What is Chemical Leasing?
What are the main advantages of Chemical Leasing?
In which industry sectors can Chemical Leasing be applied?
What are the differences between Chemical Leasing
and the classical form of leasing?
How do Chemical Leasing and Chemical Management Service (CMS) business models differ?
Are model contracts available for Chemical Leasing?
What do the new EU Chemicals Regulation (REACH) and Chemical Leasing have in common and how do they interact?
What is Chemical Leasing?
Following the UNIDO definition, Chemical Leasing (ChL) can be described as a service-oriented business model that shifts the focus from increasing sales volume of chemicals towards a value-added approach (for the complete UNIDO definition see here).
The producer sells the functions performed by the chemical and gets paid for the service provided. Functional
units (number of pieces, area coated, etc.) are used to quantify the payment.
The main chemical applications coming into question for a ChL business model are cleaning, greasing/degreasing, cooling/heating and paint operations. It is important to note that the service has to be rendered by the application of a chemical, otherwise the business model cannot be referred to as Chemical Leasing. In this context a chemical can come up to the definition given in the Council Regulation (EC) No. 793/93:
(Chemical) Substances are defined as chemical elements and their compounds
in the natural state or obtained by any production process,
including any additive necessary to preserve the stability of the product and any impurity deriving from the process used,
but excluding any solvent which may be separated without affecting the stability of the substance or changing its composition.
or be understood as a mixture or solution composed of two or more substances; in any case it is essential that its function is primarily determined by its chemical composition.
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What are the main advantages of Chemical Leasing?
ChL is a win-win situation. It aims at increasing the efficient use of
chemicals while reducing the risks of chemicals and protecting human health. It improves
the economic and environmental performance of participating companies and enhances their
access to new markets.
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In which industry sectors can Chemical Leasing be applied?
ChL can basically be applied in any sector using chemicals. ChL business models have the greatest success when applied to processes that allow good recycling rates.
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What are the differences between Chemical Leasing
and the classical form of leasing?
In a classical leasing model the user leases the product from a supplier. In ChL models, the user benefits of the service (final result) from the supplier but does not actually apply the product (chemical) himself.
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How do Chemical Leasing and Chemical Management Service (CMS) business models differ?
There is no unique definition of CMS. In a CMS business model the supplier of a chemical offers a series of chemical related services, like pollution monitoring, maintaining MSDS, personell training, safety issues, laboratory works, etc. The range of chemical management services varies considerably. Payments can consist of a fixed fee or be quantified (like in the ChL model) in functional units.
Consequently there are only little differences between the two business models. The main difference being that the services offered in a ChL model focus on the optimisation of the application process of a certain chemical, while CMS may encompass many other services. These services often concern the whole palette of chemicals used in a company that may not all be supplied by the company offering the CMS. In the context of ChL, on the contrary, the company offering the service also supplies the chemical(s) it offers the service for.
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Are model contracts available for Chemical Leasing?
Yes, a model contract is available, as well as Annex I and Annex II to the contract.
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What do the new EU Chemicals Regulation (REACH) and Chemical Leasing have in common and how do they interact?
ChL business models and REACH have a series of common objectives:
- both intend to reduce the risks resulting from the use of chemicals
- both intend to improve the industry's competitiveness through responsible
manufacture and application of chemicals
- both intend to create benefits from an intensified sharing of know
how and information.
REACH will boost ChL for different reasons:
- Promotion of information exchange
Aspects of REACH concerning the transfer of information along the supply chain are also addressed by the ChL model; both concepts promote an increased cross-linking of know-how between producer and user of chemicals.
- Higher recognised value of solutions for risk management
Due to the complexity of the REACH regulation the consumer value of
integrated management services is expected to rise, especially in the
fields of legal compliance and risk management; the need to share costs
and benefits becomes more obvious as a result of the REACH requirements.
- Need for new rules for confidentiality
Solutions and developments under REACH regarding confidentiality will
require new rules to ensure mutual trust and confidence; increased
transparency of chemical processes entails the risk of imitation,
service oriented business models are therefore protected by an imitation
barrier.
- Better environmental record of production processes
The perception of ecologically sustainable process solutions is expected
to increase along the supply chain due to REACH. This should
increase the market value of service solutions that promote closed loop systems.
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