sufficient profits on the import of sodium chlorate from its non-EU operations to justify a business decision to expand capacity at these global operations.

One reason for such a decision could be due to the potential for the EU pulp and paper industry to switch majorly or entirely to TCF bleached paper, or due to the potential for other non-EU suppliers to be able to supply sodium chlorate at more competitive rates (e.g. due to lower transport or other costs), leading to a loss of market share for the applicant. As is the case for non-use scenario 1, the applicant would also have to shut down their chlorate manufacturing units and remediate any sites that are no longer in use.

Under this scenario, the applicant’s revenues and associated profits from sales of sodium chlorate would be lost in their entirety so the impacts to the applicant are greater than under non-use scenario 2. It is estimated that the applicant’s annual turnover under this scenario would be €''''''''#E#''''''' million with a net profit of €''''''''#E#'''''' million per year, not taking into account remediation/plant costs. Taking these costs into account over the assessment period and assuming one-off costs occur in the first year, the total discounted turnover of €''''''''''#E#'''''''' million and a profit of €'''''''''#E#''''''' million. In comparison to the applied for use, this is a reduction in profit of €''''''''#E#''''''''' million. Some of the applicant’s integrated operations that are currently supported by chlorate manufacture would continue to operate at an increased per unit manufacturing cost, putting these operations at risk.

Some of the applicant’s production sites are shared with other companies (multiple companies operating on the same industrial area with some shared resources), leading to additional impacts for them, should the applicant’s operations cease.

In addition, the applicant would incur site remediation costs. All electrolyte would be treated as hazardous waste (total volume of chromium containing liquid would be ''''''''#E#' '''''' '''''' '''''''''' ''''' '''''''''' '''''' '''''' ''''' ''''''''''''), with total costs estimated at around '''''''''' '' '''''''' '''''''''''''' ''''''' '''''''''' '''' '''''''

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 26 ''#E# '''''''' million for all plants. These figures exclude the social costs of decommissioning site, and the value of lost investments.

2.5.5 Likelihood of “non-use” scenarios

The scenarios above lead to different impacts on the applicant company and its supply chain, and would have wider effects on the communities surrounding the applicant’s sites and the EU- economy. As described earlier, non-use scenario 1 is judged to be entirely unrealised, as it involves implementation of a technically infeasible alternative. The most likely scenario is that which would result in the smallest losses for the applicant company, and this would be non-use scenario 2. The costs arising from this scenario are detailed in Section 3. However, it is also accepted that due to the considerable uncertainty for the entire EU pulp and paper sector due to disruption in sodium chlorate supply, the pulp and paper sector could move toward TCF technology and non-use scenario 3 could become more likely in the longer term. It is therefore considered the worst case scenario, while scenario 2 is a more realistic situation.

The two more realistic non-use scenarios are summarised in Table 2-8 for each of the applicant’s sites and products. Non-use scenario 2 involves the applicant continuing to serve its customers and maintaining parts of its operations without the production of sodium chlorate in the EU. Non-use scenario 3 describes the situation where this is not possible and the applicant is not able to support the ancillary operations without the economic benefits brought about by process integration. Under this third scenario, all of the sites would be affected and all, except Stockvik, would stop production; the sites would be decommissioned.

Table 2-8: Comparison of non-use scenarios for the applicant (projected 2017 figures) Applied for use capacity and Product Sites Non-use Scenario 2 Non-use Scenario 3 turnover (€ million) Imported sodium Stop production of chlorate: '''''''''''' chlorate; no ''''''''''''''' '' '' '''''''''''''''' ''''''''''''''' purchases from Sodium chlorate Alby, Stockvik, '''''''''''''#B#''' '''''' ''''''''''''''' '''''#E#'' '''' ''' ''''' upstream (including sales of Ambès and Oulu ''''' '''' '''''''''''''''''' '''' '''''''''' ''''''''''''''''' ''''' suppliers, no sales hydrogen) '''''''''' ''''' '''''''''''''''''''' ''''''' '''' to downstream ''''' ''''' '''''''''''''''' '''''' customers ''''''''' '''' '''''' '''''' Applicant is the only EU Stop production '''''''''''''#B, C#''''''' '''''''' '''''''''' '' XXXX producer – stop '''''''''''''' production Replace hydrogen with As for Scenario 1 fossil fuels (hydrogen '''''''''''''''''' ''''''''''''''''' '''''''' '''''''''''' '' from steam reformer) – Process continues Replace hydrogen with As for Scenario 1 ''''''''''''''''''''''''' ''''''''''''''' '' ''''''''''' '''' fossil fuels (heat) – Process continues '''''''''''''''''''''''''''''' Replace hydrogen with As for Scenario 1 '''''''''''''''' ''''''''''''''''''' fossil fuels (hydrogen ''''''''''''''' '' ''''''''''' ' '''''''''''''''''''''''''''' from steam reformer) – '''''' ''''''''''' ''''''''''''''''' Process continues Replace hydrogen with As for Scenario 1 '''''''''''''''' ''''''''''''''' '''''''''' fossil fuels (heat)

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 27 Table 2-8: Comparison of non-use scenarios for the applicant (projected 2017 figures) Applied for use capacity and Product Sites Non-use Scenario 2 Non-use Scenario 3 turnover (€ million) '''''''''''' '''''''''''' '' Stop production; the Stop production '''''''''''' XXXXXXXXXX is ''#B#'''''''''''''' dependent on excess '''''''''''''''#B, C#''''' '''''''''''''' '' ''''''' hydrogen from chlorate ''''''''' '''''''''' ''''''''''''''' ''''''''''''' '' manufacture ''''''''''' ''''''''''

''''''''''' '''''''''''

'''''''''' ''''''' ''''''''''' '''''''''''' t NaClO3 Build independent ClO2 Stop production of '''''''''' ''''''''''''''''''' '''' per year used. generator; import ClO at Stora Enso ''''''''' 2 '''''''''' '''''''''' ''''''''' '''''''''''' ''''''''' '''' sodium chlorate + '''''' ''''''''''' '''''''' ''''' sulfuric acid '''''' '''''''''''''' ''''' '''''''''' ''''''''' '''''''''''''' ''''''''''' '' '#E#' '''''''''''#E#''''' '''''''' '''''''''''''''''' '''''''''''' ''''' ''''''''''''''''''' '' '''''' '''''''''''''' ''''' ''''''''' '''''''''''''''''''''' ''''''''' ''''''''''''''''' ''''''' '''' ''''''''''''''''' '''''''''''''''''''' '''''' ''''''''''''' '''''' ''''''''''''' '' '''''''''''''''' ''''''' '''' ''''''''''''''''''''

2.6 Information for the length of the review period

The applicant is one of the leading developers of sodium chlorate technology, having commissioned a significant amount of research and obtained numerous patent. The applicant has invested in excess of '''''#B#'' '''''''''''' since the 1980’s ''''''''''''''''' '''''''#B# ''''''''''''' ''''''''''''''''''' ''''''''''''''''''' into research and development of the sodium chlorate manufacturing process. Despite this, the applicant has not found a suitable alternative to-date and does not foresee a suitable alternative technology to sodium dichromate or chromium(III) chloride being available in the near future (further details are provided in the AoA). The applicant is continuing research efforts to improve the performance of the process and to further reduce exposure to sodium dichromate.

The applicant would note the following when considering the length of review period:

 The applicant’s facilities are highly integrated in order to minimise environmental impacts and receive economic benefits. Therefore it is not a simple matter to replace the existing plant without affecting all others. The loss of integration would trigger plant closures, loss of jobs and economic benefits to the surrounding communities

 The applicant is a supplier of municipal heating to the regions surrounding the production sites. These have been EU-funded and are tied to long-term contracts. Non-use would result in breach of contracts and loss of EU-investment

 The research and development toward alternatives has been only partially successful over many decades of concerted effort. It has so far been only possible to reduce the concentration of sodium dichromate but research indicates that it may not be possible to completely avoid it in the foreseeable future (15-20 years)

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 28  The exposure of workers is very low and the applicant is in the process of switching to the use of chromium(III) chloride to further reduce exposure to sodium dichromate

Given these parameters, a long review period can be justified and a '''''#A#''''''''' review period is hereby requested. Nevertheless, the applicant believes that technically and economically feasible alternatives for sodium dichromate may require longer than '#A#'''' years to become available on an industrial scale.

In order to highlight the fulfilment of ECHA criteria and conditions that may lead to the recommendation of a long review period, the applicant has summarised key points in the following table (Table 2-9).

Table 2-9: How the applicant fulfils ECHA criteria and considerations for a ‘long’ review period ECHA criteria* and considerations that would lead How applicant fulfils criteria / considerations to a recommendation of a long review period 1 The applicant’s investment cycle is demonstrably The implementation of a new technology is likely to be only very long (i.e. the production is capital intensive) possible by construction of a new plant and making it technically and economically decommissioning of the old facility. The alternatives meaningful to substitute only when a major discussed in the AoA require changes outside of the sodium investment or refurbishment takes place chlorate unit (where sodium dichromate is used) in order to account for technical differences in performance of alternatives

2 The costs of using the alternatives are very high The implementation of a new technology and construction and very unlikely to change in the next decade as of a new plant will be many tens of million and a potentially technical progress (as demonstrated in the higher cost may be associated with remediation of the application) is unlikely to bring any change. For existing site (see AoA). example, this could be the case where a substance is used in very low tonnages for an The use of sodium dichromate by SDAC members accounts essential use and the costs for developing an for <1% of the total annual tonnage in the EU and supports alternative are not justified by the commercial ca. 19% of the worldwide supply of sodium chlorate (see value Section 2.1). The use of sodium dichromate represents the Best Available Technique for production of sodium chlorate (IPPC, 2015). There is no alternative technology known to be used anywhere in the world and non-EU countries will continue to use SD to the detriment of the EU economy.

3 The applicant can demonstrate that research and Decades of research have been carried out by the SDAC development efforts already made, or just members and by others without any feasible alternatives started, did not lead to the development of an being identified. Further research is on-going but so far no alternative that could be available within the alternatives have been identified that would enable the normal review period complete removal of sodium dichromate from the process, though exposure to sodium dichromate has been successfully reduced. If a new technology arises, it will nevertheless take many years to demonstrate that it can be industrialised.

4 The possible alternatives would require specific Not relevant for this application legislative measures under the relevant legislative area in order to ensure safety of use (including acquiring the necessary certificates for using the alternative)

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 29 Table 2-9: How the applicant fulfils ECHA criteria and considerations for a ‘long’ review period ECHA criteria* and considerations that would lead How applicant fulfils criteria / considerations to a recommendation of a long review period 5 The remaining risks are low and the socio- This SEA demonstrates that even over a long assessment economic benefits are high, and there is clear period (''''#A#' ''''''''') the benefit of continued use is evidence that this situation is not likely to change extremely high and the remaining risk very low with a in the next decade benefit:cost ratio of '''''''#F#''''''''''''.

Exceptional circumstances beyond the above criteria EU competitiveness Non-use of sodium dichromate in the EU would trigger increased worldwide production of sodium chlorate to meet the EU demand. Therefore, any non-use scenario would export both the human health impacts and the economic benefits outside of the EU. This would be the case regardless of the length of review period

*Source: ECHA (2013)

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 30 3 Analysis of impacts

3.1 Human Health Impacts

3.1.1 Hazard profile of sodium dichromate

Sodium dichromate (SD) has been classified as a category 1B carcinogen (H350 ‘may cause cancer’21), category 1B mutagen (H340 ‘may cause genetic defects’) and category 1B reproductive toxicant (H360 ‘may damage fertility and the unborn child’) according to Regulation (EC) 1272/2008. Identified as a Substance of Very High Concern (SVHC) according to Article 57(a)(b) and (c), SD was included in the candidate list for authorisation on the 28th October 2008 (ECHA decision ED/67/2008).

There is a wealth of information pertaining to the toxicity of hexavalent (VI) chromates22, which 2- 2- readily dissolve in aqueous body environments to release chromate (CrO4 ) and dichromate (Cr2O7 ) ions. Hexavalent chromates (Cr(VI)), such as sodium dichromate, are reduced to Cr(III) in the environment and via glutathione enzymes in the body. Thus, health effects are likely to be local to the source of Cr(VI)23. Whilst human data is limited, the available toxicokinetic data suggest that Cr(VI) compounds behave comparably in biological tissues. Studies of inhalation exposure in vivo suggest that 20-30% of administered Cr(VI) is absorbed by the respiratory tract, which may bioaccumulate in the event of repeat exposure. Inhaled chromium compounds can remain in the lungs for several weeks post-exposure, binding to erythrocyte haemoglobin and accumulating in tissues. However, Cr(VI) compounds are poorly absorbed by the gastrointestinal tract (2-9% of the administered dose) and via dermal contact (1-4% of the administered dose) 24.

Occupational epidemiology studies have shown that short-term inhalation of aqueous Cr(VI) mist leads to irritation and inflammation of the respiratory tract, with dyspnoea25 and cyanosis26. Oral ingestion induces signs and symptoms indicative of corrosive damage, leading SIAM to conclude that highly water-soluble Cr(VI) compounds are toxic by inhalation and ingestion. Data from exposed workers and standard animal tests suggest that Cr(VI) compounds are skin sensitisers. Corrosive in nature, single or repeat Cr(VI) exposure can induce severe and persistent eye and skin effects, including ulcers. Furthermore, in the absence of a No-Observed-Adverse-Effect Level (NOAEL) for the relationship between inhalation of Cr(VI) and occupational asthma, there may be no safe dose of Cr(VI).

21 This corresponds to a classification as a carcinogen category 2, R45 (may cause cancer) in Annex VI, part 3, Table 3.2 (the list of harmonised classification and labelling of hazardous substances from Annex I to Directive 67/548/EEC) of Regulation (EC) No. 1272/2008. 22 The five hexavalent chromates (Cr(VI)) compounds are: chromium trioxide, sodium chromate, sodium dichromate, ammonium dichromate and potassium dichromate. 23 EC JRC (2005) Chromium trioxide, sodium chromate, sodium dichromate, ammonium dichromate and potassium dichromate Summary Risk Assessment Report. Institute for Health and Consumer Protection, European Chemicals Bureau I-21020 Ispra (VA): Italy http://www.echa.europa.eu/documents/10162/f5f958a9-8ec8-45ba-b30a-0d7a143b6a12 24 OECD SIDS Initial Assessment Profile (2002): http://webnet.oecd.org/hpv/UI/handler.axd?id=88ff8c1a- a6a1-4443-adf2-75cb7a467fff 25 Dyspnoea (dyspnea) is a symptom associated with impaired breathing. 26 Cyanosis is the appearance of blue or purple skin colouration, due to low oxygen saturation.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 31 Whilst limited in scope, the effects observed in repeat dose toxicology studies are consistent with those observed in occupationally exposed humans. Ninety-day exposure to sodium dichromate aerosols (0.07mg/m3 [0.025 mg Cr(VI)/m3]) increased rat alveolar macrophage and spleen lymphocyte activity. However, sodium dichromate concentrations of 0.57 mg/m3 [0.2mg Cr(VI)/m3] inhibited alveolar macrophage phagocytosis. Chrome electroplating workers exposed to Cr(VI) present excess lung cancer mortality, whilst animal carcinogenicity studies have shown increased lung tumours in rats repeatedly exposed to sodium dichromate. Inhalation or intrabronchial implantation of chromium (VI) induced lung tumours in 1-2 test group rodents, which were absent among controls. In addition, there is a wealth of genotoxicity data that suggest highly water-soluble Cr(VI) compounds, such as sodium dichromate, can produce significant mutagenic activity in vitro and in vivo. There is no known Cr(VI) exposure threshold below which there is no carcinogenicity or genotoxicity risk27.

There is limited human data pertaining to the effects of Cr(VI) on reproduction. However, testicular degeneration has been observed in rats following 90-day exposure to 40 mg/kg/day sodium dichromate [14 mg Cr(VI)/kg/day]; a NOAEL of 20 mg/kg/day SD [7 mg Cr(CI)/kg/day] was established. Altered fertility was observed in male and female mice receiving oral Cr(VI) compounds at 120 mg/kg/day and 140 mg/kg/day, respectively. Female mice exposed to 40 mg Cr(VI)/kg/day showed reduced corpora lutea and increased pre-implantation loss. Supporting the evidence for reproductive toxicity, a further study demonstrated post-implantation loss and developmental effects in mice following gestational (PND 0-1928) oral chromate exposure (20 mg Cr(VI)/kg/day). Significant levels of total chromium were detected in treated animals, which have been linked to the developmental effects and post-implantation loss. However, it should be acknowledged that some of the adverse effects on reproduction observed might be attributed to the germ cell mutagenicity of chromium (VI) compounds. The aforementioned findings can be regarded as relevant to humans, thus, in the absence of NOAELs for repeated exposure, it is not possible to formally calculate a Margin of Safety (MOS).

Addressing the endpoint of greatest concern, the RAC published an exposure-risk relationship for the carcinogenic effects of 14 hexavalent chromium (Cr(VI)) compounds. Whilst a clear mode of action (MoA) has not been established, ECHA concluded that Cr(VI) causes lung tumours via inhalation and gastrointestinal tract cancers following oral exposure. It is assumed that the genotoxicity of Cr(VI) results in local DNA adducts and oxidative DNA damage at the site of exposure, which contributes to the carcinogenic process, together with tissue cellular damage, irritation, inflammation and cell proliferation effects. Despite mechanistic evidence indicative of non-linearity, dose-response relationships were derived by linear extrapolation.

Extrapolating outside the range of observation inevitably introduces uncertainties and ECHA acknowledge that excess risks in the low exposure range may be overestimated. Furthermore, the 14 hexavalent Cr(VI) reviewed for the reference dose response relationship included a broad range of chromates29, including pigments such as lead sulfochromate yellow and lead chromate, in which

27 OECD SIDS Initial Assessment Profile (2002): http://webnet.oecd.org/hpv/UI/handler.axd?id=88ff8c1a- a6a1-4443-adf2-75cb7a467fff. 28 Post Natal Day 0 – 19. 29 The 14 hexavalent chromates: ammonium dichromate (231-143-1), potassium chromate (232-140-5), chromium trioxide acids (231-801-5 and 236-881-5), chromium trioxide (215-607-8), potassium dichromate (231-906-6), sodium chromate (231-889-5), sodium dichromate (234-190-3), potassium hydroxyocataoxodizincatedichromate (234-329-8), pentazinc chromate oxtahydroxide (256-418-0), lead sulfochromate yellow (215-693-7), lead chromate molybdate sulphate red (235-759-9), lead chromate (231-846-0), dichromium tris(chromate) (246-356-2) and strontium chromate (232-142-6).

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 32 Cr(VI) ions may not accurately reflect the hazard. Consequently, the ‘aggregated’ dose-response relationship may over-predict the risks associated with sodium dichromate exposure. Nevertheless, subsequent sections evaluate the human health impacts of sodium dichromate exposure, expected under the applied for use scenario, in light of the RAC’s exposure-risk relationship.

3.1.2 Operational conditions and risk management measures

AkzoNobel’s sites employs '''#D#'''' people who may be exposed at very low levels to sodium dichromate in the production of the chlorate. All processes at the plant involving sodium dichromate are predominantly contained, mostly automated processes and all workers involved use appropriate personal protective equipment. However, exposure may occur during sampling, loading, maintenance and cleaning tasks.

Based on the process characteristics and properties of SD as a non-volatile substance, all potential inhalation exposure will be towards an aerosol/dust containing SD, whereas potential dermal exposure will be towards SD dissolved in liquids. The most significant route of occupational Cr(VI) exposure is inhalation. Whilst dermal exposure may occur, due to the corrosive nature of sodium dichromate, substantial skin contact is unlikely. The chemical safety report (CSR) stipulates that the dermal pathway is negligible in the context of the total exposure, thus, inhalation exposure is the only pathway considered in this SEA for workers. Significant oral exposure is not expected to occur at the workplace.

Reflective of a consortium of companies using sodium dichromate in the manufacture of sodium chlorate, the CSR adopted a holistic approach to evaluate exposure, collating ART modelling and air monitoring data of SD emission sources from 8 of 11 sites. Overall, the total number of samples was 10 per site, resulting in 80 samples reflective of ambient air (14 samples) and SD operations (66 samples). Consequently, the exposure estimates detailed herein are not company specific and reflect the worst case exposure scenario, relevant to AkzoNobel as a manufacturer of sodium chlorate. The entire process of SD use in sodium chlorate production can best be described by PROC 3 according to ECHA Guidance (ECHA, 2010): “Use in closed batch process (synthesis or formulation): Batch manufacture of a chemical or formulation where the predominant handling is in a contained manner, e.g. through enclosed transfers, but where some opportunity for contact with chemicals occurs, e.g. through sampling”, justifying the approach of the CSR.

Occupational exposure for the inhalation pathway was modelled with ART (Advanced REACH Tool, version 1.5) that is considered a higher tier tool in the ECHA Guidance IR and CSA, Ch. R14 (ECHA, 2012) The worker exposure was estimated on the basis of ART ‘near field exposure’, which assumes that workers are <1m from the Cr(VI) emission source, 75% confidence intervals, task-based concentrations (assuming 480 minutes exposure) and task frequency. Estimated long-term time- weighted-averages (TWA) were combined in aggregated exposure estimates for each task, since a single shift operator may perform more than one task during a shift.

