This article provides a brief introduction to the chemical industry, its economic contribution, and its environmental problems. The article identifies the key features of the industry that are likely to influence the possibilities for regulatory design. The main components and limitations of current regulatory regimes in North America, Western Europe and Australia are summarized. The main task of the article is to highlight the design of regulatory policy in harnessing a broader mix of instruments and institutional actors that are tailored to the particular circumstances of the chemical industry.
The problems focused upon are necessarily a subset of the environmental problems confronting the chemical industry as a whole. Point-source pollution and chemical accidents, have been the major environmental concerns with which the industry is associated.(1) The chemical industry is, by a large margin, the most polluting industry sector both in the United States and in a number of other countries. Solutions to problems in the chemical industry have resonance far beyond the chemical industry itself.
THE CHEMICAL INDUSTRY AND THE ENVIRONMENT
The chemical industry,(2) is a key manufacturing sector in most of the industrialized world. It transforms natural raw materials, such as metals, minerals, coal, oil, natural gas, vegetable oils, and animal fats, into thousands of organic chemicals for commercial use. The chemical industry produces tens of thousands of products including raw and basic or intermediate materials for other industries, and finished products for industry, construction, service, agriculture, business, and individual consumers.
During the early part of the 20th century, the industry expanded into explosives, synthetic dyes, pharmaceuticals, and petrochemicals, and diffused chemical industry products into many other industrial sectors. In so doing, it has come to play a dominant role in the manufacturing sector of most developed and many developing countries. More recently, the industry's trend is away from bulk chemicals towards higher added value products including pesticides, herbicides, dyestuffs, and biotechnology applications.
Almost all of the largest chemical companies are transnational. Most of these companies expanded from their original base in North America or Western Europe to establish substantial foreign subsidiaries. This expansion was particularly evident from the second half of the 1980's until the 1991 - 1992 recession, during which period companies opened new markets and built new plants, especially in the Asia-Pacific region. During the same period world gross output in chemicals grew from US $744 billion to US $1.136 trillion.(3) The industry also includes many smaller operators. These include specialty chemical manufacturers, distributors, and others to whom chemicals are supplied (e.g. upstream suppliers and buyers for manufacturers downstream).
The chemical industry is a keystone of the U.S. economy. It is also a leading industry in Western Europe, where it accounts for an estimated one-third of the world turnover of chemical production and thirty-seven percent of the total European trade balance of manufacturing.(4) In Australia, the chemical industry similarly plays an important role, both as a key supplier of raw materials to the overall manufacturing industry and to key export industries such as agriculture and mining.
The chemical industry is a major source of environmental pollution. It is the United States' largest consumer and generator of highly toxic chemical substances.(5) Roughly half of all releases and transfers reported through the Toxic Release Inventory ("TRI"), and eighty to ninety percent of hazardous waste generation reported through the Resource Conservation and Recovery Act, can be attributed to the industry.(6) These figures represent three times that of the next major contributor to pollution - the metal industry. …