Cumulative cost assessment (CCA) of the EU glass industry : final report.
Date: 2017-07-18
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs
Subjects: administrative expenditure, administrative formalities, application of EU law, approximation of laws, cost analysis, cost-benefit analysis, costing, glass industry, industrial policy, legislation, simplification of legislation

Cumulative Cost Assessment 
(CCA) of the EU Glass Industry 

Final Report 

Written by:  
CEPS, Economisti Associati and Ecorys 
June 2017 

  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs 
Directorate C — Industrial Transformation and Advanced Value Chains 
Unit C2 — Resource Efficiency and Raw Materials 

E-mail:  GROW-C2@ec.europa.eu 

European Commission 
B-1049 Brussels 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Cumulative Cost Assessment 
(CCA) of the EU Glass Industry 

Final Report 

Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs  

2017 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Luxembourg: Publications Office of the European Union, 2017 

ISBN 978-92-79- 68040-3 

DOI 10.2873/64877  

© European Union, 2017 
Reproduction is authorised provided the source is acknowledged. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Authors 

CEPS (Leader) 

Andrea Renda (Project Director) 

Felice Simonelli (Project Manager) 

Jacques Pelkmans 

Mattia Di Salvo 

Federica Mustilli 

Edoardo Storti 

Christian Egenhofer 

Eleanor Drabik 

Katja Tuokko 

Igor Taranic 

Fabio Genoese 

Andrei Marcu 

Wijnand Stoefs 

Economisti Associati (Partner) 

Enrico Giannotti 

Giacomo Luchetta 

Ecorys (Partner) 

Jan Maarten de Vet (Deputy Project Director) 

Andreas Pauer 

Olga Abramczyk 

Elodie Salle 

Luca Giustozzi 

 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table of contents 

List of acronyms ...................................................................................... 5 

PART A. METHODOLOGY AND SAMPLE .............................................................. 8 

1 

2 

3 

2.2 
2.3 

General understanding ..................................................................... 9 
1.1 

Putting the Cumulative Cost Assessment of the EU ceramics and glass 
industry in context ..........................................................................9 
The rationale and scope of a Cumulative Cost Assessment .................. 10 
1.2 
1.3 
Content of the Study ..................................................................... 12 
Methodology .................................................................................. 13 
Proposed methodology for assessing regulatory costs......................... 13 
2.1 
Direct costs ................................................................... 14 
2.1.1 
Indirect costs ................................................................ 17 
2.1.2 
2.1.3 
Enforcement costs .......................................................... 18 
Aggregating and cumulating regulatory costs .................................... 18 
Methodological issues .................................................................... 20 
Business as usual ........................................................... 20 
2.3.1 
Main cost parameters associated with SOs and IOs ............. 21 
2.3.2 
Typical year................................................................... 22 
2.3.3 
Additional issues ............................................................ 23 
2.3.4 
Data validation .............................................................. 23 
2.3.5 
Sample ......................................................................................... 25 
Sampling criteria .......................................................................... 25 
3.1 
Required composition of samples in selected sectors .......................... 28 
3.2 
Data collection strategy ................................................................. 36 
3.3 
Sample ....................................................................................... 38 
3.4 

PART B. ASSESSMENT OF REGULATORY COSTS ................................................ 44 

4 
5 

6 

5.2 

Legislation covered by the Cumulative Cost Assessment ...................... 45 
Internal Market legislation ............................................................... 49 
Construction Products Regulation and Directive ................................. 49 
5.1 
Description of the Act ..................................................... 49 
5.1.1 
Categories of regulatory costs .......................................... 49 
5.1.2 
Methodological aspects ................................................... 50 
5.1.3 
5.1.4 
Cost assessment – Flat Glass ........................................... 53 
Internal Market for chemicals ......................................................... 57 
Description of the Acts (REACH and CLP) ........................... 57 
5.2.1 
Methodological aspects ................................................... 58 
5.2.2 
General findings relevant to all glass subsectors ................. 58 
5.2.3 
Cost assessment – Packaging glass ................................... 59 
5.2.4 
5.2.5 
Cost assessment – Flat glass ........................................... 61 
Measuring Instruments Directive ..................................................... 63 
Description of the Act ..................................................... 63 
5.3.1 
Methodological aspects ................................................... 63 
5.3.2 
Cost assessment – Glass tableware ................................... 63 
5.3.3 
Energy legislation ........................................................................... 65 
Overview and relevance of energy policy for the EU glass sector .......... 65 
6.1 
Global developments in energy prices ............................... 66 
6.1.1 
Summary of the legislation covered .................................. 67 
6.1.2 

5.3 

1 

 
 
 
 
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Cumulative Cost Assessment of the EU Glass Industry 

6.6 

6.5 

6.2 

6.3 
6.4 

Methodological aspects .................................................................. 68 
General aspects ............................................................. 68 
6.2.1 
Electricity specific aspects ............................................... 70 
6.2.2 
6.2.3 
Natural gas specific aspects ............................................. 72 
Energy efficiency specific aspects ..................................... 72 
6.2.4 
Overview of the impact of energy costs on production costs ................ 73 
Electricity .................................................................................... 81 
Description of the Acts .................................................... 81 
6.4.1 
Categories of regulatory costs .......................................... 83 
6.4.2 
Cost assessment – Packaging glass ................................... 83 
6.4.3 
6.4.4 
Cost assessment – Glass tableware ................................... 93 
Cost assessment – Flat glass ......................................... 100 
6.4.5 
Gas .......................................................................................... 111 
Description of the Acts .................................................. 111 
6.5.1 
Categories of regulatory costs ........................................ 112 
6.5.2 
Cost assessment – Packaging glass ................................. 112 
6.5.3 
Cost assessment – Glass tableware ................................. 122 
6.5.4 
6.5.5 
Cost assessment – Flat glass ......................................... 128 
Energy efficiency ........................................................................ 139 
Description of the Acts .................................................. 139 
6.6.1 
Categories of regulatory costs ........................................ 139 
6.6.2 
Cost assessment – Packaging glass ................................. 139 
6.6.3 
Cost assessment – Glass tableware ................................. 143 
6.6.4 
Cost assessment – Flat glass ......................................... 145 
6.6.5 
Climate legislation ........................................................................ 149 
Description of the Acts ................................................................. 149 
7.1 
Phase 1 (2005-07) ...................................................................... 150 
7.2 
Phase 2 (2008-12) ...................................................................... 150 
7.3 
Phase 3 (2013-20) ...................................................................... 150 
7.4 
Categories of regulatory costs....................................................... 151 
7.5 
Methodological aspects ................................................................ 152 
7.6 
Data validation ............................................................ 152 
7.6.1 
Model ......................................................................... 152 
7.6.2 
Substantive compliance costs ......................................... 153 
7.6.3 
Indirect costs .............................................................. 153 
7.6.4 
7.6.5 
Administrative burdens ................................................. 154 
Cost assessment – Packaging glass ............................................... 155 
Sample ....................................................................... 155 
7.7.1 
Direct regulatory costs .................................................. 155 
7.7.2 
Indirect regulatory costs ............................................... 156 
7.7.3 
7.7.4 
Cumulative regulatory costs ........................................... 157 
Cost assessment – Glass tableware ............................................... 159 
Sample ....................................................................... 159 
7.8.1 
Direct regulatory costs .................................................. 159 
7.8.2 
Indirect regulatory costs ............................................... 160 
7.8.3 
7.8.4 
Cumulative regulatory costs ........................................... 161 
Cost assessment – Flat Glass ........................................................ 162 
Sample ....................................................................... 162 
7.9.1 
Direct regulatory costs .................................................. 162 
7.9.2 
Indirect regulatory costs ............................................... 163 
7.9.3 

7.7 

7.9 

7.8 

2 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

8 

9 

10 

8.5 

7.9.4 

Cumulative regulatory costs ........................................... 164 
Environmental legislation for the glass sector ................................... 168 
Description of the Act .................................................................. 168 
8.1 
Categories of regulatory costs....................................................... 169 
8.2 
Methodological aspects ................................................................ 172 
8.3 
8.4 
Cost  assessment  –  Hollow  glass  (packaging  glass  and  glass 
tableware) ................................................................................. 174 
Sample ....................................................................... 174 
8.4.1 
Substantive compliance costs ......................................... 174 
8.4.2 
Administrative Costs ..................................................... 175 
8.4.3 
8.4.4 
Cumulative regulatory costs ........................................... 175 
Cost assessment – Flat glass ........................................................ 177 
Sample ....................................................................... 177 
8.5.1 
Substantive compliance costs ......................................... 177 
8.5.2 
Administrative Costs ..................................................... 178 
8.5.3 
Cumulative regulatory costs ........................................... 179 
8.5.4 
Waste legislation .......................................................................... 180 
Waste Framework Directive and Landfill of Waste Directive ............... 180 
9.1 
Description of the Acts .................................................. 180 
9.1.1 
Categories of regulatory costs ........................................ 180 
9.1.2 
Methodological aspects ................................................. 182 
9.1.3 
Cost assessment – Packaging glass ................................. 183 
9.1.4 
Cost assessment – Glass tableware ................................. 185 
9.1.5 
9.1.6 
Cost assessment – Flat glass ......................................... 186 
Packaging and packaging waste .................................................... 188 
Description of the Acts .................................................. 188 
9.2.1 
Categories of regulatory costs ........................................ 188 
9.2.2 
Methodological aspects ................................................. 189 
9.2.3 
Cost assessment – Packaging glass ................................. 190 
9.2.4 
Cost assessment –Glass tableware .................................. 192 
9.2.5 
Consumer and health legislation ..................................................... 195 
10.1 

9.2 

11.1 

10.2 
10.3 
10.4 
10.5 
10.6 

Description  of  the  Acts  (Materials  and  Articles  in  contact  with  food 
and General Product Safety Directive) ............................................ 195 
Categories of regulatory costs....................................................... 196 
Methodological aspects ................................................................ 197 
Cost assessment – Packaging glass ............................................... 197 
Cost assessment – Glass tableware ............................................... 200 
Cost assessment – Flat glass ........................................................ 202 
11  Workers’ safety and health legislation ............................................. 205 
General workers’ safety and health and general workplace safety ...... 205 
Description of the Acts .................................................. 205 
11.1.1 
Categories of regulatory costs ........................................ 206 
11.1.2 
Methodological aspects ................................................. 207 
11.1.3 
Cost assessment – Packaging glass ................................. 208 
11.1.4 
Cost assessment – Glass tableware ................................. 209 
11.1.5 
11.1.6 
Cost assessment – Flat glass ......................................... 210 
Special workers’ safety and health ................................................. 213 
Description of the Acts .................................................. 213 
11.2.1 
Categories of regulatory costs ........................................ 213 
11.2.2 
Methodological aspects ................................................. 214 
11.2.3 

11.2 

3 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

12.1 

11.2.4 
11.2.5 
11.2.6 

Cost assessment – Packaging glass ................................. 216 
Cost assessment – Glass tableware ................................. 218 
Cost assessment – Flat glass ......................................... 220 
12  Other areas of legislation............................................................... 223 
Trade legislation ......................................................................... 223 
Trade analysis ............................................................. 223 
12.1.1 
12.1.2 
Trade policy ................................................................ 227 
Competition legislation ................................................................ 235 
Antitrust legislation and merger control ........................... 235 
12.2.1 
12.2.2 
State aid control .......................................................... 237 
Transport legislation .................................................................... 240 
Description of the Acts .................................................. 240 
12.3.1 
Categories of regulatory costs ........................................ 240 
12.3.2 
Relevance for the sectors .............................................. 240 
12.3.3 

12.2 

12.3 

PART C. CUMULATIVE COST ASSESSMENT ...................................................... 242 

13 

13.2 
13.3 

Cumulative cost assessment .......................................................... 243 
Hollow glass: packaging glass ....................................................... 245 
13.1 
EU ............................................................................. 245 
13.1.1 
Central-Eastern Europe ................................................. 248 
13.1.2 
Southern Europe .......................................................... 250 
13.1.3 
13.1.4 
Northern-Western Europe .............................................. 252 
Hollow glass: Glass tableware ....................................................... 256 
Flat glass ................................................................................... 259 
EU ............................................................................. 259 
13.3.1 
Central-Eastern Europe ................................................. 262 
13.3.2 
Southern Europe .......................................................... 265 
13.3.3 
Northern-Western Europe .............................................. 269 
13.3.4 
14 
Relevance ‘heat maps’ .................................................................. 272 
Annex I – Sectoral analysis of glass sectors not covered by the CCA ............ 274 
Introduction ............................................................................................ 274 
Other glass, including technical glassware ................................................... 274 
Sectoral statistics ....................................................................... 275 
Annex II – International Comparison ....................................................... 278 
Introduction ............................................................................................ 278 
Packaging Glass ...................................................................................... 278 
Flat Glass ............................................................................................... 280 

4 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

List of acronyms 

Administrative Burdens 

Anti-Dumping 

Associate Emission Level 

Assessment and Verification of Constancy of Performance 

Business to business 

Best Available Techniques 

Business As Usual 

Best Available Techniques Reference Document 

Capital Expenditures 

Cubic Boron Nitride 

Cumulative Cost Assessment 

Conformité Européenne 

Central-Eastern Europe / Central-Eastern European 

Combined Heat and Power 

Classification, Labelling and Packaging 

AB 

AD 

AEL 

AVCP 

B2B 

BAT 

BAU 

BREF 

CAPEX 

CBN 

CCA 

CE 

CEE 

CHP 

CLP 

COMEXT 

Community External Trade Statistics  

CPD 

CPR 

DC 

DoP 

EAD 

EBIT 

EBITDA 

EC 

ECHA 

EEC 

EED 

ELR 

ELV 

ETS 

EU 

EUA 

FC 

FPC 

FTE 

GHG 

Construction Products Directive 

Construction Products Regulation 

Direct Charges 

Declaration of Performance 

European Assessment Document 

Earnings Before Interest and Taxes 

Earnings Before Interest, Taxes, Depreciation and Amortization 

European Commission 

European Chemicals Agency 

European Economic Community 

European Efficiency Directive 

Eco-Label Regulation 

Emission Limit Values 

Emissions Trading System 

European Union 

European Emissions Allowances 

Financial Costs 

Factory Production Control 

Full Time Equivalent 

Greenhouse Gas 

5 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Giga Joule 

Good Manufacturing Practice 

Hydrogen Fluorides 

Harmonized System 

Impact Assessment 

Indirect Costs 

Industrial Emissions Directive 

Integrated Environmental Permit 

Information Obligation 

Integrated Pollution Prevention and Control 

International Standard Classification of Occupations 

Information Technology 

Initial Type Testing 

Lesser Duty Rule 

Market Access Database 

Market Economy Status 

Monetary Obligations 

Monitoring, Reporting and Verification 

Megawatt hour 

Statistical Classification of Economic Activities in the European 

Community 

National Allocation Plan 

Nitrogen Oxides 

Northern-Western Europe / Northern-Western European 

Operating Expenditures 

Occupational Safety and Health 

Personnel Costs 

GJ 

GMP 

HF 

HS 

IA 

IC 

IED 

IEP 

IO 

IPPC 

ISCO 

IT 

ITT 

LDR 

MADB 

MES 

Mo 

MRV 

MWh 

NACE 

NAP 

NOx 

NWE 

OPEX 

OSH 

PC 

PRODCOM 

European Community Industry Production 

RAPEX 

RCM 

REACH 

REFIT 

RES 

RSB 

SCC 

SCM 

SE 

Rapid Alert System for non-food dangerous products 

Regulatory Cost Model 

Registration, Evaluation, Authorisation and Restriction of 

Chemicals 

Regulatory Fitness and Performance Programme 

Renewable Energy Support 

Regulatory Scrutiny Board 

Substantive Compliance Costs 

Standard Cost Model 

Southern Europe / Southern European 

6 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Small Medium Enterprise 

Substantive Obligation 

Sulphur Oxides 

Substances of Very High Concern 

Technical Barriers to Trade 

Trade Defence Instrument 

Treaty on the Functioning of the European Union 

Transaction Log 

Transatlantic Trade and Investment Partnership 

United Kingdom 

United States 

Value-Added Tax 

Weighted Average Cost of Capital 

World Trade Organisation 

SME 

SO 

SOx 

SVHC 

TBT 

TDI 

TFEU 

TL 

TTIP 

UK 

US 

VAT 

WACC 

WTO 

7 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Part A. Methodology and sample 

8 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

1  General understanding 

1.1  Putting  the  Cumulative  Cost  Assessment  of  the  EU  ceramics  and  glass 

industry in context 

Regulation is an essential part of modern society and good governance. At the EU level, 
it  also  plays  a  critical  role  in  meeting  the  strategic  aims  of  the  EU  and  its  Member 
States,  achieving  the  objectives  of  the  EU  Treaty  and  setting  the  conditions  for 
smart,  sustainable  and  inclusive  growth.  When  well  drafted  and  designed, 
regulation provides legal certainty and creates safeguards for public interest. It ensures 
that  rights  of  businesses,  workers,  consumers  and  citizens  are  protected.  Importantly, 
EU  rules  create  a  common  framework  by  aligning  national  laws  while  helping  Member 
States  work  together  on  many  fronts,  such  as  to  secure  fundamental  rights,  preserve 
public  interests  and  address  cross-border  challenges.  In  the  glass  and  ceramics 
industries,  for  instance,  EU  regulation  plays  a crucial role  in  maximising  the  benefits  of 
the Internal Market, assuring a certain level of health and safety standards for workers, 
protecting  consumers  and  ensuring  that  the  industries  contribute  to  the  EU’s  ambitions 
in  the  field  of  environment  and  sustainable  development.  In  parallel,  especially 
considering the 2008 economic and financial crisis, it is often claimed that EU regulation 
sets burdensome requirements and generates additional costs for businesses.  

The Commission’s Better Regulation agenda, as renewed on 19 May 2015, aims to 
facilitate  the  achievement  of  public  policy  objectives  at  a  minimum  cost,  thus 
eliminating  unnecessary  red  tape  while  improving  the  added  value  of  EU  intervention.1 
Since  2005,  the  Commission  has  approved  more  than  660  initiatives  of  simplification, 
codification  or  recasting,  with  more  than  6,100  legal  acts  repealed,  and  some  300 
proposals  withdrawn.2  As  part  of  this  agenda,  in  December  2012  the  Commission 
initiated a Regulatory Fitness and Performance Programme (REFIT) with the aim of 
eliminating  unnecessary  regulatory  costs  while  ensuring  that  EU  legislation  is  'fit  for 
purpose'  to  create  growth  and  jobs.3  Recently,  the  European  Commission  has 
announced  its  intention  to  use  also  REFIT  to  stimulate  innovation-driven  investment.4 
REFIT  exercises  are  expected  to  provide  a  simple,  stable  and  predictable  regulatory 
framework for businesses, workers and citizens, by screening the stock of EU legislation 
in  selected policy areas  and  reviewing  it  without  compromising  public  policy  objectives. 
More  specifically,  REFIT  systematically  reviews  EU  legislation  to:  i)  check  whether  the 
original aims are met efficiently and effectively; ii) detect excessive regulatory burdens, 
gaps,  and  inefficiencies;  iii)  identify  opportunities  for  simplification;  and  vi)  enable  the 
Commission  to  propose  to  the  Council  and  the  Parliament  appropriate  legislative 
revisions or repeals. 

EU efforts under REFIT are underpinned, inter alia, by two concepts: i) simplification, 
i.e.  making  EU  laws  clearer  and  easier  to  understand;  and  ii)  reducing  regulatory 
burdens, i.e. diminishing the reporting, monitoring and other requirements imposed by 
EU laws and making it easier for businesses to meet them. In 2013, a major screening 
exercise  of  the  acquis  communautaire  had  identified  key  areas  where  a  special  effort 
should be made to cut unnecessary and burdensome regulations. This resulted in many 
evaluation  exercises  being  initiated  in  a  variety  of  different  policy  fields.5  For  the  first 
time,  cumulative  cost  studies  were  included  among  those  measures  that  can  more 

1  Communication from the Commission, EU Regulatory Fitness, 12.12.2012, COM(2012)746. 
2 “REFIT – making EU law lighter, simpler and less costly”, available at: 

http://ec.europa.eu/smart-regulation/docs/refit_update.pdf. 