Occupational air monitoring data identified extremely low exposure; even at the SD emission source, detection required the use of new techniques to detect nanogram per cubic metre levels of exposure. A combination of data from air monitoring and modelling were used for the characterisation of risk for the different groups of workers potentially exposed, utilising the value that gave the highest level of exposure to characterise the risk. Thus, the exposure estimates are based on very conservative assumptions, which overestimate the extent of exposure. The final exposure estimates are shown in Table 3-1.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 33 Table 3-1: Final exposure estimates for manufacturing tasks Task Description PPE Final exposure estimate Task 1 Feeding liquid into the process (PROC 8b) Gloves, apron and RPE 0.25 ng/m3 Task 2 Use in closed batch process (PROC 3) Gloves 1.40 ng/m3 Task 3 Laboratory analysis (PROC 15) Gloves 0.48 ng/m3 Task 4 Maintenance and cleaning (PROC 8a) Gloves, apron and RPE 0.53 ng/m3 Task 5 Waste handling of filter (PROC 8b) Gloves 0.46 ng/m3 Task 6 Central Laboratory (PROC 15) Gloves 0.42 ng/m3 Respiratory protective equipment (RPE) refers to half or full respiratory mark with P3 filters; suitable gloves with a breakthrough time >8 hours were worn at all sites30.

To accurately reflect exposure the tasks detailed in Table 3-1 were aggregated by employee role, which assumed that half the tasks were performed per operator/worker:

 Unit operators were assigned tasks 2, 3 and 4  Day workers were assigned task 1, 4 and 5

The aggregate final exposure estimates for unit operators and day workers are used to calculate the human health impacts in Section 3.1.3. However, it should be noted that all exposure estimates reflect a worst-case scenario and overestimate occupational exposure.

General population SD exposure

Demonstrating a high degree of closure from an environmental perspective (IPPC, 2007), emissions to the environment are expected to be low. Nonetheless, exposure via ambient air and from oral exposure (through ingestion of drinking water and consumption of fish) were assessed with EUSES software (v.2.12) at regional and local scales, since direct use of monitoring data was inappropriate (i.e. below the limit of detection).

The release factors for three sites, including two sites that use the highest amounts of sodium dichromate, were evaluated in the CSR. The release factor for air was based on the worst-case assumption for diffuse emissions. The human health impacts associated with this exposure are calculated in Section 4.3.2 in the uncertainty analysis.

3.1.3 Human health impacts under the applied-for-use scenario

Exposed worker population

Table 3-2 presents data on the exposed workforce at the applicant’s production site under the applied for use scenario. As stated in the CSR, exposure at the plant is limited to three types of worker: unit operators, day workers and central laboratory workers. For all other workers exposure is considered to be negligible.

The figures given in Table 3-2 represent all of the applicant’s employees involved in the production of sodium chlorate and, therefore, the use of sodium dichromate. Although the applicant is planning on increasing their production of sodium chlorate and other products, the number of employees required would remain the same under the planned increases.

30 Adequate glove materials: natural rubber/natural latex; polychloroprene; nitrile rubber/nitrile latex; butyl rubber; fluoro carbon rubber; and, polyvinylchloride.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 34 Table 3-2: Number of workers exposed to Cr(VI) under the “applied for use” scenario

Plant Role/tasks Number of employees Exposed to SD? Alby Unit operators ''#D#'''' ''' Day workers ''''' ''' Coordinators '' '''' Central lab ''' ''' Other ''''' ''' Stockvik Unit Operators '''''' ''' Day workers ''' ''' Coordinators ''' '''' Central lab ''' ''' Other ''' ''' Ambes Unit Operators ''''' ''' Day workers ''' '' Coordinators ''' ''' Central lab ''' ''' Other ''' '''' Oulu Unit Operators ''''' ''' Day workers ''' ''' Total ''''''' ''

Table 3-3 shows the level of exposure to sodium dichromate in sodium chlorate manufacturing in the applicants’ facility. It should be noted that the data presented in Table 3-3 are task-specific and aggregated long-term TWA for inhalation exposure estimates for unit operators and day workers. The levels of exposure were based on either ART modelling or exposure monitoring data, which were averaged across the consortium. However, it should be noted that the data varied across applicants, in terms of both the sampling dates and the number of workers over which they were taken. In some cases, data were provided by job type or production line; in others, this information is missing. In some cases, the data are disaggregated by hours worked by employee.

Table 3-3: Exposure levels to chromates in Applicant’s production process Type of worker Exposure (ng/m3) Increase in Risk at Level Unit Operators 1.23 0.492 x 10-5 Day workers 0.62 0.248 x 10-5 Central lab 0.42 0.168 x 10-5 Source: Consultation with the applicant * the maximum value is used as a typical value for applicants with limited available information as part of this conservative analysis

Calculation of excess lung cancer cases for workers

In December 2013, the Risk Assessment Committee (RAC) agreed lifetime mortality risk estimates associated with carcinogenicity for workers exposed to Cr(VI) substances31. It assumes a linear relationship for both lung and intestinal cancer. The excess cases of these endpoints for workers are as follows:

31 ECHA (2013): Application for authorisation: Establishing a reference dose response relationship for carcinogenicity of hexavalent chromium. Helsinki, 04 December 2013. RAC/27/2013/06 Rev. 1 (agreed at RAC-27).

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 35  Lung cancer: 4·10-3 per μg Cr(VI)/m3, after inhalation, with inhalable, respirable fraction of the particles contributing32  Intestinal cancer: 2·10-4 per μg Cr(VI)/kg bw/day, with the inhalable, non-respirable fraction contributing.

The CSR provides risk estimates for each type of worker (as shown above in Table 3-3) based on the exposure mortality risk relationship (ERR) derived by ECHA (2013) and the relevant exposure level estimates. The CSR risk characterisation is based solely on inhalation exposure and the risk of lung cancer, as there is no information on the fraction of inhalable, but non-respirable particles, preventing the differentiated consideration of inhalation and oral exposure of workers. This is also the default procedure proposed by ECHA (2013).

In order to calculate the number of excess fatal lung cancer cases for workers, it was necessary to weight the each excess risk mortality functions by relevant time period for the continued use of the chromates '''''' ''#A#''''''''''33'' The following equations present the risk estimates over the ''''''#A# '''''''' Authorisation period:

''''''''''''' ''''''''''''''''' ''' '''''''''' '#F#'' '''''''' '''''' ''''''''' '''''''''''''

''''''''''' ''''''''''''''''' ''''''''''' '' ''''''''#F#'' ''''' ''''''''' '''''''''''''

''''''''''''''''''' '''''' '''''''''''''''' ''' ''''''''#F#''' '' ''''''''' '''''' ''''''''' '''''''''''''

The total number of additional fatal lung cancer cases was then calculated by applying the weighted risk estimates above to the respective number of workers exposed to sodium dichromate in each category:

(1) Ri x Ni = πi

Where Ri is the weighted mortality risk estimate for type i workers; Ni is the number of type i workers; and πi is the number of additional fatal lung cancers among type i workers. Since the ECHA (2013) ERR refers to additional fatal lung cancer cases, it was also necessary to calculate the total number of non-fatal lung cancer cases. Firstly, estimates of the lung cancer fatality and survival rate were derived from the GLOBOCAN 2012 database, see Table 3-4.

Table 3-4: Estimated incidence and mortality of cancers across the EU-28 (thousands) Type of cancer Cases Deaths Survivals Lung 214 186 (87%) 28 (13%) Colorectum 193 83 (43%) 110 (57%) Source: GLOBOCAN 2012 (http://globocan.iarc.fr/Pages/fact_sheets_cancer.aspx) To calculate the number of additional non-fatal lung cancer cases, a ratio of deaths to survivals was applied to the number of additional fatal lung cancer cases, as shown below:

(2) (0.14/0.87) × πi = σi where πi is the number of additional fatal lung cancer cases and σi is the number of additional non- fatal lung cancer cases among type i workers, respectively.

32 It should be noted that the ECHA (2013) estimation refers explicitly to mortality risk. This signifies that dose-response relationship refers to additional fatal lung cancers. 33 The ECHA ERR assumes exposure 40 year working life (8h/day, 5 days/week).

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 36 General population (Human via Environment)

Exposed general population

The CSR considers exposure to the general population via three pathways: inhalation, drinking water and fish. The risks to the exposed general population are modelled at two levels: local and regional.

The exposure is pre-dominated by the drinking water pathway and even the low level of risk calculated in EUSES is considered unrealistic. The EUSES modelled increase in total chromium concentration of drinking water still would not have any discernible effect on water quality as the concentration of Cr(VI) is calculated in the range 1.3-4.4 ng/L at the regional level and 3.1-40 ng/L at the local level. Both of these are 1-4 orders of magnitude below the concentration (270 ng/L) corresponding to a risk of 1 × 10-6. As these are well below the allowable total chromium concentration in drinking water (50,000 ng/L), they would not have any discernible effect on drinking water quality in the regions.

These modelled risk estimates can be considered as worst case scenarios and in most cases unrealistic (as described in the CSR) as they do not consider:

 Inhalation is defined at a distance of 100 m from the site. No population is present within this zone and so any  “The approach chosen will likely “over-estimate the actual indirect exposure as conversion of Cr (VI) to Cr (III) is expected to occur under the vast majority of environmental conditions”  “(p)eople do not consume 100% of their food products from the immediate vicinity of a point source. Therefore, the local assessment represents a situation which does not exist in reality”.

As described in the CSR, the level of risk associated with HvE exposure is well below the level that is deemed to be an “indicative tolerable risk level” of 1 × 10-6 for the general population (ECHA, 2012a), for both local and regional assessments. The HvE risk estimates calculated in the CSR are shown overleaf in Table 3-5.

Table 3-5: General population exposure pathways and risk estimates via the environment Local population Pathway Site A Site B Site C Inhalation 8.29 × 10-08 4.87 × 10-08 1.70 × 10-07 Drinking water 1.85 × 10-07 1.02 × 10-07 2.99 × 10-08 Fish 5.30 × 10-08 2.65 × 10-08 3.37 × 10-08 Aggregated for all pathways 2.48 × 10-07 1.77 × 10-07 2.34 × 10-07 Contribution drinking water 45 % 57 % 13 % Contribution inhalation 33 % 28 % 73 % Regional population Pathway Site A Site B Site C Inhalation 1.38 × 10-18 1.02 × 10-18 2.15 × 10-18 Drinking water 2.25 × 10-08 1.51 × 10-08 5.98 × 10-09 Fish 3.37 × 10-09 2.25 × 10-09 8.92 × 10-10 Aggregated for all pathways 2.59 × 10-08 1.74 × 10-08 6.87 × 10-09 Contribution drinking water 87% 87% 87% Contribution inhalation <0.0001% <0.0001% <0.0001%

Taking into account the limitation of the modelling, the estimation of HvE exposure risk is overly conservative and thus it would be inappropriate to consider it as a cost of the continued use of sodium dichromate. Nevertheless, in order to assess the possible cost from a sensitivity analysis

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 37 perspective, the calculation of excess cancers cases in the general population for both local and regional scales is described in Section 4.3.

Economic valuation of health costs

The economic valuation of the health impacts takes into account two important welfare components, namely the costs associated with mortality and morbidity. The first component (costs of mortality) can be measured in two ways, either through the value of statistical life (VOSL) or the value of a life year lost. For this analysis, the value of statistical life is used. The ECHA SEA guidance provides two figures for the value of statistical life34, a central value of €1,052,000 (2003 prices) and a sensitivity value of € 2,258,000 (2003 prices).

A recent study led by the Charles University in Prague35 and undertaken for ECHA found a value of a statistical life for the avoidance of a death by cancer to be €5 million (2014 prices), which is significantly higher than the figures presented in above. For the purposes of this study (and as a worst case scenario), this upper value of €5 million will be used to provide estimates of the health damage costs associated with mortality due to cancer.

The second component of the health impacts related to morbidity effects takes into account not only the willingness to pay of individuals to avoid the pain and suffering experienced by individuals during an illness, but also the health care costs associated with a disease case. Starting with willingness to pay studies (WTP), the available literature offers a broad range of estimates for the willingness to pay to avoid a non-fatal cancer.

Estimates range from a low of €16,000 (1999 prices) to a high of €1,950,000 (1999 prices) depending on the type of cancer (Pearce, 2000). The ECHA SEA guidance reports a value of €400,000 (2003 prices) for calculating the costs associated with morbidity for non-fatal cancers. The more recent WTP study (Alberini & Ščasný, 2014) undertaking for ECHA found a figure of €396,000 (2014 prices).

With regard to direct medical or health care costs, a range of studies were identified that provide estimates of the costs of medical treatment for patients surviving lung cancer. These are summarised in Table 3-6. The average cost across the four lung cancer studies is €15,646 per annum. This figure looks high when compared to the figures quoted for 2012 and 2008 but is adopted here to err on the side of conservatism.

Table 3-6 Alternative estimates of medical treatment costs Average direct costs in Direct costs Study Year for prices original units in € 2014 (per annum) Lung cancer Leal (2012) 2012 £9,071 € 11,141 Gomez et al (2012) 2008 €8,261 € 8,833 Braud et al (2003) 2001 €12,518 € 15,170 Dedes et al (2004) 1999 CHF 20,102 € 18,1821

34 Based on environmental pollution willing-to-pay values. 35 Alberini and Ščasný (2014): Stated-preference study to examine the economic value of benefits of selected adverse human health due to exposure to chemicals in the European Union, Part III: Carcinogens, FD7. Final report, Service contract No. ECHA/2011/123.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 38 Table 3-6 Alternative estimates of medical treatment costs Average direct costs in Direct costs Study Year for prices original units in € 2014 (per annum) Intestinal cancer (colon, colorectal and rectal cancer taken as proxies) Luo et al (2010) 2000 (assumed) US$29,196 € 28,854 Lang et al (2009) 2006 US$28,626 € 24,433 York Health Economics Consortium (2007) 2004 £8,808 € 13,197 York Health Economics Consortium (2007) 2004 £12,037 € 18,035

The average cost figures reported for intestinal cancer are based on figures produced for colon, rectal and colorectal cancer in the US and UK. The US figures are high compared to the UK data; as a result, the average across the two UK studies is taken here, with this being around €14,363 per case in 2014 prices, using the projections on GDP, as explained earlier.

These average medical costs are annual figures and apply to survivors over the period of time that they continue to be treated. For lung cancer, it is assumed that individuals will survive for a maximum period of 10 years, with this applying to 5% of those contracting the disease. A further 5% will only survive for 8 years, while the remaining 90% are likely to only survive for around 5 years. Based on these time periods, the NPV of average future medical costs per case in 2014 prices is estimated at € 65,84036. The survival rates for intestinal cancer are assumed to be the same as those for lung cancer (but based on data for colon or bowel cancer), with the resulting NPV figure being € 77,130 per case in on-going medical costs.

The valuations of mortality and morbidity were multiplied by the estimated number of additional cancer cases in each scenario. The basic calculations are presented below:

(1) (π × (€ 5,000,000)) + (σ × (€ 396,000 + €65,841)) = Total lung cancer costs

(2) (0.44δ × (€ 5,000,000)) + (0.56δ × (€ 396,000 + €77,126)) = Total intestinal cancer costs

Predicted value of excess cancer cases for the Applied for Use Scenarios

Workers

The following table provides estimates of the additional number of lung cancers for the applied for use scenario, assuming '''' #A#''''''''''' for the continued use of sodium dichromate following the Sunset Date.

36 Note that for simplicity, both this calculation and that for intestinal cancer assume that all of the cancer cases would be contracted in 2017 with survival then occurring for up to 10 years after this date. More correctly, the number of cases involving survival would be spread over the 5-year period from 2017 to 2022. The calculations provided here therefore will overestimate costs by a small amount.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 39 Table 3-7: Additional number of occupational cancer cases under the Applied for Use Scenario Lung cancer Plant Mortality Morbidity (survivor cases) Total cases ''''' ''#A#'''''''' '''' '#A#''''''''' ''''' '''#A#'''''''' Alby ''''''''''''''' '''''''''''''' ''''''''''''''''' Stockvik ''''''#D#''''''''' '''''#D#''''''''' ''''''''#D#''''''''' Ambes ''''''''''''''' '''''''''''''' ''''''''''''''''' Oulu ''''''''''''''' '''''''''''''' ''''''''''''''''' Total ''''''''''''''' ''''''''''''' '''''''''''''''' Source: derived estimates from information received from the applicant Note: figures are rounded so totals may differ from sum of individual figures

In total, over the ''''' #A#'''''''' period during which sodium dichromate would continue to be used in sodium chlorate production, the additional number of cancer cases would be around ''''#D#''''''' (including both fatal and non-fatal cases), of which ''''''#D#'''''''''' cases would be fatal.

Table 3-8 applies the economic value of the associated health impacts to these additional statistical cases of cancer to generate the total economic damage costs of the additional lung cancer cases. Under the applied-for-use scenario, the present value costs are ''' #D#''''''' (in this case discounted over ''''' '''#A#'''''''', as appropriate). Note that these estimates assume that there is no increase in the number of workers at the applicant’s site, even though capacity is expected to increase.

Table 3-8: Present value and annualised economic value of mortality and morbidity effects (2014 prices discounted over '''' '#A#'''''''''' @4% per year) PV lung cancer Present value cost estimates Mortality Morbidity (survivor cases) ''''' ''#A#''''''''' ''''' ''#A#'''''''' Willingness to Pay (WTP) PV and direct medical ''' #D#'''''''' ''#D# ''' costs PV Total PV health impacts ''' '#D#'''''' Total annualised costs '' '''' Note: figures are rounded

3.1.4 Human Health impacts under the non-use scenario

Non-use scenario 2 is judged to be the most realistic scenario. Therefore, it is the only one that is considered in Section 3 and will hereafter be simply referred to as the “non-use scenario”.

Under the non-use scenario, the employees currently employed in the use of sodium dichromate to manufacture sodium chlorate would be made redundant. This also means that, after the plants have been decommissioned and the sites remediated where necessary, these employees would no longer have exposure to sodium dichromate. The costs outlined in Section 3.2.1 would therefore be avoided for each year of the applied for use.

However, during the process of decommissioning, there may be exposure to hazardous substances through the dismantling of existing equipment, its removal off-site and other site clean-up activities. This could take a period of at least one year, with subsequent remediation of any contaminated land taking several more years.

Although workers at the site may continue to handle sodium chlorate, this is not a carcinogen and therefore does not pose the same risks as the use of sodium dichromate does in the manufacture of the chlorate.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 40 It is assumed that worker exposures during these activities will be minimised and that proper personal protective equipment will be used. In comparison to the regular exposure of workers to sodium dichromate under the applied for use scenario, this short term exposure is not considered to be significant. It is therefore assumed that no worker exposure to carcinogens will take place under the non-use scenario.

Finally, it is important to note that although the non-use scenario would result in reductions in exposures of EU workers to sodium dichromate, these exposures would just be shifted to facilities outside the EU (whether at the applicant’s own facilities or at competitors production facilities). This is because the use of sodium dichromate is the only known process for producing the sodium chlorate. 3.2 Environmental impacts

3.2.1 Environmental impacts under the applied-for-use scenario

Production of Sodium Chlorate

The production of sodium chlorate is an energy intensive process, using 5,230 kWh/t (5.23 MWh/t) sodium chlorate produced (value obtained on the basis of default assumptions, as described in the AoA accompanying this SEA). Under the “applied for use” scenario, the applicant would continue to produce ''''''#B#'''''''''' tonnes of sodium chlorate per year, consuming '''#B#'''''''' GWh per year. Using greenhouse gas emission factors available from the UK Department for Environment, Food 37 38 and Rural Affairs the resulting emissions can be estimated at ''''#F#'''''''''' tonnes CO2e per year . This estimate assumes that the electricity is produced using the average mix of generating methods across the countries. The applicant’s own audit provides an estimate of 20,000 tonnes CO2e per year, taking into account a higher percentage of low-carbon electricity generating methods. As these emissions would continue outside of the EU and can be considered cross border impacts due to the nature of greenhouse gases, they are not considered further in this SEA for comparison with the non-use scenario.

Pulp and paper manufacture

Under the applied-for-use scenario, the Portuguese and broader EU pulp and paper industry would continue to use sodium chlorate to produce chemically bleached pulp using the ECF manufacturing process. The applicant’s downstream users in the pulp and paper sector would therefore continue to source their sodium chlorate from the applicant, as well as the other EU sources that they currently rely upon.

Historically there has been some debate as to whether ECF pulp manufacturing processes are environmentally damaging in comparison to TCF methods. More recently, however, there is now a consensus that ECF and TCF are both accepted as best available technologies for pulp bleaching, with no clear difference between either in terms of environmental impact (IPPC, 2015).

37 Available at: http://www.ukconversionfactorscarbonsmart.co.uk/, accessed 29 September 2014. 38 The DEFRA 2013 overseas electricity generation factors for France, Sweden and Finland were used alongside the plant nameplate capacities in those countries to derive a weighted average emissions factor: ((''''' ''' ''''''''''''''''' ''' ''''''''' ''' '''''''''''#F#''''' ''' ''''''' ''' ''''''''''''''''''''''''''''' ''' ''''''''''''' kg CO2e/kWh of electricity. Using this factor, the generation of ''#F#'''''''' GWh of electricity would generate an additional emission of ''''''#F#'''''''' tonnes of CO2e per year.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 41 The production of bleached pulp typically employs a sequence of different bleaching stages to achieve the desired characteristics (e.g. brightness and strength of pulp) and each mill may employ a range of different technologies in sequence. For example, typical pulp bleaching sequences involve39:

ECF: ClO2  extraction/O2 gas  H2O2  ClO2

TCF (peroxide): chelation  extraction/ H2O2  extraction  H2O2

TCF: chelation  ozone  H2O2  extraction  H2O2

The choice of technology depends on many factors, including the location of the mill and the facilities available in the surrounding area and economic factors associated with the cost of technology or materials. Ozone uses a considerable amount of electrical energy and chlorine dioxide must be manufactured on site and cannot be stored. The use of hydrogen peroxide, ozone or peracetic bleaching in combination with chlorine dioxide helps reduce the amount of chlorine dioxide required but, because they use requires chelation to ensure their process stability, they have an additional input of chelation agents that introduce a source of emissions.

The Best Available Technique Reference document (IPPC, 2015) describes the relative environmental impacts of TCF and ECF technologies and find that “[n]o clear difference in the effect pattern and effect intensity between effluents from mills using modern ECF (chlorate reduced) and TCF bleaching has been detected” and that “the entire mill operation including the waste water treatment system and the avoidance of disturbances and accidental releases are also crucial aspects to consider” when considering the impact from these two technologies.

