Chemical industry fails to deliver environmental investments

The UK chemical industry's spending on environmental protection is expected to account for 24% of its capital expenditure in 1994, up from 10% in 1991, according to a survey by the Chemical Industries Association (CIA). But the credibility of the figures has been dented by the industry's failure to achieve even half the level of environmental spending projected by a previous survey.

The figures released in April were based on the CIA's annual survey of the investment intentions of its member companies.

The returns showed that capital spending by the chemical industry totalled £1,860 million in 1991, a fall of 13% in real terms on the 1990 figure. Spending is expected to fall to £1,760 million in 1992, a further real reduction of 10%, before picking up to £1,880 million in 1993.

In contrast, spending on environmental protection is projected to increase in real terms for each of the next three years. Returns by 32 companies indicate that environmental protection accounted for 10% of their capital expenditure in 1991. This is expected to rise to 14% in 1992, 21% in 1993, and 24% in 1994.

The increase may appear impressive, but the CIA neglected to mention how the figures compare with the results of a special survey which it carried out last year. This concluded that the chemical industry's capital investments in environmental protection would run at an annual average of £440 million in 1990 to 1992 - equivalent to over 23% of its expected total capital expenditure in that period (ENDS Report 195, p 3).

However, both these expenditures and the grim consequences for profit margins forecast by the CIA have failed to materialise. Its latest survey suggests that the industry's environmental investments are likely to reach about £630 million over the three years - only 11% of the total. And in none of the next three years is expenditure on environmental protection now projected to come anywhere close in real terms to the levels previously forecast for 1990-2 and beyond.

The revision of the forecasts may in part reflect less alarmist projections of the impact of integrated pollution control (IPC). Last year, the CIA said that the capital cost of complying with IPC would amount to £1,500 million over four years. Now, if the responses to its latest survey are representative of the industry as a whole, capital spending on environmental protection will amount to £1,065 million over the next three years - and only £540 million of this is attributable to legislative requirements, of which IPC is only one.

The survey also reveals that chemical companies are slashing their investments in energy saving. Their forward spending plans give it only a 6% share of the total capital budget. Last year's survey gave it an 11% share - the lowest figure since 1983.

The figure does not bode well for the CIA's "Responsible Energy" campaign, launched in March amidst claims that the chemical industry has a "remarkable" energy efficiency record. The campaign is part of the CIA's drive to dissuade the European Commission from proceeding with its proposals for a carbon/energy tax in order to curb carbon dioxide emissions (see pp 14-16 ).

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