3 Communication from the Commission, EU Regulatory Fitness, 12.12.2012, COM(2012)746. 
4 European Commission, Staff Working Document, “Better Regulation for Innovation-driven 

Investment”, 2016, at http://ec.europa.eu/research/innovation-
union/pdf/innovrefit_staff_working_document.pdf.  

5 European Commission, Staff Working Document, Regulatory Fitness and Performance 

Programme (REFIT): Initial Results of the Mapping of the Acquis, 01.08.2013, SWD(2013)401. 

9 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

effectively contribute to growth and economic recovery. A subsequent Communication in 
October 2013 reviewed the achievements of the Smart Regulation initiative to date and 
defined next steps for the REFIT.6 In this document, the Cumulative Cost Assessment 
(CCA) was mentioned as a key instrument for identifying, assessing and quantifying the 
overall  costs  generated  by  EU  rules  on  specific  industrial  sectors.  In  June  2014,  the 
Commission adopted a new Communication on REFIT,7 which reaffirmed the importance 
of  measuring  costs  and  benefits  for  smarter  regulation.  The  Commission 
announced  that,  as  part  of  the  horizontal  REFIT  actions,  several  CCAs  would  be 
undertaken, one of which would cover the EU ceramics and glass industries. It also 
stated  that  while  CCAs  provide  an  industry-wide  assessment  of  a  range  of  key  cost 
factors, they are not meant to be the only basis for policy recommendations. Rather, the 
results  will  provide 
impact 
assessments. As a result, in its Work Programme for 2015,8 the Commission included, 
a “Cumulative cost assessment of the regulatory costs incurred by the most relevant EU 
legislation  and  policies  for  the  EU  glass  and  ceramics  industry”,  i.e.  the  subject  of  this 
Study. Finally, in May 2015 the Commission launched its new Better Regulation Package 
as a step forward in the consolidation of the REFIT programme. From now on, REFIT will 
be  backed  by  a  new  REFIT  Stakeholder  Platform  and  placed  under  oversight  of  the 
Regulatory  Scrutiny  Board  (RSB)  that  is  replacing  the  Impact  Assessment  Board.  The 
RSB now includes three independent members, one Chair and three Commission internal 
full-time  members.  The  commitment  to  REFIT  initiatives  is  also  clearly  restated  and 
shaped in the name of sectoral competitiveness.   

inputs  for  evaluations,  Fitness  Checks  and 

1.2  The rationale and scope of a Cumulative Cost Assessment 

A CCA aims to identify, assess and, where possible, quantify the cumulative costs 
generated  by  selected  areas  of  EU  legislation  on  a  given  industrial  sector.  It  is 
retrospective, e.g. in the case of ceramics and glass, regulatory costs generated over the 
period  2006-15  have  been  assessed,  and  strictly  centred  on  EU  rules,  i.e.  additional 
costs generated by national implementation of EU rules should not be accounted for. The 
assessment  of  regulatory  costs  is  based  on  a  company’s  cost  structure,  which  is  the 
building  block  of  the  CCA.  Indeed,  once  regulatory  costs  are  quantified,  the  CCA 
evaluates how much they affect: i) the cost structure and profitability of companies 
operating in the selected industry; and ii) the competitiveness of these companies vis-
à-vis their international competitors.9  

In  terms  of  scope,  the  CCA  considers  several  legislative  acts  rather  than  a  single  act, 
and adopts an ex post perspective rather than an ex ante one. This approach is similar 
to  the  one  adopted  in  a  ‘fitness  check’,  in  the  meaning  of  the  2012  Communication  on 
Regulatory Fitness.10 Yet, a CCA has a narrower scope than a ‘fitness check’ as it focuses 
only  on  how  costly  policies  and  rules  are  for  a  selected  industry  rather  than  for 
the  economy  or  society  as  a  whole.  In  this  respect,  a  CCA  is  not  a  new  technique  to 
assess ex post outcomes of a regulation. Rather, it relies on a set of existing tools used 
to  meet  the  requirements  of  a  new  approach  to  policy  appraisal:  focusing  on  all 
policies  having  an  impact  on  one  class  of  addressees,  rather  than  focusing  on  all 
addressees  of  one  policy  (or  one  small  set  of  closely  knit  policies)  as  it  is  traditionally 
done.  This  change  of  approach  leads  to  specific  methodological  choices  to  accurately 
answer  the  following  question:  what  are  the  costs  of  the  EU  acquis  for  a  given 

6 Communication from the Commission, Regulatory Fitness and Performance (REFIT): Results and 

Next Steps, 2.10.2013, COM(2013)685. 

7 Communication from the Commission, Regulatory Fitness and Performance Programme (REFIT): 

State of Play and Outlook, 18.6.2014, COM(2014)368. 

8 Annex to the Communication from the Commission, Commission Work Programme 2015, A New 

Start, 16.12.2014, COM(2014)910. 

9 Schrefler, L., G. Luchetta and F. Simonelli (2015), “A new tool in the box? The cumulated cost 

assessment”, European Journal of Risk Regulation, 1, Lexxion.  

10 Communication from the Commission, EU Regulatory Fitness, 12.12.2012, COM(2012)746. 

10 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

industry/class  of  addressees?  This  novelty  encouraged  the  CEPS  and  Economisti 
Associati research team responsible for the CCAs on steel and aluminium industries11 to 
devise a coherent methodology.  

The CCA, nomen omen, is all about costs. Hence, it does not include the benefit side 
of rules,12 nor does it assess the cost-benefit balance of the legislation. In this respect, 
since  EU  policy  evaluation  has  to  provide  information  on  both  costs and  benefits,  CCAs 
have  to  be  supplemented  with  extensive  information  on  benefits.  Indeed,  policies  are 
adopted because  they are  expected  to  deliver  a set  of  specific  benefits,  although  those 
affected by the costs and benefits do not always coincide. This is often the case for so-
called ‘regulatory policies’, which tend to have concentrated costs and more diffuse 
benefits.13  By  measuring  these  concentrated  costs,  the  CCA  fills  a  gap  that  is  not 
covered by existing tools. As in the case of other better regulation instruments, the CCA 
is  not  meant  to  judge  the  content  of  policies:14  it  only  provides  evidence  that 
potentially feeds into further policy decisions. Interestingly, its distinctive combination of 
logic  and  scope  allows  the  CCA  to  operationalise  key  elements  that  are  traditionally 
treated  separately  through  the  literature  on  policy  appraisal  on  the  one  hand,  and 
literature  on  competitiveness  on  the  other.  In  terms  of  logic,  a  CCA  is  –  in  simplified 
terms  –  an  ex  post  evaluation  of  costs  generated  by  different  policies.  In  terms  of 
scope,  however,  because  it  applies  to  an  entire  sector and  not to  a  single  act/policy,  it 
contributes to measuring the cost competitiveness of a given sector.  

Competitiveness  has  indeed  become  the  main  aim  of  many  economic  policies  at 
European,  national  and  local  level.15  Industry  competitiveness  is  affected  by 
several forces such as industry rivalry, threat of new entrants, bargaining power, etc.16 
It depends, in part, on the business environment that is also influenced by the quality of 
regulation.17  In  a  globalised  world,  economic  areas  are  more  exposed  to  international 
competition;  therefore,  domestic  companies  are  subject  to  fiercer  pressure  on  their 
competitive  advantage.  Companies,  sectors  and  regions  whose  strategies  were  more 
largely  based  on  cost-competitiveness  are  particularly  exposed.  For  this  reason,  EU 
policies have increasingly been steered towards the promotion of competitiveness, even 
more in the aftermath of the economic and financial crisis.18 To ensure that the flow of 
new legislation improves, or at least does not hamper the competitiveness  of European 
companies,  the  European  Commission  released  in  2012  a  competitiveness  proofing 

11  CEPS  and  EA  (2013),  “Assessment  of  Cumulative  Cost  Impact  for  the  Steel  and  Aluminium 
Industry”, Study for the European Commission. 
12 As long as the legislation in the scope of the analysis does not result in revenues for the industry 

rather than costs, see e.g. the case of the ETS legislation and its mechanism of free 
allowances. Cf. CEPS and EA (2013), “Assessment of Cumulative Cost Impact for the Steel 
Industry”, Study for the European Commission, June 2013, at §6. 

13 Revesz, R.L.  and M.A. Livermore (2008), “Retaking Rationality. How Cost-Benefit Analysis Can 

Better Protect the Environment and Our Health”, New York: Oxford University Press. 

14 Radaelli, C.M. (2008), “Evidence-based policy and political control: what does regulatory impact 
assessment tell us?”, presentation held at the ECPR Joint Sessions of Workshops, University of 
Rennes, France. 

15 European Commission, European Competitiveness Report 2013: “Towards Knowledge-Driven 

Reindustrialisation”, SWD(2012)347. 

16 Porter’s ‘Five Competitive Forces Model’ (Porter, M.E. (1980),  Competitive Strategy, New York: 
The  Free  Press)  provides  a  comprehensive  framework  to  assess  industry  competitiveness.  Three 
‘forces’ out of five account for the so-called ‘horizontal competition’ and include: i) industry rivalry; 
ii) threat of new entrants; and iii) threat of substitute products or services. Two additional forces 
account for  the so-called ‘vertical  competition’ and include:  i) bargaining power of  suppliers; and 
ii)  bargaining  power  of  customers/buyers.  In  order  to  complete  the  picture  stemming  from  the 
application of the Five Competitive Forces Model, two additional ‘forces’ are usually added: i) the 
role of external stakeholders (which accounts also for the regulatory and institutional background); 
and ii) interactions with complementary industries.  
17 Pelkmans, J. and G. Galli (eds) (2000), Regulatory Reform and Competitiveness in Europe, vol. 

I, Cheltenham: Edward Elgar. 

18 Communication from the Commission, For a European Industrial Renaissance, COM(2014)14. 

11 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

toolkit to complement the Impact Assessment Guidelines.19 The toolkit reflects the need 
that  “all  proposals  with  a  significant  effect  on  industry  undergo  a  thorough  analysis  for 
their impacts on competitiveness”.20 The CCA provides useful data to assess two out of 
the  three  dimensions  of  enterprise  competitiveness  as  defined  by  the  European 
Commission:21 i) cost competitiveness, i.e. the impact on the costs of doing business; 
and ii) international competitiveness, i.e. the impact on the global market shares of 
EU  industries,  on  trade  indicators  and,  more  generally,  on  keeping  a  competitive 
advantage vis-à-vis main international competitors.22  

1.3  Content of the Study 

The Final Reports represent the last deliverable of the Cumulative Cost Assessment 
(CCA)  of  the  EU  Ceramic  and  Glass  industries.  While  each  of  the  two  companion 
Reports  focuses  on  one  of  the  two  industries  covered  by  the  Study,  i.e.  ceramics  and 
glass, they are both structured as follows: 

  Part  A  (Methodology  and  sample)  comprises  i)  the  general  understanding  of 
the  Study  (see  above);  ii)  a  description  of  the  methodology  applied  by  the 
Research Team to assess regulatory costs as well as to estimate production costs 
and key performance indicators; and ii) an overview of the main features of the 
samples on which the assessment of regulatory costs relies. 

  Part  B  (Assessment  of  regulatory  costs)  presents  the  assessment  of 
regulatory costs generated by the following areas of legislation: i) Internal Market 
for chemicals, ii) Internal Market for construction products, iii) electricity, iv) gas, 
v)  energy  efficiency,  vi)  climate,  vii)  environment,  viii)  waste,  ix)  packaging 
waste,  x)  general  worker’s  health  and  safety  and  workplace  safety,  xi)  special 
worker’s  health  and  safety,  xii)  consumers  and  health  and  xiii)  the  Measuring 
Instruments  Directive;  in  addition,  it  discusses  the  role  played  by  trade, 
competition and transport legislation in the sectors covered by this Study. 

  Part  C  (Cumulative  cost  assessment)  presents  the  overall  regulatory  costs 
generated by EU rules on the sectors under investigation, identifies the main cost 
components  and  compares  regulatory  costs  with  production  costs  and  key 
performance indicators.  

Finally, Annex I sketches a sector analysis of those sectors which have not been included 
in  the  CCA;  Annex  II  compares  production  costs  and  margins  registered  by  EU 
manufacturers  of  packaging  glass  and  flat  glass  vis-à-vis  those  experienced  by  plants 
based in third countries. 

19 European Commission, Impact Assessment Guidelines, SEC(2009)92. 
20 European Commission, Staff Working Document, Operational Guidance for Assessing Impacts on 
the  Commission  Impact  Assessment  System  –  A 

Sectoral  Competitiveness  within 
“Competitiveness Proofing” Toolkit for use in Impact Assessments, SEC(2012)91. 

21 Commission, Competitiveness Proofing Toolkit, supra note 20, at p. 7. 
22 Interestingly, while the Commission’s Competitiveness Proofing is intended for ex ante and 
forward-looking assessments (the IA), the CCA is based on a retrospective analysis.  

12 

 
 
 
 
 
 
                                          
 
Cumulative Cost Assessment of the EU Glass Industry 

2  Methodology  

This  Chapter  describes  the  methodology  to  assess  regulatory  costs  adopted  in  the 
context of this CCA. More specifically, the first part of this Chapter describes the general 
methodology adopted to estimate direct and indirect regulatory costs.23 Then, the 
approach used to cumulate regulatory costs and compare them with production costs 
and  margins  is  detailed.  Finally,  some  additional  methodological  issues  relevant  to 
the current Study are presented and discussed.  

Importantly,  to  assess  costs  stemming  from  certain  pieces  of  legislation  or  provisions 
thereof, this general methodology is adapted for each policy area covered by the Study. 
For  instance,  additional  assumptions  or  different  approaches  are  needed  to  cope  with 
challenges  posed  by  the  quality  and  quantity  of  primary  data  collected,  or  to  analyse 
certain  costs  whose  nature  is  specific  to  one  or  a  few  pieces  of  legislation.  In  this 
respect, any adjustment of the methodology and limitations of estimated results 
are flagged and discussed in the Chapters presenting the assessment of regulatory costs 
(see Part B of this Study).24 

At this stage, two important caveats need to be flagged:  

  As  discussed  in  Chapter  1,  the  CCA  by  its  very  nature  does  not  cover 
benefits,  nor  does  it  assess  the  cost-benefit  balance  of  the  legislation.  In  this 
respect,  it  is  worth  remarking  that  the  Better  Regulation  Toolbox  includes  ‘cost 
savings’ generated by EU rules within the scope of direct regulatory benefits.25 In 
fact,  the  main  benefit  of  Internal  Market  harmonisation  lies  in  cost  savings 
following  the  replacement  of  28 different  national  rules  with  one  harmonised  EU 
regime.26  Therefore,  cost  savings  are  in  principle  out  of  the  scope  of  the 
CCA. Yet, as the CCA of the EU glass industry requires a diachronic analysis over 
a  10-year  period,  some  cost  savings  introduced  by  EU  rules  might  be  captured 
and presented in the Chapters covering specific areas of legislation (see Part B of 
this Study). More specifically, whenever the relevant EU legislation changed over 
the  period  under  observation  (this  is  the  case,  e.g.  for  CPD/CPR  and  for  the 
Waste  Framework  Directive),  cost  savings  (if  any)  introduced  by  new  rules 
are expected to be reflected by declining regulatory costs over time. 

  The  CCA  is  a  retrospective  analysis  that  aims  to  identify,  assess  and  when 
possible  quantify  regulatory  costs  generated  by  selected  EU  rules  on  companies 
operating  in  a  certain  industrial  sector  (see  Chapter  1).  In  this  respect,  as 
opposed to an impact assessment, the CCA does not compare different policy 
options  or  costs  generated  by  EU  rules  with  costs  hypothetically 
generated  by  national  rules  which  would  develop  in  the  absence  of 
harmonising  EU  rules  (the  so-called  ‘baseline  scenario’).  This  type  of  analysis 
would  require  devising  complex  ‘counterfactual  scenarios’  that  may  undermine 
the essence of the CCA, which is based on hard-data collected from plants based 
in  the  EU.  Comparing  regulatory  costs  against  hypothetical  counterfactual 
scenarios is out of the scope of the Study. 

23 Enforcement costs have proven to generate no or trivial regulatory costs in the context of this 
CCA, therefore no quantitative assessment is provided. 
24  European  Commission,  Better  Regulation  "Toolbox"  attached  to  the  Better  Regulation 
Guidelines, at p. 345. 
25 Ibid., pp. 338, 341. 
26 Ibid., p. 147. 

13 

 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

2.1  Proposed methodology for assessing regulatory costs 

Regulatory costs can be classified along different dimensions such as the type of cost per 
se,  e.g.  charges,  non-monetary  costs  etc.,  frequency  of  occurrence  (non-recurrent  vs. 
recurrent  costs),  degree  of  certainty  (cost  vs.  risk),  target/addressee  of  the  cost,  e.g. 
business,  consumers,  public  authorities,  etc.  Nonetheless,  the  most  comprehensive 
classification, which has been adopted by  the new better regulation guidelines,27  relies 
on their relation with legislative acts; this classification leads to the identification of three 
different  categories  of  regulatory  costs:  i)  direct  costs;  ii)  indirect  costs;  and  iii) 
enforcement costs.  

2.1.1  Direct costs 

This  CCA  quantifies  the  so-called  ‘direct  compliance  costs’,  which  comprise  three 
main  cost  components  representing  the  bulk  of  regulatory  costs  across  most  of  the 
areas of legislation in the scope of this CCA:28  

  administrative burdens; 

 

substantive compliance costs; and 

  direct charges. 

Administrative  burdens  are  compliance  costs  incurred  by  companies  to  provide 
information  to  public  authorities  and/or  third  parties.  They  are  generated  by 
information  obligations  (IOs)  included  in  the  relevant  legislation.  More  specifically, 
administrative  burdens  stem  from  those  administrative  activities  that  businesses  only 
perform to comply with a legal obligation.29 At the EU level, administrative burdens are 
normally  assessed  through  the  International  Standard  Cost  Model30  (SCM)  whose  main 
principles  are  then  integrated  in  the  EU’s  SCM.31  In  a  nutshell,  the  SCM  methodology 
requires the identification of the annual cost of each relevant IO.  

Substantive  compliance  costs  include  expenditures  faced  by  businesses  to  comply 
with  requirements  imposed  by  legal  rules.  They  are  generated  by  substantive 
obligations  (SOs),  i.e.  provisions  requiring  businesses  to  take  actions  to  adapt 
their activities in order to comply with the legal obligation. The most common example 
would  be  the  installation  of  anti-pollution  filters  to  comply  with  emission  limits. 
Regulatory  costs  other  than  administrative  costs  fall  outside  the  scope  of  the 
International  SCM;  yet,  they  can  be  assessed  via  the  so-called  Regulatory  Cost  Model 
(RCM),32  which  is  based  on  the  same  principles  of  the  SCM  and  broadens  its  scope  of 
application.  Again,  the  yearly  cost  per  SO  is  assessed.  For  quantification  purposes, 
administrative burdens and substantive compliance costs can be treated jointly in 

the  guidelines 

for  Better  Regulation,  at:  

27  European  Commission  website  on 
http://ec.europa.eu/smart-regulation/guidelines/tool_51_en.htm. 
28  Direct  costs  can  also  materialise  in  the  form  of  ‘hassle’  or  ‘irritation  costs’;  in  this  regard, 
qualitative comments collected during the interviews are included, where relevant, in the Chapters 
covering specific areas of legislation. 
29  Administrative  burdens  are  usually  computed  as  the  difference  between  the  overall 
administrative  costs  stemming  from  a  certain  IO  and  the  ‘so-called  business-as-usual’  (BAU) 
factor,  i.e.  costs  that  businesses  would  incur  even  in  the  absence  of  the  obligation  under 
investigation  (European  Commission,  Better  Regulation  "Toolbox"  attached  to  the  Better 
Regulation Guidelines, at p. 361). 
30  SCM  Network  (2005),  “The  International  SCM  Manual;  Measuring  and  Reducing  Administrative 
Burdens 
http://www.administrative-
available 
burdens.com/filesystem/2005/11/international_scm_manual_final_178.doc. 
31  European  Commission,  Better  Regulation  "Toolbox"  attached  to  the  Better  Regulation 
Guidelines, at p. 360. 
32 
(2009), 
http://www.bertelsmann-stiftung.de/cps/rde/xbcr/SID-89F9FDDB-
1D307B05/bst_engl/xcms_bst_dms_29039__2.pdf (last accessed on 26 Nov 2014). 

for  Measuring 

Businesses”, 

“Handbook 

Regulatory 

available 

Costs”, 

KPMG 

at: 

for 

at 

14 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

the broader category of compliance costs and assessed with the same methodological 
approach.  This  allows,  inter  alia,  for  reliance  upon  complementarities  and  synergies  in 
identifying  groups  of  addresses  and  collecting  relevant  data.  The  actions  required  to 
assess compliance costs (both administrative burdens and substantive compliance costs) 
for  this  CCA  are  summarised  in  Box  1,  which  builds  upon  the  methodology  common  to 
the EU SCM and RCM.  