The European paper industry has led the development of both ECF and TCF technologies to remain competitive despite cheaper production and raw materials costs elsewhere in the world (IPPC, 2015). These advances in technology have also driven reductions in emissions (CO2, COD/BOD, SO2 and AOX) of the pulp and paper industry by 60% between 1990 and 2008 (IPPC, 2015).

3.2.2 Environmental impacts under the non-use scenario

Production of Sodium Chlorate

The production of sodium chlorate outside of Europe under the non-use scenario would continue to produce cross-border environmental impacts associated with the externalities from electricity production in the same way as described under the applied for use scenario.

Pulp and Paper Manufacture

As noted above, the BAT Reference document (IPPC, 2015) for the pulp and paper sector states that there is no clear difference in environmental impact between the use of ECF and TCF technologies. As a result, there would be no reduction in downstream environmental impacts should pulp and paper mills be forced to move to TCF technology due to a shortage of sodium chlorate on the EU market.

39 Extraction involves use of sodium hydroxide; chelation involves use of agents such as ethylene diaminetetraacetic acid (EDTA).

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 42 Transportation

Under non-use scenario 2, as described in Section 2.5.3, the applicant would import sodium chlorate produced using their excess production capacity outside of the EU to supply their EU-based customers. The sodium chlorate product would need to be transported, therefore, from the applicant’s sites in North America and/or Brazil to the nearest container port by Heavy Goods Vehicle and then by ship to Europe. The increased emissions through transportation are estimated in Table 3-13 and Table 3-14 below. These estimates assume that, initially, at the beginning of the non-use scenario, the applicant’s spare capacity ('''''#B#''''''''''' tonnes per year) is split as follows:

  #B#         

''''''''' ''''''''''' ''''''' ''''''''''''''' '''''''''''''''''' ''''''''''''' ''' '''''''''''''''''' '''' ''''''''' '''''' ''''''' ''''''''''''''''''' '''''''''''''''' '''' ''''''' ''''''''''''' '''''''''''''''''' ''''''' ''''''''''''''''' ''''#B, C#''''''' '''''''' ''''' ''''''''' '''' '''''''''''' ''''''''''''''''''' ''''''''''''''''' '''' ''''''''''' '''' ''''''''''''' ''''''''' ''' ''''''''''' '''''''''''''''' ''''''''''''''''' '''''' ''''''''''''''''''' ''''''' '''' '''''''''''''''' '''' '''''''''' '''''' ''''''''''''''''''' '''' ''''''' '''''''''''''''''''''' ''''''''''''''''''' ''''''''''''''''''' ''''''''''''''''' ''''''''''''''''' ''''''''''''' '''''''''''

Monetisation of the greenhouse gas emissions associated with this transport of sodium chlorate from North America and Brazil is based on the methodology developed by the UK government for carbon valuation in public policy appraisal, as described above40. The value used in this assessment is £31/tonne CO2 for the year 2017 (year of the Sunset Date), valued at an exchange rate of £1 = €1.25 was used to convert the value in £ to € (€38.8/t).

Table 3-9: Estimate of carbon emissions of inland transport to shipping port Capacity Tonnage of Monetised Distance Location (Schlag & sodium t CO e/year damage cost Port location (km) 2 Mori, 2013) chlorate/year (€/year) ''''''''''''''''''' '''''''#B#''''''' '''''''#B#'''''' ''''#B#'''' '''''#F#'''''''' '''''''#F#'''''''''''' '''' '''#B#''''''''' ''''''''''' '''''''''''''''''''''' ''''' ''''''''''''''' ''''''''''''''' '''''''''''''' '''''''' '''''''''''' '' ''''''''''''''' '''''' '''''''''''''''''' ''''''''''''' ''''''''' ''''''''''''' '''''''''''''' ''''''' '''''''''''' ''' ''''''''''''''' ''''' ''''''''''''' '''''''' ''''''''''''''' ''''' ''''''''''''''' '''''''''''''' ''''''''''''' ''''''' '''''''''''' ''' ''''''''''''''''' '''''''''''''' ''''''' '''''''''''''''''''' ''''' ''''''''''''''' '''''''''''''''' '''''''''''''' ''''''' '''''''''' ''' ''''''''''''''' '''''''''''''''' '''''''' ''''''''' '''''''''''''''' '''''''''''''' '' ''''''''''''' ''' '''''''''''''''''''

40 Available at https://www.gov.uk/government/publications/updated-short-term-traded-carbon-values- used-for-uk-policy-appraisal-2014 (accessed on 13 December 2014).

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 43 Table 3-10: Estimate of carbon emissions through shipping to The Netherlands Tonnage of sodium chlorate Monetised Capacity (Schlag & Tonnes Location to be Distance (km) damage cost Mori, 2013) CO e/year transported 2 (€/year) (t/year) '''''''''''' '''''''''''#B#''''''''''''''''''' '''''''''''#B#''''''''''''''' '''''''''''#B#''''''''''''''' ''''''''''#F#''''''''' ''''''''#F#'''''' '''''''''''''''''''''' '''''''''''''''' ''''''''''''' '''''''''''''' ''''''''''''' '' '''''''''''''''' '''''' '''''''''''''' '''''''''' '''''''''''''' '''''''''''' '''''''''''' ''''''''''' ''' ''''''''''''' '''''''' ''''''''''''''' ''''''''''''''' '''''''''''' '''''''''' '''''''''' ''' '''''''''''''' '''''''''''''''' ''''''''''''''''''''''' '''''''''''''''' ''''''''''''' '''''''''''' ''''''''''' '' ''''''''''''''' '''''''''''''''' '''''''''' '''''''''''''' ''''''''''''' '' ''''''''''''' ''' ''''''''''''''''' Based on UK DEFRA conversion factors, for average container ship (size 0-8000 TEU capacity) of 0.016047 kgCO2e per tonne.km ''' '''''''''''''''' ''''''''''''''#F#' '''' ''''''''''' ''''' '''''''''''''''''' '''''''''''''' '''''''''''''' '''''''''''''''

The values above represent the annual impact arising from transportation of sodium chlorate to the EU under the non-use scenario. Table 3-11 provides the cost over the assessment period.

Table 3-11: Timeline of environmental impacts for non-use scenario 2017''''#A#''''''' Monetised E Monetised Discounted value impacts of inland impacts of sea Year Total (€ millions) PV at (4% per transport (€ transport (€ annum, € millions) millions) millions) 2017 ''' '#E#'''''''' ''' ''#E#''''''' ''' #E#''''''''' ''' #E#''''''''' 2018 ''' ''''''''' ''' ''''''''' ''' ''''''''' ''' ''''''''' …. ''' '''' ''''''''' ''' '''''''' ''' ''''''''' ''' '''''''' ''' '''''''' Total ''' ''''''''''' ''' '''''''''' ''' '''''''''' ''' '''''''''''

3.3 Economic impacts

3.3.1 Impacts under the applied-for-use scenario

Applicant

The applicant’s sites and operations are summarised in Figure 3-1 and Table 3-12, overleaf.

The applicant’s sites produce a variety of products with a different combination of products at each site. Table 3-12 below highlights current capacity and indicates the expected trends beyond 2017. '''' ''''''''''''''''' '''' ''''''''''''''''''' ''''''''''''''''' '''''''''''''''' '''''''''' ''''''' '''''''' ''''''' '''''''''' ''''''''''''' ''''''' ''''''''''''''''' '''' ''''''''' '''' ''''''''''''''''' '''' ''''' '''''''''''''''''''' ''''''''' '''''''''''''' ''''''''''#B, C#'''' '''' '''''''''' '''' ''''''''''''' ''''''''''''' '''' ''''''''''''' ''''''''''''''' '''' ''''''''''' ''''''' ''''''''''''''''''' '''''''' '''''''''''''''' '''''''' '''''' ''''''''' ''''''''''''''''' '''''''' '''' ''''''' ''''''''''''''''' '''''''''''''' '''''' ''''''''' '''''''''''''''' ''''' '''''''''' '''''' '''''''''''''''' ''''''''''''''' ''''''''' '''''''' '''' '''' ''''''''''''''' ''''''''''''' '''' '''''''''

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 44 ''''''' ''''' '''''''' '''' ''''''' ''''''' ''''''''''''''''''' ''''' ''''''''''''''''''' ''''''''''''''' '''' ''''' '''''''''''''' ''''''''' '''''''''''''' ''''''''' ''''' ''''''' '''''''' ''''''' '''''''''''' '''''''''''''''

Figure 3-1: AkzoNobel sodium chlorate annual production and main operations by site in 2017 (applied for use) in blue boxes. Country-wide sodium chlorate total capacity shown according to IPPC (2007)

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 45 Table 3-12: Summary of sites and business areas under the “applied for use” scenario (projected values for 2017 onwards) 2014 2017+ 2017 Sales Turnover (€ Profit (€ Turnover per Profit per tonne Site Product Production Production (tonnes per millions) millions) tonne (€/t) (€/t) (tonnes) tonnes (per year) year) ''''#B#'''''''''''''' '''''''''''''' ''''''''''''' ''''''''''''' ''' '''''#B#''''''' ''' ''''''''' ''' ''''''' ''' ''''''' '''''''''''' ''''''''''''' '''''''''''''' '''''''''''' ''' '''''''' '' '''''''' ''' ''''''' ''' ''''''' '''''''''' '''''''''''''' '''''''''''' '''''''''''' '''''''''''' '''''''''' ''' '''''' ''' '''''' ''' '''''''''''' ''' '''''''' ''''''' '''''''''' ''' ''''''' '' '''''''' ''''''''''''''''''' '''''''''''' '''''''''''''' '''''''''''' ''' '''''''' ''' '''''' ''' '''''''' ''' ''''''' '''''''''''''''''''''''''' ''' '''''''' '' '''''''' '''''''''''''''' '''''''''''''''''''''''''' '''''''''''''''' '''''''''''''''''''''''''''' '''''' '''''''''' ''' ''''''''' '' ''''''' '''''''''''''''''''' ''''''''''''' '''''''''''' ''''''''''''' ''' ''''''''' ''' '''''' ''' '''''''' ''' ''''' ''''''' ''''''''''''''''' '''''''''''''' '''''''''''' ''''''''''' '''''''''''' ''''''''''' ''' '''''' ''' '''''' ''' ''''''''''' ''' ''''''' '''''''''' '''''' ''''''''' ''' '''''''' ''' ''''''' ''''''''''''' '''''''''''' ''''''''''''' '''''''''''''' '''''''''''' '''''''''''''' ''''''''''''''''' '''''''''''' '''''' '''''''''' ''''''''''''' '''''' ''' '''''''' ''' '''''' ''' ''''''' ''' ''''' '''''''''''''' '''''' '''''''''' '''''''''''' '''''''''' '''''''''' ''' '''''' ''' ''''''' '''''''''' '''''''''''''''' ''''''' ''''''''''''' '''''''''''''' ''''''''''''' ''' ''''''' ''' ''''' ''' ''''''' ''' ''''' '''''''''' ''''''''' ''''''''''''' '''''''''' ''''''''''''' ''''''''' '''''''''''''' ''''''''''''''''''' '''' ''''''''''''''' '' '''''' ''' ''''''' '''''''' ''''' '''''''''''''''' ''''''''''''' ''''''' '''''''' ''''''''''''' '''''''' '''''''' '' '''''''' '' ''''' ''''''''''''''''''' ''''' '''''''' '''''''''''' ''''''''''''' ''''''''''''''' ''' '''''''''''''''' '''''''''''''' '''''''''''''''''''''' ''' '''''''''' '''''''''' ''''''''''' ''''''''''''' '''''''''''''' '''''''''' ''''''''''''' '''''''' ''''''''''''' '''''''''''''' '''''''''''''''' '''''''''''''''''''''''' '''''''''''''''''''''''''' ''''''''''''''' '''''''' '''''''' ''''''''''''''' ''''''''''' ''''''''' '''''''''' ''''''' ''' ''''''''''''''' ''''''''''''' ''''''''''''' ''''''' '''''' ''''' ''''''''''''''''' '''''''''' '''''''' ''''''' '''''''''''''''''''' '''''' ''''' ''''''''' '''''''''''''''' '''''''''''' '''''''''''''' '''''' ''''' ''''''''''''' '''' ''''''''''''' '''''''''''' ''''''' ''''''''''''''''' '''''''' ''''' ''' ''''''''''''''''''''''' ''''''''''''''' '''' '''''' '''''''''''''''''''' ''''''''' '''''''''' ''''' ''''''''''''' ''''''' ''''' ''''''''''''''' ''''''''''''' ''''' '''''''''''''''''' '''' ''''''''''''''' ''''''' ''''''''''''''' ''''''''' '''''''' '''''''''' ''' ''''''' '''' ''''''''''''''''' '''' '''''''''' ''''''''''''''''''' '''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 46 The applicant’s chlorate and chlorate-related products and the forecast 2017 turnover and profit associated with each is shown in Table 3-12. Over the assessment period, it is assumed that these will remain constant, resulting in the total present value estimates given in Table 3-13.

Table 3-13: Applicant’s turnover and profit across product line from 2017 until '''#A#'''''' Undiscounted value Discounted at 4% per year (€ millions) Year Turnover Profit Turnover Profit 2017 ''' ''''''''#B#''''''''' ''' '''''''''' ''' '''''''''''' ''' '''''#B#''''''''''' 2018 ''' '''''''''''' ''' '''''''''' ''' '''''''''''''' '' '''''''''''' …. ''' ''' '''' ''' ''''''''' '' ''''''''''''' ''' '''''''''' ''' '''''''''''''' ''' ''''''''''' Total ''' ''''''''''''''''' ''' ''''''''''''' ''' ''''''''''''''''' ''' '''''''''''

Upstream

The applicant’s processes currently consume raw materials purchased from upstream suppliers. The annual value of the applicant’s upstream supply chain is given below in Table 3-17.

Table 3-14: Value of upstream purchases by applicant for the applied for use scenario 2017'''#A#'''''''' Tonnes product Price per tonne Product supported Upstream material Total (€ million) supported (2017) product produced '''''''''''''' ''''''''''''' '''''''' '''''''''''''#B#''''''''''''''' '' ''''''''''''''''' '''''''''''#B#''''''''''' '''''''''''''''''' ''''''''''''''' '' ''''''''''''''''''''''''' '''''''''''''''' ''''''''''''''' ''''''''''''''' ''''''''''''''' ''''''''''''' '' ''''''''''''''''' '''''''''''''' ''''''''''''''''' '''''''''''''''''' ''''''''''''''' '''''''''''''''' ''' '''''''''''''''''''''''' '''''''''''''''''''' ''''''''''' '''''''''''''' ''' ''''''''' ''''''''''''''''''' ''''''''''''''' ''''''''''''''''' '''''''''''''''''' '''''''''' '''''''''''' ''' ''''''''' '''''''''''''' '''''''''''''''''''' ''''''''''''''' '''''''''''''' ''''''''''''' '''''''''''' ''' '''''''' ''''''''''''''''''''''' '''''''''''''''''' '''''''''''''' '''''''''' ''' '''''''' ''' ''''''''''''''''''''''' ''''''''''' '''''''''''''''''' ''''''''' '' '''''''''' '''' '''''''''''''''''' '''''''''''' '''''' '''''''' ''''''''' ''''' ''''''''''''' ''''''''''' ''''' ''''''' '''''''' '''''''''''''''''' '''''' '''''''''''''''''' '''''''' ''''''''''''''' '''''''''''''' ''''''''''' '''''''''''''

As explained in Section 2.4.2 on the applicant’s supply chain, the most important resource is the supply of electricity. It is assumed that the impacts on the suppliers of other materials would be minor in terms of their overall business. Over the '''#B#'''''''''' assessment period, the applicant’s purchases have a total present value of €'''#B#''''''''' million, of which €'''''#B#'''''' million would be for electricity.

Downstream

Under the applied for use scenario, the applicant would continue to provide its customers with '''''#B#'''''''''' tonnes of chlorate per year. This total takes into account downstream users both in and outside of the EU. Taking into account sales of ''''''#B#''''''''''' tonnes to EU downstream users alone, the applicant supports the production of approximately ''''''''''' '#B#''''''' ''''''''''''' kt of bleached pulp (assuming 15-50 kg of sodium chlorate per tonne of ECF pulp produced (IPPC, 2015). The value of this business is approximately €''''''#B#''''''' billion per year based on the market price of pulp of €''#B#''''' per tonne.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 47 3.3.2 Economic impacts under non-use scenario

The impacts on the applicant’s facilities are indicated in Figure 3-2, below. The '''''#E#''''''''' site would close and the non-chlorate operations at the other sites would be significantly affected ''''''''' '''''''' ''''''' #E#'''''''''''''' '''''''''

''''''''''''#B# ''''''' '''''''''''''''''' '''''''' '''''''' ''''''''''' ''''''''' '''' '''''''' ''''''''''' '''''''''''''''' ''''''''''''''''''' '''''''''''' '''''''' ''''''''''''''''' ''''' ''''' '''''''''''''' ''''''''''''''' ''''''

Applicant

On-going costs

Under non-use scenario 1, as described in Section 2.5.3, AkzoNobel would seek to import enough sodium chlorate to meet their expected post 2017 Sunset Date EU market share and pass the costs of transportation onto the downstream users. The closure of EU chlorate plants would also mean that the ancillary operations on the same site as the chlorate units would also be affected by increased running costs or face closure. Both of these would adversely affect the profitability of the applicant’s operation.

Provided the applicant was able to maintain their expected 2017 level of profit (''#B#'''''' euro per tonne of chlorate sold), the sale price of sodium chlorate would become €''#E#''''', taking into account the lower manufacturing cost outside of the EU (as explained in 2.5.3) and detailed below in costs to downstream users). This would allow the applicant to minimise the impact of non-use to their company. Although turnover would increase under this scenario (as per unit prices would be higher), the overall profits from sodium chlorate sales would be lower because the sales volume associated with current EU exports from the applicant’s four sites would be lost (i.e. it is not assumed that these sales are retained by the applicant due to price considerations). Nevertheless, the loss of sales from the closed product lines and the increased manufacturing costs across the remaining product lines means that the applicant’s profits would fall.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 48 Furthermore, it is questionable whether the applicant would be able to maintain their current per unit profit level on the chlorate. Competitors within and outside the EU may be willing to sell at lower profit margins to lower the sale price, making it impossible for the applicant to maintain the current level of per unit profits.

Table 3-15 sets out a summary of the forecast sales for the various products currently produced by the applicant at its different sites under the non-use scenario.

Table 3-15: Summary of sites and sales under non-use scenario (projected sales values for 2017 onwards) Sales Turnover Profit profit per Tonnage Turnover (€ Site Product (tonnes per tonne (million tonne (per year) millions) per year) (€/t) euro) (euro) ''''''''''''''' ''' ' ''' '''''#E#''''''''''' '''''''''''''' ''''''''''''' ''' ''''''''''' ''' ''''''' ''' '''''''' ''' ''''' ''''''''''''''' ''''''''''''''''''''' ''''''''''''''' '' '' ''' ''''''' '' ''' ''' ''''''' ''' ''' '''''''''' '''''''''' ''''''''''''' ''''''''''''' ''' ''''''''' ''' ''''''' ''' '''''''' ''' ''''''' '''''''''''''' ''''''''''' '''''''''' ''''''''''' ''' '''''' ''' ''' ''' '''''' '' ''' ''''''' '''''''''' ''' ''''''''' ''' ''''''' ''''''''''''''''' '' '' ''' '''''' ''' ''' ''' '''''' ''' ''' '''''''''''''''''''''''' '' ''''''''' ''' ''''''''' '''''''''''''''' ''''''''''''''''''''''''''''' '' '' '''''' '''''''''' '' '''''''''''''' ''''''''''''''''''''''' '' '' '''''' ''''''''' '' '''''' '''''''' ''' '''''''' ''' '''''''' ''''''''''''''''' '' '' ''' '''''' ''' ''' ''' ''''''' ''' ''' ''''''''''''''' '''''''' ''''''''''''''' '' '' '' '' ''''''''''''' '''''''''''' '''''''' ''''''''' ''' '''''' ''' '''''' '''''''''''''''''''' '' '' ''' '''''' ''' ''' ''' ''''''' ''' ''' '''''''''' '''''''''' ''' '''''' ''' '''''' ''''''''' ''''''''' '' '' '' '' '''''''''''''' ''''''''' ''' '''''' '' ''' ''''''' '' ''''''' '''''''''' ''' '''''' ''' ''''' ''' '''''''' '''''' ''''''''''''''''' ''' ''''''''''' '''''' ''''''''''''''' '''''''' '''''''' ''''''''''''' ''''' ''''''''' '''''''' '''''''''''''' '''''''''' '''''''''''''' '''''''''' '''''''' '''''''' ''''''' '''''''' ''''''''''' '''''''''' ''''''''''' '''''''''''' ''''' '''''' ''''''''''''' ''''''''''''''''''' ''''''''' '''' ''''''''''''''''' '''''''''''''''''''''''''' ''''''' '''''''''''' '''''''''''''''''' '''' ''''''''''''''''''''''' ''''''''''

A major additional cost under non-use scenario 1 is the replacement of the hydrogen currently co- produced by the sodium chlorate process. In order to continue hydrogen peroxide production at the site, investment of an estimated ''''' #E#'''''''''''''' in steam reforming technology would be required. In addition, there would be an increase in production costs of around ''''''#E# '''''''''''' per year (to produce a flow rate of ''''''''''' '''''''#E#'''''' '''' ''''''''''''''''''') at the Stockvik facility. As the hydrogen is currently co-produced with the chlorate, the applicant currently realises this annual figure of €'#E#'' '''''''''''' as an integrated production savings.

