Government Regulation
December 2, 2020
Potential Regulation
California Considers Listing Titanium Dioxide Nanoparticles and Other Chemicals as Reproductive Toxicants
- December 1, 2020
- Government Affairs
- Contact: Riaz Zaman
If OEHHA finalizes listing, manufacturers of products containing one or more of these chemicals must provide warnings on product labels within one year. Under Prop 65, individuals must provide warnings prior to exposure to a chemical identified by the State of California to cause cancer or reproductive harm. The duty to warn applies to most individuals causing an exposure, including product manufacturers, employers and individuals causing exposures in an affected area. Prop 65 requires the State of California maintain a list of chemicals that are known to the State to cause cancer, birth defects or other reproductive harm, or both. The list includes over 900 chemicals since it was published in 1987.
The state can add chemicals to the Prop 65 list using four mechanisms: 1) the State’s qualified expert mechanism; 2) formally required to label mechanism; 3) labor code listing mechanism; and 4) authoritative body mechanism.
Last month, ACA filed comments with OEHHA urging the agency not to list titanium dioxide nanoparticles under Prop 65.
ACA Comments
In its comments, ACA notes that paint manufacturers may use nanoscale titanium dioxide as a filter for ultra-violet light to protect binding agents in a paint matrix; however, ACA underscored that the extent of use in paints is unknown and that it may not be common.
Because no studies associate reproductive toxicity with use of products containing nanoscale titanium dioxide, ACA asserted its belief that a Prop 65 listing is not supported at this time. This is especially true for use in paint products, since any nanoscale material is bound in a matrix and rendered unavailable during use. Any releases from weathering, sanding, demolition or disposal are expected to be negligible.
Particles bound in a paint matrix do not pose a hazard
ACA urged DARTIC to consider that wetted mixtures, such as paint, containing hazardous chemicals typically pose no hazard. OEHHA has recognized that particles bound in a paint matrix do not pose a hazard during application. Studies cited in the prioritization document do not support the proposition that nanoscale titanium dioxide in paint would increase the likelihood of reproductive toxicity in users of paint products. OEHHA’s listing of crystalline silica and titanium dioxide as a carcinogen in Proposition 65, recognize that chemicals bound in a paint matrix do not pose a hazard. In considering availability for exposure of titanium dioxide, the International Agency for Research on Cancer (IARC) recognizes that “No significant exposure to primary particles of titanium dioxide is thought to occur during the use of products in which titanium dioxide is bound to other materials, such as in paints.”
ACA also noted that IARC reached a similar conclusion when considering carcinogenicity of carbon black: “End-users of these products (rubber, ink or paint) are unlikely to be exposed to airborne carbon black particles, which are bound within the product matrix.”
As such, ACA asserts that listing titanium dioxide nanomaterials for use in paint products
under Prop 65 is unwarranted.
Nanoscale titanium dioxide does not pose a significant hazard during abrasion
ACA stressed to OEHHA that any concern related to particles in wetted mixtures usually occur from sanding and abrasion after application. OEHHA’s listing of titanium dioxide and crystalline silica as Proposition 65 carcinogens is limited to “airborne, unbound particles of respirable size.” Moreover, since particles are bound in a matrix, any respirable particles typically do not contain pure form of the particle at issue, minimizing any risk posed by that chemical.
ACA pointed to a study that considers hazards associated with nanoscale titanium dioxide in paint particles where the authors conclude that hazards of nanoscale titanium dioxide in dried paint particles cannot be predicted based on hazards of pristine nanoscale titanium dioxide. The authors also note that amounts of nanoscale titanium dioxide from dried paint particles are negligible.
Specification of particle dimensions would assist in identifying products with nanoscale titanium dioxide
For clarity, ACA suggested that OEHHA harmonize California’s definition of nanoscale titanium dioxide with particle parameters identified in the U.S. Environmental Protection Agency’s (EPA) Nanoscale Materials Reporting Rule. The EPA definition specifies that:
- Particles manufactured or processed in a form where any particles, including aggregates and agglomerates, are in the size range of 1-100 nanometers (nm) in at least one dimension; and
- Are solid at 25 °C and standard atmospheric pressure.
Companies applied this definition in 2017 when identifying reportable products under the rule. Should DARTIC recommend listing, harmonizing California’s definition would assist companies that are already familiar with USEPA’s definition. U.S. EPA also provides some additional clarity by noting particle size must apply to at least one dimension.