Box 1. Actions to assess compliance costs for a single addressee 

Action 1. 

Identifying  the  SOs  or  IOs  generated  by  each  legal  provision  under 
analysis.  

Action 2. 

Identifying  the  target  group  of  addresses  that  have  to  comply  with 
each SO and IO. 

Action 3. 

Action 4. 

Action 5. 

Action 6. 

Segmenting,  if  appropriate,  the  target  group  by  creating  ‘case 
groups’  based  on  e.g.  size,  e.g.  SMEs  vs.  large  enterprises,  or  other 
dimensions, e.g. subsectors, products, regions.33  

Estimating the mode of compliance with each SO or IO by a “normally 
efficient business”.34  
Selecting  those  SOs  and  IOs  that  are  expected  to  generate  major 
regulatory costs; this allows for determining which legal obligations need 
to be quantified. 
Estimating  the  relevant  cost  parameters  associated  with  each  SO 
or IO, by accounting for:  

  Personnel  costs  (PC),  i.e.  expenditures  on  salaries  and  wages  for 
legal 
the  activities 

requested  by 

the 

employees  performing 
obligation;35 

  Other  operating  expenditures 

annual 
expenditures  on  energy  inputs,  materials  and  supplies,  purchased 
services,  maintenance  of  equipment  and  out-of-pocket  expenses, 
i.e. any external cost required for experts’ services or counselling; 

(OPEX), 

including 

 

Investment costs which includes: 

  Capital  expenditures  (CAPEX),  “annualised”  over  the  period 

of the useful life of the equipment purchased; 

  Financial  costs  (FC),  i.e.  costs  related  to  the  financing  of 

investment (normally considered in relation to CAPEX). 

Action 7. 

Action 8. 

Estimating  the  business  as  usual  (BAU)  factor  for  each  SO  or  IO, 
based on direct assessment or empirical data.  
Estimating the yearly  frequency  of occurrence,  i.e. by distinguishing 
between  one-off  obligations/costs  and  recurrent  obligations/costs  and 

33  If  different  case  groups  can  be  established,  different  notions  of  “normal  efficiency”  and  BAU 
factors for each of the groups should be adopted (see actions #4 and #7). For the identification of 
case groups see Chapter 3 below. 
34  The  concept  of  “normal  efficiency”  is  needed  in  order  not  to  factor  into  the  analysis  the 
inefficiency  of  some  of  the  addressees.  This  means  that  the  Research  Team  has  to  assess  the 
“reasonable” actions that it will take for businesses to comply with the obligations stemming from 
legal rules. This relies upon the assumption that regulated entities handle their administrative and 
substantive tasks neither better nor worse than what may be reasonably expected. 
35 Personnel costs and out-of-pocket expenses are usually the main parameters for IO.  

15 

 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

measuring the yearly frequency of recurrent obligations/costs. 

Action 9. 

Multiplying the costs per single SO or IO (Action #6), net of the BAU 
factor (Action #7), by the yearly number of occurrence (Action #8). 

Action 10.  Dividing the yearly cost (Action #9) by the total output produced by 
the addressee to obtain regulatory costs per unit of output. 

Source: Authors’ own elaboration on EU SCM and RCM. 

More  specifically,  actions  1  to  5  were  performed  to  design  the  questionnaire  for 
data collection. In fact, the questionnaire adopted for this Study focuses on the IOs and 
SOs  expected  to  generate  major  regulatory  costs  (Action  1  and  Action  5),  including 
questions  which  reflect  the  ‘reasonable’  actions  taken  by  businesses  to  comply  with 
legislation  (Action  4)  and  are  tailored  to  different  subsectors  and/or  product  categories 
(Action 2 and Action 3). Actions 6 to 10 were performed to quantify and cumulate 
compliance  costs  based  on  the  data  and  information  collected  from  sampled 
plants (see Chapter 3 below); the results of such actions are presented in this Study.  

The  last  component  of  direct  costs,  i.e.  direct  charges,  are  usually  generated  by  so-
called ‘monetary obligations’ (MOs). MOs are provisions requiring the business to bear 
monetary  costs,  such  as  costs  of  fees,  taxes  and  levies.  From  a  methodological 
standpoint,  the  assessment  of  direct  charges  is  less  complex  than  the  assessment  of 
compliance  costs.  In  fact,  such  a  cost  component  is  relatively  easier  to  assess  as  it 
requires  multiplying  the  value  of  the  charge  paid  by  the  addressee  by  the  number  of 
yearly occurrences and there is no need to estimate the BAU factor. Required actions are 
summarised  in  Box  2;  in  the  same  way  as for  compliance  costs,  Actions  1  to  3  were 
carried  out  to  draft  the  questionnaire  for  data  collection;  Actions  4  to  7  were 
performed  to  measure  direct  charges  on  the  basis  of  data  collected  at  the  plant 
level.  

Box 2. Actions to assess direct charges for a single addressee 

Action 1. 

Identify the MOs generated by each legal provision under analysis.  

Action 2. 

Identify the target group of addresses that have to comply with each 
MO. 

Action 3. 

Segment,  if  appropriate,  the  target  group  by  creating  ‘case  groups’ 
based  on  e.g.  size,  e.g.  SMEs  vs.  large  enterprises,  or  other  dimensions, 
e.g. subsectors, products, regions. 

Action 4. 

Estimate the unit cost of the charge, e.g. cost of the fee, tax, license, 
and permit. 

Action 5. 

Estimate the frequency of the payment, i.e. by distinguishing between 
one-off  obligations/costs  and  recurrent  obligations/costs  and  measuring 
the yearly frequency of recurrent obligations/costs. 

Action 6. 

Multiply  the  unit  cost  of  the  charge  (Action  #4)  by  the  yearly 
number of occurrence (Action #5). 

Action 7. 

Dividing the yearly cost (Action #6) by the total output produced by 

16 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

the addressee to obtain regulatory costs per unit of output. 

Source: Authors’ own elaboration on EU SCM and RCM. 

2.1.2  Indirect costs 

The  present  CCA  measures  the  so-called  ‘indirect  compliance  costs’,  i.e.  compliance 
costs  experienced  by  entities  operating  in  sectors  and  markets  other  than  those  under 
evaluation.  In  fact,  businesses  within  one  sector  bear  indirect  compliance  costs  when 
other  entities  in  related  markets  (usually  upstream)  have  to  comply  with  certain 
regulations  and  are  able  to  pass  on  the  related  regulatory  costs.  More  specifically,  the 
impact  of  certain  pieces  of  legislation  is  transmitted  through  regulation-induced  price 
rises and/or the change in quality or availability of inputs, e.g. goods and services.  

Broadly  speaking,  for  indirect  costs  the  general  methodology  is  the  same  as  that 
proposed for assessing direct costs, with some adjustments. More specifically, the 
methodology discussed above needs to be applied to the impact of specific areas/pieces 
of legislation on upstream players (e.g. electricity producers); then, the portion of the 
direct  cost  borne  by  upstream  operators  that  is  passed  on  downstream  in  the 
form of higher prices represents the indirect compliance cost affecting industry players in 
the scope of the CCA. With regard to the pass-on rate, in previous studies the Research 
Team  relied  on  secondary  sources  and  specific  assumptions  to  estimate  a 
reasonable rate, then coupled this rate with a sensitivity analysis, by adopting a low-
end and a high-end estimate. Again, a case in point is the determination of the pass-
on rate to measure the indirect costs generated by the EU ETS where the Research Team 
relies upon two different scenarios as further discussed in the Chapter presenting costs 
generated by climate legislation (see Part B of this Study).  

At any rate, clear boundaries need to be set for indirect costs to ensure that the Study 
does not end up being too broad. A possible selection criterion for indirect costs may 
be that the causation link between the industry subject to the CCA and the indirect costs 
has to be proximate (the so-called ‘proximity criterion’). This means that only indirect 
effects  originating  from  direct  counterparts  of  the  selected  industrial  sectors  will  be 
considered.  Secondly,  the  indirect  effects  must  be  significant,  i.e.  resulting  in  a 
measurable cost impact for the selected industry (the so-called ‘relevance criterion’). 
This allows one to focus on the most relevant impacts, rather than trying to frame and 
quantify  negligible,  albeit  existing,  indirect  effects.  It  is  worth  remarking  that  the 
approach  proposed  to  select  indirect  costs  is  fully  compliant  with  the  Technical 
Specifications36 for this Study, which require focusing on those pieces of legislation that 
generate the most significant costs for the glass industry.  

Our  assessment,  based  on  CEPS37  previous  studies,  other  relevant  literature  as  well  as 
interviews  with  stakeholders,38  indicates  that  the  following  indirect  costs  are  proximate 
and significant for the EU glass industry:  

  Impacts of energy legislation on electricity and gas prices; and  

36 See Technical Specifications, pp. 23 and 24. 
37 CEPS (2014), Final Report for a Study on “Composition and Drivers of Energy Prices and Costs 
in Energy-Intensive Industries: The Case of the Flat Glass Industry”. 
38 Arlinghaus, J. (2015), “Impacts of Carbon Prices on Indicators of Competitiveness: A Review of 
Empirical Findings”, OECD Environment Working Papers, No. 87, OECD Publishing, Paris 
(http://dx.doi.org/10.1787/5js37p21grzq-en); see also Graichen, V. et al. (2008), “Impacts of the 
EU Emissions Trading Scheme on the industrial competitiveness in Germany”, Environmental 
Research of The Federal Ministry of The Environment, Nature Conservation and Nuclear Safety, 
Research Report 3707 41 501 UBA-FB 001177.  

17 

 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

  Impacts of climate legislation on electricity prices.  

Additional  indirect  impacts  (such  as  those  generated  by  transport  legislation)  were 
discussed  in  more  qualitative  terms,  as  players  operating  in  the  sectors  under 
observation  do  not  have  data  on  relevant  regulatory  costs;  in  fact,  transport  activities 
are  mostly  outsourced  and  regulatory  costs  are  not  visible  in  bills  paid  by  glass 
producers.  

2.1.3  Enforcement costs 

Enforcement  costs  are  linked  to  the  administration  and  implementation  of  legislation. 
Since this CCA aims to assess the cumulative regulatory costs for the glass industry, the 
relevant part of the enforcement costs is  the part affecting industry players, rather 
than  public  authorities.  The  most  important  costs  in  this  respect  are  usually 
adjudication/litigation  costs  related  to  the  use  of  the  legal  system  or  alternative 
dispute  resolution  procedures.  Indeed,  rules  that  generate  high  levels  of  litigation  can 
become very burdensome, especially in the case of cross-border disputes. 

Based on interviews with sectoral associations, the magnitude of enforcement costs 
appears  to  be  marginal  compared  to  direct  and  indirect  regulatory  costs 
generated  by  the  areas/pieces  of  legislation  under  investigation.  In  a  nutshell,  some 
enforcement  costs  are  expected  to  stem  from  trade  legislation  (albeit  they  are  mainly 
incurred by sectoral associations rather than companies) and by competition rules, e.g. 
when  companies  intend  to  merge.  Such  costs  are  discussed  in  qualitative  terms  in 
the  relevant  Chapters  included  in  Part  B  of  this  Study;  when  possible,  tentative 
estimates  are  presented  by  relying  on  anecdotal  data  provided  by  EU  and  national 
sectoral associations. 

2.2  Aggregating and cumulating regulatory costs 

As detailed above, regulatory costs generated by each relevant piece of legislation were 
computed in terms of yearly cost per unit of output at the plant level. Such costs  were 
then  aggregated  by  cost  category,  e.g.  administrative  burdens,  substantive  compliance 
costs, indirect costs, and by area of legislation, e.g. energy, environment, climate. Once 
plant  level  costs  were  calculated,  the  following  steps  were  undertaken  for  each  area  of 
legislation: 

  Computation  of  regional  averages  as  weighted  averages  of  plant  level 
regulatory  costs,  adopting  as  weights  the  yearly  plant  production  in  tonnes;  to 
preserve  data  confidentiality,  regional  averages  are  presented  only  when  based 
on observations from at least three independent companies.  

  Computation  of  EU  averages  as  weighted  average  of  regional  averages, 
adopting as weight the overall regional turnover in the specific sector (based on 
Eurostat data complemented by Amadeus data; see Chapter 3 below) in order to 
reflect  the  uneven  distribution  of  production  across  the  EU;  to  preserve  data 
confidentiality, EU averages are presented only when based on observations from 
at least three different independent companies.  

Regional averages per piece/area of legislation were cumulated to compute the overall 
regulatory  costs  triggered  by  EU  rules  in  each  region;  in  the  same  vein,  EU 
averages  per piece/area of  legislation  were  cumulated to complete  the  EU  cumulative 
cost  assessment.  Finally,  cumulative  regulatory  costs  (in  €/unit  of  output)  were 
compared with production costs and key performance indicators, e.g. EBITDA, EBIT (see 
Box 3).  

18 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Box  3.  Methodology  to  estimate  production  costs  and  key  performance 
indicators 

Production  costs  and  margins  are  estimated  through  primary  data  collected  at  the 
plant level. The following information was requested from sampled plants: 

  Annual production output, e.g. in tonnes; 
  Turnover; 
  Production costs; 
  Earnings before interest, taxes, depreciation, and amortization (EBITDA); 
  Earnings before interest and taxes (EBIT); 
  Profit/loss before tax. 

Companies generally have access to this kind of information at the plant level, the only 
exception being EBIT and profit/loss before tax that, for organisations operating multiple 
plants, might be recorded only at the company level or country level. At any rate, in all 
circumstances where respondents were able to provide only data at the company 
or  country  level  (as  opposed  to  plant  level)  for  their  production  in  a  certain  sector, 
they  were  then  requested  to  also  share  data  on  the  annual  production  output  in  that 
sector at the company or country level. This enabled the Research Team to estimate key 
performance  indicators  per  tonne  of  output  by  comparing,  e.g.  country  level  financials 
with country level production.  

When  plants  did  not  provide  the  requested  key  performance  indicators,  the  Research 
Team  estimated  production  costs  and  margins  per  unit  of  output  by  relying  on 
company balance sheets and profit and loss accounts retrieved from the Amadeus 
database  compiled  by  Bureau  Van  Dijk.39  This  solution  proved  to  be  workable  only  for 
plants: i) that have indicated the VAT number of their managing business entity; ii) that 
have provided the overall output (in tonnes) produced by the managing business entity; 
and iii) whose managing business entity operates only in the sector under investigation 
(non-diversified company). 

It  is  worth  remarking  that  margins  measured  in  this  Study  are  expected  to  be 
higher  than  average  margins  experienced  by  the  sectors  in  the  scope  of  the 
CCA  across  the  period  under  observation.  This  is  mainly  due  to  sample  selection 
(see  Chapter 3).  In  fact,  all samples  include  only  plants  that  were  already operating  in 
2006 and are still operating today; therefore, all sampled plants have survived the 2008 
economic  and  financial  crisis.  Such  plants  are  very  likely  to  be  more  efficient  and 
profitable than those that have shut down between 2006 and 2015.  

To  perform  an  international  comparison,  an  estimate  of  production  costs  of 
international  competitors  is  required.  As  data  cannot  be  collected  from  extra-EU 
companies,  the  Research  Team  collected  data  via  EU  companies  operating 
production  facilities  outside  the  EU.  Such  companies  were  detected  in  cooperation 
with  the  relevant  industry  associations.  In  line  with  the  methodology  for  estimating  EU 
production  costs  and  margins  described  above,  international  indicators  are  collected  by 
requesting  the  full  set  of  information  from  the  relevant  company.  Annex  II  presents 
the  international  comparison  for  packaging  glass  and  flat  glass.  Only  a  very 
limited  number  of  glass  tableware  companies  provided  such  information  and 
compliance  with  confidentiality  rules  does  not  allow  for  presenting  the 
international comparison  in  this sector. The limited response rate may be ascribed 
to  two  main  factors:  i)  only  a  limited  number  of  EU  producers  surveyed  for  this  Study 
manage plants based in third countries; ii) key performance indicators of plants based in 
third countries are considered highly confidential information, especially if one considers 
that those producers that operate in third countries tend to focus on a limited group of 
countries and they fear that any figure presented in the Study could be traced back to a 

39 https://amadeus.bvdinfo.com/version-2016921/home.serv?product=amadeusneo.  

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Cumulative Cost Assessment of the EU Glass Industry 

specific respondent. 

Source: Authors’ own elaboration. 

2.3  Methodological issues 

As  mentioned  above,  the  assessment  of  regulatory  costs  entails  some  methodological 
issues that need to be addressed to perform a CCA. This section of the Study discusses 
cross-cutting issues and assumptions that apply to all the areas of legislation in 
the  scope  of  the  CCA.  Additional  methodological  aspects  pertaining  only  to  certain 
pieces/areas of legislation are flagged and discussed in the Chapters included in Part B of 
this Study. 

2.3.1  Business as usual 

By  definition,  both  administrative  burdens  and  substantive  compliance  costs  are  net  of 
the  business  as  usual  (BAU)  factor,  i.e.  the  share  of  ‘regulatory’  costs  that  a 
company would bear even in the absence of a regulation (see Action 7 in Box 1). Indeed, 
determining  the  BAU  factor  allows  for  distinguishing  between  the  mere  legislative 
‘consolidation’  of  industry  practices  and  cases  in  which  a  regulation  creates  a  truly 
additional burden.  

With respect to BAU, three cases may occur. First, certain obligations have by their very 
nature  a  BAU  factor  of  0%.  This  is  the  case  with  respect  to  certain  authorisation 
processes, e.g. the Integrated Emission Permit or registration application to ECHA in the 
context  of  REACH,  which  companies  carry  out  only  because  it  is  mandated  by  the 
legislation.40  Secondly,  certain  obligations  are  assigned  a BAU  factor  of  100%,  because 
they  are  part  and  parcel  of  good  business  practices  and  are  usually  requested  by 
customers.  This  is  the  case  with  respect  to  certain  quality  control  activities  codified 
under  the  CPR.  A  third  case  concerns  obligations  whose  activities  are  only  partly  done 
because of normal business practices and partly because of legislative requirements. For 
instance, investments made to comply with applicable environmental standards are only 
partially motivated by environmental legislation; in fact, other company motivations may 
apply, such as the achievement of energy savings or other types of cost savings. 