'''''''' '''''''''''''''''' ''''''''''''''' ''''''' '''''''''''#E#'''''' ''' '''''''''''''' '''''''''''''' '''''''''''''''''' '''''''''''' ''' ''''''''' '''''''' ''''''''' ''''''''''' ''''''' ''''''''''''''' '''''' ''''''' '''''''''''''''''' '''''' '''''''''''''''''' '''''''''''''''' ''''''' ''''''''''''''''''' ''''''' '''''''''''''''' ''''''''' '''' '''''' ''''''''' '''''''' ''''''''' '''''''''''''' ''''''''''''''' '''' '''''''''''''''''''' ''''''''''''''''' '''''' ''''''' ''''''''' '''''''' ''''''''' '''''''' '''''''''''''' '''''''''''''' '''' ''''''''''''''' '''''''''''''' '''''''''' ''''''''''' ''''''''''' ''''''' '''''''''''''''' '''''''''''''' ' ''''''''' ''''''' ''''''''''''''''' '''' ''''''''''''''''' '''' ''''''''''''''' ''''''' '''''''''' '''''''' ''''''''''' '''''''''' '''' ''''''' ''''''' '''''''''' '''''''''''''' '''' ''''''''''''''''' '''''''''''''''''' ''''

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 49 ''''''' '''''''''' ''''''' '''''''''''''''' ''''''''''''' '''''' ''''' ''''''' ''''' ''''''''' ''''' '''''' ''''''''' '''' ''''''''''''''''' '''''''' '''''''' '''''' ''''''''''' '''''' ''''''' '''''''''''''''''' '''''''''''' '''''''''''' ''''''' '''''''''''''#E#' ''''''''''''' ''''''''' '''''' ''''''''''''''''' '''''''' ''''''''''''''''''' '''''''''''''''''' '''''''''' ''' '''''''''' ''' ''''''''''' ''''''''''''' '''''' ''''''''''''' '''''' ''''''' '''''' ''''''''''''''''''' '''''''''''''' ''''''' ''''''''''''''' '''''''''''''''' '''' ''' '''''''''''''''''''' '''''''''''''' ''''''''' '''' '''''''' '''''' ''''''' ''''''''''''''''''''''''''' '''''''''' ''''''' '''''''''''''' ''''''''''''''''''''' ''''''''' '''' ''''''''' '''''' ''''''''''' '''' '''''''''''''' '''''''''''''''' ''''''' '''''''' '''' ''''''''''''''''''' '''''''''''''' ''''''''''''' ''' '''''''''' '' '''''''''''''' ''' '''''''''' ''''''''''''''' ''''''' '''''''''''' ''''''' '''' '''''''''' ''' ''''''''''''' ''' '''''''''''' '''''''''''' '''' '''''' '''''''''''''''''''' '''''''''' ''''''''''''' ''' '''''' ''''''''''''''''' ''' ''''''''''''' '''' '''''''' '''''''' ''''''' ''''' ''''' ''''''''''''''''''''''''' '''''''''''' ''''''' '''''''''''' ''''''''''' ''''''' '''''''''''''''' ''''''' ''''' ''' ''''''' ''''' ''''''''' ''' '''''''''''' ''' ''''''''''' ''''''''''''' '''''''''' ''''''''' ''''''''''' '''''' ''''''''''''''' ''''''''''''''''''' '''''''' ''''''''''''''''' ''''''''''' '''''''''''''''''''' '''''''' '''''''' '''''''''''''''''''' '''' '''''' '''''''''' ''''''' ''''''''''''''' ''''' ''''''' ''''''''''''''''''''' '''''''''' ''''''''''' '''''''''' '''''''' ''''''' '''''''''''''''' ''''''''''' '''''''''' '''' '''''''''''''' '''''' '''''''''''''' '''''''''''''' '''''''''''''''''' '''' ''' ''''''''' '''' '''''''' '''''''''''''' ''''''' '''''''''''''' ''''''''' ''''''''''' '''''' '''''''''''''' ''' ''''''' ''''''''''''''''' ''''''' ''''' ''''''''''' ''''''' '''''''''''''''''''' '''' ''''''' '''''''' '''''''' ''''''' ''''''''' ''''''''''''' ''''' ''''''''''''' ''''''''' '''''' ''''''''''''''''''''''''' ''''''''' '''''''''

The remaining product lines and changes in costs are described in Table 3-16, below. The sales volumes and prices for the ancillary operations are assumed to stay the same for the applied for use and the non-use scenarios. However, the additional costs that will be incurred under the non-use scenario will reduce profits further.

Table 3-16: Change in net annual profit due to loss of hydrogen use Income Net annual profit Turnover Gross Profit Change in costs Product (millions)

Sodium ''' '''#E#''''''''' ''' '''''''' chlorate '''''''''' '' ''''''''' ''' ''''''''' ''''' '''''''' '''' '''''''''''''''''' '''''''''' '' ''''' ''' '''''''' '''''''''''''''''''''''''' ''' '''''''' ''' '''''''' '''''''''''' ''''''''''' '''''''''' ''''''''''''''''''''''''''' ''''''''''' ''' ''''''' ''''''''''''' '''''''''''''''''''''''''''' '''''''''''' ''' ''''''' '''''''''''''' ''''''''' ''' '''''' ''' '''''' ''''''''''' ''''''''''' ''''''''' ''' ''''''''' ''' ''''''''''' ''''''''''''' '''''''''' ''' ''''''''' ''' '''''''' '''''''''' '''''' ''''''''

In comparison with the applied for use scenario, the applicant would see a significant reduction in annual profits from their pulp and paper chemicals related business, even when assuming that the same level of profitability is maintained. This is due to:

 Reduced sales volume from ''''''' #E#''''' '''''''' kt due to loss of non-EU exports – chlorate profits reduce by €''''''#E# '''''''''''''  Increased cost of production due to loss of heat from hydrogen – €''' ''#E#''''''''''' in increased costs across the sites  Overall, the profits reduce to: €''''''' '''#E# '''''' ''' ''' = €''''''' '#E#''''''''''''.

This estimate assumes that the downstream users in the pulp and paper sector would maintain their ECF production capacity in the EU. Although AkzoNobel would, in the event of refused authorisation, try to continue to sell in EU the volumes corresponding to its pre-Sunset Date market share, there is of course the possibility that mills in EU would react more strongly than anticipated. In particular, there is a possibility that some mills stop production in EU due to the logistic constraints caused by the need to import NaClO3. As many of the mills are part of global companies, the result may be an expansion of activities in lower cost countries, reflecting the more general increase that has been seen in pulp production in South America in particular.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 50 One-off costs and lost investments

In the event of a site closure, the applicant would be required to decommission the production sites. The cost of decommissioning, and especially site remediation, is highly uncertain; however, in the applicant’s experience, a typical cost of decommissioning is €'#B#''''''''' million (for example, the applicant incurred a cost of €'#B#'' million in 2009 in the recent decommissioning their Mo I Rana chlorate plant in Norway) without taking into account any soil remediation. Under this scenario, it is likely that each of the chlorate plants would incur a similar cost. In addition, the complete closure of the ''''#B#'''''''''' site would incur a higher cost due to the increased need to remediate the site.

The closure of plants would also mean disposal of the stock of electrolyte solution on the site. As noted in Section 2, this solution contains sodium chloride, chlorate and dichromate and is classified as hazardous waste. The cost of disposal for these materials has been described in the AoA and is estimated at €''''#E#'''''''''' million in total for the four sites or an average of €'''#E#'' million per plant.

Under this scenario, the EU production capacity would be transferred to non-EU countries'' ''''''' '''''''''''''''''' ''''''''''''''' '''''' '''''''''''''''' ''''''' ''''''' '''' '''' '''''''''''''' '''''''''''''''' '''' '''''''''''' '''''''''''''''' '''''''' ''''' '''' '''' ''''''''''''' ''' ''' ''''''''''''''''''' '''''''' '''''' ''''''''''''#B, E#''''' ''''''''''''''''' ''''''''''''''''' '''''''''''''' ''''''' ''''''' ''''' '''''''' ''''''''''''' ''''''''''''''' '''' '''''''''''' '''''''' ''' '''' ''' ''''''''''''' '''''' ''' '''' '''''''' '''''''''''''''' '''''' '''''' ''''''''''''''''''' '''' '''''''''' '''''' '''' '''''' '''' '''' ''''''''''''''''' ''''''''''''''''' ''''''' ''''''''' '''' ''' '''''''' '''' ''''' ''''''''''''' '''' '''''''''''''''''''''' ''''''''''' '''''''''''''''''' '''''''''' '''' '''''''''''''''''''''' '''' '''''''''''''''''''''''' '''''''''' ''''''' ''''''''''''' ''''''' '''''''''''''' '''''''''''''''''''''' '''''''' '''' ''''''''''''''''' '''''''''''''' '''' '''''''''' ''''''' ''''' '''''''''''''''' ''''' ''''''' '''' '''' '''''''''''''''''''''''''''' '''''''''' ''''''''''''' '''''''''''''''''' '''''''' '''' ''''''''''''''''''''

''''''''''''' '''''''' '''''''''''''''' ''''''''''''''''' ''''''' '''''''''''''#B, E#' ''''''''''''''' '''''''''''''''' ''''''' ''''''''''''''''' '''''''''''' '''''''''' '''' '''''' '''''''' ''''' ''''''' ''''''''''''''''''''''''' '''' ''''''' '''''''''''''''''' '''''''''''''''' '''' '''''''''''' '''''''''' '''''' '''''''''''''''''' ''''''''''' '''''''''''''' '''' '''''''''''' '''''''''' ''''''' ''''''''''' '''''''''''''''''' ''''''' '''''''''''''''' '''''''''' '''''''''''' ''''''''''''' '''''' ''''' '''''''' '''''' '''''''''''''''' ''' '''''''''''''''' '''''''''''''''''''. It has been estimated that it could take approximately '''''''''' '''''''''' to build capacity to replace the currently supplied amount by the applicant to Europe.

Installation of new equipment in ''#B#''''''' would also be a cost to the applicant’s group, but for the purposes of this analysis, these are not taken into account as they would be incurred by a separate legal entity. The costs are estimated though at €''#E#' million in equipment alone (without installation) per ''''#E# kt of additional chlorate production capacity or €'''''#E#'''' ''''''''''''' for '''#E#''''' kt additional capacity.

The one-off costs incurred by the applicant are summed in Table 3-17.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 51 Table 3-17: One-off costs incurred in a non-use scenario (€ millions) Plant Plant Remediation New Equipment Installation Total Decommissioning Alby ''#E#'''''' ''''' '''''''' ''''' '''''''''''''''' ''' '' ''' ''''''''''''''''''' '''''' '''''''' '''''''''' '''''''''''''''''''' ''''''''''''''''' '''''''''' '''''''''''''''''' '''''''''''' '''''''''''''' Stockvik ''''''' ''''''''''''''''''''' '''''''''''''''' '''''''''''' ''' ''' ''' ''''''''''''''''' ''''' ''''''''' ''''''''' '''''''''''''' '''''''''''''''''''' ''''''''''''' Oulu '''''''' '''''''''''''''''''' ''''''''''''''''' ''''''''''' '''''''' ''' '''''''''''''''' '''''' '''''''''' ''''''''''' '''''''''''' '''''''''''''' '''''''''''''' ''''''''''''''''''' ''''''''''''' Ambès ''''''' ''''''''''''''''''' ''''''''''''''' '''''''''' '''''' ''''''''' ''''''''' ''''''''''''' ''''''''''''' '''''''''' '' '' '''''''''''' '''''' '''''''' ''''''''' ''''''''''''''''' Total one- ''''''' ''''''''''''''''''''' '''''''''''''''' '''''''' ''''''''''' '''''''' ''''''''''' off cost ''''''''''''''''''' '''' ''''''''''''''' '''''''''''''''''' '''''''''''''' '''''''''''''' ''''''''''''' '''''''' '''' '''''''''''''''''''' '''''''''''''''' ''' '''''''''''''''''' ''''' ''''''' ''''''''''''''''' '''' ''''''''''''''''''''' ''''''' ''''''' '''' ''''''''' '''''' '''''''''''''''''' ''''''' '''''''''' ''''''' '''' ''''''''''''''''''''' ''''''''''''''' ''''''''' ''' '''''''''''''''' '''' ''''' ''''''''''''''''' '''''''''''''''' ''''''''''''' '''' '''''''''' '''' '''''''''' '''''''''''' ''''''' ''''''''' ''''' '''''''''''''''

Net impact of changes in costs on present value profits

The one-off costs calculated in Table 3-17 are assumed to occur in the first year of the non-use scenario. These costs could of course be amortised over a longer period of time and would incur interest over the loan period. However, for the purpose of this assessment, these additional loan costs are not taken into account. Based on the figures presented above, the total discounted value over the '''#A#''' year period from ''''#A#'''''''''''''''' will be used for the purpose of comparison with the applied for use scenario and shown in Table 3-18.

Table 3-18: Timeline of profits and costs for non-use scenario 2017-''#A#''''''' (€ millions) On-going Profit PV at Year Turnover Gross profit additional One-off costs Net Profit (4% per costs annum) '''''''''''' ''' ''''''' '' '''#E#'''''''''' ''''' ''' '''''''''' ''' '''''''''''''''' '''' 2017 ''''''''''' ''' '''''''''''' ''' ''''''''''' '''''''''''' '''''''''''' ''''''''''''''''''''''''' 2018 ''' '''''''''''''' '''''''''' ''''' '' ''' ''''''''''' ''' ''''''''''' …. ''''' '''' ''''' ''''' ''''' ''''' ''''''''' ''' '''''''''''''' '''''''''' ''''' '' ''' '''''''''' ''' ''''''''''' '''''''''''' '''''''' Total ''' '''''''''''' ''''''''''' ''''''''''' ''' '''''''''' ''' '''''''''' ''''''

Overall impacts on applicant’s company

The applicant will incur significantly reduced profits for the company as whole under the non-use scenario. Under the applied-for-use scenario, the expected total net profit in present value terms is €''''#E#''''''' million, while the expected total profit under the non-use scenario is €''#E#'''''''' million in present value terms. This represents a net loss of €''#E#''''' million in profit over the assessment period.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 52 These estimates assume that the applicant would be able to maintain their current level of profits per tonne of sodium chlorate sold and pass all relevant transportation and logistics costs onto the downstream user. There is no guarantee that this would be the case. As noted in Section 2, in the event of non-use scenario 2, it is likely that other non-EU producers of sodium chlorate would compete for the applicant’s market share; this may reduce the profits that the applicant would be able to obtain by importing sodium chlorate for sale in the EU. Should this be the case, the impacts for the downstream users would be reduced relative to those calculated below, and the costs to the applicant company would increase.

Upstream

The annual value of the applicant’s upstream supply chain was given in Table 3-14 above in Section 3.3.1. This shows the total value of lost sales for the upstream suppliers under the non-use scenario of '''''#B#'''''''' million per year.

When considering that €''#B#''''' million would be lost each year under the non-use scenario, the present value estimates reflect a considerable loss. The discounted value of the losses for the applicant’s suppliers between 2017 and '''#A#''''''' are shown in Table 3-19.

Table 3-19: Impacts for the applicants main upstream supply chains (€ million) Sodium Chloride Potassium Chloride Electricity Total Year Suppliers Annual ''' #B#'''''''' ''' ''''''''' ''' '''''''''' ''' ''''''''''' '''''-year total ''' '''''''''''' ''' ''''''''' ''' '''''''''''' ''' ''''''''''''' ''''' '''''''' PV (@4%) total ''' '''''''''''

Not all of these suppliers are based in the EU, including the suppliers of sodium chloride. In addition, the applicant is a relatively minor user of sodium chloride ''''''' ''''''#C#'''''''''''' '''''''''''''''', so it is unlikely that the loss of these sales would be significant for the upstream supply chain. The greatest costs would fall on the EU-energy suppliers and the applicant is a major customer in the countries where it operates. The purchases of electrical energy alone account for ''''''#E#''''' million in total or €''''#E#''''' million in present value terms (discounted at 4%) in losses to energy generation in Finland, Sweden and France. This estimate is based on the value of electricity alone (2014 prices) and does not take into account any further costs resulting in energy supply infrastructure being made redundant due to lack of use.

Alby and Stockvik are in areas of low population density and these sites are the major users of electricity in the region. The applicant’s facilities are a key part of electricity transmission infrastructure in the region; under the non-use scenario, the closure of these facilities could result in the transmission infrastructure becoming obsolete. The costs of this are significant and would have impacts beyond the energy suppliers but, due to lack of suitable information, these wider social and economic impacts have not been quantified.

Downstream

The applicant’s main customers are pulp mills and combined pulp and paper mills located both in and outside the EU. A very significant number of dedicated paper mills are also supplied in part by the applicant. These mills receive their sodium chlorate from a number of suppliers both inside and outside the EU.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 53 In addition, the applicant’s potassium chlorate is sold as an intermediate to EU companies that produce matches. According to the applicant, there are no other producers of potassium chlorate in the EU. These match producers would be affected but they should also be able to establish an alternative source of potassium chlorate from outside of the EU, at an increased transportation cost. The number of downstream users in each of these sectors is detailed in Table 3-20.

Table 3-20: Downstream users of sodium chlorate considered in this SEA Sector Number of EU customers Number of non-EU customers Pulp and paper mills ''''' ''''' Paper mills* ''''''''''#C#' ''''''' '''' ''''''' '''''''''' ''''''' '''' '''''''' Converters '''''''' '''''''''''''''' ''''''' ''''''''''''''''' Use by downstream users as '' intermediate ''''''''''' Use of potassium chlorate by ''' ''''' downstream users (producers of matches) ''' ''''''''''' '''''' ''''''' '''''''''''''' '''''''''' '''''''''''''''''''' '''' ''''''' '''''' ''''''' '''''''' ''''''''''''''' ''''''''''' ''''''''''' '''''''''' '''''' '''''''' ''''''''''''''' ''''' ''''''''''''' '''''''''''''''' ''''''''''' ''''''' '''''''''''''' '''' ''''''' '''''

As noted in Section 2, it is assumed that if the applicant were refused authorisation then all other applicants for the continued use of sodium dichromate in the production of sodium chlorate and potassium chlorate would also be refused authorisation. Because of the loss of all EU-based chlorate manufacturing capacity, all downstream users would be forced to accept an increase in the price of sodium and potassium chlorate or be required to replace their use with an alternative:

 Pulp and paper sector – existing ECF pulp mills would need to be replaced with TCF pulp mills. In terms of total pulp production volume, TCF is a minor technology in comparison to ECF  Users of potassium chlorate – No alternative substance is known to be available for these downstream users

The impacts under this non-use scenario are described for both of these groups below.

Pulp and Paper Sector

For the pulp and paper sector, the alternative technology to ECF pulp is the production of TCF pulp. TCF pulp relies on hydrogen peroxide and/or ozone for bleaching but avoids the use of sodium chlorate. In addition oxygen and peracetic acids have some use in both ECF and TCF methods.

In 2013, the EU 28 was a net importer of pulp: imports were 7.8 million tonnes, against exports of 3.5 million tonnes. The following figure shows the main import and export markets for the EU 28. In 2013, 44% of the pulp (3.4 million tonnes) came from Brazil, 19.7% (1.5 million tonnes) from the USA, and 16.4% from Chile (1.3 million tonnes). The remaining 19.9% (1.5 million tonnes) was imported from other European countries, Canada and South America. Regarding the exports, in 2013 almost 50% of EU 28 pulp was sold to China (1.7 million tonnes), 24% (0.84 million tonnes) to other Asian countries, and 18.4% (0.6 million tonnes) to other European countries.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 54 Figure 3-3: EU 28 international trade of chemical pulp, 2013 Source: elaboration based on COMTRADE (2015)

The prices of chemical pulp on the international market can be derived from data on international trade. In this respect, the following figure compares the prices of the EU 28 market with the US market. Between 2000 and 2013, chemical bleached pulp traded in the US market was consistently less expensive than that traded on the European market. On average, the price difference is estimated at €49 per tonne over the thirteen year period (FAOSTAT, 2015; ECB, 2015). According to these data, the average price per tonne of bleached sulphate pulp in the EU was €543, while it was €484 in the USA between 2010 and 2013. '''''''''''''''''''' '''' ''#C#'''' '''''''''''''''''''' ''''''''' ''''' ''''''' '''''''''''''''''''' ''' ''''''''' '''' '''''''''' ''''''' '''''''''''' '''''' ''''''''' ''' ''' ''''''''''''' '''''''''''''''' ''''' ''''''''' ''''''''''''' '''' ''''''' '''''' '''''''''''' '''''''' '''''''''''''' '''''''''''.

The alternative for pulp and paper manufacturers under the non-use scenario would be to move to TCF (Totally Chlorine-Free) or another kind of bleaching process (e.g. pulp bleached using molecular chlorine). In this respect, it is important to note that a key feature of the recent development of the pulp market has to do with the grade of pulp that is being produced. In 2012, ECF pulp production reached around 94 million tonnes, representing 93% of the world market share, while TCF maintains a small niche market of less than 5% of total production AET (2012). Moreover, since the 2009 economic crisis, ECF pulp production has been improved by new greenfield pulp mills.

Following this general trend, the European production of chemical pulp is also dominated by ECF, as indicated in Figure 3-4 for the Scandinavian region41. As noted earlier, the Best Available Technique Reference Document (IPPC, 2015) describes the relative environmental impacts of TCF and ECF technologies and find that “[no] clear difference in the effect pattern and effect intensity between effluents from mills using modern ECF (chlorate reduced) and TCF bleaching has been detected” and that “the entire mill operation including the waste water treatment system and the avoidance of disturbances and accidental releases are also crucial aspect to consider” when considering the impact from the two technologies.