For the aforementioned reasons, including insufficiency of studies indicating reproductive toxicity of nanoscale titanium dioxide as used in products, ACA urged DARTIC not to recommend listing nanoscale titanium dioxide under Prop 65 at this time.
Contact ACA’s Riaz Zaman for more information.
November 30, 2020
Online Mattress Suppliers Will Be Required to Pick Up Used Mattresses in CA
Mattress Recycling Law Levels the Playing Field
Furniture World Magazine
Volume 151 No. 6 November/December
By HFA Reports on 11/20/2020 
Content about HFA member-retailers contributed by HFA.
Omar Mendoza accepts his obligations under California’s mattress recycling program. Anyone who purchases a mattress from his store, All American Mattress & Recliners in Beaumont, is entitled to ask him to remove a used mattress for recycling at no charge.
What gets under Mendoza’s skin is when someone who’s not a customer calls to ask for the same service. Often, he learns the person making the request bought a new mattress from an online dealer.
New Rules for Online Dealers
 Pictured is Gary Trudell of HFA member Custom Comfort Mattress Company. With seven stores in Southern California, Custom Comfort collects many old mattresses. He is happy to finally see everyone share in the responsibility of recycling. |
“It happens so often it’s ridiculous,” said Mendoza, a member of the Home Furnishings Association.
But a reckoning, of sorts, is coming. Beginning January 1, 2021, online mattress sellers will face the same requirements as brick-and-mortar stores. Not only must they collect and remit to the state the same recycling fee of $10.50 for each mattress and another $10.50 for each box spring, they also must offer to pick up a used mattress for every mattress delivered—for free.
“It’s about time,” said Mendoza.
Indeed. This has been required of stores like his for the past five years. The program, operated by the Mattress Recycling Council, has diverted millions of mattresses from landfills. But it puts a heavy responsibility on retailers, who must absorb the expense of carrying away used mattresses, storing them and then hauling them to collection sites. Online sellers, which often deliver beds-in-a-box and other sleep products by common carrier, have not had to do that. That gives them a price advantage, which the MRC recognizes.
“It really does need to be fair,” said Lori Barnes, the council’s manager of industry communications.
Read more here: https://www.furninfo.com/furniture-world-articles/3899
November 30, 2020
Online Mattress Suppliers Will Be Required to Pick Up Used Mattresses in CA
Mattress Recycling Law Levels the Playing Field
Furniture World Magazine
Volume 151 No. 6 November/December
By HFA Reports on 11/20/2020
Content about HFA member-retailers contributed by HFA.
Omar Mendoza accepts his obligations under California’s mattress recycling program. Anyone who purchases a mattress from his store, All American Mattress & Recliners in Beaumont, is entitled to ask him to remove a used mattress for recycling at no charge.
What gets under Mendoza’s skin is when someone who’s not a customer calls to ask for the same service. Often, he learns the person making the request bought a new mattress from an online dealer.
New Rules for Online Dealers
Pictured is Gary Trudell of HFA member Custom Comfort Mattress Company. With seven stores in Southern California, Custom Comfort collects many old mattresses. He is happy to finally see everyone share in the responsibility of recycling. |
“It happens so often it’s ridiculous,” said Mendoza, a member of the Home Furnishings Association.
But a reckoning, of sorts, is coming. Beginning January 1, 2021, online mattress sellers will face the same requirements as brick-and-mortar stores. Not only must they collect and remit to the state the same recycling fee of $10.50 for each mattress and another $10.50 for each box spring, they also must offer to pick up a used mattress for every mattress delivered—for free.
“It’s about time,” said Mendoza.
Indeed. This has been required of stores like his for the past five years. The program, operated by the Mattress Recycling Council, has diverted millions of mattresses from landfills. But it puts a heavy responsibility on retailers, who must absorb the expense of carrying away used mattresses, storing them and then hauling them to collection sites. Online sellers, which often deliver beds-in-a-box and other sleep products by common carrier, have not had to do that. That gives them a price advantage, which the MRC recognizes.
“It really does need to be fair,” said Lori Barnes, the council’s manager of industry communications.
Read more here: https://www.furninfo.com/furniture-world-articles/3899
October 28, 2020
Chinese Wind Subsidies to End in December
China’s Renewable Power Price and Subsidy: “New” Design in 2020?
Renewable: Wind, Solar / By Yuki / 29 January 2020
China’s renewable subsidy formula and power price structure have been through a rapid and rather complex shakeup in the past two years.
Last week, the Ministry of Finance (MoF) unleashed yet another new measure, mainly addressing offshore wind and solar thermal but also clarifying some regulatory matters.