In  the  latter  case,  companies  participating  in  the  CCA  were  requested  to  estimate  the 
extent to which ‘activities’ (and costs) related to EU rules would occur even in 
the  absence  of  any  specific  legal  obligation.  More  specifically,  for  each  relevant 
obligation or group thereof, the BAU was measured via  a Likert scale going from 1 (no 
costs incurred in the absence of the legal obligation) to 5 (all costs incurred even in the 
absence  of  the  legal  obligation).  The  BAU  factor  was  then  calculated  by  applying  the 
following conversion table (Table 1), which is based on two main assumptions: 

  When a plant states that costs are entirely due to EU rules (1), the BAU factor 
needs to be lower than 100% for two main reasons. First, it is likely that some of 
the  activities  generating  those  costs  would  at  any  rate  be  performed  by  that 
plant.  For  instance,  in  case  a  piece  of  legislation  imposes  the  substitution  of 
certain  machines,  compliance  costs  will  include the  purchase  of  new  equipment; 
however,  in  assessing  the  cost  associated  with  this  investment,  account  can  be 
taken  of  the  fact  that  existing  equipment  would  be  replaced  anyway  at  some 
point  in  time;  compliance  costs  thus  represent,  at  least  partially,  an  investment 

40  Note  that  in  these  circumstances  the  removal  of  EU  rules  would  not  necessarily  eliminate  all 
regulatory costs; in fact,  national legislation may replace EU legislation in the same area. At any 
rate,  as  mentioned  above,  the  CCA  does  not  compare  costs  generated  by  EU  rules  with  costs 
hypothetically generated by national rules which would develop in the absence of harmonising EU 
rules. 

20 

 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

which  sooner  or  later  would  have  become  necessary.  Second,  there  may  be 
administrative  or  legal  gold-plating  by  Member  States  in  terms  of  different 
modalities  of  implementing  legal  obligations  of  EU  origin.  For  this  reason,  even 
when plants report that an activity is fully motivated by the legislation, regulatory 
costs  are  discounted  by  a  15%  BAU  factor  (set  at  this  level  based  on  follow-up 
interviews with company experts).  

  When  activities  would  be  performed  even  in  the  absence  of  any  legal 
obligation (5), legal obligations still determine a certain way to carry out those 
activities which might not be the most efficient, thus generating some extra costs 
(85%  BAU  based  on  follow-up  interviews  with  company  experts).  For  instance, 
any  company  pursuing  a  corporate  social  responsibility  strategy  puts  in  place 
actions  that  are  in  line  with  the  general  and  specific  objectives  of  the  EU  waste 
legislation  or  workers’  health  and  safety  legislation;  yet,  from  an  operational 
standpoint compliance with legislation requires some adjustments which have an 
impact on company efficiency. 

Table 1. Conversion table for the BAU Factor 

Likert scale  BAU Factor 

1 
1.5 
2 
2.5 
3 
3.5 
4 
4.5 
5 

15% 
24% 
33% 
41% 
50% 
59% 
68% 
76% 
85% 

Source: Authors’ own elaboration. 

2.3.2  Main cost parameters associated with SOs and IOs 

The  assessment  of  compliance  costs  requires  estimating  relevant  cost  parameters 
associated  with  SOs  and  IOs  (see  Action  6  in  Box  1).  In  the  context  of  the  CCA,  the 
estimate  of  personnel  costs  and  CAPEX  presents  some  elements  of  complexity  from  a 
methodological standpoint, which are discussed below. 

Personnel costs 

Personnel  costs  are  a  complex  cost  component  and  any  estimate  entails  several 
assumptions, especially when data provided by plants are not immediately comparable. 
In a nutshell, personnel costs have to be computed by:  

  Estimating  or  measuring  the  time  devoted  to  comply  with  a  legal 
obligation. The time indicated by respondents, in person-hours, -days, -months 
or in Full Time Equivalent (FTE), is converted in person-hours per year: 

  A person day is assumed to correspond to 8 hours.41  

  A person-month is assumed to correspond to 142 hours.42  

41  Eurofound  (2016),  “Working  time  developments  in  the  21st  century:  Work  duration  and  its 
Regulation in the EU”. 
42 Ibid. 

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Cumulative Cost Assessment of the EU Glass Industry 

  A working year (or FTE) is assumed to correspond to 1,700 hours.43 

  Multiplying the time by the hourly fee of the staff fulfilling the obligation. 
Relevant  categories  of  workers  carrying  out  activities  related  to  each  legal 
obligation in a ‘normally efficient business’ were identified via follow-up interviews 
with  company  experts.44  The  monetisation  of  personnel  costs  relies  on  average 
hourly  earnings  per  category  of  workers  at  the  Member  State  level  based  on 
Eurostat  data.45  The  hourly  fees  include  non-wage  labour  costs  and  overhead 
costs.  

Investment costs (CAPEX and Financial Costs) 

As  explained  above,  the  CCA  aims  to  measure  regulatory  costs  per  unit  of  output 
incurred  by  plants  based  in  the  EU  on  a  yearly  basis.  This  requires  annualising  the 
value of investments made to abide by EU rules. In other words, the total value of 
each relevant asset purchased over the period 2006-15 has to be divided by the useful 
life (in years) of the asset to estimate annual CAPEX. In line with the application of the 
‘normally  efficient  business’  concept,  standard  ‘useful  life’  per  category  of  assets 
was  computed  by  relying  on  useful  lives  indicated  by  respondents  to  the  questionnaire 
during  follow-up  interviews  and  available  secondary  sources.  Further  details  for  each 
area of legislation are presented in Part B of this Study.  

CAPEX are generally accompanied by financial costs as companies have to finance their 
investment through a combination of debt financing, e.g. selling bonds or borrowing 
money  from  banks,  and  equity,  e.g.  issuing  common  stocks  or  preferred  stocks.  Both 
debt and equity come at a price; in fact, lenders, e.g. bondholders or banks, provide the 
company with debt financing in exchange for interests and shareholders expect returns 
in  the  form  of  dividends.  Against  this  background,  the  so-called  Weighted  Average 
Cost of Capital (WACC) represents the rate that a company pays on average to finance 
its assets by taking into account the cost of the two components of the capital structure 
(debt and equity). Based on data collected by professor Damodaran of the Stern School 
of Business at New York University46 the average WACC for EU companies operating 
in  building  materials  (including  flat  glass,  brick  and  tiles,  and  ceramic  tiles)  and 
packaging (including hollow glass) over the period 2006-15 can be estimated at 7.4%. 
This rate has been used throughout the Study to compute financial costs of investments 
made to comply with EU rules. 

2.3.3  Typical year 

Regulatory  costs  generated  by  electricity,  gas,  energy  efficiency  and  climate  legislation 
as  well  as  key  performance  indicators,  production  costs  and  quantities  of  output  were 
collected  for  each  year  of  the  time  span  covered  by  the  CCA.  Therefore,  in  the 
analysis  below,  such  costs  and  margins  vary  across  years  in  both  absolute  value  and 
€/tonne (by reflecting variations in the production output of sampled plants). 

43 Ibid. 
44  Interestingly,  salaries  paid  per  category  of  workers  are  considered  highly  confidential 
information,  because  salary  structures  and  policies  are  key  drivers  for  competition  in  the 
manufacturing  industries.  Against  this  background,  in  order  to  increase  the  response  rate  to  the 
questionnaire, the Research Team did not collect hourly fees paid by each plant. 
45 Note that hourly fees were computed by SG C1 and provided to CEPS and Economisti Associati 
further  details  on  Eurostat  data  see: 
in 
http://ec.europa.eu/eurostat/web/microdata/structure-of-earnings-survey .  
46 
http://people.stern.nyu.edu/adamodar/New_Home_Page/datacurrent.html.  

the  context  of  a  parallel  study.  For 

available 

dataset 

entire 

The 

at: 

is 

22 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Regulatory  costs  generated  by  legislation  in  the  field  of  Internal  Market  for  chemicals, 
Internal Market for construction products,47 the Measuring Instruments Directive, waste 
(including  packaging  waste),  general  workers’  health  and  safety  and  workplace  safety, 
special  worker’s  health  and  safety  and  consumers  and  health  were  quantified  for  a 
‘typical  year’.  In  fact,  such  cost  data  are  less  sensitive  to  variations  in  production 
output. Therefore, over the period under observation, such cost items vary only in terms 
of €/tonne, reflecting changes in production outputs of sampled plants. 

With  regard  to  regulatory  costs  generated  by  environmental  legislation,  a  cumulated 
approach  was  adopted  as,  in  any  given  year,  each  plant  incurs  costs  related  to 
investments  made  in  the  same  year  as  well  as  costs  linked  to  investments  made  in 
previous  years.  As  the  Research  Team  did  not  collect  investment  costs  incurred  before 
2006,  a  realistic  cost  estimate  is  possible  only  for  the  last  year  of  the  period  under 
analysis,  i.e.  2015.  In  practice,  in  2015,  cumulated  compliance  costs  include:  i)  the 
depreciation  for  the  investments  made  that  year  as  well  as  depreciation  for  all  the 
investments made since 2006; ii) the operating costs linked to the investments between 
2006 and 2015; and iii) the financial costs incurred for the financing of all investments 
made  since  2006.  Therefore,  2015  was  selected  as  a  ‘typical  year’  and  in  the 
analysis  below  costs  generated  by  environmental  legislation  vary  across  years  only  in 
terms of €/tonne as a result of changes in quantities produced by sampled plants. 

2.3.4  Additional issues 

Regulatory costs,  be  they  direct  or  indirect,  should  be  attributed  to  a  certain  tier of 
government.  In  the  context  of  the  CCA,  the  focus  is  on  costs  generated  by  EU 
rules,  rather  than  on  overall  regulatory  costs.  This  was  reflected  in  the  questionnaires 
used for data collection, which  were drafted with the objective of collecting information 
confined  to  EU  regulatory  costs.  In  the  same  vein,  interviews  were  conducted  with  the 
main purpose of eliciting regulatory costs generated by EU legislation.48 In this respect, 
data  triangulation  and  ensuing  requests  for  clarifications  have  served,  inter  alia,  the 
purpose  to  reduce  discrepancies  generated  by  diverse  national  implementation  of  EU 
rules.  

Another  issue  to  be  addressed  in  the  analysis  stems  from  the  different  impact  that 
identified  costs  have  on  individual  firms,  depending  on  their  features  and  most 
notably  on  their  size.  A  classical  case  in  point  is  the  proportionally  higher  impact  of 
compliance costs on SMEs than on larger firms. Ideally, cumulative costs borne by SMEs 
have to be compared with cumulative costs borne by large enterprises. Nonetheless, as 
further  discussed  below  (see  Chapter  3),  SMEs  appear  to  play  a  marginal  role  in  the 
sectors of the EU glass industry in the scope of this Study; hence, cost impact on SMEs 
is not relevant to the CCA of the EU glass industry.  

2.3.5  Data validation 

Finally, in the current CCA, which is mainly based on primary data collected at the plant 
level, data validation played a key role to ensure the quality of the findings. In this 
respect,  data  were  triangulated  with:  i)  any  secondary  source  available,  including 
Eurostat  data,  data  from  national  statistics  offices,  published  reports  and  private 

47  Regulatory  costs  generated  by  legislation  in  the  field  of  Internal  Market  for  construction  were 
collected for two different ‘typical years’, i.e. before and after the entry into force of CPR. Data for 
a ‘typical year’ before the introduction of CPR capture cost impacts of CPD. 
48  As  mentioned  at  the  beginning  of  this  Chapter,  it  is  worth  remarking  that  one  of  the  main 
benefit of EU rules pursuing Internal Market harmonisation objectives lies in cost savings following 
the replacement of 28 different national rules with one harmonised EU regime. This is for instance 
the  case  of  the  Industrial  Emissions  Directive.  Nonetheless,  the  Better  Regulation  Toolbox 
(European Commission, Better Regulation "Toolbox" attached to the Better Regulation Guidelines, 
pp.  338,  341)  includes  cost  savings  generated  by  EU  rules  within  the  scope  of  direct  regulatory 
benefits. Therefore, costs savings are out of the scope of the CCA. 

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Cumulative Cost Assessment of the EU Glass Industry 

databases, e.g. the Amadeus database; ii) data provided by other companies operating 
in the same sector; iii) data provided by other companies operating in a different sector; 
iv) results of the ‘Validation Workshop’ which was held in January 2017; and v) evidence 
requested from outliers, such as balance sheet, profit/loss accounts, electricity bills and 
gas  bills.  It  is  worth  remarking  that  all  data  were  collected  via  either  face-to-face  or 
phone interviews; this contributed to increasing the overall quality of data and enabled a 
progressive validation process by checking with new interviewees some of the responses 
collected  in  previous  interviews.  Interestingly,  triangulation  led  to  the  identification  of 
two categories of outliers: 

  Plants  that  are  outliers  for  a  specific  reason.  For  instance,  some 
questionnaire respondents cannot be considered ‘typical’ plants in certain areas of 
legislation  due,  for  example,  to  the  specific  technology  they  use,  e.g.  furnaces 
powered  by  oil  rather  than  natural  gas,  or  products  they  produce,  e.g.  niche 
products  with  high  costs/high  margins.  Outliers  belonging  to  this  category  were 
excluded from samples, as their regulatory costs or production costs per tonne of 
output  were  not  representative  of  the  EU  production  of  glass.  Nonetheless,  data 
collected,  e.g.  energy  prices,  value  of  investments  for  environmental  purposes, 
have  still  been  used  to  validate  data  provided  by  other  plants  in  the  same 
region/Member State. 

  Plants  that  are  outliers  without  apparent  reason.  Plants  belonging  to  this 
category  were  contacted  to  verify  data  and  information  provided  and  either 
rectify  them  or  explain  the  main  drivers  justifying  the  detected  inconsistencies. 
Supporting  evidence  was  also  requested.  Only  fully  validated  observations  were 
included in the final sample. 

24 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

3  Sample 

In line with the consolidated methodological approach to CCAs,49 the CCA of the EU glass 
industry adopted a bottom-up approach. Hence, the bulk of regulatory costs stemming 
from EU rules  was assessed by collecting  primary data from manufacturers based in 
EU  Member  States.  More  specifically,  data  collection  was carried  out  at  the  plant  level; 
hence, the sampling units for this Study are expressed in terms of production sites, 
rather than companies.  

Given  the  large  number  of  plants  producing  glass  in  the  EU,  data  on  regulatory  costs 
cannot  be  collected  from  the  entire  population  of  EU  producers  or  from  a  statistically 
representative  sample  (see  Box  4).  Hence,  a  small  sample  of  ‘typical’  plants  were 
selected. Against this background, this Chapter aims to: 

1.  discuss  sampling  criteria  used  to  partition  the  EU  population  of  glass  producers 

into more homogenous groups;  

2.  describe  the  required  composition  of  samples  of  glass  producers  to  perform  the 

present CCA;  

3.  summarise the strategy adopted to collect data at the plant level; 
4.  detail the main features and composition of the current samples of respondents. 

3.1  Sampling criteria 

A proper selection of sampling criteria is crucial to carry out a CCA while complying with 
the  ‘principle  of  a  proportionate  analysis’.  In  fact,  the  2015  Better  Regulation 
Toolbox endorses the need to respect the principle of a proportionate analysis and make 
transparent compromises about data quality, including limiting fieldwork to a sample of 
Member States or population segments.50 In the case of CCAs, the trade-off between 
data granularity and population coverage cannot be resolved in favour of the latter. 
As  acknowledged  by  the  OECD  in  its  guidelines  for  compliance  cost  assessment, 
“statistically valid surveys may be expensive and time consuming to administer, both for 
government and for stakeholders, and may therefore not be appropriate or feasible […] 
however,  small-scale  surveys  can  provide  broad  indications  of  the  scale  of 
expected regulatory impacts.”51  

In this context, in order to measure regulatory costs, and in particular direct compliance 
costs  and  administrative  burdens, 
international  best  practices  suggest  that 
researchers should carry out at least five interviews for each major substantive or 
information obligation, and then, if necessary, follow up with additional interviews in 
case of substantial discrepancies between collected data.52 Also, international experience 
points  out  that  regulatory  costs  tend  to  follow  a  “Pareto  distribution”,  in  which  20%  of 
the obligations represent roughly 80% of the total costs to be measured.  

Box 4. Representativeness 

The  Study  does  not  rely  upon  a  statistically  representative  sample.  In  fact,  the 
number of observations required by a statistically representative sample would not have 
allowed  for  collecting  data  via  interviews  with  plants,  especially  in  light  of  the  amount 
and level of detail of data required to cover all the pieces of legislation covered by this 
CCA. In this respect, data on regulatory costs were collected from a small sample 

49 Schrefler, L., G. Luchetta and F. Simonelli (2015), “A new tool in the box? The cumulated cost 
assessment”, European Journal of Risk Regulation, 1, Lexxion. 
50  European  Commission,  Better  Regulation  "Toolbox"  attached  to  the  Better  Regulation 
Guidelines, p. 345. 
51 OECD (2014), OECD Regulatory Compliance Cost Assessment Guidance, OECD Publishing, p. 35. 
52 International SCM Manual, also quoted in the Better Regulation “Toolbox”, pp. 368-370. 

25 

 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

of  ‘typical’  plants,  selected  on  the  basis  of  sampling  criteria  summarised  in  this 
Chapter.  As  mentioned,  this  approach  is  fully  compliant  with  the  “principle  of  a 
proportionate  analysis”  and  the  International  Standard  Cost  Model  (also  quoted  in  the 
Better Regulation “Toolbox”) and international best practices, e.g. the OECD Regulatory 
Compliance Cost Assessment Guidance. For the sake of clarity, in each sector the share 
of  EU  turnover  represented  by  respondent  companies  is  presented  below  (see 
Table 6). 

Source: Authors’ own elaboration. 

This suggested approach was adjusted to match the specific features of this Study. First, 
not  all  sampled  plants  were  subject  to  all  obligations  to  be  measured;  this  provided  a 
first  reason  to  include  more  than  five  plants  in  the  sample.  Second,  experience  with 
previous similar projects has shown that while for the simplest cost items data present 
limited discrepancies, the variance of complex cost items can hardly be tackled with 
only  five  data  points.  In  this  respect,  rather  than  carrying  out  five  interviews  per 
obligation, it is crucial to partition the population of EU companies in homogenous 
groups,  based  on  selected  sampling  criteria,  and  then  collect  at  least  five 
observations for each of these groups.  

Against  this  background,  for  the  purpose  of  the  CCA,  the  sampling  strategy  for  the 
glass industry considered the following criteria: 

  Sectors; 

  Geographical distribution;  

  Company features: 

  Size/ownership; 

  Configuration of the company’s value chain; 

  Plant features: 

  Plant capacity; 

  Production technology/Product range. 

Sectors.  Due  to  the  differences  between  sectors  in  terms  of,  for  example,  product 
range,  production  technologies  and  configuration  of  the  value  chain,  data  for  the  CCA 
need to be collected and analysed at a NACE 4-digit level. Therefore, each sector under 
analysis was subject to a separate assessment.  

Geographical distribution. Based on the results of the previous CCA published by the 
European  Commission,53  variations  in  the  magnitude  of  regulatory  costs  can  be 
explained  to  some  extent  by  the  plant  location.  In  particular,  for  some  pieces  of 
legislation,  regulatory  costs  vary  across  the  EU  since  the  national  legislative  and 
regulatory  framework  prior  to  the  implementation  of  a  certain  EU  rule  differed 
substantially. Therefore, data are likely to be more homogenous within a given country. 
Nonetheless, as the production of all the sectors is concentrated in a limited number of 
Member  States  (see  Box  8),  to  ensure  the  broadest  geographical  coverage,  data  were 
aggregated  at  a  regional  level.  This  prevented  disclosing  identifiable  information  on 
specific plants in case of too few respondents from a certain Member State.  

The following way to identify regions homogeneously across sectors was adopted: 

53  CEPS  and  EA  (2013),  “Assessment  of  Cumulative  Cost  Impact  for  the  Steel  and  Aluminium 
Industry”, Study for the European Commission. 

