icheme seminar, hull, 9 th march 2005 ippc: cost or benefit? janet murfin

IChemE Seminar, Hull, 9th March 2005

IPPC: cost or benefit?

Janet Murfin


Contents

• Current perceptions of PPC costs & benefits• IPPC costs• How PPC costs affect businesses• Should you avoid the IPPC regulations by

altering business operations? • How can your business benefit from IPPC?• Can we reduce our PPC costs?• How will IPPC affect industry in medium to long

term?


Current perceptions of PPC costs and benefits


Current perceptions are negative

CBIenvironmental regulations putting off investment in UK

overall costs of all these environmental regs. are £4 billion per year

Business managers/ ownersAnother layer of bumf and bureaucracy

Might be good for the environment, but it’s not good for business


A different view of PPC

• Good for the environment• PPC can be good for your business• It’s an opportunity to combine progress and

improvement with reduced environmental impact• Main downside is the amount of information to

get to grips with. This is reducing as EA clarify what’s required, issue better guidance, and expect more compact applications


PPC is good for the environment

• Better environmental controls than under IPC (eg land now a receptor, controls on emissions are tighter)

• Some businesses eg food, intensive farming included in this type of legislation for first time – reduced pollution from these industries.

• Ongoing reduction in emissions, water use, materials (if practicable) and energy


PPC can be good for your business

• Makes businesses look at their materials, wastes, water and energy use in detail, reducing operating costs

• In-built reductions in all these areas (where practicable) improves efficiency

• Encourages novel technologies• In theory, PPC should help longer term

competitiveness of industry while reducing overall environmental impact


PPC costs


Direct costs – EA PPC charges

• Cost of application: basic charge, one STU, low-risk site – around £7,000

• Cost of running permit: EP-OPRA - half permit cost per annum £3,500

• Surrender costs: one-off fee, currently £12,110

• These figures will increase by 3% in April 2005; and again in April 2006, and so on.


Other PPC costs - Application

• Estimated time to write “typical” application – 1 person 1 year’s full-time work (eg Akcros)

• Making any “quick fix” changes to operations to reduce PPC costs

• Site Report costs: H7 desktop study (do as much as possible in-house, get it checked/ specialist advice from consultants). May need phase 1b or phase 2 investigations (holes in ground v. v. costly, consultants essential).


Other PPC costs - surrender

• Have already listed EA surrender fees - £12,110• Decommissioning Report

– Carrying out actual decommissioning, including disposal of wastes, plant and equipment

– Keeping records and collating info

• Surrender Site Report– Consultant fees – desktop site report from £3k up to

about £10k, depending on size of site and complexity– Any further intrusive investigation and/or remediation

required - £tens of thousands


Contaminated land – a nasty sting in the tail at surrender

• Under PPC, you have to show whether or not there’s been any pollution to land during the permit period (hence the need for two site reports)

• If there has, you are liable to clean it all up to your “baseline level”, even if this is much tougher to meet than the Contaminated Land regulations expect

• It might not appear a high priority, but preventing pollution to land now will save a lot of money later.


Early surrender is more expensive:

• Shorter permit lifetime to offset application and surrender costs over

• If you know you’re going to end operations before you enter PPC – can you stop beforehand and save all that time and effort?

• Example : PPC prescribed process is lead soldering on brass radiators for automotive industry

• Under PPC 2002 to 2005 (“tsunami effect” permitting – new demand for trucks using this radiator type for aid and reconstruction)


IPPC lifetime costs

EA fees per year currently £4 k

Lifetime costs:

• Application fees 8k

• Maintenance fees (three years) 12k

• Surrender fees 12k

• Consultancy fees (2 site reports) 16k

• Total cost 48k

True cost per year £16k


Reduced costs for SMEs: “low impact installation”

• Must meet certain criteria on emissions and production volume

• Standard charges: application – £2,599 maintenance – £403, surrender £319

• Application cheaper – only need to show you meet the low-impact criteria (eg no site report, and no contaminated land implications at surrender)


How do PPC costs affect businesses?