Beijing has more or less completed the design of a brand new renewable pricing, by the release of this policy and a few others since 2018.
The keyword is “subsidy-free.” Onshore wind and solar will already meet grid parity next year. And for offshore wind, only two years left before the industry need to survive without any more national financial support.
Since 2019 Beijing kicked off the pricing reshuffle, the renewable subsidy setup has become somewhat complicated, with project approval time and grid-connection time both influencing factors to the project on-grid prices. We have summarized the pricing and subsidy set-ups from 2018 to 2022 in the latter part of this article, let’s dive in.
No Subsidy for Incremental Offshore Wind and CSP Projects
Last week, the Ministry of Finance (MoF), the National Development and Reform Commission (NDRC), and the National Energy Administration (NEA) issued another policy regarding the arrangement of the renewable subsidy.
New measures introduced in this policy include:
- The collection (income) of renewable subsidy cash pool will determine the subsidy spending on renewable projects.
- Subsidy payout to renewable projects will be conducted annually; there will be an annual limit for the total subsidy payout.
- China will no longer subsidize new offshore wind projects and solar thermal projects
- “Existing” offshore wind and CSP projects—those secured approvals before 2019—are still qualified for the national subsidy if “all of their units” could complete grid connection before the end of 2021
- There will be no more “renewable subsidy catalogue” released. Prior to this policy, the MoF is in charge of reviewing eligible projects and enlisting them in a “subsidy catalogue.” Only projects included in these “catalogue” would be able to receive the subsidy. However, over the years the MoF is hesitant of registering new projects and only released seven batches of eligible projects between 2013-2016, which only account for a small portion of total renewable projects connected to the system.
- The grid companies are now in charge of screening and registering projects eligible for the national subsidy.
By the new policy, China’s offshore wind feed-in tariff and pricing structure is changed, again. See below our summary on the pricing arrangments for offshore wind projects between 2019-2022.
Meanwhile, the policy emphasized and followed a series of principles previously established by the regulators between 2018-2019
- A Gradual Reduction of Subsidy: incremental renewable projects will face less and less support
- Zero-subsidy From 2021, 2022: wind and solar projects will achieve grid parity around 2021-2022.
- Distributed Projects Enjoy Longer Supports: for distributed renewable (e.g. rooftop solar) projects, Beijing will still provide a fixed amount subsidy between 2021-2022
- Green Certificate and Alternative Trading Measures to Help: Beijing will advance green certificate trading and dispatch priority trading, two mechanisms expected to help renewable projects to secure extra revenues
Renewable Feed-in Tariff and Subsidy Pricing Becomes History
To fully grasp the impact of the new measure, some basic understanding of China’s existing feed-in tariff system is necessary. I have touched upon the set-up and its issues in a previous report. [READ MORE about the FIT Mechanism]
China has introduced feed-in tariff (FIT) pricing mechanism to the onshore wind, solar PV plants, distributed solar and offshore wind sectors since 2009, 2011, 2013 and 2014, respectively.
Within this FIT mechanism, the national price regulator NDRC set different FIT rates for varied renewable projects, which reflect the different costs to tap into these resources. Essentially, the pricing formula is a cost-based model, taking into account the regional average project cost and a fixed internal rate of return (IRR)—8% usually.
As a result, renewable investment decisions in China are often on the basis of more than 8% IRRs. [READ MORE on Fundamental Change on the IRR Investment Principle ]
Prior to 2019, renewable projects were granted a 20-year fixed FIT rate based on their grid-connection time. Specifically:
- onshore wind: four types of FIT rates
- offshore wind: two kinds of FIT rates (intertidal, or projects with >10km distance from shore)
- mounted PV power plants: three types of FIT rates
- distributed solar: previously given the same prices for rooftop solar for commercial use and residential use
- solar “exemptions”: distributed projects in the “front-runner” or “poverty alleviation” programs are granted higher FITs
The price regulator has been gradually lowered the FIT rates over the years to reflect the learning curve of the sector. But the reductions were considered gradual (or slow). Onshore wind projects and mounted solar had previously been through only three times FIT rate adjustment.
For renewable power plants, the incomes from selling power are payable in two parts:
- part-1: payable when electricity sold to the grid, at a fixed price equal to that of the local coal-fired power benchmark tariff. It is paid monthly by the grid operator.