41 Data are available only for the Scandinavia region, which can however considered as representative of the European region, as Finland and Sweden together produce 58% of the total chemical bleached pulp in Europe.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 55 Figure 3-4: Scandinavian Bleached Chemical Pulp Production: 1990-2012 Note: ECF - Elemental Chlorine-Free; TCF - Totally Chlorine-Free; Other – Pulp bleached with some molecular chlorine Source: AET - Alliance for Environmental Technology (2012) International survey http://aet.org/science_of_ecf/eco_risk/2013_pulp.html

Under the applied-for-use scenario, the pulp and paper sector is expected to be resistant to accepting changes in the price of sodium chlorate due to strong competition between EU-based chlorate suppliers. However, under the non-use scenario, the sector would be forced to find an alternative source of sodium chlorate (e.g. to import) or cease operation of their ECF pulp mills, as described above.

There is currently limited import and export activity for chlorates (according to Eurostat data). Therefore, it could be expected that the EU-supply of chlorate is price competitive with the rest of the world and that, if the EU supply of sodium chlorate were to be disrupted, downstream users would not immediately be able to source sodium chlorate from other suppliers outside of the EU due to strong (and growing) domestic demand in other chlorate producing regions. Instead, the capacity of non-EU manufacturers would need to increase and downstream customers would be forced to absorb an increase in sodium chlorate prices due to transport and storage costs.

Table 2-7 provided a summary of the impacts on EU sodium chlorate production capacity and the pulp and paper downstream sector under the non-use scenario. As described in Section 2.3, the applicant currently supplies sodium chlorate for the production of approximately ''''''''#B#'''''''''''''''' kt of ECF pulp in the EU. These pulp producers use 15-50 kg of sodium chlorate per tonne of pulp produced (IPPC, 2015) and so the cost of sodium chlorate accounts for only a small fraction of the total production cost of ECF pulp. Assuming that the cost of sodium chlorate is €''#B#'''' and this price is used for the analysis in Section 3), the cost of chlorate per tonne of pulp produced is €''#B#'''''' per tonne or between ''#B#''''' of the value of the bleached pulp42. This value is small but not insignificant. If the cost of sodium chlorate increases due to transportation and logistics, it

42 Using the applicants price under the applied for use scenario of €'#B#''' and 15-50 kg (or 0.015-0.05 tonnes) of sodium chlorate per tonne pulp required: 0.015 × '''#B#'''''' = €'''''''; 0.05 × €''''''''#B# ''' ''''''''''''. Pulp price is taken to be '''''''''' per tonne: €'''''' ''' '''''''''' ''' '''''#B#''''' '''''''''' ''' '''''''''' = ''#B#''''%.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 56 would only raise the final price of pulp by a small margin. It could be expected that the pulp and paper sector or their downstream users would be able to accommodate this increase in price.

The cost of converting a pulp mill to the use of TCF technology has been estimated at up to $US 10- 30 million per pulp mill by Greenpeace (2001). This largely agrees with the estimate provided in the latest BAT working document of €7-8 million for new hydrogen peroxide mills or €2-3 million for existing mills if the materials are compatible (IPPC, 2015).

Table 3-21: Investment and operating costs relative to ECF technology based on 1,500 tonne/day facility (IPPC, 2015) Additional operating cost (relative Technology Investment to ECF) Hydrogen peroxide (new) €7-8 million Hydrogen peroxide (existing) €2-5 million €18-21 million per year Hydrogen peroxide (compatible €2-3 million materials) Ozone €12-15 million €1.8-2.1 million per year

There are 77 Kraft (sulphate) mills and 16 sulphite pulp mills in the EU (IPPC, 2015). Assuming that all of these currently produce ECF pulp and that it costs €10 million to convert a single mill (as an average across all mills, and assuming that many would invest in ozone based technology to reduce on-going operating costs), the cost of conversion would be in the region of €930 million for the EU pulp and paper sector. In addition, the running costs of each mill would significantly increase by at least €1.8 million per mill/year if the mill moved to an ozone based process (involving the highest level of up-front investment), or by at least €167.4 million across the EU. Faced with this possibility, it is feasible that the downstream users of sodium chlorate would be willing to accept an increase in the price per tonne in the production cost of pulp in order to continue using ECF technology even if the price increases due to import; it is cheaper than the additional operating cost of either ozone or the hydrogen peroxide technology.

Under the non-use scenario, in the short to medium term, the non-EU sodium chlorate producers would react to the increase in demand and further increase their capacity accordingly. During the time that new facilities are being commissioned, which could take a number of years, shortages in supply could increase prices significantly and consequently smaller or marginally profitable mills could close.

It could be expected that both the price of sodium chlorate and global production capacity would stabilise over the course of the assessment period and for the sake of a conservative estimate, the implications of a relatively short term market disruption on price alone are not quantitatively taken into account in the SEA.

AkzoNobel’s '''#B#'''''''' non-EU capacity in sodium chlorate production would be able to be imported into the EU to act as a source of supply; however, import of ''#C#''''' kt of sodium chlorate would face considerable difficulties in terms of the logistics involved, including:

 Transportation by sea of ''#C#''' kt per year of sodium chlorate from the Americas to Europe  Transport from port to downstream user  Storage of sodium chlorate stock while awaiting use  Unpacking and dissolution of sodium chlorate to feed into the process  Disposal of packaging materials – these would be classed as hazardous waste as sodium chlorate is an oxidiser and the plastic packaging could act as a fuel. This could act as an explosive mixture, if not handled appropriately.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 57 Currently, sodium chlorate is transported by rail or tank truck as bulk solution or as crystals. Smaller quantities could be supplied in drums, hopper trucks or flexible intermediate bulk containers (“Supersacs”) (AkzoNobel, undated). For long distance transport over the sea, the applicant would be required to use Supersacs, loaded into ISO shipping containers holding 30 tonnes each for a 40- foot (Forty-foot equivalent Unit or FEU) or 15 tonnes for a 20-foot unit (Twenty-foot Equivalent Unit or TEU). Based on this assumption, approximately ''#F#'''''''' FEU ISO containers would be required to transport the '''#B#''''' kt of sodium chlorate required each year. Of course the number of actual containers would be lower because the chlorate deliveries would happen throughout the year, rather than in one shipment. The applicant estimates that '''#F#'''''''' TEU ISO containers (or 1000 FEU) would need to be rented for such purposes.

The estimated cost of transportation of sodium chlorate from ''''''''''' '''''''#E# '''''''''' '''''''''''''''' for the applicant is shown in Table 3-22 in 2014 prices. Under this scenario, this cost would be met by the increasing the sale price to downstream users.

Table 3-22: Cost of sodium chlorate transport (inland, followed by sea, 2014 prices) Container Total cost per Inland rental (€ per tonne Sea Location ($US cost per tonne based Bag disposal (assuming all ($US per tonne) tonne) on 2,000 from single containers) location) '''#C#''''''''' ''''#F#'''''''''''' '''''#F#'''''''''''''''''''' ''''#F#''''''''''''''' '''''#F#''''''''''''''''''' ''''''#E#'''''''''' ''''' '''''''''''''''' '''''''''''''''' '''''''''''''''' ''''''' '''''''''''' '''''''''''''''''''

As described earlier, the applicant would seek to meet the EU demand by increasing their sodium chlorate production capacity in '''''''''''' '#B, E#'''''''''''''''' ''''''''' '''' ''''''' '''''''''''''''''' '''' '''''' ''''''''''''''''' ''''''''''''''''' ' '''''''''' '''' '''''' '''''''''''''''' '''''''''''' ''''' '''''''' ''''''''' '''''''''' '''''''''''''''''' '''''''' '''''''' '''' ''''''''''''''''''''''''''' '''''''''' ''''''''''' '''''''''''''''' '''' '''''''''''' ''''''' '''' ''''''''''' ''''''''''''''''''''' ''''''''''''' ''''''''''''''''''''''''' ''''''''' ''''''' '''''''''''''''''''''' ''''''' ''''' '''''''''' '''''''''''' ''''''''''''''''''''' ''''''' ''''''''''''' '''' '''''''''' '''' ''''''''''''''''' ''' ''' ''''''''''''''''''' ''''''''' ''''' ''''' ''''''' ''''''''''''''' ''''''''''' '''''' ''''''''''''''''''' '''' '''''''''''' ''''' '''''''''''' ''''' ''''''' '''''''' ''''' ''''''' ''''''''''''''' '''' ''''''' '''''''''''''''''''''' ''''''''''''' ''''''' ''''''' '''''''''''''''' ''' ''''''''''''' '''' '''''''''''''''''''''''''''' ''''''' '''' ''''''' '''''''''''' ''''''''''''''''''''''''''''' ''''''''' ''''''''' ''''''''''''' Using the mid-range estimate shown in Table 3-22, the transport cost for downstream users would increase by '''''#E#'''''' per tonne.

If the applicant were to act as an importer, as proposed under this non-use scenario, then the applicant would have to re-register as an importer of sodium chlorate in order to import the sodium chlorate from its partner companies. Due to international transfer pricing measures, the applicant would source the chlorate from the outside of the EU at near the market price. Thus, it is the sale price of sodium chlorate in the USA or Brazil which is of relevance. Data indicates that the price is slightly lower than in EU, at around €420-480 per tonne in the USA43 or €430 on average for the 2010-201444, most likely due to lower costs of production stemming from lower energy costs.

43 The USA is the major producer of sodium chlorate; the price of sodium chlorate is 525-600 USD (average 535 USD) per tonne (1000 kg, 2010-2014) or approximately €420-480. 44 Sodium chlorate prices for the USA market were calculated using trade data provided by COMTRADE, where the substance is registered according to the following codes: HS - 2829.11; Sitc Rev 3 - 523.32. Data for imports and exports (in both quantity and value) were used to calculate an annual average US$ price between 2000 and 2013. The US$ prices were then converted to €uro using the annual nominal exchange rate provided the ECB. The final price - €430 per tonne - is the average price between 2010 and 2013. COMTRADE (2015) United Nations Commodity Trade Statistics Database, available at:

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 58 The applicant would therefore not be able to absorb additional transportation costs of between €'''#E#'''''' per tonne for transportation in order to sell sodium chlorate at the current price of €''#E#''''' At most, the applicant could absorb around €''#E#''''' per tonne (assuming they were able to buy product at the lower market price from its US partner companies) 45, although this would yield no profit margin to the applicant. Although the turnover of the global group which the applicant is part of may remain the same under such an arrangement, the applicant as a legal entity would not be able to operate under this scenario and the group would experience a loss in EU sales volume, turnover and profits. Costs would have to be passed to downstream users.

Taking €430 as the estimate of the market price and assuming that the applicant maintains the level the level of profit expected under the applied for use of €''#E#'''' per tonne, the price of sodium chlorate for the applicant’s downstream users would become ''''#E#'''''' ''''''' ''' ''''''''' ''' '''''''''' per tonne or an increase of '''''#E#' '' ''''''''' ''' ''''''''' per tonne in comparison to the applied-for-use scenario.

Taking into account this difference in price, the annual cost to the applicant’s downstream users in the Pulp and Paper sector is estimated at €''''#E#'''' million. The total increase in costs for the downstream pulp and paper sector are estimated at €''''#E#''''''' million in PV terms (discounted at 4% per year).

As discussed above, these are conservative assumptions as they only take into account the cost of sea transport and no other costs associated with transportation, such as intermediate storage, road transport within Europe, and handling of bulk chlorate in flexible intermediate bulk containers.

In addition, because of the longer distance and length of transportation time over sea, additional sodium chlorate storage capacity would be required at the pulp mills (the main customers) to ensure supply is maintained in case of delays caused by shipping over some 6,300 km from Quebec, Canada, 8,000 km from Belem, Brazil to Europe, 9,000 km from Mississippi or 16,000 km from the applicants Washington State facility by sea alone. These passages take approximately 7-19 days to reach Europe46 not taking into account:

 Transport from production site to port  Loading and unloading at the port and any customs procedures required  Transport from port to any distribution centre, and  Transport to downstream user.

This represents a considerable increase in the complexity of logistics required to guarantee a continued supply of sodium chlorate to the pulp and paper mills. Downstream users in the pulp and paper sector are reliant on timely deliveries of sodium chlorate and so the possible interruption to supply caused by delays due to complex logistics would be a concern. Sodium chlorate is a hazardous material and as such can be subject to delays along the supply chain, particularly at

http://comtrade.un.org/db/; ECB (2013) Statistical Data Warehouse - European Central Bank, available at: http://sdw.ecb.europa.eu/ 45 Due to international transfer pricing measures, the applicant would source the chlorate from the outside of the EU at near the market price. 46 At 19 knots (UNCTAD, 2014) or 35 km/h, a 6,000 km passage takes 171 hours and a 16,000 km passage takes 457 hours.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 59 transport terminals where material incompatibilities could result (e.g. transport of oxidisers such as sodium chlorate and organic materials that can act as fuels (ICIS, 2013).

Downstream users would be expected to increase their storage capacities to compensate for the possibility of delays in sodium chlorate deliveries. '''''''#E#''''''''''''' ''''' '''''' '''''''''''''''''''' ''''''''' '''''''''''''''''''''''' '''''''''' '''''''''''''''' ''''''''''''' ''''''''''''''''''' '''''''' '''''''' ''''''''''' ''''''''''''''' ''''' '''' '''''' '''''''''''' '''' ''''''''' '''''''''''''''' ''''''''' ''''''''' '''''''' '''''''' ''''''''''''''' '''''''''''''''' ''''' ''''''''''''''''''''''''''' ''' ''''''''''''' ''''' ''''''''''''' ''''''''''''''''' ''''''' ''''' '''''''''''''''''''''''''' '''''''''''''''' '''''''''''''' '''' '''''''''''''''' ''''''''''''''''' '''''' ''''''''' '''' ''''''' ''''''''''''' '''''''' '''''''''

Alternatively, the applicant would be required to maintain distribution centres to unpack, sieve (to remove caking during transportation) and repack into bulk containers. This would also mean that downstream users would not require significant changes to their processes (such sieving or dissolution of chlorate) and so minimise disruption for them but at a significantly increased cost to the applicant. The applicant estimates that at least three distribution centres, each holding 7,000 tonnes of sodium chlorate would be required. As these sites would not be simply sites for temporary storage of sodium chlorate (Oxidising solid, >200 tonnes), they would also need to be subject to the requirements of the SEVESO III directive (2012/18/EU) as a higher-tier facility. This has implications as to what other businesses can be adjacent to the facility and so siting of these facilities could be problematic and result in additional transport distances. In order to meet the demand of existing customers and to avoid additional SEVESO generation, these distribution centres could be sited at location of the existing facilities.

Besides the additional transportation costs, these distances clearly increase the carbon footprint of the process (see Section 3.3 on environmental impacts) and the logistical challenges introduced by transporting large quantities of hazardous materials globally. For the applicant’s EU customers, who would typically receive their chlorate in bulk tankers or containers, the use of Supersacs would introduce an additional need to unpack the containers and dispose or handle the packaging as well as dissolving the sodium chlorate for use in their processes.

An important consideration for this SEA is that under the non-use scenario, all other manufacturers of sodium chlorate would also be required to cease production in the EU. This means that the entire European demand for sodium chlorate would need to be met by imports. Assuming that the cost of sodium chlorate rises by ''#E#''''''' per tonne for all pulp and paper downstream users, the cost of meeting the 559,000 tonnes annual demand (see Section 2.3.2) is €''#E#'''''' million per year. Over the ''''''#A# '''''''' assessment period, this is a total of ''#E#''''''''''' million in discounted costs (at 4%) across all EU downstream users of sodium chlorate.

Downstream users of potassium chlorate (producers of safety matches)

As described in Section 2, a refused authorisation would lead to the loss of potassium chlorate for downstream customers in the match industry. Currently, the applicant supplies potassium chlorate to ''#C#''' customers, of which #C#'' and '#C#'''' non-EU. While it is expected that these customers would be able to source potassium chlorate from elsewhere, the EU based producers would be adversely affected by higher transportation costs due a cessation of potassium chlorate production in the EU - the applicant is the only supplier of potassium chlorate in the EU. It is assumed that customers outside the EU would be able to source potassium chlorate at a relatively similar price but lower quality.

Applying the same transportation costs derived above for the pulp and paper industry, it is possible to estimate the potential impact on EU based customers of potassium chlorate. Currently, the applicant manufactures and sells ''#B#''''''''' tonnes of potassium chlorate. The applicant estimates

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 60 that total sales to the EU are in the region of '''''#B#'''''' tonnes per year. Table 3-23 applies this estimate to the transportation costs derived above.

Table 3-23: Estimated increase in transportation costs (TC) for EU potassium chlorate customers Estimated annual Total estimated Location Number of customers TC increase tonnage used annual TC increase EU '#C#' '''#C#''''''' '''#B#'''''''' ''''''#B#'''''''''''' Non-EU '''''' ''''''''' '''''''''''''''' '''' '''''''''''' ''''''''''''''' '''' ''''''''''' Source: calculations based on applicant’s information

For the purposes of this evaluation, the economic impact on the users of potassium chlorate is considered to be a minimum of €''#E#'''''' million in present value terms discounted at 4% for the assessment period. This figure takes into account only the increase in cost of transport and is therefore likely to be a gross under-estimate. The calculation assumes that the price of potassium chlorate is constant across both EU and non-EU markets (i.e. the additional transportation costs would not be compensated by lower prices). Currently, the applicant’s customers pay a price of around €''#B#'''''''' per tonne of potassium chlorate. While this may not be case at present, it is reasonable to assume that the cessation of production activities in Europe’s sole supplier of potassium chlorate would place an upward pressure on prices. Likewise, match producers in the EU may face additional costs associated with broader supply chain management such as longer lead times, higher transaction costs and increased supply risk. It is thus reasonable to assume that the costs presented in Table 3-23 are indicative of the potential impacts that would arise for EU match producers in the event of a refused authorisation. However, it does not take into account any impacts arising from disruption to their supply of potassium chlorate such as the cost of temporary shutdowns of match production.

Other sectors

A further downstream impact, that is not considered in detail in this SEA, is the sale of hydrogen peroxide to the ''''''#C#'''''''''''''''''' '''''''''''''. The applicant’s Alby site is a '''''''''''#B#'''''''''' '''''''''''''''' of hydrogen peroxide ''''''#B# ''''''' ''''''''''''' and these downstream users may be required to switch to a more toxic alternative if their supply of hydrogen peroxide is disrupted.

3.3.3 Differences between the scenarios

This SEA takes into account the economic impacts from the non-use of sodium dichromate for the applicant’s upstream suppliers of energy and materials, the applicant’s company and EU downstream users of sodium chlorate. It is based on non-use scenario 2, as this is the most likely response of AkzoNobel to a refused Authorisation. In total, the economic impact of the non-use scenario is estimated at €'#E#'''''' million in lost economic value across the EU-27 over the assessment period, relative to the applied for use scenario. This considers only the impact on AkzoNobel profits and the increased cost to its downstream users for sodium chlorate in the pulp and paper sector only. It does not take into account the impacts of the loss of hydrogen peroxide capacity on the same sector. The pulp and paper sector impacts are therefore considered an under- estimate. In addition, depending on the number of SDAC members granted or refused authorisation the impact on the wider pulp and paper sector can vary significantly. For the purpose of deriving impacts on downstream users (and wider economic impacts in Section 3.6 below), it has been assumed that all EU sodium chlorate producers would be affected by the non-use of sodium dichromate, leading to a cessation of sodium chlorate production.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 61 Table 3-24: Summary of economic impacts relative to the applied for use scenario Total Value 2017-'''#A#'''''' (PV € millions Impact Type of impact @4%) relative to applied for use Upstream supply chain Lost sales '' '' ''#E#''''''''' Applicant company Reduced profits '' ''' '''''''' Downstream users – pulp Applicants market share: - ''' ''#C#''''''''' Increased production costs / and paper sector and users EU-27: - ''''#C#'''''''' million across the reduced profits of potassium chlorate sector 3.4 Social impacts

3.4.1 Impacts under the applied-for use scenario

Table 3-27 provides a summary of the total number of jobs that would be retained under the applied for use scenario.

Table 3-25: Total number of FTE jobs under the applied for use scenario Plant/process Number % of total Production of sodium chlorate in Alby '''#D#'''''' ''''''''' Production of sodium chlorate in Stockvik ''''' '''''''' Production of sodium chlorate in Ambès '''''' '''''''' Production of sodium chlorate in Oulu ''''' ''''''''' Potassium chlorate manufacture in Alby ''''''' '''''' Production of PAC in Oulu ''' '''''' Chlor alkali and HCl plant in Oulu ''''' '''''''' Total ''''''''' '''''''''''

3.4.2 Impacts under the non-use scenario

Employment

Under the non-use scenario, the halting of production at multiple sites would result in both direct and indirect employment effects. In total, all ''#D#''''''''' full time equivalent (FTE) jobs would be lost across the operations of AkzoNobel, with the largest proportion of these losses occurring at the Alby plant ''''''#D#''''''' of the total). The majority of the FTE jobs lost (''#D#'''''''') would be associated directly with the production of sodium chlorate while an additional ''#D#''''''' FTE jobs would be lost in auxiliary operations (e.g. production of PAC).

The employees affected by the closures would consist of process operators and engineers, maintenance staff and laboratory technicians. The applicant has stated that all jobs would be lost because the customer service desk would look after overseas orders. Furthermore, the applicant has asserted that these jobs could not be maintained or relocated to elsewhere in the company.