PPC and larger businesses

• If you’re new to dealing with the Environment Agency, eg food industry, it can be a massive change (amount of information required, levels of “interference” in business)

• If your industry is already heavily regulated, eg chemicals, it’s not such a big step

• For regulated industries, it’s often an upgrade from IPC (but don’t think you can just re-submit your IPC application, PPC covers many more areas)

• Overall perception from larger chemical companies who entered in 2003 is “a lot of work, but an opportunity to improve”


Large companies cope better, on the whole

• IPPC charges often significantly lower than IPC because one permit and not several

• Large companies can absorb overheads – PPC charges and consultancy fees are a smaller proportion of turnover/ profits

• Have “spare capacity” in manpower• Technical knowledge to do most of work in-

house• However, several large unprofitable businesses

have been closed before permit entry


PPC hits smaller companies harder

• Charges are higher proportion of profits

• Less/ no spare manpower for application

• Less in-house technical knowledge (eg no environmental manager)

• May affect profitability

• May put businesses off growing into areas of work covered by PPC regulations


Graph showing impact of annual PPC charges alone on SME profits

assuming 10% gross profits

010203040506070

0.5M 1 M 1.5M 2M

Turnover per annum

% o

f p

rofi

t ta

ken

by

IPP

C f

ees

7.5k EPOPRAfees

15k EPOPRAfees

22.5k EPOPRAfees

30k EPOPRAfees


Should SME’s consider avoiding PPC by altering their

operations?


Options for SMEs

• It’s important to find out which operations take you into the PPC regulations

• Don’t assume you come under the regulations – read the small print

• Example – Grotech Production Ltd, Martin Usher• But don’t think you can carry on as you are and

pretend not to know anything – there are prosecutions and fines when you’re caught


Altering PPC operations

• Can you avoid the PPC regulations altogether by stopping a particular operation?

• Would reducing the amount of a product made take you into the “low impact” category?

• Or to try and fit into the “low impact installation” category

• Or to consider whether your PPC business is viable in the longer term/ whether you should change your operations


Points to consider before altering operations to minimise PPC impact• Could you pay for PPC costs if you had to – eg

increased sales?• Can you stand the reduced sales if you stop

your PPC products?• Will coming out of PPC give your rivals an

advantage?• Or is everybody else pulling out a particular

product in the UK – could you get a permit and charge more, to cover costs?


Who should make the decision?

• Ultimately, going into the PPC regulations is a business decision

• This decision should be made by the owners or their representatives (ie board of directors)

• It’s important for owners of all manufacturing business, particularly those using chemicals, to know at what point the PPC regulations affect them – if operations change, would you suddenly go into the regime?


How can your business benefit from PPC?


There are immediate benefits to your company

• A very thorough review of your site’s environmental impact, including areas previously overlooked (eg land)

• Opportunity to make changes which will save you time and money, increasing your long-term competitiveness

• In-built review of environmental performance, keep you on your toes


Business perception is vital:

• PPC is either a chance to improve operations, reduce emissions, cut down on energy – which will work to business advantage in the long term

• Or its another layer of bumf and bureaucracy which has to come out of profits

• Management attitudes will affect the success of the business, especially under the PPC regime

• Example: Aire and Calder Project (first “green business club” in UK)


How do environmental improvements save money?

• Directly – reduced charges for waste or effluent disposal (increasing landfill costs will make engineering out wastes, waste minimisation, composting or recycling much more important in the next few years)

• Indirectly – freeing up space or time, giving greater capacity to existing plant or warehousing

• Under PPC – by meeting environmental targets, you benefit from reduced permit fees


Aire & Calder water and effluent minimisation: 10 years later

• Company A spent money mainly on emissions abatement kit

• Company B spent time on monitoring and reducing emissions, training staff, optimising product range, running in campaigns to minimise wash-outs, reducing type and number of samples, also spent money on troll balls for efficient washing, sampling points etc

• Result – Company B made more savings, more consistently, and can apply thinking to other areas and processes. Company A didn’t alter how they worked or thought.


PPC tools to help you improve

• Requirement to map water, energy and materials use, and waste produced will provide valuable information

• The Best Available Technique section of PPC exists to ensure that everybody is working to the highest practicable standard (which shouldn’t mean they’re doing things in the same way, but that the outcome for the environment is optimised)

• PPC gives you an opportunity to benchmark and find out how well you’re doing technically, compared to your industry or sector as a whole


Make those improvements

• Make your EMS (whether in-house or ISO 14001) a live system, not a dead handbook

• Ask people doing the job what they think, they may know better than an environmental manager or consultant

• Environmental improvements can be cost-free eg how people behave rather than having expensive kit

• Keep looking for improvements, it’s not a one-off event, more a state of mind


Marketplace changes may also benefit your business

• Could you take on work from a competitor if they don’t want to get a PPC permit?