26 

 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

  Northern-Western  Europe  (NWE):  Austria,  Belgium,  Denmark,  Finland, 

France, Germany, Ireland, Luxembourg, the Netherlands, Sweden, the UK; 

  Southern Europe (SE): Cyprus, Greece, Italy, Malta, Portugal, Spain; 

  Central-Eastern  Europe  (CEE):  Bulgaria,  Croatia,  Czech  Republic,  Estonia, 

Hungary, Latvia, Lithuania, Poland, Romania, Slovak Republic, Slovenia. 

Company  features:  size/ownership.  Although  the  analysis  remains  plant-based, 
company  size/ownership  may  have  an  impact  on  regulatory  costs  as  well  as  on  overall 
production  costs  and  margins,  as  larger  companies  may  be  able  to  benefit  from,  for 
example,  economies  of  scope,  economy  of  scale,  better  bargaining  power  vis-à-vis 
suppliers of raw materials or subcontractors. As a result, in principle each sample should 
be divided in two main groups: i) large enterprises; and ii) small and medium-sized 
enterprises.54  

Company features: configuration of the company’s value chain. The configuration 
of  the  company  value  chain  is  another  important  feature  to  take  into  account  while 
performing a CCA, as different pieces of legislation affect different activities. To be sure, 
it  is  not  possible  to  retrieve  information  on  the  value  chain  of  a  given  company  from 
secondary sources. Hence the configuration of the value chain cannot be used as an ex 
ante sampling criterion. In this respect, it is worth stressing that a CCA should focus on 
the  same  number  and  typology  of  activities,  i.e.  value  chain  links,  in  all  the  sampled 
plants within a given sector and, where possible, across sectors. This aspect is crucial for 
a  meaningful  aggregation  of  results  at  regional  as  well  as  EU  level  and  to  compare 
results between sectors. Yet, different plants may be characterised by different levels of 
vertical  integration.  Hence,  once  an  agreement  is  reached  on  the  activities  covered  by 
the CCA, the level of vertical integration of the interviewees should be taken into account 
for the categorisation of regulatory costs. In a nutshell, rules affecting a certain activity 
are  expected  to  generate  either  direct  costs,  when  such  activity  is  carried  out  within  a 
company, or indirect costs, when the same activity is outsourced. This is for instance the 
case of regulatory costs triggered by transport legislation.  

Plant  features:  capacity.  Costs  generated  by  EU  rules  are  likely  to  be  affected  by 
plant  capacity  in  several  policy  areas  (for  instance  the  ETS  Directive  as  well  as  the 
Industrial  Emission  Directive  apply  only  to  installations  above  certain  capacity 
thresholds). In addition, production capacity is a crucial factor in determining production 
costs and margins, especially for homogenous products manufactured in large quantities 
where  economies  of  scale  do  matter.  Unfortunately,  plant  capacity  is  considered 
‘sensitive’  information  and,  as  in  the  case  of  value  chain  configuration,  no  data  are 
available from public sources or sectoral associations.55 Since no quantitative information 
can  be  retrieved  via  desk  research,  as  a  mitigating  measure  the  sample  should  be 
analysed  ex  post  to  account  for  differences  in  regulatory  costs  generated  by  different 
plant capacities.  

54  For  statistical  purposes  a  workable  definition  of  SME  is  the  one  adopted  by  Eurostat,  which  is 
based on the number of people employed. In this respect, it is worth remarking that this definition 
was  recently  adopted  by  the  European  Commission  in  the  latest  “SME  performance  review” 
(Muller, P., C. Caliandro, D. Gagliardi and C. Marzocchi (2015), “Annual Report on European SMEs 
2014/2015  –  SMEs  start  hiring  again”,  European  Commission).  Nonetheless,  this  definition  tends 
to overestimate the number of SMEs as it does not consider: i) the other two thresholds that are 
relevant to the EU definition of SME, i.e. annual turnover and balance sheet total; and ii) the fact 
that  number  of  employees,  turnover  and  total  assets  of  partner  or  linked  enterprises  have  to  be 
(totally or partially) cumulated to assess compliance with thresholds set for SMEs (see Commission 
Recommendation  of  6  May  2003  concerning  the  definition  of  micro,  small  and  medium-sized 
enterprises (Text with EEA relevance) (notified under document number C(2003) 1422)). 
55  All  surveyed  plants  were  requested  to  provide  information  on  plant  capacity.  In  this  respect, 
confidentiality  of  such  information  is  protected  by  a  non-disclosure  agreement  between  the 
Consortium and the respondents.  

27 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Plant  features:  production  technology/product  range.  Production  technology  and 
product  range  are  two  additional  plant  features  that  can  be  relevant  to  partition  the 
population of EU companies into homogenous groups. In this respect, two considerations 
are  necessary:  i)  in  the  specific  case  of  the  glass  industry,  these  variables  are  closely 
intertwined  because  similar  products  are  usually  manufactured  via  similar  production 
processes; ii) performing separate CCA at sectoral level (NACE 4-digit) helps increasing 
homogeneity  among  sampled  plants,  especially  in  those  sectors  comprising  a  limited 
variety  of  products,  and  reduces  the  relevance  of  production  technology/product  range 
as sampling criteria. Still, within some sectors covered by this Study, e.g. hollow glass, 
differences  in  products  and  production  technologies  should  be  taken  into  account  when 
devising a sample strategy.  

3.2  Required composition of samples in selected sectors 

In  what  follows,  the  composition  of  samples  in  selected  sectors  of  the  EU  glass 
industry  is  discussed.  More  specifically,  this  section  focuses  on  the  two  NACE  4-digit 
sectors in the scope of this CCA (see Box 5 for further details on the selection of sectors 
covered by the Study): 

  Manufacture of Flat glass (NACE rev.2 23.11); 

  Manufacture of Hollow glass (NACE rev.2 23.13). 

Box  5.  Reasons  to  refrain  from  launching  a  CCA  of  the  EU  manufacture  and 
processing of other glass, including technical glassware 

The  Technical  Specifications  for  this  CCA  required  covering  three  sectors  of 
the EU glass industry: 

  23.11 Manufacture of flat glass; 

  23.13 Manufacture of hollow glass; 

  23.19 Manufacture and processing of other glass, including technical glassware. 

The  EU  associations  representing  the  manufacture  and  processing  of  other  glass, 
including technical glassware were contacted during the Inception Phase of this Study 
to enquire about the willingness of their members to provide cost data for the CCA. In 
this  respect,  they  have  explained  that  any  attempt  to  collect  primary  data  at  plant 
level from their members would have faced major obstacles, mainly due to the highly 
fragmented  structure  of  the  sector.  In  the  absence  of  cooperation  from  these 
stakeholders,  collection  of  primary  data  for  the  CCA  would  have  been  very 
difficult;  hence,  any  cost  assessment  for  the  manufacture  and  processing  of  other 
glass sector would have relied almost exclusively on secondary sources and theoretical 
cost modelling, which would compromise the ultimate accuracy of the results.  

Furthermore,  an  additional  methodological  obstacle  exists:  the  high  level  of 
heterogeneity in terms of products, production processes and technologies as well as 
value  chains  featuring  this  sector  would  make  it  quite  difficult  to  identify  ‘typical’ 
plants  and  thus  to  aggregate  data.  In  this  respect,  even  selecting  the  most 
appropriate  unit  of  measurement  for  costs  and  margins  would  prove  challenging.  In 
fact, the manufacture and processing of other glass covers a wide range of products, 
from  laboratory  glassware  to  paving  blocks,  jewellery  and  optical  glass;  even  within 
each  product  category,  elements  of  heterogeneity  can  be  detected,  e.g.  jewellery 
items.  In  addition,  this  sector  comprises  both  manufacturers  and  downstream 
processing  companies,  the  latter  being  out  of  the  scope  of  the  CCA  (see  Annex  I  for 
further  details  on  manufacture  and  processing  of  other  glass,  including  technical 

28 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

glassware). 

Finally,  it  is  worth  remarking  that  sectors  covered  by  the  CCA  represent  the  lion’s 
share of the EU glass industry. In fact, in 2015 manufacturers of flat glass and hollow 
glass  were  responsible  for  some  79%  of  the  overall  turnover  in  the  EU  glass 
sectors  listed in  the  Technical Specifications.  Hence,  a CCA  confined  to  manufacture 
of  flat  glass  and  hollow  glass  still  covers  a  substantial  share  of  the  EU  glass 
industry turnover. At any rate, no conclusion for the missing sector can be drawn by 
relying on data collected in the sectors under observation. 

Source: Authors’ own elaboration. 

To partition the EU population of flat glass and hollow glass producers into homogenous 
groups, the following sampling criteria need to be taken into account: 

  sectors; 

  geographical distribution. 

In  addition,  in  both  sectors  plant  features  concerning  production  technology  and 
product range play a crucial role in devising the sample strategy.  

On  the  one  hand,  whereas  the  flat  glass  sector  is  rather  homogeneous  in  terms  of 
product  range,  it  includes  two  main  production  technologies,  namely  float  glass  and 
rolled and patterned glass. Nonetheless, according to Eurostat PRODCOM data, in 2015 
some  87%  in  value  of  production  sold  by  EU  plants  was  based  on  the  float  process. 
Hence, the proposed sample comprises only plants manufacturing float glass (see Box 
6 for a description of the production process). 

Box 6. Float glass: classification and overview of the production process 

Flat  glass  includes  all  glass  products  originally  manufactured  in  flat  form.  It  is 
mostly  used  in  buildings,  automotive,  solar-energy  equipment  as  well  as  interior 
design,  electronics  and  appliances.  Even  though  the  flat  glass  industry  makes  use  of 
two  different  production  processes,  namely  float  process  and  rolled  process,  the 
former  represents  around  90%  of  the  sector’s  output.  More  specifically,  glass 
produced using the float process (also called “float glass”) consists in large sheet glass 
(with an average size of 6x3.1 m) made from the floating of molten glass on a bath 
of  molten  tin,  immediately  after  the  molten  glass  flows  out  of  the  furnace.  The 
resulting product is rather homogenous with low variation, even though the variety of 
products is very large to meet customers’ needs, e.g. different thickness, colours, size 
and  composition.  Most  of  the  float  glass  produced  is  further  processed  to  give  the 
glass certain qualities and characteristics.  

According  to  the  NACE  (Rev.2)  statistical  classification  of  economic  activities  in 
the  European  Community,  the  manufacturing  of  float  glass  is  included  in  the  class 
23.11,  encompassing  manufacturers  of  flat  glass.  More  specifically,  it  includes  the 
following NACE 8-digit codes:  

  23.11.12.12:  Non-wired  sheets,  of  float,  surface  ground  or  polished  glass, 

having a non-reflecting layer; 

  23.11.12.14:  Non-wired  sheets,  of  float,  surface  ground  or  polished  glass, 

having an absorbent or reflective layer, of a thickness ≤3.5 mm; 

  23.11.12.17:  Non-wired  sheets,  of  float,  surface  ground  or  polished  glass, 
having  an  absorbent  or  reflecting  layer,  not  otherwise  worked,  of  a  thickness 

29 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

>3.5 mm;         

  23.11.12.30:  Non-wired  sheets,  of  float,  surface  ground  or  polished  glass, 
coloured throughout the mass, opacified, flashed or merely surface ground; 

  23.11.12.90. Other sheets of float/ground/polished glass, n.e.c. 

Float glass is manufactured through a standardised production process, which confers 
the  product  with  uniform  thickness  (ranging  from  0.4mm  to  25mm)  and  a  very  flat 
surface.  The  float  process  includes  six  main  stages:  i)  preparation  of  the  raw 
materials (batching and mixing); ii) melting and refining; iii) float bath (tin bath); iv) 
annealing; v) inspection; and vi) cutting to order. A type of float glass processing, i.e. 
‘online’ coating, is sometimes performed between stages iii) and iv) although 80% of 
glass coating activities take place ‘offline’, on separate production sites.  

Preparation  of  raw  materials.  The  exact  raw  materials  composition  differs 
depending on the kind of glass produced (e.g. coloured glass or extra-clear glass) but 
nearly  all  float  glass  is  soda-lime  silicate  glass.  Borosilicate  float  glass  is  a  rare 
composition for specialty applications in research, industry, optics and appliances. The 
soda-lime silicate float glass preparation requires sand (69-74%), soda ash (10-16%) 
and  lime  (5-14%).  These  inputs  are  mixed  in  a  batch  plant  together  with  “cullet 
glass”, i.e. recycled glass. As cullet melts at lower temperatures, it allows for reducing 
natural  gas  consumption  as  well  as  CO2  emissions;  nevertheless,  as  float  glass  is 
extremely sensible to even low level of contaminations, mostly pre-consumer cullet is 
used and the use of external cullet is limited. 

Melting and refining. The batched raw materials are transported from a mixing silo 
to  a  furnace  where  they  are  melted  down  at  1600°C  to  remove  impurities  and 
bubbles. The furnace is a wide tank made of refractory materials where glass is fired 
from  above  from  alternating  sides.  It  is  heated  from  alternating  sides,  using  natural 
gas and waste gases to produce flames above the raw materials and molten glass.  

Float  bath  (tin  bath).  Once  molten,  the  glass  flows  from  the  furnace  onto  the 
surface of an enclosed bath of 1100°C molten tin; a refractory lip is used to ensure a 
correct spreading of the glass. As the glass passes over the bath, this acquires uniform 
flatness;  in  addition,  adjustable  rollers  are  used  to  govern  the  thickness  of  the  glass 
and to achieve a ribbon of uniform viscosity. Eventually, the glass leaves the float bath 
at a temperature of 600°C.  

Annealing.  Annealing  is  a  heat-treatment  meant  to  relieve  internal  stresses  and  to 
ensure  perfect  flatness  of  the  ribbon.  Thus,  once  glass  reaches  a  temperature  of 
600°C, this is taken out of the tin bath and passed through a temperature-controlled 
tunnel, the so-called “lehr”. This operation might take time and space as ribbons need 
to cool down from 600°C to 60°C in a controlled manner. 

Inspection.  Automated  on-line  inspections  allow  for  achieving  two  different  results. 
On the one hand, it reveals process faults upstream so they can be corrected. On the 
other,  it  enables  computers  downstream  to  design  cuts  around  potential  flaws;  in 
other  words,  data  gathered  during  the  inspection  stage  drive  cutters,  further 
improving product quality.   

Cutting  to  order.  Once  having  reached  lower  temperatures,  glass  is  washed  and 
transported to the cutting area where diamond wheels cut the ribbon to size dictated 
by a computer. Moreover, stressed edges (also called “selvedge”) are trimmed off and 
recycled as cullet. Finally, glass sheets are packed and stored, either for direct sale or 
for secondary processing. 

Online Coating (optional). Some float glass plants are equipped with online coating 
technology to directly process the ribbon of float glass. Further explanation is provided 

30 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

below under ‘secondary processing’. 

Figure 1. Production process for the float glass sector 

Source: Authors’ elaboration on http://cyberglasstrade.com/product.html. 

Secondary  processing.  Flat  glass  produced  by  way  of  the  float  process  is  often 
further processed to give it certain qualities  or specificities, thus meeting the various 
requirements  and  needs  of  the  end  market.  Common  examples  of  secondary 
processing are: 

  Toughening: Glass is treated to be more resistant to breakage and to break in 
a more predictable way, thus providing a major safety advantage in almost all 
of its applications. Toughened glass is made from annealed glass treated with a 
thermal tempering process. 

  Laminating: Laminated glass is made of two or more layers of glass with one 
or  more  “interlayers”  of  polymeric  material  bonded  between  the  glass  layers. 
Laminated  glass  offers  safety  and  security  advantages  as  well  as  colouring, 
sound dampening, resistance to fire, ultraviolet filtering properties 

  Mirroring:  A  metal  coating,  generally  made  of  silver,  aluminium,  gold  or 
chrome,  is  applied  to  one  side  of  the  glass  in  order  to  give  it  reflective 
properties. 

  Coating. A transparent layer of metallic oxides is deposited onto the hot glass 
ribbon.  Coating  profoundly  modifies  the  optical  properties  of  the  glass  ribbon 
and/or  confers  the  same  low-emissivity,  solar  control  or  self-cleaning 
properties. This is what confers energy-efficiency properties to float glass used 
in  buildings  for  example.  Most  glass  coating  takes  place  ‘offline’,  on  separate 
sites, where the vapour is applied to the cold glass surface in a vacuum vessel. 
As mentioned, in some cases, ‘online’ coating is performed by relying on online 
chemical  vapour  deposition  (CVD).  Coatings  are  applied  directly  onto  the  hot 
glass ribbon in the float glass plant. The ribbon of glass flowing out of the float 
bath goes through the coater before entering the annealing “lehr”. 

  Painting. A coat of paint is applied onto the glass for decorative purposes. 

Source: Authors’ own elaboration. 

On  the  other  hand,  whereas  technologies  adopted  in  the  hollow  glass  sector  are 
homogenous  irrespective  of  the  final  shape  of  the  products,  e.g.  bottles,  jars,  drinking 
glasses  (see  Box  7  for  a  description  of  the  production  process),  stakeholders  have 
stressed  some  elements  of  heterogeneity  (especially  in  terms  of  production  costs) 
between  packaging  glass,  e.g.  bottle  and  jars,  flacons,  and  glass  tableware,  e.g. 
drinking glass. Therefore, the sample should reflect this heterogeneity and include both 
plants  manufacturing  packaging  glass  and  plants  manufacturing  glass  tableware.  Yet, 
companies  and  plants  producing  glass  tableware  in  the  EU  are  limited  in  number, 
especially  when  compared  with  facilities  producing  packaging  glass  (according  to 

31 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Eurostat PRODCOM data, in 2015 glassware represented some 17% of the values of the 
EU production of hollow glass) and this makes it difficult to collect the same number of 
observations  in  both  subsectors;  hence,  to  capture  specificity  of  the  glass  tableware 
production while complying with the ‘principle of a proportionate analysis’, the Research 
Team dropped the geographical distribution criterion for this segment.  

Finally,  it  is  worth  remarking  that  within  both  the  packaging  glass  subsector  and 
the  glass  tableware  subsector  additional  elements  of  heterogeneity  exist.  With 
regard  to  packaging  glass,  producers  of  flacons  represent  a  small  segment  (in 
volume) characterised by high costs/high margins; therefore, data collected from plants 
operating  in  this  segment  cannot  be  averaged  with  those  collected  from  producers  of 
bottles and jars. In the same vein,  glassware of lead crystal is a special segment of 
the  glass  tableware  subsector,  with  specificities  which  do  not  allow  for  averaging  data 
collected  from  producers  of  crystal  glass  with  those  from  other  producers  of  glass 
tableware.  Unfortunately,  as  further  discussed  below,  the  limited  number  of  plants 
producing  flacons  or  glassware  of  lead  crystal  in  the  EU  did  not  allow  us  to  collect  and 
present figures for these two segments. 

Box 7. Hollow glass: classification and overview of the production process 

Hollow glass has been used as packaging in all aspects  of everyday life since ancient 
times.  The  main  products  of  the  hollow  glass  sector  are  bottles,  e.g.  for  wines, 
sparkling wines, beers and ciders, soft drinks and mineral water,  jars, e.g. for jams, 
milk products, sauces, oil, vinegar, and other containers, e.g. flacons for perfumery, 
cosmetics  and  pharma,  which  come  in  different  colours  and  shapes  in  order  to 
achieve  additional  features.  For  instance,  brown  glass  is  used  to  pack  light/UV-
sensitive  contents,  such  as  medicine,  juice  or  beverages  containing  beer  to  prolong 
shelf  life.  As  mentioned,  besides  packaging,  the  hollow  glass  sector  also  includes 
tableware, e.g. drinking glasses, pitchers, dishes. The two categories of products are 
quite different when it comes to production costs, revenues, value-to-weight ratio and 
international  trade,  which  is  considerably  higher  for  glass  tableware,  thus  making 
these products globally tradable.  

