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June-August 2022

Innovation in a climate of risk and regulation

The precautionary principle has a place in regulating chemicals new to Australia, but for chemicals already used elsewhere are the burdens of time and cost unnecessarily heavy?

Life is full of hazards. We take risks every day. The riskiest trip many of us take is along the birth canal – much more hazardous than white-water rafting, they say – but here we all are, mostly having arrived quite safely …

We understand the precautionary principle, but if we always applied it in order to know all the outcomes of every action we might take before we set out, we’d perhaps still be living in caves or in the Dark Ages, without any of the comforts of modern living or benefits of modern science. Professor K. Clive Thompson from the UK’s Society of Chemical Industry spoke on the topic ‘Does the over-zealous implementation of the precautionary principle inhibit innovation?’ at the RACI Centenary Congress in 2017. In short, his answer was ‘yes’. In early 2019, Daniel Castro and Michael McLaughlin at the Information Technology & Innovation Foundation wrote ‘Ten Ways the Precautionary Principle Undermines Progress in Artificial Intelligence’. One of their key messages was that, to capture the full benefits of AI, policymakers should follow the ‘innovation principle’, which holds that the vast majority of new innovations are beneficial and pose little risk, so government should encourage them. Is what should be right for AI be right for the chemical industry?

Chemical engineers have spent decades studying and refining risk profiles of chemical reactions. Usually, when something goes seriously awry in a chemical plant, it is because someone’s homework hasn’t been done properly, or someone hasn’t evaluated all the possibilities of what might go wrong. The literature of the risk engineering fraternity is littered with examples of failures because shortcuts were taken, or insufficient account was taken of all possible eventualities.

If new chemicals with measurable benefits are to be introduced into the world, how much risk are we prepared to tolerate before their introduction is permitted? Addressing this question has challenged many an industrial research chemist over many years.

We know how important it is to ensure that the food we eat doesn’t poison us, and that the medicine we take helps to cure us, not make us worse. The Food and Drugs Administration (FDA) was set up in the USA to ensure these sorts of outcome. Established in 1848, it originally focused on chemical analysis of agricultural products to ensure their safety, and then in 1906, the Pure Food and Drugs Act, 25 years in the making, laid the groundwork for the FDA’s modern regulatory functions, prohibiting interstate commerce in adulterated and misbranded food and drugs etc.

Similar regulatory bodies in other jurisdictions offer similar protections to consumers. In Australia, for example, one of the key functions of Food Standards Australia New Zealand (FSANZ) is to control the introduction of new food additives to ensure that they are safe to use and safe to consume. The Australian Pesticides and Veterinary Medicines Authority (APVMA) regulates agricultural and veterinary products, and the Therapeutic Goods Administration (TGA) regulates the introduction of pharmaceuticals: no new pharmaceutical compounds can be introduced on the market unless and until they have been rigorously tested, evaluated and pronounced safe and efficacious. Admittedly, in days gone by, before the need for rigorous evaluation under all conceivable conditions of application were appreciated, things sometimes did go wrong, sometimes with disastrous consequences. But we have learned from our mistakes.

Should new industrial chemicals be subjected to similar evaluations? Well, yes, because we know of the potential dangers to people and the environment if potentially hazardous substances are discharged in an unregulated manner without appropriate controls. But how rigorous should those regulations be if the products concerned have demonstrably beneficial properties, are going to be used in a properly regulated environment, and particularly if they are already used overseas?

An early step along the route to chemicals regulation in Australia was the establishment of the Australian Core Inventory of Chemical Substances (ACOIN). Published in 1984 by the Department of Home Affairs and Environment, it listed all chemicals that companies said were in use at the time. The idea of collating a database like this was to establish a foundation from which to build new knowledge about new chemicals. If a chemical entity was listed on the inventory, then companies could introduce (i.e. manufacture, import and/or use) it provided that the organisations concerned had registered with the department, and paid the requisite fees. Of course, some of the listed chemicals, despite having been in use for ages, weren’t as safe as they might have been and over time were subject to more critical examination by the department, sometimes with subsequent restrictions on how they could be used in future. Industrial chemicals were defined by exclusion: an industrial chemical is anything that is not a foodstuff (regulated by FSANZ), a medicine (regulated by the TGA) or a veterinary product (regulated by the APVMA).