A number of subsidiary companies also provide maintenance and logistics services to the sites. The values of these contracts are large and have a combined value of €''#C#''''''' million across all operations (see Table 3-26). In the event that no authorisation was granted, these contracts would be lost and this could result in a loss of employment at these firms, the magnitude of which would be company specific and thus difficult to determine without further consultation.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 62 Table 3-26: Total value of contracts with third parties Plant/process Transport Maintenance Misc. Production of sodium chlorate in Alby ''#B, C#''''''''' ''''''''''''' ''''''''''''' Production of sodium chlorate in Stockvik '''''''''''' ''''''''''' '' Production of sodium chlorate in Ambès ''''''''''''' ''''''''''''' '' Production of sodium chlorate in Oulu ''''''''''''' '''''''''''' ''

Hydrogen peroxide manufacture in Alby ''''''''''' '''''''''''' '' Potassium chlorate manufacture in Alby ''''''''''' ''''''''''''' '' Manufacture of expandable microspheres in Stockvik '''''''''''' '' '' Chlor alkali and HCL plant in Oulu '''''''''''' ''''''''''' '' Total ''''''''''''''' '''''''''''' '''''''''''

Impacts on unemployment and social conditions

The loss of ''''#D#'''''' FTE jobs would not have a large direct impact upon unemployment at the macroeconomic level. However at the micro level, the impacts would vary significantly among the localities. In small localities, such as Alby and Ambès, it could be argued that the impacts of the plant closures would be more pronounced. The locality of Alby has a small population of 367 inhabitants and is relatively remote - it is situated approximately 106km from the regional centre of Sundsvall47. Furthermore the Ånge municipality is largely rural and has a very low population density48 of 3 inhabitants per km2. It is therefore likely that the plant and its workers contribute significantly to the local economy, both in terms of employment opportunities and local spending.

With regards to the social implications, it is important to note that the population of the Ånge municipality has been steadily declining since the late 1960s. SEMIGRA (2012) states that the population decline has been an issue across Västernorrland County due a combination of out- migration and natural population decline. In particular, out-migration has been driven by a number of factors such as de-industrialisation, the draw of the urban lifestyle, high levels of unemployment and public sector restructuring, amongst others49. Migration is particularly high among the 18-24 age group and women (SEMIGRA, 2012), which has implications for the future demographic of the county. It can be argued that the loss of an industrial plant and jobs could contribute to this trend.

Similarly, the closure of the plant in Ambès could also have significant impacts upon unemployment and social conditions in the locality. As of 2011, there were approximately 169 individuals unemployed in the Ambès commune50. An additional loss of 44 jobs could therefore increase unemployment in absolute terms by approximately 26% to 213 individuals, assuming that unemployment has remained relatively constant at the 2011 level. It is also important to note that 72.7% of residents in Ambès work outside of the commune, indicating that the locality itself does not support a large number of jobs and it thus likely that those made unemployed would have to search for employment elsewhere (e.g. Bordeaux) (see Annex for further details).

On the other hand, in larger localities, the effects of the closures may be less pronounced as the total number of affected jobs only represents a small percentage of total employment. The Stockvik plant for example is located only 8.2km from the city of Sundsvall, the largest city in Västernorrland

47 As determined in Google Maps. 48 http://www.ange.se/ange/105.html 49 See Rauhut & Johansson (2012) and SEMIGRA (2012)for an overview of these factors. 50 Based on INSEE data that states 9.4% of the population aged 15-64 years (1,800 individuals) are unemployed.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 63 county and forms part of the broader Sundsvall municipality. As discussed earlier, the Sundsvall municipality has a population of 96,943 and therefore the loss of 26 FTE jobs will not make a substantial impact on the level of unemployment. Moreover, the municipality is one of the only parts of Västernorrland county that experiences net in-migration (as opposed to Ange) as it has relatively low unemployment, a university, a large hospital and a relatively female-friendly labour market with a large service sector (SEMIGRA, 2012).

Nonetheless, it should be noted that Oulu has suffered from a persistent level of high unemployment over recent years. In 2014, there were 17,492 unemployed job seekers in Oulu of which 4,641 were long term unemployed (see Table 3-29). Assuming the same level of unemployment it can be calculated that total unemployment in Oulu would directly increase by around 0.2%51 in the non-use scenario. While this is a relatively small increase, it should be noted that any additional unemployment (regardless of the magnitude) would be undesirable a societal viewpoint.

Across all the locations, workers affected under the non-use scenario could face a significant welfare loss due to a loss of income. The applicant estimates that the total wage bill that would be lost in the event of a refused Authorisation is €9.43 million (see Table 3-27). Workers at the Alby plant would be affected considerably as it accounts for the largest wage bill and the applicant has stated that there are no opportunities to find jobs of a similar role and pay level within the locality. It is therefore likely that such workers would have to relocate to find work and thus incur additional costs (e.g. job and housing search costs). In the three other locations, the applicant has stated that the workers receive a level of pay comparable to those in the surrounding areas and that jobs exist nearby in similar roles.

Table 3-27: Total wage bill of workers to be made redundant Plant/process €/y Production of sodium chlorate in Alby ''''''#E#''''''' Production of sodium chlorate in Stockvik ''''''''''''' Production of sodium chlorate in Ambès ''''''''''''' Production of sodium chlorate in Oulu ''''''''''''

Potassium chlorate manufacture in Alby '''''''''''' Production of PAC in Oulu ''''''''''' Chlor alkali and HCL plant in Oulu ''''''''''''

Pulp mill in Oulu (ClO2) '''''''''''' Total ''''''''''' Note: 1 SEK = 0.107166 EUR

It is important to note that the closure of the plants could have indirect employment impacts due to the inherent linkages with other sectors. It is difficult to precisely quantify the scale of such effects but, in general, reductions in employment at the four locations can be expected to have wider implications due to multiplier effects on the local and wider domestic economy (as well as more limited effects at the interregional level).

A recent report for DG Employment, Social Affairs and Inclusion (Stehrer & Ward, 2012) provides calculations of domestic and interregional employment multipliers for a range of countries and sectors. These multipliers provide an estimate of the number of additional jobs that are expected to be created in response to each job created in a particular sector, resulting from changes in demand and supply along supply chains and considering linkages between different sectors.

51 Assuming the 2014 level of unemployment.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 64 Table 3-28: : FTE jobs at and dependent on operations at Akzo Nobel “Applied for Use” Scenario Domestic Interregional No. Total Jobs multiplier multiplier Total FTE jobs in Finland '#D#'''' ''''' Additional FTE jobs inside 2.6 '''''''''''' Additional FTE jobs outside 4.7 ''''''''''

Total FTE jobs in France ''''' '''''' Additional FTE jobs inside 4.9 ''''''''''' Additional FTE jobs outside 7.0 '''''''''''

Total FTE jobs in Sweden ''''''''' ''''''''' Additional FTE jobs inside 2.3 ''''''''''' Additional FTE jobs outside 4.7 '''''''''' Total '''''''''''''''

Table 3-28 shows that some ''#D#'''''''' FTE jobs across AkzoNobel’s operations (in France, Finland and Sweden) and further afield would therefore be maintained under the applied for use scenario. In the event that no Authorisation is granted, under the non-use scenario, these ''#D#'''''''' FTE jobs would be lost, directly at the four locations and more widely within the respective countries and abroad as a result of decreased demand.

It may be the case that in the event of a refused Authorisation, supply of the products currently manufactured by AkzoNobel will be taken up by other EU suppliers or non-EU suppliers. It cannot be certain whether this would translate into new jobs within the EU and where these jobs would materialise. An increase in production/supply volumes by competitors to AkzoNobel would not necessarily result in them hiring additional members of staff.

Possibilities for re-employment

While the overall impacts on employment and social conditions may not be large, it can be argued that some of the workers affected under the non-use scenario would find it difficult to regain employment in the short term52. As discussed in the preceding sections, the unemployment rates in the localities of Ange (the municipality surrounding Alby), Sundsvall and Oulu are relatively higher than their respective national averages (the labour market situation in the Sundsvall municipality is less clear due to a lack of comparable data). This indicates that there is an excess supply of labour over demand in these localities thus hindering the prospects of re-employment for those workers affected under the non-use scenario (in the short term).

Table 3-29 presents the number of employees affected at each plant by their respective levels of education. The applicant has stated that all employees in its plants display a comparable or higher level of education relative to the workers in the surrounding areas. Nevertheless, it can be argued that workers with the lowest level of education would have the most difficulty regaining employment. For instance, at the Stockvik plant 72% of the workforce has just primary education, which is significantly higher than the Sundsvall municipality average of 18.8%. Likewise, at the Ambès plant 61.5% of the workforce has attained only primary level education whereas in the surrounding commune the corresponding level is 10.5%.

52 Less than a year.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 65 Table 3-29: Total number of jobs lost by educational attainment Relative No Tertiary Plant (location) Primary Secondary education qualification (academic) level Sodium chlorate (Alby) Only a few Only a few The majority Only a few higher Sodium chlorate (Stockvik) 0 18 1 6 comparable Sodium chlorate (Ambès) 0 24 10 5 comparable Sodium chlorate (Oulu) 0 3 8 9 comparable

Potassium chlorate (Alby) Only a few Only a few The majority Only a few comparable PAC (Oulu) - Chlor alkali and HCL (Oulu) 0 3 8 9 - Note: Relative education level refers to the difference between the education level of affected workers and those in the surrounding locality

Another sub-group of employees that could find it difficult to regain employment are those aged over 50 years. The applicant has indicated that in all four localities it may be very difficult for workers from this age group to regain employment as opportunities are very limited. For instance, France and Finland have some of the highest unemployment rates for older individuals (aged 55-64 years) amongst the OECD countries at 7.3% and 7.7% respectively – the OECD average is 5%53.

Women made redundant at the Alby and Stockvik plants could also face potential difficulties. Information from the applicant shows that females account for '''''#D#''' ''''''' jobs in Alby and '#D#' ''''''' jobs in Stockvik. A recent report by Rauhut & Johansson (2012) highlights that the regional labour market in Västernorrland county is less female friendly than others within Sweden (e.g. Stockholm). This is because the labour market has become segmented with a high proportion of male dominated and industrial jobs, which in turn has led to a high rate of female migration (SEMIGRA, 2012; Rauhut & Johansson, 2012).

Summary of employment impacts

Under the non-use scenario it is expected that around ''''#D#'''''''' FTE jobs could be lost, both directly (163) through the closure of the plants/lines and indirectly (1370) through the various linkages that exist between the plants and other sectors of the economy.

The analysis has highlighted that the employment impacts are likely to be localised and will reflect each specific regional labour market situation. It has found that the impacts of the non-use scenario is likely to be strongest in the Alby locality, which has a small local population and is relatively remote compared to the other localities assessed. The employment impacts could also be significant in the Ambès commune, which like Alby, has a small population. On the other hand, in larger localities such as Oulu and Sundsvall the employment and social impacts are less likely to be evident, although Oulu is recently experiencing the loss of other jobs due to the decline in companies such as Nokia. Nevertheless, these regions exhibit high existing levels of unemployment and this will hinder the re-employment possibilities for the affected workers.

53 http://stats.oecd.org/index.aspx?queryid=36499

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 66 Local communities

The increase in unemployment could have implications for the local communities as the subsequent need to commit budgetary resources (via unemployment benefits and social security) to these areas, would increase. The municipal and county budgets could be placed under strain as they would be faced with a reduction in level of income received through taxes, due to the closure of the sites, and a subsequent increase in expenditures, as a result of increased unemployment.

Local shops, restaurants and service providers, which are currently used by the workers, could also be negatively impacted through reduced demand for their goods and services. As shown in the previous sections, the aggregate annual wage bill that would be lost amounts to ''#E#'''''''' million across the localities - the largest loss of wages in a single locality would occur at Alby '#E#'''''''''' million per year). It is reasonable to assume that a proportion of these wage bills would be spent within the localities and would be lost in the event of a refused authorisation. While the magnitude of this effect is difficult to quantify, it could possibly lead to subsequent decreases in employment amongst service providers.

Lastly, AkzoNobel supplies energy to the Ange municipality. The supply of energy is with excess hot water from the cooling of the process it is designed for 22-26 GWh per year. For 2014, the actual heat value was 21,496 MWh corresponding to heating of 1,000 homes54. The closure of the site could therefore cause disruption for the local community and force individuals to spend time and effort looking for new suppliers, whose supply would likely be more costly than that currently provided by AkzoNobel. 3.5 Wider economic impacts

3.5.1 Effects on competition and competitiveness

Competition and competitiveness effects under the applied-for-use scenario

As it currently stands, there are 7 companies producing sodium chlorate using sodium dichromate in the EU, with two companies located in Norway having closed recently due to lack of profits. The majority of the supply (''#B#''' '''''''''' is accounted for by the applicant and two other companies with the remaining four accounting for the remaining ''#B#''''''. The market is currently dominated by the applicant and two other companies and there remains competition within the EU market. This can be concluded from the fact that imports into the EU are small, indicating that buyers of chlorate in the pulp and paper sector are not able to obtain supplies at significantly lower prices by importing.

Similarly, the recently published BREF note for the pulp and paper sector indicates that there are 93 pulp mills producing chemically bleached pulp within the EU. No clear information has been found regarding competition within the sector, but articles in relevant trade journals suggest that the sector is highly competitive. For example, a Norwegian firm recently (2013) left the sector due to price pressures55.

Competition and competitiveness effects under the non-use scenario

Two of the EU producers of sodium chlorate, AkzoNobel and Kemira, have significant non-EU sodium chlorate production capacity. The applicant’s parent group is responsible for approximately 25% of

54 VTT (2012) provides estimates of the potential heating energy that is required for each home. 55 See, http://www.euwid-paper.com/news/singlenews/Artikel/soedra-tofte-mill-down-for-good.html

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 67 the worldwide production. Given this, it could be feasible for the applicant to respond to increased demand in the EU, should Authorisation not be granted. Smaller capacity manufacturers in the EU, who do not have manufacturing facilities outside of the EU, would not be able to act as importers of sodium chlorate and remain competitive. For this reason, global companies would enter competition with each other to meet the EU demand using imported sodium chlorate.

It is assumed, however, that if one applicant were to be refused authorisation then all applications would be refused given that the socio-economic case is similar for all companies. As described earlier, the loss of EU sodium chlorate production could have significant impacts on the EU pulp and paper sector. These may include impacts on levels of competition within the sector.

As noted earlier in Section 3.3, the loss of EU supplies of sodium chlorate could result in increased costs to the EU pulp and paper manufacturers, as price per tonne of imported chlorate is expected to be higher than current EU prices due to the need to cover transportation costs. This may mean that the EU industry becomes less competitive compared to pulp and paper manufacturers outside the EU. In particular, one of the main changes occurring in the pulp market has been the increasing importance of Brazil as one of the main producers of chemical pulp.

In particular, larger pulp and paper mills are likely to be at an advantage under the non-use scenario, as they are more likely to be able to deal with the logistic requirements associated with the import of sodium chlorate from outside the EU, or to undertake the investment needed to move to TCF bleaching processes. Smaller operators could be put at a competitive disadvantage compared to these larger operators.

In addition, those mills that already rely on the TCF process for pulp bleaching will have a competitive advantage compared to their rivals that currently use the ECF process. However, the TCF producers will also be negatively affected by the non-use scenario, although not as severely as ECF producers. This is because the loss of EU chlorate production capacity will also reduce the EU hydrogen peroxide capacity for those plants that operate both processes in an integrated manner. This will mean that the pulp and paper sector as a whole will be affected by the non-use scenario, due to reduced access to raw materials that support both ECF and TCF pulps, at least in the immediate time frame after the Sunset date (see Table 2-7). As described in Section 2, the TCF process has lost market share over recent years, so one can expect that there will be proportionally fewer of these types of pulp producers operating within the EU.

The sector as a whole may be put at a disadvantage compared to non-EU producers. In particular, as noted in Section 2, there has been increasing levels of investment in Brazil in both sodium chlorate production as well as in pulp and paper production. Although this increase in production is responding to increased demand for pulp and paper products in South America, Brazil also has an explicit goal of increasing its level of exports. Should EU pulp and paper production costs increase significantly, this may translate to a loss in sales within the EU to cheaper imported products from Brazil or, indeed, Asia.

3.5.2 Effects on trade

Trade under the applied-for-use scenario

As it currently stands, the EU is self-sufficient in sodium chlorate production, with there being comparatively low levels of import and export (based on Eurostat data, this is roughly 8,100 and 5,800 tonnes respectively compared to a total production of just under 560,000 tonnes). The value per tonne produced is estimated at around €525 (based on Eurostat data – see Table 2-1), creating a total sector value of €294 million per annum. According to these data, the value of the imports is

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 68 around €4.25 million, while the value of exports is around €3.05 million per annum. ''''''' ''#B#'''''''' '''' ''''''' ''''''''''''''''''''' ''''''''' ''''''' '''''''''''''''''''''' ''''''''' '''''''''''' ''''''''''' ''''' '''''''''''' '''''' ''''''''''''''' '''''''''''''''' ''''''''''''' '''' '''''' ''''' '''''' '''''''' ''''''''' ''''' '''''''''''''''''''''''' '''''''''' ''''' ''''''''''' '''''''''''''''''''''''''

Trade under the non-use scenario

The EU’s trade balance with respect to sodium chlorate will change dramatically under the non-use scenario. Effectively, imports of sodium chlorate will increase to account for the loss of EU production, with the total value of imports expected to also equate to around €300 million per annum (or higher, given an estimated per tonne delivered cost of around €584), assuming that pulp and paper mills continue to undertake chemical bleaching using the ECF method. There would be no increase in exports elsewhere within the supply chain to offset these imports.

As noted earlier in Section 3.3.2, the loss of EU supplies of sodium chlorate could result in increased costs to the EU pulp and paper manufacturers, as price per tonne of imported chlorate is expected to be higher than current EU prices due to the need to cover transportation costs. This may mean that the EU industry becomes less competitive compared to pulp and paper manufacturers outside the EU. In particular, one of the main changes occurring in the pulp market has been the increasing importance of Brazil as one of the main producers of chemical pulp.

This pattern can be better observed when production capacities are considered, as shown in the following figure which compares the performance of USA, Brazil and Finland56. Between 2000 and 2013, the US production capacity of chemical bleached pulp experienced a slow decline, from 30.3 to 26.2 million tonnes; and the latest forecast provided by FAO shows a further slow decline. In contrast, Brazil has grown considerably, expanding its production capacity to 13.7 million tonnes in 2013, from 9.6 million tonnes in 2007 (with an average growth rate of 6.7% since 2000). FAO forecasts expect a further expansion of the Brazilian chemical bleached pulp capacity, which should reach 21.9 million tonnes in 2018. In this respect, it is worth noting that in 2018 the Brazilian capacity will still be below US capacity.

It is also important to note that Brazilian chemical pulp production is export orientated. Since 2007, on average 72.4% of Brazilian production has been exported (the annual average apparent consumption was only 3.4 million tonnes against an annual average production of 11.2 million tonnes). In 2013, the main export market for Brazilian pulp was the EU 28, with a share of 41% of the total import (4 million of tonnes), followed by China with a share of 30% (2.9 million tonnes) and the USA (20%; 1.9 million tonnes). This further highlights the difficulties that EU pulp producers may have in raising prices to EU paper producers.

56 Data for the current production capacities and forecasts to 2018 are not available for every European country. However, data on Finland can be considered as representative of the whole EU 28, because this country produces 32% of the total chemical bleached pulp produced in Europe in 2013. As remarked in the previous section, Finland and Sweden together produce 58% of the total chemical bleached pulp in Europe.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 69 Figure 3-3: Chemical bleached pulp production capacity - selected countries, 2000-2018 Note: data after 2013 are estimated Source: FAO (2014)

3.5.3 Effects on tax revenues

Tax revenues under the applied-for-use scenario

The applicant’s operations result in tax revenues for both local and central government. These would be expected to continue for the duration of the applied-for-use scenario. The current total tax revenues (in 2014) amount to some ''#B#'''''' million for local governments and '#B#'''''''''' million for central governments (Finland, Sweden and France). If the tax rates remain constant, then these values are likely to remain mostly stable or perhaps increase slightly beyond 2017.

The production of sodium chlorate directly generates '''#B#''''''' million for the Swedish government (total for central and local); ''''#B#'''''' for Finnish government (total for central and local) and ''#B#'''''''' million for the French local government. Over the assessment period the applicant would pay €'''#B#'''''' million in PV terms to local governments and €''#B#''''''''' million to central governments in Finland, France and Sweden.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 70 Table 3-30: Current and foreseeable tax revenues for local and central governments under the “Applied for Use” Scenario Taxes paid to the local government Taxes paid to the central government Location (€/y) (including taxes on energy) (€/y) 2014 Trend post-2017 2014 Trend post-2017 Production of sodium '''#B#''''' '''' ''''''''''' '''''' '''''' ''''''''''' ''''''''''''''' chlorate in Alby Production of sodium ''''''' '''''''''''''' '''''''''' '''''' ''''''' '''''''''''' chlorate in Stockvik Production of sodium ''''''''' ''''' ''''''''''' ''' '''''''''' ''''''''''''''''' chlorate in Ambès Production of sodium ''''''''' ''''' ''''''''''' '''''' ''''''' ''''''''''' chlorate in Oulu

Sales of H2 '''''''''''''''' ''' '''''''''''''''' ''' '''''' '''''''''''''''' ''''''''''''''

Hydrogen peroxide ''''''''' ''''' ''''''''''' ''''' '''' '''''''''''' ''''''''''''''' manufacture in Alby Potassium chlorate ''''''' '''''''''''''''' '''''''' '''' ''''''''''' ''''''''''''''' manufacture in Alby Manufacture of expandable microspheres '''''' ''''''''''''''''''''' '''''' '''''' '''''''''''''' '''''''''''''' in Stockvik Surface chemistry (hydrogenation) and '''''' heating some equipment in Stockvik Production of intermediates in Stockvik '''''' for other AkzoNobel units Manufacture of paper ''''''''''''''''' '''' chemical wet strength ''''''''''' ''''''''''''''''' ''''''''''''''''' agent in Ambès Pulp mill in Oulu ''' '''''' '''''' Production of Purate in ''''''' ''''''''''''''''' '''''''' ''''''''''''''''' '''''' Stockvik Production of PAC in Oulu '''''' ''''''''''''''' ''''''' ''''''''''''''''' '''''' (Polyaluminium chloride) Chlor-alkali plant & HCL '''''''''''''''''' ''''' ''''''''''''''''' '''' '''''' '''' ''''''' '''''' ''''''''''''' '''''''''''' Total '''''''''' '''' '''''''''''''' '''' PV (@4%) ''' ''''''''' '''''''''''''' '' ''''''''''' ''''''''''''

Tax revenues under the non-use scenario

Under the non-use scenario, the closed units would not produce taxable output for local or central governments. The applicant’s import and sales would still be subject to tax but, given the uncertainty about which countries would levy the tax and at what rate, these have not been quantified in this SEA.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 71 3.5.4 Impacts on consumers

Applied-for-use versus non-use scenario

It is not anticipated that there will be any significant impacts on consumers under the non-use scenario as pulp and paper mills should, on the whole, be able to absorb the increased costs of chlorate imports. They translate to just over €1 per tonne of pulp57. In addition, should EU pulp producers be forced out of the market for price reasons, then it is likely that this would be due to the increased import of price-competitive pulp produced outside the EU.