Class 23.13 of the NACE (Rev.2) statistical classification of economic activities in 
the  European  Community  comprises  the  manufacturing  of  hollow  glass.  More 
specifically, the following NACE 8-digit codes are covered by the present CCA: 

  Packaging glass: 

  23.13.11.10:  Glass  preserving  jars,  stoppers,  lids  and  other  closures 
(including  stoppers  and  closures  of  any  material  presented  with  the 
containers for which they are intended); 

  23.13.11.30:  Glass  containers  of  a  nominal  capacity  ≥2.5  litres  (excluding 

preserving jars);  

  23.13.11.40:  Bottles  of  colourless  glass  of  a  nominal  capacity  <2.5  litres, 
for  beverages  and  foodstuffs  (excluding  bottles  covered  with  leather  or 
composition leather, infant’s feeding bottles); 

  23.13.11.50: Bottles of coloured glass of a nominal capacity <2.5 litres, for 
beverages  and  foodstuffs  (excluding  bottles  covered  with  leather  or 
composition leather, infant’s feeding bottles); 

  23.13.11.60:    Glass  containers  for  beverages  and  foodstuffs  of  a  nominal 
capacity  <2.5  litres  (excluding  bottles,  flasks  covered  with  leather  or 
composition leather, domestic glassware, vacuum flasks and vessels); 

32 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

  23.13.11.80:  Glass  containers  of  a  nominal  capacity  <2.5  litres  for  the 
conveyance  or  packing  of  goods  (excluding  for  beverages  and  foodstuffs, 
for pharmaceutical products, containers made from glass tubing);    

  Glass tableware: 

  23.13.12.20  Drinking  glasses  (including  stemware  drinking  glasses),  other 

than of glass ceramics, of lead crystal, gathered by hand;  

  23.13.12.40: Drinking glasses (including stemware drinking glasses), other 

than of glass ceramics, of lead crystal, gathered mechanically; 

  23.13.12.60:  Drinking  glasses  (excluding  stemware  drinking  glasses  and 

products of glass ceramics or lead crystal), of toughened glass;  

  23.13.13.50:  Table/kitchen  glassware  with  linear  coefficient  of  expansion 
≤5 x 10-6/K, temperature range of 0°C to 300°C excluding glass-ceramics, 
lead crystal/toughened glass, drinking glasses; 

  23.13.13.90:  Table/kitchen  glassware  (excluding  drinking),  toughened 

glass. 

As mentioned, the CCA does not cover the EU production of flacons or of glassware of 
lead crystal. 

Usually,  hollow  glass  production  includes  five  main  stages:56  i)  preparation  of  the 
raw materials (batching and mixing); ii) melting and refining; iii) forming (blow-and-
blow  and  press-and-blow  process);  iv)  annealing  and  (online)  coating;57  v)  and, 
finally, inspection.  

Preparation of raw materials. Raw materials employed depend on the kind of glass 
produced,  e.g.  soda-lime  glass,  lead  glass  and  borosilicate  glass.  In  spite  of  this 
potential  heterogeneity,  hollow  glass  is  primarily  of  the  soda-lime  kind58  whose 
preparation  requires  silicon  dioxide  (sand/silica)  (70-74%),  sodium  oxide  (12-16%), 
calcium  oxide  (5-11%),  magnesium  oxide  (1-3%)  and  aluminium  oxide  (1-3%).59 
These  inputs  are  mixed  in  a  batch  plant  together  with  “cullet  glass”,  i.e.  recycled 
glass.  As  cullet  melts  at  lower  temperatures,  it  allows  to  reduce  natural  gas 
consumption as well as CO2 emissions;60 in fact, the loss on ignition or fusion loss can 
vary, depending on the quantity of cullet used, there being less fusion loss the greater 
the quantity of cullet. 

Melting and refining. The batched raw materials are transported from a mixing silo 
to a furnace where they are melted down at 1,500°C; operating continuously, furnaces 
are  characterised  by  an  investment  life  between  10  and  15  years.  It  takes 
approximately 24 hours for a batch of raw materials to be converted into molten glass 
and refined to remove bubbles.  Subsequently, it is conveyed to the forming area.  

Forming.  Having  been  conditioned  by  careful  temperature  control  in  the  forehearth, 
i.e.  a  channel-like  structure  fired  by  a  number  of  small  burners,  the  molten  glass 
enters the feeder and flows through holes in an orifice plate. Streams of glass are cut 
into gobs of a predetermined weight, which are then guided into individual moulds. In 

56 Consol (2014), “Glass Manufacturing Process” (www.consol.co.za/business/why-glass/glass-
manufacturing-process). See also Robertson, G.L. (2013), Food Packaging: Principles and Practice, 
Boca Raton, FL: CRC Press, p. 234. 
57 Coating can be also carried out offline as a downstream activity. 
58 Robertson, G.L. (2013), “Food Packaging: Principles and Practice”, Boca Raton, FL: CRC Press, 
pp. 230-231. 
59  Ecorys  (2008),  “Competitiveness  of  the  Glass  Sector”.  Within  the  Framework  Contract  of 
Sectoral Competitiveness Studies, ENTR/06/054, Final Report, October, p. 48. 
60  See  International  Energy  Agency  (2007),  Tracking  Industrial  Energy  Efficiency  and  CO2 
Emissions, In support of the G8 Plan of Action. 

33 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

a first stage the gob of glass falls into a blank mould to produce a parison. Depending 
on  the  kind  of  product,  hollow  glass  is  formed  through  two  different  two-step 
processes.  In  the  blow-and-blow  process,  used  for  narrow-neck  containers,  e.g. 
bottles, compressed air is blown into the molten gob to create a cavity while this is in 
the  blank  mould.  The  result  is  a  hollow  and  partly  formed  container,  which  is 
subsequently  subjected  again  to  compressed  air  to  blow  and  mould  the  final  shape. 
The  second  process,  known  as  the  press-and-blow  method,  is  generally  used  for 
jars and tapered narrow-neck containers. Here, a metal plunger instead of air is used 
to  press  a  cavity  into  the  gob  in  the  blank  mould  before  compressed  air  is  used  to 
form the container in the blow mould. Figure 2 provides a schematic illustration of the 
two above-mentioned shaping processes. 

Annealing and (on-line) coating. The formed hollow glassware is removed from the 
mould  and  transferred  by  conveyer  to  a  temperature-controlled  tunnel,  also  called 
“lehr”,  to  cool  down  in  a  controlled  manner.  In  other  words,  annealing  consists  in  a 
heat-treatment meant to relieve internal stresses, prevent uneven cooling and ensure 
mechanical  stability;  this  process  might  take  up  to  two  hours.  While  still  in  the  lehr, 
the  external  surface  is  first  coated  with  a  thin  layer  of  tin  oxide  to  increase  its 
strength.  Eventually,  before  leaving  this  phase,  the  product  is  coated  also  with 
polyethylene wax to protect the surface and prevent scuffing. 

Inspection.  The  hollow  glassware  undergoes  visual  inspection  by  high-resolution 
camera  equipment  as  well  as  by  trained  specialists.  Rejected  containers  are  sent  to 
the recycling operation to be turned into cullet and re-enter the production process. 

Finally,  the  products  are  packed  and  stored,  either  for  direct  sale  or  for  secondary 
processing. 

Figure 2. Schematic illustration of the blow-and-blow (a) and press-and-blow 
(b) forming processes  

Source:  Authors’ elaboration http://cyberglasstrade.com/product.html. 

Source: Authors’ own elaboration. 

34 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Against  this  background,  considering  that  at  least  five  observations  are  required  to 
measure  costs  generated  by  a  given  obligation,  a  minimum  of  15  interviews  per  flat 
glass and of 20 interviews per hollow glass, i.e. 15 per packaging glass and five per 
glass tableware, are necessary (Table 2).61 

Table 2. Minimum number of plants to be interviewed in the glass industry 

Geographical regions 

Southern Europe 
Central-Eastern Europe 
Northern-Western Europe 

Total 

Flat glass 

Hollow glass 

Float glass 

5 
5 
5 
15 

Packaging 
glass 
5 
5 
5 
15 

Glass 
tableware 

5 

5 

Source: Authors’ own elaboration. 

Notwithstanding  the  same  minimum  number  of  interviews  per  geographical  regions,  as 
mentioned  in  Chapter 2  above, when  aggregating  data at  EU  level,  the  Research  Team 
computed  weighted  average  by  adopting  as  weights  the  share  of  turnover  per 
geographic area. In this respect, Table 3 presents the average distribution of production 
value across the EU over the period 2006-15; EU averages were computed by relying on 
annual  values  of  such  distribution.  In  a  nutshell,  responses  from  Northern-Western 
European  countries  were  weighted  more  than  responses  from  Southern  European  and 
Central-Eastern  European  countries  to  reflect  the  uneven  distribution  of  production 
across the EU. 

Table 3. Distribution of production value across the EU (2006-15, average) 

Geographical regions 

Flat glass  

Hollow glass  

Southern Europe 

Central-Eastern Europe 
Northern-Western Europe 

25.22% 

19.36% 
55.42% 

28.79% 

13.05% 
58.16% 

Note: Missing data on turnover for flat glass and hollow glass were estimated via Amadeus.  
Source: Authors’ own elaboration on Eurostat Structural Business Statistics and Amadeus.  

As regards the other sampling criteria discussed above, it is worth remarking that both 
sectors are almost entirely composed of large companies. This was confirmed by the 
relevant  EU  industry  associations  and  is  coherent  with  Eurostat  SBS  data.  In  fact,  in 
2014 the turnover of the EU glass industry (NACE rev.2 23.1) was mainly generated by 
large-  (63%)  and  medium-sized  (24%)  companies.  These  shares  of  turnover 
underestimate  the  role  played  by  large  companies  in  the  manufacturing  of  flat  and 
hollow  glass  if  one  considers  that  figures  for  the  EU  glass  industry  cover  also  sectors 

61  As  mentioned,  segmenting  the  population  into  more  homogenous  groups  allows  for  mapping 
regulatory costs by collecting at least five observations for each group. Yet, if necessary, additional 
observations need to be collected in case of substantial discrepancies between gathered data. Note 
that  the  International  Standard  Cost  Model  (see  above)  does  not  require  a  statistically 
representative  sample  to  map  regulatory  costs.  At  any  rate,  the  share  of  total  turnover 
represented by sampled plants is reported below.  

35 

 
 
 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

such  as  ‘shaping  and  processing  of  flat  glass’  (NACE  rev.2  23.12)  where  a  relatively 
larger  number  of  SMEs  operate.  In  addition,  Eurostat  classifies  companies  only  on  the 
basis of the number of employees and this tends to overestimate the role of SMEs, as it 
does not take into account that some small or medium-sized companies may be part of 
larger  pan-European  groups.  Accordingly,  company  size  is  not  a  relevant  sampling 
variable for flat and hollow glass manufacturing.  

When  it  comes  to  the  value  chain  configuration,  according  to  the  Technical 
Specifications,  “shaping  and  processing  of  flat  glass”  are  out  of  the  scope  of  this  CCA. 
Hence,  the  flat  glass  value  chain  in  the  scope  of  the  assessment  does  not  include  any 
downstream activity. Conversely, in the hollow glass value chain, downstream activities 
appear  to  play  a  minor  role  and,  with  few  exceptions,  e.g.  some  decorating  and/or 
labelling  activities,  are  performed  within  the  same  plant  producing  packaging  glass  or 
tableware.  In  this  respect,  as  respondents  were  not  able  to  single  out  the  share  of 
regulatory costs pertaining to downstream activities, the Research Team included in the 
sample either plants producing finished products (hence including all finishing activities) 
or outsourcing a minor share of finishing activities.  

It is worth remarking that, as the time span covered by the Study is from 2006 to 2015, 
to  the  extent  possible,  only  plants  that  were  already  operating  in  2006  were 
included  in  the  sample.  As  this  piece  of  information  was  not  available  ex  ante,  a 
preliminary question was asked to each plant in the scoping phase of the data collection 
exercise (see below). 

3.3  Data collection strategy 

On the grounds of the sampling criteria and composition of the sample discussed above, 
the  Research  Team  prepared  three  different  lists  of  companies  to  be  contacted  during 
the data collection phase of this CCA: 

  A  ‘main  list’  including  randomly  selected  companies/plants  that  were  directly 

asked to participate in the data collection phase;  

  A ‘mirror list’ including randomly selected companies/plants that were contacted 

in case some players included in the ‘main list’ refused to cooperate; 

  A  ‘reserve  list’  including  companies/plants  suggested  by  the  relevant  EU 
industry  associations,  based  on  their  availability  to  participate  in  the  CCA;  the 
Research  Team  resorted  to  this  list  only  in  case  the  response  rate  from  players 
included  in  the  ‘main  list’  and  ‘mirror  list’  did  not  allow  for  performing  the 
required number of interviews. 

Interestingly,  the  flat  (float)  glass  industry  is  very  concentrated  and  comprises  only 
seven  companies  and  some  40  plants  across  the  EU.  In  this  respect,  the  three  lists 
mentioned  above  included  virtually  the  entire  population  of  EU  manufacturers  of  float 
glass.  It  is  worth  remarking  that  all  the  members  of  Glass  for  Europe  confirmed 
their  availability  to  cooperate  in  the  Study.  This  is  equivalent  to  saying  that  the 
‘reserve’  list  included  more  than  30  plants;  hence,  the  Research  Team  was  able  to 
randomly select plants even among those ready to provide data for the CCA. 

As regards  hollow glass, the ‘main list’ and ‘mirror  list’  were compiled by resorting to 
the Amadeus database and lists of members of both FEVE and EDG. With regard to the 
Amadeus  database,  the  Research  Team  focused  on  the  following  selection  criteria:  i) 
primary  NACE  code:  23.13;  and  ii)  primary  line  of  business:  manufacturing.  This  was 
important to reduce the risk of sampling companies involved only in design, decoration 
or retail activities. It is worth remarking  that the ‘reserve list’ for the hollow glass 
sector  included  some  120  plants  across  the  EU.  In  the  same  way  as  for  the  flat 
glass  industry,  this  left  ample  room  to  randomly  select  interviewees  from  such  a  list. 
Finally,  available  data  did  not  allow  for  identifying  ex  ante  plants  producing  packaging 
glass and plants producing tableware. In this respect, a preliminary question was asked 

36 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

to  potential  interviewees  during  the  scoping  phase  of  the  data  collection  exercise  (see 
below) in order to ensure compliance with the sampling criteria discussed above. 

In fact, as some information relevant to the sampling strategy was not public available, 
e.g.  company  size,  product  manufactured  by  a  certain  company  or  plant,  etc.,  the 
Research Team performed the data collection exercise in three steps:  

  Step #1: scoping. Companies included in the ‘main list’, ‘mirror list’ and ‘reserve 
list’  received  a  short  questionnaire  including  a  limited  set  of  scoping  questions 
aiming to:  

  ascertain  that  selected  companies  were  willing  to  participate  in  the  data 

collection for the CCA;  

 

identify a contact person for the Study within the company;  

  univocally identify the company (via the VAT number); 

  gather  missing  data  to complete the  selection  of  the  sample,  e.g.  number of 
employees, products manufactured by the plant, years in which the plant has 
operated, features of the plant value chain;  

  assessing the relevance of specific pieces of legislation to the plant in order to 

tailor the ‘full questionnaire' (see Step #2);  

  ascertain that selected companies were willing to share documentary evidence 
for  data  validation  purposes  and/or  to  provide  some  basic  data  for  plants 
based in third countries. 

  Step #2: interview preparation. Based on the results of Step #1, the Research 
Team  completed  the  sample  selection  in  compliance  with  the  sampling  criteria 
detailed above. Sampled plants received a written questionnaire covering all the 
relevant  areas  of  legislation  as  well  as  key  performance  indicators.  They  were 
given  enough  time  to  retrieve  data  and  information  required  to  respond.  During 
Step  #2,  a  selected  member  of  the  Research  Team  for  each  plant  was  always 
available to provide guidance and clarification regarding the questionnaire and all 
the information required to fill in the questionnaire. This was key to maximise the 
response  rate  and  ascertain  that  questions  were  not  misinterpreted  and 
responses were consistent across the sample. 

  Step  #3:  semi-structured  interviews.  Semi-structured  interviews  were 
organised with all sampled plants accepting to participate in the Study in order to 
complete  the  questionnaire  and  gather  any  additional  evidence  or  comments 
relevant  to  the  CCA.62  Interviews  were  carried  out  either  face-to-face  or  via 
telephone.  Interviewees  were  free  to  share  a  pre-filled  questionnaire  before 
performing the interviews; while this was not required, it proved to be the most 
effective approach to increase the quality of collected data. 

Against  this  background,  the  Research  Team  drafted  a  ‘scoping  questionnaire’  for 
Step  #1  for  each  sector  in  the  scope  of  the  CCA  as  well  as  a  ‘full  questionnaire’  for 
Steps  #2  and  #3  to  collect  primary  data  from  sampled  companies.  The  ‘full 
questionnaire’  underwent  a ‘pilot experiment’  to  test  its  content  before  launching  the 
full-scale  data  collection  and  reflected  the  methodology  detailed  in  Chapter  2.  It  is 
divided  into  different  parts  covering  selected  legislation  areas  and  the  most  relevant 
pieces  of  legislation  within  each  area.  In  this  respect,  it  is  worth  remarking  that  some 
parts  or  sections  of  the  questionnaire  applied  only  to  a  sub-set  of  the  sectors  and 
subsectors in the scope of the CCA; this aspect will be further discussed in Part B of this 
Study. 

62  This  is  generally  the  most  suitable  approach  to  gathering  a  set  of  comparable  data  while  still 
leaving  space  for  a  more  in-depth  analysis  of  the  specificities  of  cases  and  exploring  differences 
between interviewees’ experiences. 

37 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

3.4  Sample 

Some 50 EU glass manufacturers were involved in Step 1 (see above) of the Data 
Collection  strategy.  More  specifically,  30  plants  producing  glass  packaging,  five  plants 
producing glass tableware and 15 plants producing flat glass were requested to fill in the 
‘scoping  questionnaire’.  Interestingly,  all  contacted  plants  returned  the  ‘scoping 
questionnaire’ (Table 4).  

All  respondents  to  Step  1  were  requested  to  complete  the  ‘full  questionnaire’.  The 
response rate was very high and the samples on which this CCA relies are composed as 
follows (Table 5; see Box 8 for key statistics on glass sectors and subsectors covered by 
the CCA): 

  Flat  glass.  The  sample  comprises  15  plants,  i.e.  more  than  35%  of  the  total 

value of production sold by EU producers of float glass (Table 6). 

  Packaging  glass.  The  sample  includes  26  plants,  as  four  plants  manufacturing 
flacons decided to withdraw from the CCA. Nonetheless, only 21 questionnaires 
can  be  used  to  assess  regulatory  costs  generated  by  EU  rules  on  packaging 
glass. In fact, five questionnaires were compiled by plants manufacturing flacons 
belonging to two companies. In this respect, while compliance with confidentiality 
rules  does  not  allow  for  showing  regulatory  costs  borne  by  EU  producers  of 
flacons, such plants cannot be considered ‘typical plants’ and their data cannot be 
averaged with those provided by other producers of packaging glass. At any rate, 
data  and  information  provided  by  these  plants  were  used  for  data  validation 
purposes. The sample used for cost assessment represents more than 15% of the 
total value of production sold by EU producers of packaging glass (Table 6).  

  Glass  tableware.  The  sample  is  composed  of  five  plants.  The  sample  covers 
more  than  40%  of  the  total  value  of  production  sold  by  EU  producers  of  glass 
tableware  (Table  6).  No  plant  producing  glassware  of  lead  crystal  replied  to  the 
‘full questionnaire’. 

It is worth stressing that, as not all pieces/areas of legislation are relevant to all plants, 
the  assessment  of  regulatory  costs  generated  by  specific  pieces/areas  of 
legislation  may  be  based  on  a  number  of  observations  lower  than  the  total 
number  of  plants  included  in  the  sample.  In  this  context,  each  Chapter  covering 
specific  regulatory  costs  includes  a  section  presenting  the  number  of  observations  on 
which the cost assessment relies (see Part B of this Study). 