The establishment of the National Industrial Chemicals Notification and Assessment Scheme (NICNAS) the same year as ACOIN meant that new chemical entities (new to Australia, that is) not on the inventory had to be subject to rigorous examination before they could be introduced (manufactured, imported or used) in Australia in industrial applications. (Some exemptions were allowed for small-scale and research purposes.) Chemicals were identified by their CAS numbers, which generally worked well. An organisation wishing to introduce a new chemical first had to be registered, then had to produce a wide range of data on the new chemical’s physical and chemical properties, toxicity to a range of plant life, river, ocean and terrestrial organisms, impact on the environment etc. All well and good in theory, but in practice the cost of carrying out the requisite tests as required under Australian conditions, often in circumstances where overseas evaluations were not readily accepted, often made the introduction of the new chemical uneconomic. The department set itself a clock by which to respond to new product submissions, but the clock stopped every time the proponent was asked to provide more data, which often meant substantial time delays in getting approval. And I don’t think the clock was ever beaten!

So what happened in practice was that Australia was quite probably deprived of new products and new technologies because, although they were already being used overseas, the cost of providing data required by Australian authorities exceeded the revenue expected from the Australian market. And this applied not just to new chemicals, but also to formulations (cosmetic, toiletry, paint, inks or glues) that contained these new chemicals.

NICNAS transitioned to the Australian Industrial Chemicals Introduction Scheme (AICIS) in 2020 in order to address some perceived deficiencies in the old scheme. The AICIS website claims that although this new scheme has the same mission as the old scheme, some of the operating principles have been modified: they now include inter alia risk-proportionate regulation, a rebalancing of pre-introduction versus post-introduction controls, with less focus on pre-introduction assessment, and more on post-introduction monitoring and evaluation, and incentivising lower risk chemical introductions.

The idea as outlined on the AICIS website is for the government to regulate chemicals, including polymers, introduced (manufactured, imported and/or used) for industrial applications such as in inks, paints, adhesives, solvents, cosmetics and personal care products, cleaning products, as well as in manufacturing, construction and mining applications. The legislation establishing the AICIS was contained in the Industrial Chemicals Act 2019.

The website says that the scheme helps to protect the health of Australians and our environment by finding out the risks of industrial chemicals and recommending ways to promote their safer use. It doesn’t refer to the potential impact of regulation on the health of Australian industry. Although to be fair, some aspects of the new scheme have attempted to address this.

Would proponents of the precautionary principle say the safest thing to do is to not use new industrial chemicals and relocate the risk associated with their manufacture and use offshore? That thinking would bring about the further demise of Australian manufacturing industry and deprive Australian consumers of the most modern technology. It is very frustrating when new chemicals with advantages over existing products in terms of safety, efficacy and reduced environmental impact are not introduced into Australia to substitute for less efficacious existing products because the cost of testing makes their introduction uneconomic. At least AICIS is more receptive to overseas test results than NICNAS was.

What AICIS claims it does is to conduct scientific risk assessments on the introduction and intended use of industrial chemicals in Australia. It publishes its findings. Actually, the AICIS takes data developed, provided and paid for by industry and, according to the website, scientifically interprets it to determine potential risks. Too often, the term ‘scientific interpretation’ just means ticking boxes.

The AICIS maintains the Australian Inventory of Industrial Chemicals on which something like 40 000 entities are listed. More than 7000 companies are registered to import, manufacture or use industrial chemicals. The AICIS issues certificates and authorisations for the introduction of industrial chemicals in Australia. It makes risk management recommendations to protect human health and the environment. It sets and maintains the Industrial Chemicals Categories Guidelines and maintains the Register of Industrial Chemical Introducers. It also monitors compliance and investigates breaches of the relevant laws and collects statistics (which all 7000 companies registered with AICIS have to provide at their own cost) on the use of industrial chemicals in Australia.