There is inadequate information available to enable an assessment of the relative quality of EU pulp compared to pulp produced in North or South America, or the Asian Pacific region.

57 Assuming that the current cost of sodium chlorate per tonne is €544 (mid-range of €525-563), that 32.5 kg (mid-range of 15-50 kg) of chlorate is used to produce a tonne of pulp, the cost of the chlorate per tonne of pulp produced is €17.7. If the price of sodium chlorate increases to €584, this increases the costs of production by €1.3 per tonne and to the total chlorate costs to €19.0 per tonne of pulp produced.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 72 4 Combined Assessment of Impacts

4.1 Comparison of impacts

The differences in the applied-for-use and non-use scenario over the assessment period from '#A#'''''' '''''''''' for each of the different impact types are summarised in the table below. This summary includes an indication of both those impact assessed in quantitative and qualitative terms.

As discussed in Section 3.3, it has been possible to assess only some of the key economic impacts in quantitative terms. In particular, it has not been possible to quantify the impacts on the pulp and paper sector associated with any disruption to their ability to continue to chemically bleach pulp using the ECF processes immediately after the Sunset Date. At this point in time, their supply of sodium chlorate could be severely disrupted due to the need to source and import 559,000 tonnes of sodium chlorate per year.

Table 4-1: Comparison of impacts under the scenarios (monetised values in PV @4%) Indicator “Applied-for-use” “Non-use” scenario Difference (“applied for Scenario use” minus “non-use”) Human Health Impacts Worker exposure '''#D#'''' workers continue No exposures to sodium '#D#''''''' EU workers no to have very limited dichromate within the longer exposed exposure to sodium EU, with exposures dichromate shifted to non-EU facilities producing sodium chlorate Present Value of ''''''#D# ''' '''''''' additional 0 -€'''#D#''''' in human mortality and morbidity cancer cases or €''#D#'''''' health related benefits effects for workers due in total for workers over to workers within the EU to carcinogenic effects ''''' ''''#A#'''''' from reduction in of sodium dichromate statistical mortality and morbidity effects over '''''' #A#''''''''''' Consumer exposure 0 0 0 Environmental impacts Limited transport Increased worldwide +€''#B#'''''' million in due to transport internally in Europe shipping of hazardous monetised impact material. Approximately avoided. '''''#F#'' '''' of CO2e per year or €''#E#'''''' million in monetised impact over all. Economic Impacts Impacts on turnover €''#B#''''''xxxxx in Turnover reduces to '''#E#'''''''''' million in and profits for Akzo turnover maintained €''''''#E#''' '''''''''''' turnover maintained Nobel (over ''#A#''' €''#B#''''''''' million in Profit reduced to ''''#E#'''''' million in years, 4% discount) profits gained €''''#E#''''''' million profit gained Decommissioning/ €0 -€''''#E#''''' million cost +'''#E#''''' million saved remediation costs/loss incurred of asset values Lost investment €0 Loss of residual value of Loss of residual value of plants and equipment plants and equipment Upstream sales – €''#B#''''''''' million €0 ''#E#''''''''' million in turnover ('#A#'''' years, turnover maintained 4% discount rate)

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 73 Table 4-1: Comparison of impacts under the scenarios (monetised values in PV @4%) Indicator “Applied-for-use” “Non-use” scenario Difference (“applied for Scenario use” minus “non-use”) Additional cost of €0 -€''#E#'''''' million over +'''#E#''''''' million saved chlorate supply for X#A#X years transport costs applicant’s downstream customers due to transport Additional cost of €0 -€ unknown but may be +€ unknown but may be chlorate supply for significant in the short significant in the short applicant’s customers term as non-EU chlorate term as non-EU chlorate due to global supply producers bring on new producers bring on new shortage capacity capacity Other economic None Some ECF pulp Some ECF pulp bleaching impacts to market bleaching operations operations may be actors may be forced out of forced out of the market the market or be forced or be forced to invest in to invest in TCF TCF technology. Those technology. Those that that remain in the sector remain in the sector will will face increased costs face increased costs of of operations due either operations due either to to more complex more complex logistical logistical arrangements arrangements or to the or to the increased costs increased costs associated with the TCF associated with the TCF process process Impacts on consumer None No significant impacts No significant impacts on prices on consumer prices consumer prices expected expected Social Impacts Employment ''#D#'''''' jobs in total '#D#''''' jobs remain on '#D#''''''' jobs lost. across Finland, France sites Potential multiplier and Sweden maintained. effects leading to In addition contractor and additional job losses in Multiplier effects lead to an area of high additional jobs within the unemployment region and possibly wider Wider Impacts Competitiveness and Continued levels of Loss of EU production of Continued levels of competition – Sodium competition between sodium chlorate and competition between chlorate suppliers of sodium self-sufficiency in suppliers of sodium chlorate and other production, leading to chlorate and other products produced by the need for pulp and products produced by AkzoNobel. paper sector to import Solvay in order to continue ECF based pulp bleaching Competitiveness and Continued levels of Potential loss of Continued levels of competition – Sodium competition between competition in EU pulp competition between chlorate pulp and paper and paper sector as pulp and paper manufacturers larger operators have manufacturers an advantage in meeting increased logistic and potential investment requirements

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 74 Table 4-1: Comparison of impacts under the scenarios (monetised values in PV @4%) Indicator “Applied-for-use” “Non-use” scenario Difference (“applied for Scenario use” minus “non-use”) Trade Low levels of EU import EU import of sodium EU is largely self- and export chlorate to meet pulp sufficient – relatively low bleaching demand leads levels of EU import and to trade imbalance of export around €300 million

Overall, it is clear that the costs of a refused Authorisation, indicated by a positive sign (+) in the table above, significantly outweigh the benefits, which are indicated by a negative (-) sign. Taking into account only the impacts associated with the present value of lost profit to AkzoNobel, site decommissioning costs, the increased transport costs and hence price of sodium chlorate for the pulp and paper industry and the human health impacts for workers (totalling just under €'#E#''''''' for the entire assessment period) the benefit to cost ratio of a granted authorisation is ''''''''''#F#''' ''''' '''. This ratio is clearly significant, especially as it does not take into account the full costs that are likely to be faced by the downstream users of the chlorate in the pulp and paper sector nor the increased environmental impacts associated with transportation. 4.2 Distributional impacts

Table 4-2 presents the impacts as they are distributed between the different groups affected under both the applied for use and non-use scenarios. Details on the costs and benefits for each interest group under both scenarios are provided in Section 3.

Table 4-2: Distributional analysis Interested Group “applied-for-use” scenario “non-use” scenario Benefits: Benefits: €''#B#''''''''' million in profits from a No benefits to EU operations but some continued turnover of around €'#B#''''''' operations would continue. AkzoNobel billion for the '#A#''''-year period would increase production capacity outside of the EU Costs: Costs: AkzoNobel No additional costs over the baseline €''#E#'''''''' million in profits from a scenario, apart from R&D and investment continued turnover of around €''#E#'''''' costs required to move to an alternative for the '#A#''''-year period. This is a loss to sodium dichromate, should an of €''''#E#''''''' million in profit relative to alternative become available applied for use. One-off costs associated with dismantling and relocation of equipment of €''#E#'''''' million Benefits: Benefits: No significant increase in demand from Loss of 19% of global sodium chlorate EU pulp sector expected, and hence no production capacity creates a supply Non-EU sodium corresponding increase in exports to the shortfall, enabling non-EU producers, chlorate producers EU including AkzoNobel to both increases prices in the short term and to increase their sales to the EU market

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 75 Table 4-2: Distributional analysis Interested Group “applied-for-use” scenario “non-use” scenario Costs: Costs: None. EU remains self-sufficient in Investment in increased capacity in order sodium chlorate to meet EU shortfall, although one would expect companies to earn a sufficient return that this will translate to a net benefit. May also need to invest in storage facilities near to ports Benefits: Benefits: ''#D#''''' EU jobs would be maintained as Elimination of exposure to sodium a result of the continued operation of the dichromate for '#D#'''''' workers. site, which is located in an area of high PV associated with mortality and unemployment morbidity effects due to carcinogenic effects of sodium dichromate exposure of €''#E#''''' in total over ''#A#'''' years would AkzoNobel be eliminated workers Costs: Costs: '''#D#''''' workers continue to have very These ''#D#'''''' workers would lose their limited exposure to sodium dichromate. jobs (with the total wage bill of workers PV associated with mortality and made redundant being €'''#B#''''' '''''''''''''') morbidity effects due to carcinogenic effects of sodium dichromate exposure of €''#D#''''' in total over '#A#'''' years would be eliminated Benefits: Benefits: Continuation of jobs at contractors and in None other activities benefitting from multiplier effects Costs: Costs: None Loss of jobs associated with multiplier Other workers effects. In addition, there would be a shift of risks to workers outside the EU as sodium chlorate production capacity is increased in other countries, given that this will also rely on the use of sodium dichromate Benefits: Benefits: Tax income totalling €'#B#''''''''' million to None local and central governments in Finland, France and Sweden Member state Costs: Costs: authorities None Increase in social security payments associated with loss of jobs at the applicants sites Reduction in tax revenues for Finland, France and Sweden Benefits: Benefits: EU pulp and paper EU supplies of sodium chlorate remain None mills available on the market

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 76 Table 4-2: Distributional analysis Interested Group “applied-for-use” scenario “non-use” scenario Costs: Costs: None Loss of EU supply of sodium chlorate is likely to lead to price increases in the short term due to global shortages, while non-EU producers bring new capacity online. Mills are also likely to have to invest in storage facilities or in TCF technology. Some may no longer be financially viable although there is inadequate data to assess this aspect Benefits: Benefits: Maintained supply of other products None (potassium chlorate, hydrogen etc.) for other sectors Other customers Costs: Costs: of AkzoNobel None Lost production of potassium chlorate, chlor-alkali products impacting on both downstream user sectors

Benefits: Benefits: Continued access to full range of EU pulp None and paper products. Avoided costs of environmental impacts associated with increased global CO2 emissions due to transport. Equivalent to Consumers approximately €''#E#'''''' million Costs: Costs: None Costs of environmental impacts associated with increased global CO2 emissions due to transport. Equivalent to approximately €''#E#'''''' million

4.3 Uncertainty analysis

The estimated impacts on AkzoNobel and the pulp and paper industry are far greater than the human health impacts that would be associated with the continued use of sodium dichromate at the applicant’s sites in Finland, France and Sweden.

4.3.1 Transport costs

The estimates of the cost of sodium chlorate transportation are a possible source of uncertainty in terms of impacts on downstream users, but this estimate will not change the overall conclusion of the analysis. By way of example, even if the transport costs for the shipment of sodium dichromate from North or South America are only €62 per tonne (assuming the lower estimate for non- hazardous materials as shown in Section 3.3.2) rather than €'#B#'''''' per tonne, the increased costs faced by the EU pulp and paper sector would equate to €''#E#''''''' million per year or €''#E#'''''''' million in PV for the assessment period for the applicant’s downstream users. These relate to transport alone and do not reflect the likely increase in the price per tonne of sodium chlorate on the global market. Even after adjusting the total benefits to EU industry of a granted authorisation for this lower assumption on the increase in transport costs, the benefit-cost ratio of a granted authorisation remains at just over ''''#F#'''''''''''' to 1, not taking into account the non-quantified impacts on the pulp and paper sector.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 77 4.3.2 Human via environment impacts

The analysis is very sensitive to changes in the value of benefits to human health arising from non- use of sodium dichromate. The majority of the apparent residual risk is associated with workers, and the assessment of human via environment impacts is considered overly precautionary. However, this is the area of most uncertainty.

Using exposure data alongside the exposure-risk relationships (ERR) derived by ECHA (2013) for the general population, the CSR provides risk estimates for each exposure pathway and site (see Table 4-3Table 3-5)58. Monitoring data for chromium releases (Cr(VI) and Cr(III)) to the environment were available for all sites (as required by national legislation). However, Cr(VI) specific information was only available for four sites, of which three provided adequate data to calculate the release factors for wastewater during the use of SD. These release factors were used to model the exposure of humans via the environment and derive the excess risk estimates for each pathway. For the purposes of this SEA, the site with the highest aggregate risk estimate at both local and regional levels (site A) was used for modelling human health impacts via the environment. The risk associated with this site was taken to be representative of all sites within the SDAC to provide a conservative estimate. For each pathway a different end-point was assumed: inhalation (lung cancer), drinking water (intestinal cancer) and fish (intestinal cancer).

Table 4-3: General population exposure pathways and risk estimates via the environment Local population Pathway Site A Site B Site C Inhalation 8.29 x 10-08 4.87 x 10-08 1.70 x 10-07 Drinking water 1.85 x 10-07 1.02 x 10-07 2.99 x 10-08 Fish 5.30 x 10-08 2.65 x 10-08 3.37 x 10-08 Aggregated for all pathways 2.48 x 10-07 1.77 x 10-07 2.34 x 10-07 Contribution drinking water 45 % 57 % 13 % Contribution inhalation 33 % 28 % 73 % Regional population Pathway Site A Site B Site C Inhalation 1.38 x 10-18 1.02 x 10-18 2.15 x 10-18 Drinking water 2.25 x 10-08 1.51 x 10-08 5.98 x 10-09 Fish 3.37 x 10-09 2.25 x 10-09 8.92 x 10-10 Aggregated for all pathways 2.59 x 10-08 1.74 x 10-08 6.87 x 10-09 Contribution drinking water 87% 87% 87% Contribution inhalation <0.0001% <0.0001% <0.0001%

The ECHA (2013) ERR assumes exposure over a 70 year period (24h/day, every day). It was therefore necessary to recalculate weight the excess risk estimates in terms of the ''#A#''' year authorisation (applied-for-use) period:

Local level (based on site A risk estimates):

(1) Inhalation = ''''''' ''''''''''''''' (2) Drinking water = '''''''#F#'' ''''' (3) Fish = '''''''' '' ''''''''X

58 This derivation of this table is explained in more detail within the CSR.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 78 Regional level (based on site A risk estimates)

(1) Inhalation = '''''''' ''' '''''''''' (2) Drinking water = ''''''#F#' ''''''''''' (3) Fish = ''''''''' ''' ''''''''''''

These weighted excess risk estimates were then applied to the local population surrounding the plant. For inhalation exposure, it was assumed that only individuals within a 100m radius of the plant would face a '''''''''#F#'''''''''''' excess risk of developing a fatal lung cancer. For the sake of providing a conservative estimate, a radius of 1000 m was applied to the population densities of the relevant municipalities to estimate the local assessment of exposure for the general population. The same ratio of deaths to survivals (see Table 3-4) was applied to derive the number of additional non- fatal lung cancers over the ''#A#''-year period.

For the derivation of regional impacts, it was assumed that the potentially exposed population represents the population living within the 40,000 km2 area as defined in the EUSES model. Taking the default population density of 500 people per km2 would be entirely inappropriate, as significant portions of the regions are located in the sea (see Figure 4.1 below). Indeed the entire population of Finland and Sweden combined is <20 million (the assumed population in a single region).

Figure 4-1: Map showing a 40,000 km2 area (112.8 km radius circle) surrounding the Applicant’s sites. The circles appear as different sizes at different latitudes due to map projection used.

Instead this area was applied to the average population densities of each plant’s respective country to derive a potentially exposed population of 6,752,250 people59. These individuals would face a

59 Population density from Eurostat database tsp00003 available at: http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tps00003, accessed 12 August 2015.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 79 combined risk of developing intestinal cancer equivalent to 2.59 x 10-08 if they are exposed for their entire lifetime. This is extremely low and it equates to risk of approximately one in ''#F#''''' years of continued use, if the exposed population is assumed to be 6.75 million people.

Data on the incidence and mortality associated with colorectal cancer from the GLOBOCAN database (see Table 3-4) were used to derive the number of fatal and non-fatal intestinal cancers. Table 4-4 provides estimates of the additional number of lung and intestinal cancers for the applied-for-use scenario, assuming '#A#'''' years for the continued use of sodium dichromate following the Sunset Date.

Table 4-4: Additional number of cancer cases under the applied-for-use Scenario Lung Intestinal Mortality Morbidity Total cases Mortality Morbidity Total cases Exposed (survivor (survivor population cases) cases) ''''' '#A#''''''' ''''''''' '''''''''''' '''' ''''''''' '''''''''''''' ''''''''''''''' Localities ''''''#D#''''''''''' '''''''''''''''' ''''''''''''''''' '''''''''''''''' ''''''''''''''''''' '''''''''''''''''' Regions ''''''''''''''''' ''''''''''''''''''' '''''''''''''''''' '''''''''''''''' ''''''''''''''''''' '''''''''''''''''' Total '''''''''''''''' ''''''''''''''''''' '''''''''''''''''' ''''''''''''''''' ''''''''''''''''''' '''''''''''''''''' Note: figures are rounded so totals may differ from sum of individual figures

Table 4-5 applies the economic value of the associated health impacts to these additional statistical cases of cancer to generate the total economic damage costs of the additional lung and intestinal cancer cases. Under the applied-for-use scenario, the present value costs are € '''#D#''''''''' (in this case discounted over ''''' #A#'''''''''', as appropriate). Note that these estimates assume that there is no increase in the population over the '''''#A# ''''''''''.

Table 4-5: Present value and annualised economic value of mortality and morbidity effects (2014 prices discounted over ''#A#''' years @4% per year) Lung cancer Intestinal cancer Mortality Morbidity Mortality Morbidity Locality (survivor cases) (survivor cases) '''' '''#A#''''''' '''''#A# '''''''''' ''''#A#' '''''''''' '''#A#'' '''''''''' Willingness to Pay (WTP) PV ''' #F#''''''' '''#F# ''' ''' ''#F#'''''''''''' ''' ''#F#'''''''''' and direct medical costs PV Total PV health impacts ''''#D#'''' ''' '''#D#'''''''''' Note: figures are rounded

If the worst-case (probably unrealistic) estimates of risk calculated above are included in the assessment, the costs to human health (including both workers and human via environment impacts) are estimated at just under ''' #E#'''''''''''. The benefits of continued use for the applicant and the applicant’s downstream users continue to outweigh the costs to human health by a ratio of approximately '''''#E#'''''''''. Given that the use of sodium dichromate is carried out in an exclusively industrial setting and that regional impacts typically only relevant to wide-dispersive uses, it is considered inappropriate to include these human via environment impacts in the benefit to cost analysis of continued use.

4.3.3 EU-wide downstream user impacts

The analysis presented above takes into account the cost of increased cost of transportation for the applicant’s downstream users alone and does not consider wider effects for the rest of the sodium chlorate manufacturers in the EU. If all members of SDAC are refused authorisation, the benefits of

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 80 continued use would be significantly higher60 than currently presented in this analysis, as would the costs to human health. Because the level of exposure across the SDAC members is similar, it could be expected that the benefit to cost ratio would remain similar if the total impact were to be taken into account. However, because of the potential for double counting, the EU-wide impacts on across all of SDAC’s downstream users are not taken into consideration when calculating a benefit to cost ratio.

As a result of the above analysis, any uncertainties in the calculations presented above (which have been based on conservative assumptions) cannot have any discernible effect on the conclusions of this analysis.

60 This cost is described in Section 3.3.2 and is estimated at €682.8 million in present value terms over the assessment period.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 81 Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 82 5 Conclusions

5.1 Socio-economic benefits of continued use

This SEA demonstrates that there are clear socio-economic benefits of continued use of sodium dichromate in the manufacture of sodium chlorate. The pulp and paper sector receives a critical raw material from the EU producers of sodium chlorate and non-use of sodium dichromate would put EU manufacturing at a significant disadvantage in comparison to the rest of the world, while at the same time having no overall benefit to human health globally as the non-use of sodium dichromate in the EU would simply export the risk to the sodium chlorate producing countries that would continue to receive the economic benefits of use.

The use of sodium dichromate for this use across all applicants in the task force represent a very minor fraction of the total used in the EU each year (<1%) and the risk arising from exposure is very low for workers (less than 5 × 10-6). When considering the potential man-via environment exposure of local population surrounding the applicant’s production sites, the risks are extremely low (below 1 ×10-6) even when using highly conservative modelling techniques.

Given the extremely low risks associated with this use there can be only very limited benefits to human health from non-use of sodium dichromate. The total costs of human health impacts on workers are estimated at €''#D#'''''' for '''#A# ''''''''''''' assessment period starting at the sunset date. In comparison, the benefits of continued use are significant for the applicant, employees and the EU pulp and paper sector as a whole. Even when only taking into account the applicant’s lost profit, loss of sales to the upstream supply chain and increased costs to the applicant’s downstream supply chain, the benefits of continued use far outweighs the costs by a ratio of ''''#F#''''''''''' '''' '''. This conservative estimate does not take into account the loss of jobs at the applicants site and those supported in this regions surrounding the applicants sites in Finland, Sweden and France, nor the whole cost and risk to the pulp and paper businesses in these countries and in the wider EU economy. 5.2 Residual risks to human health and the environment of continued use

AkzoNobel’s EU sites employ ''#D#''''' people who may be exposed at very low levels to sodium dichromate in the production of the chlorate. All processes at the plant involving sodium dichromate are predominantly contained, mostly automated processes and all workers involved use appropriate personal protective equipment. The CSR stipulates that the dermal pathway is negligible in the context of the total exposure, thus inhalation exposure is the only pathway considered in this SEA for workers (see Section 3.1 of the CSR).