Table 4. Scoping questionnaires  

Flat glass 

Packaging glass 

Glass tableware 

Requested 

Collected 

Requested 

Collected 

Requested  Collected 

SE 

CEE 

NWE 

5 

5 

5 

Total 

15 

5 

5 

5 

10 

6 

14 

10 

6 

14 

15 

30 
30 
Source: Authors’ own elaboration. 

5 

5 

5 

5 

Table 5. Full questionnaires 

Flat Glass 

Packaging glass 

Glass tableware 

38 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Requested  Collected 

Requested 

Collected 

Requested  Collected 

SE 

CEE 

NWE 

5 

5 

5 

5 

5 

5 

10 

6 

14 

10 

6 

10 

5 

5 

15 

Total 
30* 
Note: *Four plants withdrew from the Study; **Five respondents manufacture special products 
and cannot be considered ‘typical plants’, hence, their data have not been used to assess 
regulatory costs. 
Source: Authors’ own elaboration. 

26 (21)** 

15 

5 

5 

Table 6. Turnover of sampled plants out of total value of production sold by EU 
glass producers (%) 

2006  2007  2008  2009  2010  2011  2012  2013  2014  2015 

Float 
glass 

23.7*  32.9*  31.9*  35.2*  34.7*  35.1*  33.1*  33.2*  34.2*  36.6* 

Packaging 
glass*** 

12.9*
* 

14.0*
* 

13.4*
* 

14.4*
* 

14.7*
* 

15.2*
* 

15.8*
* 

15.2*
* 

15.2*
* 

15.7*
* 

Glass 
tableware 

70.6*
*** 

36.5 

38.0 

37.7 

38.3 

39.9 

56.5 

36.4 

38.3 

41.7 

Notes: *Missing data for two plants over the entire period and for a third plant over the period 
2006-11. **Missing data for one plant over the period 2006-11 and for another plant over the 
period 2006-2009. ***Turnover based on a sample of 21 plants used to assess regulatory 
costs. ****For 2006, the high value is due to lack of data from PRODCOM for the product 
‘Other drinking glasses’ (23131290); float glass includes the NACE Rev. 2 category 23.11.12; 
hollow glass packaging includes the NACE Rev. 2 categories 23.13.11.10/20/30/40/50/60/80; 
hollow glass tableware includes the NACE Rev. 2 categories 23.13.12.20/40/60 and 
23.13.13.50/90. 

Source: Authors’ own elaboration based on PRODCOM and plant level data. 

39 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Box 8. Flat glass and hollow glass: sectoral statistics 

Flat glass 

In  recent  years,  the  EU  flat  glass  sector  has  experienced  a  gradual,  yet 
constant  decline  in  terms  of  number  of  persons  employed  as  well  as  number  of 
enterprises (Figure 3).63 

Figure  3.  Number  of  employees  (right  axis,  absolute  value)  and  enterprises 
(left axis side, index number 2006=100) in the EU flat glass sector 

120

100

80

60

40

20

0

35.000

30.000

25.000

20.000

15.000

10.000

5.000

0

2006 2007 2008 2009 2010 2011 2012 2013 2014

N. employees

N. enterprises

Source: Authors’ own elaboration based on Eurostat Structural Business Statistics. 

The  trend  registered  by  total  value  of  production  sold  by  EU  flat  glass  producers 
reflects the decline in the number of enterprises and persons employed. In fact, after 
2009,  the production  value  was  significantly  below  pre-crisis  levels;  between 
2011  and  2015,  this  indicator  went  down  from  some  €3.5  billion  to  about  €3  billion 
(Figure 4).  

Figure 4. Value of production sold by EU flat glass producers (€ millions) 

63 According to Glass for Europe data, there are no more than six companies producing float glass 
in the EU; in the same vein, EU companies producing rolled glass are in the area of five to six. 

40 

 
 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

4.500

4.000

3.500

3.000

2.500

2.000

1.500

1.000

500

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Authors’ own elaboration based on PRODCOM. 

The  distribution  of  flat  glass  production  across  the  EU  appears  to  be  quite 
concentrated,  with  eight  Member  States  accounting  for  almost  90%  of  the  total 
sectoral turnover (Table 7).  

Table  7.  Share  of  turnover  by  major  Member  States  for  flat  glass  (average 
2006-14) 

Member State 

Germany 
Belgium 
Spain 
Italy 
France 
Czech Republic 
United Kingdom 
Poland 
Total 

% of total 
turnover 
19.1% 
15.6% 
13.2% 
11.4% 
10.4% 
7.5% 
5.6% 
5.0% 
87.80% 

Note: Missing values for specific countries in Eurostat were estimated via Amadeus.   

Source: Authors’ own elaboration based on Eurostat Structural Business Statistics and 

Amadeus. 

Hollow glass 

The  EU  hollow  glass  sector  registered  a  constant  decrease  in  terms  of 
employment;  by  contrast  the  number  of  enterprises  grew  up  to  2010  and  then 
levelled out (Figure 5).64 

64  It  is  worth  remarking  that  FEVE  (The  European  Container  Glass  Federation)  statistics  are 
substantially different from Eurostat data. Direct employment is estimated in the region of 65,000: 
glass  packaging  accounts  for  44,000  direct  employees  (FEVE  statistics)  and  glass  tableware  for 
21,000 (EDG/FEVE statistics). In addition, the number of companies has not increased as Eurostat 
indicates. 

41 

 
 
 
 
 
 
 
                                          
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  5.  Number  of  employees  (right  axis,  absolute  value)  and  enterprises 
(left axis side, index number 2006=100) in the EU hollow glass sector 

140

120

100

80

60

40

20

0

140.000

120.000

100.000

80.000

60.000

40.000

20.000

0

2006 2007 2008 2009 2010 2011 2012 2013 2014

N. employees

N. enterprises

Source: Authors’ own elaboration based on Eurostat Structural Business Statistics. 

After  decreasing  by  about  €1  billion  between  2008  and  2009,  the  value  of 
production  sold  by  EU  packaging  glass  producers  constantly  increased  and 
went  above  the  pre-crisis  level  during  the  last  three  years  under  examination.  In 
fact,  since  2013,  the  value  of  production  sold  for  packaging  glass  remained  steadily 
above €8.8 billion (Figure 6).65 

Figure  6.    Value  of  production  sold  by  EU  packaging  glass  producers  (€ 
millions) 

9.200

9.000

8.800

8.600

8.400

8.200

8.000

7.800

7.600

7.400

7.200

7.000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Authors’ own elaboration based on PRODCOM. 

Conversely, in the EU glass tableware subsector, figures are still far from pre-

65 Once again, it is worth emphasizing that FEVE statistics are not aligned with Eurostat data. For 
instance,  according  to  FEVE,  2007  was  an  exceptional  year  for  glass  packaging  in  terms  of 
production output, well above 2008. 

42 

 
 
 
 
 
 
 
                                          
 
Cumulative Cost Assessment of the EU Glass Industry 

crisis  levels.  Moreover,  in  this  subsector,  the  value  of  production  sold  by  EU 
producers  decreased  beginning  in  2010.  More  specifically,  between  2013  and  2015, 
the sector registered an 11.8% contraction (-€218 million). 

Figure  7.  Value  of  production  sold  by  EU  glass  tableware  producers  (€ 
millions) 

2.500

2.000

1.500

1.000

500

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Note: The low value for 2006 is due to missing information for the NACE line 23.13.12.90 “Other 
drinking glasses”. 
Source: Authors’ own elaboration based on PRODCOM. 

France is the leading country in the hollow glass sector, with an average share of total 
turnover of 25.2% over the period 2006-14. Germany and Italy follow with 17.2% and 
15.9% respectively (Table 8). Interestingly, these three countries together account for 
almost  60%  of  the  total  EU  turnover.  Similarly  to  flat  glass,  some  90%  of  the  EU 
production (in value) is concentrated in nine Member States. 

Table  8.  Share  of  turnover  per  major  Member  States  for  hollow  glass 
(average 2006-14) 

Member State 

% of total turnover 

France 

Germany 

Italy 

Spain 

United Kingdom 

Poland 

Portugal 

Czech Republic 
Netherlands 
Total 

25.2% 

17.2% 

15.9% 

8.0% 

6.6% 

5.3% 

4.3% 

2.8% 
2.8% 
88.2% 

Note: Missing values for specific countries in Eurostat were estimated via Amadeus.   

Source: Authors’ own elaboration based on Eurostat Structural Business Statistics and 
Amadeus. 

Source: Authors’ own elaboration. 

43 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Part B. Assessment of regulatory costs 

44 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

4  Legislation covered by the Cumulative Cost Assessment 

This Part of the Study presents a detailed assessment of regulatory costs generated by 
the following area of legislation on EU glass producers: 

  Internal Market legislation 

  Energy 

  Climate 

  Environmental legislation (industrial emissions) 

  Environmental legislation (waste) 

  Consumers and health legislation 

  Workers' and workplace safety  

In addition, it includes three Chapters providing a more qualitative discussion of the role 
played by EU trade, competition and transport legislation in the EU glass industry.  

As  discussed  in  Chapters  1  and  2,  the  CCA  focuses  on  the  most  burdensome 
legislation for the EU glass industry. The pieces of legislation covered by this Study 
were selected during its Inception Phase: 

  The  starting  point  for  this  selection  was  the  ‘indicative  list’  of  relevant 
legislation and regulatory measures provided in Annex 4 of the Technical 
Specifications.  

  Based on legal research (screening of EU legislation, including through EUR-Lex), 
literature review (including the references provided in the Tender Specifications) 
and  review  of  the  websites  of  stakeholder  associations,  this  ‘indicative  list’  of 
EU  rules  has  been  extended  to  cover  all  the  pieces  of  legislation  that 
potentially  affected  the  glass  industry.  Only  binding  legal  acts  were  included  in 
the ‘extended list’; non-binding acts were selected insofar as they were expected 
to generate specific costs for the industry, e.g. EC Guidance on undertaking new 
non-energy  extractive  activities  in  accordance  with  Natura  2000  requirements.66 
At  any  rate,  more  general  EU  policies,  e.g.  innovation  policy,  tax  policy,  labour 
policy,  were  left  out  of  the  scope  of  the  CCA,  and  trade  policy  was  included 
insofar as trade defence instruments are concerned.  

  Pieces  of  legislation  included  in  the  ‘extended  list’  were  shortlisted  via 
desk  research  activities  and  several  interviews  with  relevant  stakeholder 
associations  and  industry  experts  in  order  to  single  out  the  most  burdensome 
legislation  for  the  sectors  covered  by  the  CCA  (packaging  glass,  glass  tableware 
and flat glass). 

  Finally,  the  ‘final  list’  of  legislation  underwent  a mapping  exercise  aimed 
to  screen  each  piece  of  legislation  and  identify  those  regulatory 
obligations that were expected to engender costs for EU manufacturers of glass. 
The  results  of  the  mapping  served  as  a  basis  to  prepare  the  questionnaires  to 
collect costs data at plant level. 

An overview of the pieces of legislation encompassed by the present CCA is provided in 
Table 9. Importantly, the Research Team also assessed impacts of prior legislation that 
was still in force in some of the years covered by this Study and was then repealed by 
the acts listed below. 

66 European Union (2011), Guidance Document, “Non-energy mineral extraction and Natura 2000” 
(http://ec.europa.eu/environment/nature/natura2000/management/docs/neei_n2000_guidanc
e.pdf). 

45 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Table 9. List of EU legislation covered by the CCA 

1. Internal Market legislation 
Regulation (EU) No 305/2011 of the European Parliament and of the Council of 9 March 
2011 laying down harmonised conditions for the marketing of construction products 
(CPR) 
Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 
December 2006 concerning the Registration, Evaluation, Authorisation and Restriction of 
Chemicals (REACH) 
Regulation (EC) No 1272/2008 on classification, labelling and packaging of substances 
and mixtures (CLP) 
Measuring Instrument Directive: Directive 2004/22/EC of the European Parliament and 
of the Council of 31 March 2004 on measuring instruments (MID) 

2. Energy legislation 

Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 
concerning common rules for the Internal Market in electricity and repealing Directive 
2003/54/EC 
Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 
2009 on conditions for access to the network for cross-border exchanges in electricity 
and repealing Regulation (EC) No 1228/2003 
Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 
concerning common rules for the Internal Market in natural gas and repealing Directive 
2003/55/EC 
Regulation (EC) No 715/2009 of the European Parliament and of the Council of 13 July 
2009 on conditions for access to the natural gas transmission networks and repealing 
Regulation (EC) No 1775/2005 
Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on 
the promotion of the use of energy from renewable sources and amending and 
subsequently repealing Directives 2001/77/EC and 2003/30/EC Energy Efficiency 
Directive (Directive 2012/27/EC 
Guidelines on State Aid for environmental protection and energy 2014-2020 are ‘soft’ 
legislation and relevant to assess the cost impact of the Renewable Energy Directive 
Council Directive 2003/96/EC of 27 October 2003 restructuring the Community 
framework for the taxation of energy products and electricity 
Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 
on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing 
Directives 2004/8/EC and 2006/32/EC Text with EEA relevance 

3. Climate legislation 
Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 
establishing a scheme for greenhouse gas emission allowance (also known as the EU ETS 
Directive) 
Commission Regulation No 600/2012 of 21 June 2012 on the verification of greenhouse 
gas emission reports and tonne-kilometre reports and the accreditation of verifiers 
pursuant to Directive 2003/87/EC of the European Parliament and of the Council 
Commission Regulation No 601/2012 on the monitoring and reporting of greenhouse gas 
emissions pursuant to Directive 2003/87/EC of the European Parliament and of the 
Council 
Commission Decision determining transitional Union-wide rules for harmonised free 
allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the 
European Parliament and of the Council (2011/278/EU) 

4. Competition legislation 

Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the 
rules on competition laid down in Articles 81 and 82 of the Treaty 
Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the 
rules on competition laid down in Articles 81 and 82 of the Treaty 

46 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for 
the application of Article 93 of the EC Treaty 
Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council 
Regulation (EC)No 659/1999 laying down detailed rules for the application of Article 93 
of the EC Treaty 
Council Regulation (EU) No 734/2013 of 22 July 2013 amending Regulation (EC) No 
659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty 
Community guidelines on state aid for environmental protection (2008/C 82/01) 
Guidelines on State aid for environmental protection and energy 2014-2020 (2014/C 
200/01) 
Guidelines on certain state aid measures in the context of the greenhouse gas emission 
allowance trading scheme post-2012 (2012/C 158/04) 

5. Environmental legislation (industrial emissions) 

Directive 2010/75/EU of the European Parliament and of the Council on industrial 
emissions (integrated pollution prevention and control) (Industrial Emissions Directive, 
IED) 

6. Environmental legislation (waste) 

Waste Framework Directive: Directive 2008/98/EC of the European Parliament and of 
the Council of 19 November 2008 on waste 
Council Directive 1999/31/EC of 26 April 1999 on the landfill of waste 
Packaging and packaging waste Directive: European Parliament and Council Directive 
94/62/EC of 20 December 1994 on packaging and packaging waste 

7. Trade legislation 

Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against 
dumped imports from countries not members of the European Community 
Council Regulation (EC) No 597/2009 of 11 June 2009 on protection against subsidised 
imports from countries not members of the European Community 
Council  Regulation  (EC)  No  260/2009  of  26  February  2009  on  the  common  rules  for 
imports 
Council Regulation (EC) No 625/2009 of 7 July 2009 on common rules for imports from 
certain third countries 

8. Consumer and Health legislation 

Commission Regulation 2023/2006 on good manufacturing practice for materials and 
articles intended to come into contact with food 
Framework Regulation EC 1935/2004 on materials and articles intended to come into 
contact with food and repealing Directives 80/590/EEC 
Directive 2001/95/EC on general product safety 

9. Workers’ and workplace safety legislation 

Council Directive of 12 June 1989 on the introduction of measures to encourage 
improvements in the safety and health of workers at work (89/391/EEC) 
Directive of 30 November 1989 concerning the minimum safety and health requirements 
for the workplace 
Council Directive 98/24/EC of 7 April 1998 on the protection of the health and safety of 
workers from the risks related to chemical agents at work 
Directive 2003/10/EC of the European Parliament and of the Council of 6 February 2003 
on the minimum health and safety requirements regarding the exposure of workers to 
the risks arising from physical agents (Noise Directive) 
Directive 2013/35/EU of the European Parliament and of the Council of 26 June 2013 on 
the minimum health and safety requirements regarding the exposure of workers to the 
risks arising from physical agents (electromagnetic fields) (20th individual Directive 
within the meaning of Article 16(1) of Directive 89/391/EEC) and repealing Directive 
2004/40/EC 
Directive 2006/25/EC of the European Parliament and of the Council of 5 April 2006 on 
the minimum health and safety requirements regarding the exposure of workers to risks 

47 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

arising from physical agents (artificial optical radiation) 

10. Transport legislation 

Directive 2002/15/EC of the European Parliament and of the Council of 11 March 2002 
on the organisation of the working time of persons performing mobile road transport 
activities 
Regulation (EC) No 561/2006 of the European Parliament and of the Council of 15 March 
2006 on the harmonisation of certain social legislation relating to road transport and 
amending Council Regulations (EEC) No 3821/85 and (EC) No 2135/98 and repealing 
Council Regulation (EEC) No 3820/8 
Directive 2006/22/EC of the European Parliament and of the Council of 15 March 2006 
on minimum conditions for the implementation of Council Regulations (EEC) No 3820/85 
and (EEC) No 3821/85 concerning social legislation relating to road transport activities 
and repealing Council Directive 88/599/EEC 
Note: The CCA covers also predecessors of the pieces of legislation listed above that were in force 
between 2006 and 2015. 
Source:  Author’s own elaboration. 

48 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

5  Internal Market legislation 

5.1  Construction Products Regulation and Directive 

5.1.1  Description of the Act 

The Construction Product Regulation (CPR)67 sets out rules for the measurement and 
declaration of performance of construction products placed on the Single Market, 
including  those  made  of  glass  or  ceramics.  The  CPR  aims  at  ensuring  the  free 
circulation  of  construction  products  within  the  Internal  Market.  The  above-
mentioned  objective  is  achieved  by:  (i)  mandating  manufacturers  to  express  the 
performance  characteristics  of  their  products  using  only  the  harmonised  technical 
language  set  by  the  CPR  framework  (including  the  applicable  standards);68  and  (ii) 
prohibiting Member States from impeding the making available on the market or the use 
of construction products compliant with the CPR framework.69  

The CPR came fully into force in July 2013, replacing the Construction Product Directive 
(CPD).70  While  the  CPR  introduced  some  changes  and  simplifications  compared  to  the 
previous framework, the two acts share the same logical framework.  

The  CPR  is  based  on  the  ‘New  Approach’  to  Single  Market  regulation.  Therein,  the 
basic act sets the general objectives, while the detailed specifications applicable to every 
single  product  are  left  to  standardisation,  in  the  remit  of  the  European  Committee  for 
Standardisations. That way, the system remains flexible,  as technical details are left to 
co-regulation  via  harmonised  standards  (hEN),  while  the  fulfilment  of  the  overarching 
objectives is ensured by setting them through binding rules. 

The CPR is a sui generis Regulation within the New Approach paradigm, because it does 
not  set  performance  targets,  but  introduces  a  uniform  measurement  methodology 
for  product  performance.  While  a  New  Approach  Directive  on,  e.g.  the  safety  of 
certain  products  would  state  the  minimum  safety  level  that  a  manufacturer  has  to 
guarantee  to  place  a  product  on  the  Single  Market,  the  CPR  ‘only’  sets  a  common 
methodology  for  measuring  the  performance  of  construction  products  based  on  their 
essential  characteristics  (as  defined  in  Art.  2.4  CPR),  which  then  relate  to  the  Basic 
Requirements of a construction work.71 

The CPR and CPD are relevant for the glass  subsector producing construction products, 
which  is  flat  glass,  to  the  extent  to  which  plants  are  not  exclusively  producing  for  the 
automotive  sector.  However,  these  acts  are  not  relevant  for  the  hollow  glass  sector, 
which does not manufacture construction products. 