The AICIS is funded by the fees and charges paid by manufacturers and importers (introducers) of industrial chemicals, so maintaining AICIS represents a direct cost on innovation. In effect, industry pays to get its products tested, pays to get the tests assessed by the AICIS, then pays to hold the relevant licence to ‘introduce’ the products. Surely, all these costs are a disincentive to innovation?

I wonder what would have happened if the precautionary principle had been applied to the first chemical processes that humans worked on, such as fermentation to make beer and wine. Would alcohol, with all its adverse effects, have ever been allowed? Maybe some people would have set the precautionary principle aside and taken note instead of the psalmist acknowledging God for ‘wine that gladdens human hearts’ (Psalm 104:15). Maybe there is a case for taking a similar innovative approach today!

Richard Thwaites FRACI CChem retired in 2008 after a 41-year career in the chemical industry. He currently chairs the RACI Victorian Branch Health, Safety and Environment Group, is a member of the HS&E Division, convenes the RACI Victoria Retirees, and is a member of the RACI Victorian Branch Food Nutrition and Analytical Chemistry Group.

Chemicals, conventions and the ‘dirty dozen’

The period from 1997 to 2007 was a bumper decade for introducing controls on the chemical industry.

The Chemical Weapons Convention entered into force in 1997. The Rotterdam and Stockholm Conventions were signed in 2004. And the European Chemicals Agency (ECHA), responsible for implementing the REACH (Registration, Evaluation, Authorization and Restriction of Chemicals) program was established in 2007. So, Australia’s AICIS program is not an isolated example of a government wanting to regulate the production and use of chemicals.

In 2001, the Stockholm Convention, an international agreement to minimise the emission or discharge of persistent organic pollutants (POPs), was adopted. Australia became a signatory in 2004, the year that the Convention entered into force.

Initially, 12 POPs – the ‘dirty dozen’ – were recognised under the Stockholm Convention as causing adverse effects on humans and ecosystems:

  • Pesticides: aldrin, chlordane, DDT, dieldrin, endrin, heptachlor, hexachlorobenzene, mirex, toxaphene
  • Industrial chemicals: hexachlorobenzene, polychlorinated biphenyls (PCBs)
  • By-products: hexachlorobenzene; polychlorinated dibenzo-p-dioxins and polychlorinated dibenzofurans (PCDD/PCDF), and PCBs

POPs covered by the Stockholm Convention have been added to over time and now numbers around three dozen chemical entities. Chemicals currently under review include methoxychlor and chlorpyrifos.

Two other international conventions, those of Basel and Rotterdam, are international agreements concerning international trade and transboundary movement of hazardous waste and pesticides/certain hazardous chemicals, respectively. The Rotterdam Convention focuses on pesticides and industrial chemicals that have already been banned in various countries, such as asbestos. The 52 chemicals covered by the Rotterdam Convention can also be very persistent in the environment. Signatories to the Convention ban the import and export of the chemicals and products listed in Annex III with the aim of including more countries where the chemicals are banned.

REACH, under the administration of the ECHA, is the mechanism that controls the production, use, introduction and sale of chemicals in the EU. The ECHA was established in Helsinki and currently has about 600 staff working for it. Its role is to implement the EU’s chemicals legislation to protect people and the environment from the hazards of chemicals. It claims also to contribute to the well-functioning internal market and the innovation and competitiveness of the European chemicals industry.

The Basel, Rotterdam and Stockholm Conventions Conference of Parties is being held in Geneva in June this year. For further information, visit

If new chemicals with measurable benefits are to be introduced into the world, how much risk are we prepared to tolerate before their introduction is permitted?
Too often, the term ‘scientific interpretation’ just means ticking boxes.

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