- part-2: the renewable subsidy part, which equals to the differences between the renewable FITs and the coal-fired benchmarks. This subsidy amount is paid out separately by the Renewable Energy Development Fund (REDF) managed by the MoF.
However, due to the mounting deficit in the REDF, Beijing has been delaying the subsidy, part-2, payment to renewable projects listed in the catalogue. Moreover, it also slowed down the release of new “subsidy catalogues” inclusive of the eligible plans. As a result, a majority of the wind and solar projects in China, in fact, either receive no subsidy at all for the past years or face severe payment delays. The whole value chain is, thus, under mounting financial pressure and the threat of insolvency. [READ MORE on the Reason Behind China’s Renewable Asset Sale Wave]
To address this black-hole alike REDF deficit, the three regulators have re-design the pricing and subsidy measures, pushing new projects to decouple from the national subsidy.
New Renewable Tariff and Pricing Structure
China’s renewable market is now moving toward a brand-new zero-subsidy era, with utterly different pricing formula.
We have summarized the pricing arrangement of onshore wind and solar projects from 2016 to 2022.
Implications of the New Policy
The shake-up upon renewable pricing is meant to solve the deficit issue of China’s REDF. However, the current measures taken—to limit new project growth and their subsidy demand—may have questionable results.
- Delay and lack of subsidy payment will continue to haunt the industry: the most critical element leading to the insufficient subsidy cash pool, in our view, is the inefficient collection of renewable surcharges. However, Beijing has been highly reluctant to raise electricity surcharges on consumers. We DO NOT expect Beijing to increase renewable subsidy surcharge in the coming years. The lack of funding will continue to haunt the industry. [Read More on the Consequence, as in, Renewable Projects Set off Asset Sales Wave ]
- Offshore wind and CSP industry will embrace some significant financial challenge: although over 40GW offshore projects rushed for approvals before 2018. Majority of these projects are unlikely to achieve the required grid connection deadline (2021 Dec). We expect 2/3 of the pipeline projects would face a reduced of FITs and are under threat of cost overrun and lowered return. [Read More about the Offshore Wind Installation Rush ]
This will decrease epoxy demand for the blades . . .
October 28, 2020
Chinese Wind Subsidies to End in December
China’s Renewable Power Price and Subsidy: “New” Design in 2020?
Renewable: Wind, Solar / By Yuki / 29 January 2020
China’s renewable subsidy formula and power price structure have been through a rapid and rather complex shakeup in the past two years.
Last week, the Ministry of Finance (MoF) unleashed yet another new measure, mainly addressing offshore wind and solar thermal but also clarifying some regulatory matters.
Beijing has more or less completed the design of a brand new renewable pricing, by the release of this policy and a few others since 2018.
The keyword is “subsidy-free.” Onshore wind and solar will already meet grid parity next year. And for offshore wind, only two years left before the industry need to survive without any more national financial support.
Since 2019 Beijing kicked off the pricing reshuffle, the renewable subsidy setup has become somewhat complicated, with project approval time and grid-connection time both influencing factors to the project on-grid prices. We have summarized the pricing and subsidy set-ups from 2018 to 2022 in the latter part of this article, let’s dive in.
No Subsidy for Incremental Offshore Wind and CSP Projects
Last week, the Ministry of Finance (MoF), the National Development and Reform Commission (NDRC), and the National Energy Administration (NEA) issued another policy regarding the arrangement of the renewable subsidy.
New measures introduced in this policy include:
- The collection (income) of renewable subsidy cash pool will determine the subsidy spending on renewable projects.
- Subsidy payout to renewable projects will be conducted annually; there will be an annual limit for the total subsidy payout.
- China will no longer subsidize new offshore wind projects and solar thermal projects
- “Existing” offshore wind and CSP projects—those secured approvals before 2019—are still qualified for the national subsidy if “all of their units” could complete grid connection before the end of 2021
- There will be no more “renewable subsidy catalogue” released. Prior to this policy, the MoF is in charge of reviewing eligible projects and enlisting them in a “subsidy catalogue.” Only projects included in these “catalogue” would be able to receive the subsidy. However, over the years the MoF is hesitant of registering new projects and only released seven batches of eligible projects between 2013-2016, which only account for a small portion of total renewable projects connected to the system.
- The grid companies are now in charge of screening and registering projects eligible for the national subsidy.
By the new policy, China’s offshore wind feed-in tariff and pricing structure is changed, again. See below our summary on the pricing arrangments for offshore wind projects between 2019-2022.