• If you have an operation which doesn’t justify the extra costs it brings to your permit, can you get it toll manufactured?

• Will there be more opportunities for you if your competitors are all leaving the marketplace to avoid PPC? Can you increase prices as a result?

• Closures can release skilled staff into the economy (good if you’re recruiting)


Can we reduce our PPC costs?


Time is money - work well with your EA inspector

• The key factor in whether a PPC permit runs well is your relationship with your Inspector

• After all, you both want the permit application to go through as smoothly as possible, and to ensure that running the permit is easy

• Don’t be a doormat - you should stick up for your point of view, particularly if you can justify your argument, but don’t be confrontational either.

• Do remember Inspectors are people too, and appreciate being treated fairly and with respect


Use consultants sensibly

• You can use a consultant to project manage the application, or act as a sounding board, or help with a bit of the project.

• They don’t need to write the whole application for you, unless you want that service.

• Consultants can help you liaise with the EA, and quietly stick up for you in meetings

• A consultant should know their way round the regulations and guidance, it may be cost-effective to ask them for help early on


Cut down your permit fees

• Read the small print – make sure you’re in PPC for the right reasons, under the correct category

• Negotiate with your EA inspector – defining the installation and STU’s correctly can save money throughout the permit lifetime

• Use the EP-OPRA calculation to see where you can make savings – if you get ISO 14001, would that reduce your score? (although you can’t alter some aspects eg location)


Reduce costs of writing application

• Use your in-house expertise – can you form an in-house team? Do you have the right skills? Are the right departments talking to each other?

• Get in a new graduate for a year to handle the bulk of the application

• Have a go at filling in your own site report using the EA’s template (but get it checked by a consultant, as a poor one can cost money at surrender)

• Don’t sacrifice the quality of your application for cheapness


SMEs: get free or reduced-fee help for aspects of your permit

• You can’t get help to comply with legislation directly, but you there is grant money for environmental improvement and implementing EMSs (which will help your application)

• Find out what’s in your area: contact Business Link, Envirolink, BITC, your local environment forum eg BBEF

• Join a Green Business Club for your sector, talk to competitors through trade forums, compare experiences


Make promises you can keep

• Don’t over-promise on your improvement programme (part of your permit conditions)

• Only put in improvements which are absolutely essential

• Give yourself plenty of time to make any improvements

• Improvement programmes have legal status, you may not have money for them in a couple of years

• Discuss the improvement conditions with the EA• Give yourself room to improve during permit


Avoid land pollution during the PPC permit lifetime

• ensure no pollutants stored or handled on/ near open land

• no underground chemical tanks/pipes• all effluent drains in good order and kept in good

repair • train all relevant staff in spillage control• keep good records (eg ISO 14001, SPMP)• if you have an incident where land is polluted,

remediate it ASAP, don’t leave it til later


Potential effects on industry in medium to long term


If your attitude is “another cost”, you might predict PPC would..

• Reduce the number of businesses carrying out PPC operations

• Drive smaller firms into non-PPC operations

• Cull weaker businesses • Leave UK more dependant on imports• Potentially affect the long-term health of

UK industry if start-ups are hampered by the regulations


But we can’t predict the future, we can only prepare for it….

• There will be unexpected events eg Asian tsunami has boosted demand for trucks, China’s rapid growth may mean it actually needs exports from Europe soon

• The UK has a flexible, highly trained workforce which can respond rapidly to opportunity

• As the public become more environmentally aware, PPC could become a marketing tool – “buy British, save the planet”

• Increased sales could justify permit costs


IPPC, cost or benefit?

• PPC, correctly implemented, can be good for your company’s efficiency and bottom line as well as environmental performance

• Size matters – large companies will benefit most at first, they can deal better with upfront costs

• Smaller companies should consider the business case for PPC– whether to minimise its impact by altering operations– will there be new business opportunities which a PPC

permit will open up


Thank you very much

• Any questions?

• Presentation available at www.ttenvironmental.co.uk/icheme.html

• Contact tel: 01274 870306

• Email: [email protected]

icheme seminar, hull, 9 th march 2005 ippc: cost or benefit? janet murfin

Documents

icheme seminar

ppc costs surrender

ppc costs application

ppc costs site report

ippc costs

surrender costs

environment ppc

business slide