Air monitoring and modelling data are available from recent testing. The level of exposure has been found to be extremely low and detection required the use of new techniques to detect low nanogram per cubic metre levels of exposure. The exposure level varies by the employee’s role. For shift workers, who operate the plant throughout the year, the time-weighted average level of exposure across their tasks is 1.23 nanograms per cubic metre (ng/m3). Day workers who carry out periodic maintenance and cleaning tasks receive an average exposure of 0.66 ng/m3. Laboratory workers are exposed at a time-weighted average level of 0.42 ng/m3. The RAC-published exposure- risk relationship for the carcinogenic effects of sodium dichromate for both lung and intestinal cancer has been used by the applicant to estimate the number of additional cancer cases that would

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 83 arise over the assessment period of ''''#A#' ''''''''''' the resulting increases in risk of lung cancer for workers has been calculated at 4.9 × 10-6, 2.5 × 10-6 and 1.7 × 10-6 for the three groups of workers based on exposure over a 40 year working life. Over the '''#A#'' '''''''' assessment period, this risk translates to ''''''#D# '''''''''' additional cases of lung cancer taking into account the entire workforce. As described in Section 3.1.3, this has been valued at €'''#D#'''' in PV costs over '''#A#'' '''''''''''.

As described above, the system is predominantly closed, nevertheless EUSES modelled human-via- environment exposure of local populations have been taken into account using highly conservative estimates. The aggregate level of cancer risk through inhalation, drinking water and fish consumption is very low at 4 × 10-8 for the local level. For the region (40,000 km2) surrounding the applicant’s site, the aggregate risk is even lower at 4 × 10-9. As described in the CSR, this is a highly conservative risk assessment and even when included in the assessment of the benefit-cost ratio of the applied-for-use scenario for sensitivity analysis, it does not change the conclusion of the SEA.

The combined assessment of impacts and the uncertainty analysis presented in Section 4 shows that even when taking into account the areas of greatest uncertainty, the impacts of non-use (''#E#'''''''''' million in profit or cost savings) far outweigh any potential reduction in health impacts (€''#D#''''' for impacts on workers’ health) by a factor in excess of ''''#F#'''''''''''''. 5.3 Factors concerning operating conditions, risk management measures and monitoring arrangements

The factors related to operating conditions, risk management measures and monitoring arrangements for the use of sodium dichromate are described in the CSR Part A and Part B Chapter 9. 5.4 Factors relating to the duration of the review period

AkzoNobel currently knows of no technically feasible alternative that ensures the high protection of health, process safety and energy efficiency for the use of sodium dichromate in the production of sodium chlorate. This is despite significant R&D efforts already carried out by the applicant over a number of decades.

They believe that at least '#A#''''' years is required from 2017 in order to undertake the R&D necessary to develop an alternative and to prove this at the industrial level, for example to achieve the same cathode lifetime). Once a new technology has been identified, it will then need to be piloted and scaled up to industrial production levels. As an interim measure, the applicant has developed the technology surrounding the use of chromium(III) chloride to minimise the exposure of workers to sodium dichromate. Nevertheless, the applicant does not believe that the use of sodium dichromate could be entirely avoided from the process.

Therefore, the applicant submits this Application for Authorisation with a request for a review period of '''#A#'' years may give sufficient time for a viable replacement for sodium dichromate to be developed, although successful conversion of the applicant’s plants within this timeframe is by no means guaranteed (see Section 2.6).

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 84 6 Annex – Justifications for confidentiality claims

This Annex is available in the complete version of this document.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 85 Table 8-1: Justifications for confidentiality claims

Reference type Commercial Interest Potential Harm Limitation to Validity of Claim

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 86 7 Appendix 1 – Information Sources

AkzoNobel, 2015. Pulp and Performance Chemicals. [Online] Available at: https://www.akzonobel.com/aboutus/organization/specialty_chemicals/pulp_and_performance_ch emicals/ [Accessed 16 March 2015].

AkzoNobel, undated. Sodium Chlorate - Product information manual, s.l.: s.n.

Alberini, A. & Ščasný, M., 2014. Stated-preference study to examine the economic value of benefits of avoiding selected adverse human health outcomes due to exposure to chemicals in the European Union, s.l.: ECHA.

Braud, L. & al, 2003. Direct treatment costs for patients with lung cancer from first recurrence to death in France. Pharmacoeconomics, 21(9), pp. 671-679.

Dedes, K. J. & al, 2004. Management and costs of treating lung cancer patients in a university hospital. Pharmacoeconomics, 22(7), pp. 435-444.

ECHA, 2012. Guidance on information requirements and chemical safety assessment. Chapter R.16: Environmental Exposure Estimation.. [Online] Available at: http://echa.europa.eu/guidance-documents/guidance-on-information-requirements- and-chemical-safety-assessment [Accessed 7 October 2015].

ECHA, 2013. SETTING THE REVIEW PERIOD WHEN RAC AND SEAC GIVE OPINIONS ON AN APPLICATION FOR AUTHORISATION. [Online] Available at: http://echa.europa.eu/documents/10162/13580/seac_rac_review_period_authorisation_en.pdf [Accessed 28 July 2014].

Gomez, G. & al, 2012. Direct health care costs of lung and bladder cancer attributable to work: Spain. Rev Esp Salud Publica, 86(2), pp. 127-138.

Greenpeace, 2001. Pulp bleaching around the Baltic Sea, s.l.: s.n.

ICIS, 2013. US train carrying hazardous chemical derails in Maryland; one hurt. [Online] Available at: http://www.icis.com/resources/news/2013/05/29/9673037/us-train-carrying- hazardous-chemical-derails-in-maryland-one-hurt/ [Accessed 11 May 2015].

IHS, 2012. Chemical Economics Handbook Sodium Chlorate. [Online] Available at: https://www.ihs.com/products/sodium-chlorate-chemical-economics-handbook.html [Accessed 13 May 2015].

IPPC, 2007. Large Volume Inorganic Chemicals – Solids and Others Industry, s.l.: European Commission.

IPPC, 2007. Reference Document on Best Available Techniques for the Manufacture of Large Volume Inorganic Chemicals - Solids and Others industry, s.l.: s.n.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 87 IPPC, 2013. Best Available Techniques (BAT) Reference Document for the Production of Pulp, Paper and Board (Final Draft July 2013), s.l.: s.n.

IPPC, 2015. Best Available Techniques (BAT) Reference Document for the Production of Pulp, Paper and Board (working draft in progress), s.l.: s.n.

Lang, K. & al, 2009. Lifetime and Treatment-Phase Costs Associated with Colorectal Cancer: Evidence from SEER-Medicare Data. Clinical Gastroenterology and Hepatology, Volume 7, pp. 198-204.

Leal, J., 2012. Lung cancer UK price tag eclipses the cost of any other cancer, presentation by Health Economics Research Centre, University of Oxford to the NCIR Cancer Conference, Wednesday, 7 November. s.l.:s.n.

Luo, Z. & al, 2010. Colon cancer treatment costs for Medicare and dually eligible beneficiaries. Health Care Finance Review, 31(1), pp. 33-50.

Mendiratta, S. K. & Duncan, L. B., 2003. Chloric Acid and Chlorates. In: Kirk-Othmer Encyclopedia of Chemical Technology. s.l.:John Wiley & Sons, pp. 103-120.

Pearce, D., 2000. Valuing Risks to Life and Health - Towards Consistent Transfer Estimates in the European Union and Accession States, Brussels: European Commission (DGXI).

Rauhut, D. & Johansson, M., 2012. 'Should I Stay or Should I go?’ - A Case Study on Young Women Leaving Rural Sweden. Bratislava, 52nd Anniversary European Congress of the Regional Science Association International.

Schlag, S. & Mori, H., 2013. CEH Product Review Sodium Chlorate, s.l.: CEH.

SEMIGRA, 2012. Case Study Report: Västernorrland’s County, s.l.: ESPON 2013 Programme.

Stehrer, R. & Ward, T., 2012. Study on Monitoring of Sectoral Employment. [Online] Available at: http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&cad=rja&uact=8& ved=0CDQQFjAA&url=http%3A%2F%2Fec.europa.eu%2Fsocial%2FBlobServlet%3FdocId%3D7418%2 6langId%3Den&ei=QWPGU8_OL9Sy7AaSj4DgCQ&usg=AFQjCNEhPoREnEVxSknIki0gFgwPfv33Yg&bv m=bv.7 [Accessed 16th July 2014].

Tilak, B. & Chen, C. P., 1999. Chlor-Alkali and Chlorate Technology: R. B. MacMullin Memorial Symposium. In: H. S. Burney, N. Furuya, F. Hine & K. Ota, eds. Electrolytic Sodium Chlorate Technology: Current Status. Pennington(New Jersey): The Electrochemical Society, Inc., pp. 8-40.

York Health Economics Consortium, 2007. Bowel Cancer Services: Costs and Benefits, Final Report to the Department of Health, April 2007, York: University of York.

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 88 8 Appendix 2 - Demographics

8.1 Demographics of the areas associated with AkzoNobel’s Sites

8.1.1 Oulu, North Ostrobothnia, Finland

Oulu is a city situated in the region of North Ostrobothnia, Finland. In terms of population, Oulu is the fifth largest city in Finland with 193,902 inhabitants61, and is well renowned for its high level of technology62, due to the past presence of companies such as Nokia. Over the past few years the city of Oulu has seen a number of job cuts from major employers such as Nokia. For instance, in 2012 Nokia cut 700 jobs at their Oulu unit63 and there are further reports that Nokia is considering closing down its R&D plant in the city in 201464.

In 2011, GDP in North Ostrobothnia stood at around €11.7 billion and accounted for approximately 6.2% of Finland’s total GDP. In the same year, GDP per capita in North Ostrobothnia was lower than the national average, which stood at €35,000. Total GVA in North Ostrobothnia was around €10 billion in 2011 and made up for 6.2% of Finland’s total GVA. The share of manufacturing in total GVA was around 17.4%, which was just over half a percentage point higher than the national average. Further data on the composition of GVA within the manufacturing sector in North Ostrobothnia show that GVA in the ‘manufacture of paper and paper products’ sector was about €82.2 million in 2012; the sector thus accounted for 5.2% of total manufacturing GVA in North Ostrobothnia65.

In Finland, unemployment is monitored through two different statistics every month. The Labour force survey of Statistics Finland is based on sampling and the Employment service statistics of the Ministry of Employment and the Economy on information in the TE offices’ customer register. The unemployment figures in the Labour force survey and the Employment service statistics differ from each other because the two statistics are based on different criteria with regard to job-seeking activeness and labour market availability.

In 2013, the labour force of Oulu consisted of 92,042 individuals of which 13,990 were listed as unemployed (15.2%)66. The unemployment rate in Oulu was 1.6 percentage points higher than the regional rate in North Ostrobothnia and 3.9 percentage points above the national rate (see Table 3- 27).

61 Population register centre, 31/01/14, accessed at: http://vrk.fi/default.aspx?docid=7809&site=3&id=0 62 EURES, Short overview of the labour market, accessed at: https://ec.europa.eu/eures/printLMIText.jsp?lmiLang=en®ionId=FI2&catId=7499 63 Yle uutiset, Nokia axes 700 jobs in Oulu, accessed at http://yle.fi/uutiset/nokia_axes_700_jobs_in_oulu/6240684 on 19/09/14 64 ZDNet, One in five ex-Nokia workers in Finland could be axed as Microsoft prepares layoffs, accessed at http://www.zdnet.com/one-in-five-ex-nokia-workers-in-finland-could-be-axed-as-microsoft-prepares- layoffs-7000031667/ on 19/09/14 65 Statistics Finland, Teollisuuden alue- ja toimialatilasto 2012, accessed at http://pxweb2.stat.fi/database/StatFin/databasetree_fi.asp on 22/09/14 66 Ministry of Employment and the Economy, available http://www.tem.fi/files/38581/elykun2013_en.pdf

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 89 Table 6-1: Labour market indicators in selected Finnish regions (based on Employment service statistics), annual average 2013 Indicator Oulu North Ostrobothnia Finland Labour force 111,525 182,235 2,611,164 Total number of unemployed job 16,191 24,784 294,136 seekers Under 25 years 2,856 4,173 38,834 Over 50 years 4,295 7,547 109,391 Long term unemployed 3,911 5,494 73,686 Unemployment rate 14.5% 13.6% 11.3% Source: Employment service statistics, The Ministry of Employment and the Economy http://www.tem.fi/files/38582/seukun2013_en.pdf accessed on 08/09/14

In terms of average monthly earnings, individuals in the North Ostrobothnia region earned on average €3,067 per month, which was lower than the average across all regions (€3,206). Nonetheless, in terms of average monthly earnings, the region ranked 5th highest among the other regions in Finland – behind Uusimaa, Åland, Pirkanmaa and Ostrobothnia (http://www.stat.fi/til/pra/2012/pra_2012_2014-04-08_tau_001_en.html).

8.1.2 Stockvik, Sundsvall Municipality, Västernorrland County, Sweden

Stockvik is a town located in the Sundsvall municipality, Vasternorrland County, Sweden. In 2010, the town had a total of 2,359 inhabitants67. The Sundsvall municipality and Västernorrland county had a populations of 96,943 and 241,969, respectively (2013 data)68.

The county of Västernorrland is the sixth largest in the country and consists of 7 municipalities: Härnösand, Kramfors, Sollefteå, Sundsvall, Timrå, Ånge and Örnsköldsvik. The county can be split into two distinct areas. The coastal area (where the Sundsvall municipality is located) is more heavily populated with a diversified economic structure. In contrast, the inner part of the county is more sparsely populated and agricultural activities are predominant69.

The total GDP of Västernorrland county was around €9.4 billion euros in 2011, which meant the county accounted for approximately 2.4% of Sweden’s total GDP (based on Eurostat, Regional economic accounts). In terms of GDP per capita, the county ranked above the regional average of Mellersta Norrland, but was still below the national average, which sat at €40,800.

In 2011, the total GVA in Västernorrland county was €8.2 billion, which was approximately 2.4% of Sweden’s total GVA. Manufacturing GVA stood at €1.4 billion in Västernorrland and accounted for 17.6% of the county’s total GVA. Manufacturing’s share in GVA was higher in Västernorrland than in the region of Mellersta Norrland and Sweden as a whole.

67 Statistics Sweden, Tätorternas landareal, folkmängd och invånare per km2 2005 och 2010, accessed at http://www.scb.se/sv_/ on 09/09/14 68 Statistics Sweden, Population 1 November by region, age and sex. Year 2002 – 2013, accessed at http://www.scb.se/en_/ on 09/09/14 69 Case Study Report: Västernorrland’s County, SEMIGRA, accessed at http://www.lansstyrelsen.se/vasternorrland/SiteCollectionDocuments/Sv/nyheter/2012/semigra-case- study-report-vasternorrland-12-05-01.pdf on 10/09/14

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 90 Employment statistics are published in Sweden through two sources: the Labour Force Survey (LFS), which adheres to the EU and ILO recommendations, and the Swedish Public Employment Service. These two sources differ in their definitions and methodologies used to calculate unemployment. Municipality level data is only available from the Swedish Public Employment Service while official unemployment statistics from the LFS are only counted at the regional and national levels.

Unemployment data from the Swedish Public Employment Service show that the Sundsvall municipality had an unemployment rate of 9.1% in 2014 – over one percentage point higher than the national rate (8.0%). Similarly the county level of unemployment was also higher than the national level during 2014 at 9.5%.

Data for the wider Västernorrland County shows that there were 573 chemical processing plant operators and 204 chemical products machine operators employed in the county during 201270. In addition, there were 1,824 individuals employed as wood-processing and papermaking plant operators; these individuals represented 1.77% of Västernorrland’s total workforce (see Table XX).

The average income in the Sundsvall municipality is higher than the national rate. In 2013, the median annual income in Sundsvall was 252,325 SEK (€27,522) while the corresponding national salary was 242,844 SEK (€26,48871).

8.1.3 Alby, Ånge Municipality, Västernorrland County, Sweden

Alby is a locality situated in the Ånge municipality, Västernorrland County, Sweden. In 2010, the locality had 367 inhabitants72. The Ånge municipality had a populations of 9,561 (2013 data)73.

The total GDP of Västernorrland county was around €9.4 billion euros in 2011, which meant the county accounted for approximately 2.4% of Sweden’s total GDP. In terms of GDP per capita, the county ranked above the regional average of Mellersta Norrland. However, GDP per capita in Västernorrland was still below the national average, which sat at €40,800.

In 2011, the total GVA in Västernorrland county was €8.2 billion, which was approximately 2.4% of Sweden’s total GVA. Manufacturing GVA stood at €1.4 billion in Västernorrland and accounted for 17.6% of the county’s total GVA. Manufacturing’s share in GVA was higher in Västernorrland than both the region of Mellersta Norrland and Sweden as a whole.

Unemployment data from the Swedish Public Employment Service shows that the Ånge municipality had an unemployment rate of 10.7% in 2013 – over 2 percentage points higher than the national rate (8.5%). Similarly the county level of unemployment was also higher than the national level during 2013 at 10.3%.

The largest employer within the Ånge is the Ånge municipality, with around 1,000 employees74. Further data for the wider Västernorrland County show that there were 573 chemical processing plant operators and 204 chemical products machine operators employed in the county during 2012.

70 Statistics Sweden, Employees 16-64 years by region of residence by region, occupation, age, sex and year, accessed at http://www.scb.se/en_/ on 09/09/14 71 All values converted using exchange rate on 09/09/14, 1 SEK = 0.109074 EUR 72 Statistics Sweden, Tätorternas landareal, folkmängd och invånare per km2 2005 och 2010, accessed at http://www.scb.se/sv_/ on 09/09/14 73 Statistics Sweden, Population 1 November by region, age and sex. Year 2002 – 2013, accessed at http://www.scb.se/en_/ on 09/09/14 74 Ånge Kommun, Fakta om näringslivet, accessed at http://www.ange.se/ange/3788.html on 11/09/14

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 91 In addition, there were 1,824 individuals employed as wood-processing and papermaking plant operators; these individuals represented 1.77% of Västernorrland’s total workforce75.

The median annual income in Ånge has remained below the levels in Sweden and Västernorrland over the period. For instance, in 2012 the municipality’s median level of annual income stood at 224,629 SEK (€24,501) while the county and national levels were 240,163 SEK (€26,196) and 242,844 SEK (€ 26,488), respectively.

8.1.4 Ambès, Gironde, Aquitaine, France

Ambès is a commune in the Gironde department in south-western France. The commune has a population of 2,868 while the broader Gironde department has 1,463,662 inhabitants. The department of Gironde is located in the region of Aquitaine.

Around 60% of all salaried jobs in Aquitaine are concentrated within four industries: aerospace and defence, agri-food, chemicals and forest products. In addition, the region is home to five competitiveness clusters recognised by the French government76:

 Aerospace Valley - a cluster of aerospace engineering companies and research centres across the regions of Midi-Pyrénées and Aquitaine supporting over 115,000 jobs77  Agri Sud Ouest - a competitiveness cluster in agricultural and food processing  Route des Lasers – Optics and lasers  Xylofutur - Forestry, wood and paper  Avenia - Geosciences, energy and environment

The chemicals sector in Aquitaine consists of 600 establishments, supporting over 16,000 employees and 600 researchers. The sector specialises in six main areas: eco-design and recycling; plant chemistry; sulphur chemistry (lacq natural gas); functional materials; bio-sourced materials and high performance materials (composites and advanced materials)78.

In 2011, GDP in the Gironde department and Aquitaine region stood at €44.1 billion €87.7 billion respectively. Gironde thus accounted for 2.2% of French national GDP while the Aquitaine region made up for approximately 4.4%. At €30,000, GDP per capita in the Gironde department was relatively similar to the national level and above the regional average for Aquitaine, which stood at €26,800.

Total GVA in the Gironde department stood at €40.2 billion in 2011 and represented approximately 2.2% of total national GVA. GVA for the broader Aquitaine region accounted for 4.4% of France’s total GVA, at €79.5 billion. Statistics for the size of manufacturing GVA were unavailable from Eurostat.

In 2011, 73.7% of the population of Ambès was economically active, while 26.3% was classified as economically inactive. In the same year, 9.4% of the population were unemployed in Ambès, which

75 Statistics Sweden, Employees 16-64 years by region of residence by region, occupation, age, sex and year, accessed at http://www.scb.se/en_/ on 09/09/14 76 Invest in Aquitaine, Sectors of activity in Aquitaine, accessed at http://www.invest-in- southwestfrance.com/sectors-of-activity-in-aquitaine.html on 10/09/14 77 EACP, Aerospace Valley, accessed at http://www.eacp-aero.eu/index.php?id=26 on 10/09/14 78 Invest in Aquitaine, Chemicals, Materials, accessed at http://www.invest-in- southwestfrance.com/chemicals-materials.html on 10/09/14

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 92 is below the previous level in 2006. The rate of unemployment in Ambès was lower but relatively similar to the national level in 2011. On the other hand, it was higher than the levels for the surrounding regions of Gironde and Aquitaine. The data also show that the level of economic inactivity in Ambès was more than one percentage point lower than the surrounding regions.

In 2011, 414 individuals were employed in the industrial sector. The sector was the second largest employer in the commune accounting for 32.2% of total employment. However, as the table shows, the level of employment in the industrial sector declined by 3.2% over the period 2006-2011.

The average annual wage in the Gironde department was €20,756 in 2011, which was €998 more than the average for Aquitaine (€19,758) and €482 less than the national level (€21,238).

Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 93 Use number: 1 & 2 Legal name of applicant(s): AkzoNobel Pulp and Performance Chemicals 94