Meanwhile, the policy emphasized and followed a series of principles previously established by the regulators between 2018-2019
- A Gradual Reduction of Subsidy: incremental renewable projects will face less and less support
- Zero-subsidy From 2021, 2022: wind and solar projects will achieve grid parity around 2021-2022.
- Distributed Projects Enjoy Longer Supports: for distributed renewable (e.g. rooftop solar) projects, Beijing will still provide a fixed amount subsidy between 2021-2022
- Green Certificate and Alternative Trading Measures to Help: Beijing will advance green certificate trading and dispatch priority trading, two mechanisms expected to help renewable projects to secure extra revenues
Renewable Feed-in Tariff and Subsidy Pricing Becomes History
To fully grasp the impact of the new measure, some basic understanding of China’s existing feed-in tariff system is necessary. I have touched upon the set-up and its issues in a previous report. [READ MORE about the FIT Mechanism]
China has introduced feed-in tariff (FIT) pricing mechanism to the onshore wind, solar PV plants, distributed solar and offshore wind sectors since 2009, 2011, 2013 and 2014, respectively.
Within this FIT mechanism, the national price regulator NDRC set different FIT rates for varied renewable projects, which reflect the different costs to tap into these resources. Essentially, the pricing formula is a cost-based model, taking into account the regional average project cost and a fixed internal rate of return (IRR)—8% usually.
As a result, renewable investment decisions in China are often on the basis of more than 8% IRRs. [READ MORE on Fundamental Change on the IRR Investment Principle ]
Prior to 2019, renewable projects were granted a 20-year fixed FIT rate based on their grid-connection time. Specifically:
- onshore wind: four types of FIT rates
- offshore wind: two kinds of FIT rates (intertidal, or projects with >10km distance from shore)
- mounted PV power plants: three types of FIT rates
- distributed solar: previously given the same prices for rooftop solar for commercial use and residential use
- solar “exemptions”: distributed projects in the “front-runner” or “poverty alleviation” programs are granted higher FITs
The price regulator has been gradually lowered the FIT rates over the years to reflect the learning curve of the sector. But the reductions were considered gradual (or slow). Onshore wind projects and mounted solar had previously been through only three times FIT rate adjustment.
For renewable power plants, the incomes from selling power are payable in two parts:
- part-1: payable when electricity sold to the grid, at a fixed price equal to that of the local coal-fired power benchmark tariff. It is paid monthly by the grid operator.
- part-2: the renewable subsidy part, which equals to the differences between the renewable FITs and the coal-fired benchmarks. This subsidy amount is paid out separately by the Renewable Energy Development Fund (REDF) managed by the MoF.
However, due to the mounting deficit in the REDF, Beijing has been delaying the subsidy, part-2, payment to renewable projects listed in the catalogue. Moreover, it also slowed down the release of new “subsidy catalogues” inclusive of the eligible plans. As a result, a majority of the wind and solar projects in China, in fact, either receive no subsidy at all for the past years or face severe payment delays. The whole value chain is, thus, under mounting financial pressure and the threat of insolvency. [READ MORE on the Reason Behind China’s Renewable Asset Sale Wave]
To address this black-hole alike REDF deficit, the three regulators have re-design the pricing and subsidy measures, pushing new projects to decouple from the national subsidy.
New Renewable Tariff and Pricing Structure
China’s renewable market is now moving toward a brand-new zero-subsidy era, with utterly different pricing formula.
We have summarized the pricing arrangement of onshore wind and solar projects from 2016 to 2022.
Implications of the New Policy
The shake-up upon renewable pricing is meant to solve the deficit issue of China’s REDF. However, the current measures taken—to limit new project growth and their subsidy demand—may have questionable results.
- Delay and lack of subsidy payment will continue to haunt the industry: the most critical element leading to the insufficient subsidy cash pool, in our view, is the inefficient collection of renewable surcharges. However, Beijing has been highly reluctant to raise electricity surcharges on consumers. We DO NOT expect Beijing to increase renewable subsidy surcharge in the coming years. The lack of funding will continue to haunt the industry. [Read More on the Consequence, as in, Renewable Projects Set off Asset Sales Wave ]
- Offshore wind and CSP industry will embrace some significant financial challenge: although over 40GW offshore projects rushed for approvals before 2018. Majority of these projects are unlikely to achieve the required grid connection deadline (2021 Dec). We expect 2/3 of the pipeline projects would face a reduced of FITs and are under threat of cost overrun and lowered return. [Read More about the Offshore Wind Installation Rush ]
This will decrease epoxy demand for the blades . . .
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