5.1.2  Categories of regulatory costs  

To  abide  by  the  CPR  provisions,  companies  do  not  have  to  incur  substantive  costs  to 
modify  their  products  or  production  processes  to  meet  any  performance  requirement. 

67  Regulation  (EU)  No  305/2011  of  the  European  Parliament  and  of  the  Council  of  9  March  2011 
laying  down  harmonised  conditions  for  the  marketing  of  construction  products  (Construction 
Product Regulation, CPR). 
68 See Art. 4-6 CPR. 
69 See Art. 8.4 CPR. 
70  Council  Directive  89/106/EEC  on  the  approximation  of  laws,  regulations  and  administrative 
provisions of the Member States relating to construction products. 
71 The Basic Requirements of a construction work are listed in Annex I to the CPR as follows: (i) 
mechanical  resistance  and  stability;  (ii)  safety  in  case  of  fire;  (iii)  hygiene,  health  and  the 
environment;  (iv)  safety  and  accessibility  in  use;  (v)  protection  against  noise;  (vi)  energy 
economy and heat retention; and (vii) sustainable use of natural resources. The last requirement 
was not included in the CPD. 

49 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Rather,  the  CPR  generates  costs  to  measure,  certify  and  communicate  to  the 
customers the performance of the products according to the applicable hEN.  

Measurement, certification and information provisions generate direct costs,72 such as: 

  administrative burdens, i.e. those related to the drafting and submission of the 
product  declaration  of  performance,  and  to  the  CE  marking  process  (including 
access to applicable hENs);73 and 

  substantive compliance costs, namely the costs for the testing of products and 

production control.74  

Five  regulatory  obligations  were  identified  in  the  CPR.  Four  of  them  are 
information  obligations  concerning  the  draft,  supply  and  storage  of  the  Declaration  of 
Performance (DoP) and the labelling of products with the CE marking. One of them is a 
substantive  obligation  concerning  the  Assessment  and  Verification  of  Constancy  of 
Performance (AVCP), which is the duty to carry out the Initial Type Testing (ITT) and the 
Factory Production Control (FPC). 

As far as the attribution of costs is concerned, CPR provisions are directly applicable 
to  companies  and  largely  rely  on  EU-wide  hENs.  National  actors  have  a  role,  e.g.  for 
compliance checks, but the costs can be attributed to the EU level.  

5.1.3  Methodological aspects 

To  measure  regulatory costs  associated to  the  CPR,  and  the  changes  brought  about  by 
the CPD, companies were presented with three sets of questions: 

  Questions  on  the  administrative  burdens  due  to  the  draft,  supply,  and 
storage  of  the  DoP  and  the  CE  marking.  These  obligations  were  bundled 
together,  for  two  reasons.  First  and  foremost,  the  same  company  activities 
provide  information  and  data  for both  the  DoP  and  CE  marking,  and  usually  the 
same  personnel  is  in  charge  of  both  instruments.  Secondly,  bundling  the 
questions  eased  respondents’  efforts,  as  they  did  not  need  to  allocate  costs  to 
more granular tasks. 

  Questions on the substantive costs due to AVCP, including both ITT and FPC. 

  Questions on the changes between CPR costs and those incurred under the 

CPD. 

The  measurement  of  regulatory  costs  will  be  done  on  two  typical  years,  which  are 
2015  for  CPR  costs  and  2012  for  CPD  costs.  This  is  done  because  CPR  and  CPD  costs 
mostly depend on the number of product series manufactured by each plant and on the 
number of new series put into the market. As these variables may change from year to 
year without a clear pattern, it was considered more appropriate to require information 
on  the  typical  amount  of  personnel  and  other  resources  spent  by  companies  to  comply 

72 With regard to indirect compliance costs, in principle CPR costs may be passed on to the glass 
industry  by  construction  companies  when  purchasing  other  construction  products,  e.g.  when 
building or renovating plants. In fact, however, the share of construction products over total input 
is  negligible,  thus  impacts  are  likely  to  be  close  to  zero  in  practical  terms.  As  for  other  indirect 
costs, the CPR may contribute in certain cases to raising market access barriers for newcomers or 
foreign  operators,  by  increasing  the  entry  costs  linked  to  product  testing  and  certification. 
However, such impact on the glass sector is estimated to be limited. Finally, there is no evidence 
of significant litigation costs. 
73 Costs for access to standards were classified as direct charges in the inception report. However, 
since  most  companies  have  access  to  standards  by  means  of  subscription  to  standardisation 
bodies,  this  can  be  best  be  considered  an  out-of-pocket  expenditure  linked  to  an  information 
obligation. This change has no impact on the quantification provided below. 
74  According  to  Tool  #54,  “testing  costs  are  not  considered  as  administrative  burdens”.  See 
European Commission (2015), Better Regulation Toolbox. 

50 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

with  this  framework.  Importantly,  CPR  activities,  once  the  system  up  and  running, 
remain  fairly  consistent  across  time,  as  indicated  during  interviews,  which  again 
supports  the  appropriateness  of  the  ‘typical  year’  approach.  At  the  same  time,  one-off 
costs  linked  to  the  passage  between  CPR  and  CPD,  which  took  place  in  2013,  are  also 
surveyed,  and  then  included in  the  quantification.  While  absolute  amounts  in  euros  will 
be  calculated  for  two  typical  years,  costs  per  tonne  may  vary  depending  on  the  yearly 
output.  This  is  considered  appropriate  because  CPR  and  CPD  costs  are  for  most  part 
fixed and need to be borne even when production declines.  

Concerning the measurement of the administrative burdens due to the DoP and CE 
marking, the following methodology was adopted: 

  First,  plants  are  asked  whether  DoP  and  CE  marking  are  managed  at  local  or 
centralised level, or a combination of both. Indeed, several companies, especially 
large  and  multinational,  do  manage  centrally  some  of  these  obligations,  in 
particular the preparation and storage of the DoP, while plants are responsible for 
printing,  labelling  and  supplying  DoP  and  CE  marking.  When  this  is  the  case, 
follow-up  questionnaires  are  submitted  to  company’s  headquarters  to  retrieve 
information  on  these  costs.  Whenever  relevant,  headquarters  are  also  surveyed 
on  the  best  method  for  allocating  costs  to  plants,  which  may  either  be  on  an 
output  base,  i.e.  larger  plants  ‘bear’  a  larger  share  of  costs  depending  on  the 
yearly production, or equally across all plants. 

  Plants are asked information on the following cost and resource items: 

  Amount  of  personnel  (in  FTE)  working  on  ‘DoPs  and  CE  marking,  including 
drafting,  supplying  and  storing  and  in  the  creation/maintenance  of  items  in 
the catalogue and company databases’.  

  Costs of access to hEN (including subscription to standardised bodies). 

 

IT  investment  and  operational  costs  for  storing  and  supplying  the  DoP, 
annualised over a five-year amortisation period and including financial costs.  

  Printing  investment  and  operational  costs  for  DoP  (when  provided  on  paper) 

and CE marking, annualised for IT costs and including financial costs.  

  Translation and other costs (annualised over the same five-year period when 

one-off). 

The  rate  of  reply  and  the  quality  of  information  for  this  set  of  questions  was 
good. With respect to personnel costs, in certain cases it was not immediately possible 
for  companies  to  disentangle  personnel  time  allocated  precisely  to  these  activities,  and 
data  were  refined  by  means  of  follow-up  contacts  with  interviewees  and  information 
retrieved  from  other  plants.  The  data  gaps  were  larger  for  investment  costs  for  IT 
systems and printing. These costs usually have less salience to companies compared to 
personnel costs, also because, in the context of CPR, they are generally limited, as they 
do  not  comprise  large  investments.  However,  compliance  with  the  CPR  framework 
requires  IT  and  printing  operations;  for  this  reason,  data  gaps  were  filled,  using  the 
median  value  for  each  subsector.  Obviously,  for  plants  that  do  not  resort  to  the 
electronic  provision  of  DoP,  no  IT  costs  were  inputted.  Using  a  zero  value  for  non-
respondents would have led to the underestimation of these costs. 

Based  on  these  cost  parameters,  total  administrative  costs  due  to  the  DoP  and  CE 
marking were quantified for each plant in the sample. To obtain administrative burdens, 
plants’ costs were discounted by the BAU factor.  

With respect to the measurement of the substantive costs due to AVCP, plants were 
preliminarily  asked  to  clarify  whether  ITT  and  FCP  activities  were  part  of  their  normal 
business practice. This was done because in the cumulated cost and benefit assessment 
of the construction sector, a survey showed that ‘most or all costs incurred for the AVCP, 

51 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

including initial  testing,  ongoing  testing,  and other  FPC measures, would  be  incurred  in 
any  case  because  of  quality  management  and  to  provide  information  on  product 
performance to customers’.75 In line with this early result, only one company in the flat 
glass sector reported that these activities are not part of their normal business practice. 
Accordingly, no regulatory burdens are attributed to this obligation. 

Finally, as for the changes between CPR costs and those incurred under the CPD, 
companies  are  requested  to  provide  an  estimated  percentage  change  with  respect  to 
various cost parameters, such as personnel’s time for DoP and CE marking, other one-off 
administrative  costs,  personnel’s  time  for  ITT  and  FPC,  testing  costs,  notified  bodies 
costs.  In  addition  to  change  reported  during  interviews,  CPD  costs  do  not  include  any 
expense linked to the provision of the DoP, as, under the previous framework, there was 
no  duty  to  provide  such  documents  to  customers.  The  main  changes,  relevant  for  the 
cost quantification, from CPD to CPR are summarised in Box 9 below. 

Box 9. Changes between the CPD and the CPR 

DOP.  Under  the  CPD,  the  manufacturer  had  to  draw  the  Attestation  of  Conformity  for 
the product that it intended to CE-mark; under the CPR, the manufacturer needs to draw 
the DoP for all products covered by hEN or EAD. Both the CPD Attestation of Conformity 
and the CPR DoP include similar information. The main difference between the CPD and 
the  CPR  is  the  duty  of  the  manufacturer  to  provide  the  DoP  to  customers;  under  the 
current framework, companies can opt for supplying their DoP via paper or via electronic 
means. Derogations from the duty to draw a DOP were introduced in the following cases: 
(i)  products  individually  manufactured  or  custom-made  in  a  non-series  process,  and 
installed in a single identified construction work; (ii) construction products manufactured 
on  the  construction  site;  and  (iii)  construction  products  manufactured  in  a  traditional 
way or for heritage conservation. Under the CPD, there was no derogation from the duty 
to  draw  the  Attestation  of  Conformity,  though  a  simplified  declaration  of  conformity 
could be drafted for individual and non-series production.  

CE  marking.  Under  the  CPR,  all  products  covered  by  a  DOP  or  EAD  need  to  be  CE-
marked. Under the CPD, CE marking was not mandatory in four Member States: Finland, 
Ireland, Sweden, and the United Kingdom. However, many industrial sectors CE-marked 
their  products  even  in  Member  States  in  which  this  was  not  required,  especially  when 
products were also designed for exports. In addition, the meaning of the CE marking in 
the context of the CPR was clarified.  

AVCP. AVCP systems were simplified, by removing System 2, foreseen under the CPD. 
Art.  37  allows  micro-enterprises  to  use  different  methods  for  products  covered  by 
Systems  3  and  4,  where  so  provided  for  in  the  hEN,  and  to  resort  to  System  4  for 
products for which System 3 would be required. Art. 38 allows manufacturers to replace 
AVCP  with  Specific  Technical  Documentation  for  individually  manufactured  or  custom-
made products in a non-series process. 

Source: Supporting study for the Fitness Check on the construction sector: EU Internal Market and 
energy efficiency legislation. 

75  Cf.  Economisti  Associati,  CEPS,  Milieu  et  al.,  Supporting  study  for  the  Fitness  Check  on  the 
construction sector: EU Internal Market and energy efficiency legislation. Volume 1 – Main Report, 
p. 45. 

52 

 
 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

5.1.4  Cost assessment – Flat Glass 

Sample 

Regulatory  costs  triggered  by  CPR/CPD  can  be  assessed  by  relying  on  14 
questionnaires.  For  the  remaining  plant,  its  production  line  was  targeted  to  the 
automotive  sector.  Sufficient  data  across  the  three  sub-regions  are  available,  which 
allow regional estimates to be presented.  

Administrative Costs 

The  estimated  parameters  for  administrative  costs  generated  by  DoP  and  CE  marking 
are presented below. When possible, comparisons to the estimates from the Cumulated 
Costs  and  Benefits  Assessment  of  the  Construction  Sector  (in  short,  the  ‘Construction 
report’) are given. 

  Amount  of  personnel:  the  median  and  average  values  are  0.18  FTEs.  FTEs 
range  from  less  than  0.01  FTE  to  0.5.  These  values  are  significantly  lower  than 
those from the Construction report, in which one FTE was estimated for a typical 
small  company,  and  two  FTEs  were  estimated  for  medium-sized  and  large 
companies.  

  Annual costs of access to hEN (including subscription to standardised bodies): 
the median value is €145, while the average value is €563, which is significantly 
lower than the Construction report’s estimate of €1,000.  

  IT investments and operational costs: the median IT CAPEX is €7,000, while 

the median operational costs are €5,015 per year.  

  Printing  investment  and  operational  costs:  the  average  value  is  €1,852. 
Combined  median  values  for  IT  and  printing  (€12,015)  are  significantly  higher 
than  those  in  the  Construction  report  (€6,000),  which  may  be  explained  by  the 
larger  average  size  of  flat  glass  plants  compared  to  other  construction  product 
suppliers.  

  Annual other costs: negligible.  

The median value of total administrative costs due to DoP and CE marking per plant is 
about €9,800, while the sample average value is around €10,100. The sample weighted 
average  is  only  slightly  higher  with  €10,900,  indicating  that  larger  plants  face  higher 
costs,  but  only  marginally.  The  BAU  factor  analysis  shows  a  modal  and  median 
assessment corresponding to a BAU factor of 40%, which is in line with the Construction 
report (36%). The median and sample average typical administrative burdens therefore 
come to about €4,400 and €4,000, and a sample weighted average of €4,000.    

Cumulative regulatory costs 

In  Table  10  and  Table  11  the  regulatory costs  per tonne  of  flat  glass  generated  by  the 
CPR and CPD are presented. The costs are shown for the EU and the three sub-regions 
and  are  measured  in  the  typical  years  2015  and  2012.  Regulatory  costs  are  in  the 
area  of  a  few  euro  cents  per  tonne  of  product.  Regional  differences  remain  small, 
with SE facing marginally higher costs than NWE and CEE. The cost analysis over the 10-
year period can be found in Figure 8 to Figure 11 below, for the EU and the three sub-
regions.  

53 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

CPR  and  CPD  costs  show  a  slight  increase  over  this  period,  increasing  from  less  than 
€0.01 to about €0.02/tonne. Regional differences are again minimal with CEE and NWE 
showing  an  almost  identical  development,  reaching  €0.01/tonne,  and  SE  presenting  a 
slightly  higher  increase  from  €0.01  to  €0.03/tonne.  Overall,  costs  remained  widely 
constant  from  2006  to  2012  and  then  again  from  2013  to  2015.  Between  2012  and 
2013, there is a slight increase following the introduction of the new CPR obligations.   

Table  10.  Regulatory  costs  generated  by  the  CPR  on  the  flat  glass  sector 
(€/tonne – Typical year: 2015 – averages) 

Direct 
regulatory 
costs 

Administrative 
burdens  
Substantive 
compliance 
costs 

Direct charges 

Indirect regulatory costs 

NWE 

0.01 

0 

0 

0 

Regions 
CEE 

0.01 

0 

0 

0 

SE 

0.03 

0 

0 

0 

EU 

0.02 

0 

0 

0 

Total regulatory costs 

0.01 

0.01 

0.03 

0.02 

Source: Authors’ own elaboration. 

Table  11.  Regulatory  costs  generated  by  the  CPD  on  the  flat  glass  sector 
(€/tonne – Typical year: 2012 – averages) 

Direct 
regulatory 
costs 

Administrative 
burdens  
Substantive 
compliance 
costs 

Direct charges 

Indirect regulatory costs 

NWE 

0.00 

0 

0 

0 

Regions 

CEE 

0.00 

0 

0 

0 

SE 

0.01 

0 

0 

0 

EU 

0.01 

0 

0 

0 

Total regulatory costs 

0.00 

0.01 

0.01 

0.01 

Source: Authors’ own elaboration. 

54 

 
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 8. Regulatory costs generated by the CPD/CPR on the flat glass sector at 
the EU level (€/tonne – average costs) 

0,025

0,020

0,015

0,010

0,005

0,000

Administrative
Burdens

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Authors’ own elaboration. 

Figure 9. Regulatory costs generated by the CPD/CPR on the flat glass sector in 
the Central Eastern European Region (€/tonne – average costs) 

0,018

0,016

0,014

0,012

0,010

0,008

0,006

0,004

0,002

0,000

Administrative
Burdens

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Authors’ own elaboration. 

55 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 10. Regulatory costs generated by the CPD/CPR on the flat glass sector 
in the Southern European Region (€/tonne – average costs) 

0,035

0,030

0,025

0,020

0,015

0,010

0,005

0,000

Administrative
Burdens

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Authors’ own elaboration. 

Figure 11. Regulatory costs generated by the CPD/CPR on the flat glass sector 
in the Northern-Western European Region (€/tonne – average costs) 

0,018

0,016

0,014

0,012

0,010

0,008

0,006

0,004

0,002

0,000

Administrative
Burdens

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Authors’ own elaboration. 

56 

 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

5.2 

Internal Market for chemicals  

5.2.1  Description of the Acts (REACH and CLP) 

The  Regulation  No  1907/2006/EC  (REACH)  is  the  European  Union's  regulatory 
framework  on  chemicals  and  their  safe  use  that  entered  into  force  on  1  June  2007. 
REACH  makes  the  industry  responsible  for  assessing  and  managing  the  risks 
posed  by  chemicals  and  for  providing  appropriate  safety  information  to  their 
users.  At  the  same  time,  the  European  Union  has  the  possibility  to  take  additional 
measures  on  highly  dangerous  substances,  where  there  is  a  need  for  complementary 
action at EU level.76 

Regulation  No  1272/2008  (CLP  Regulation)  lays  down  EU-wide  criteria  that  are 
applied  to  determine  whether  a  substance  or  mixture,  which  is  manufactured  or 
imported  into  the  European  market,  has  properties  that  could  damage  human 
health or the environment.77  

According to the REACH Regulation, the producer has to demonstrate with conclusive 
scientific data that substances used in its production process fulfil the criteria specified in 
the Regulation.78 The REACH Regulation includes also several obligations for downstream 
users,  who  have  to  identify,  apply  and,  where  suitable,  recommend  appropriate 
measures  to  adequately  control  risks;  they  are  obliged  to  communicate  information 
down  the  supply  chain,  as  well  as  to  prepare  Safety  Data  Sheets  or  a  chemical  safety 
report  (which  includes  exposure  scenario  for  the  identified  use(s));  and  in  some  cases 
they have to notify the European Chemicals Agency (ECHA).79 

Glass is exempted from certain provisions, if it fulfils the criteria reported in Annex 
V of REACH (Box 10). According to point 11 of this Annex, articles made of glass, which 
are not intended to release any substances, are exempted from certain provisions (Title 
II registration of the substances, Title V downstream users and Title VI evaluation) and 
can also be considered exempted from the obligation of registration and notification.80  

Box 10. Explanation for glass exemption from certain provisions of REACH 

Certain boron substances included in the Candidate List, such as diboron trioxide, boric 
acid  and  disodium  tetraborate,  are  involved  in  processes  leading  to  the  production  of 
articles  containing  “borosilicate  glass”.  In  these  processes,  the  boron  substances  are 
usually  first  chemically  transformed  into  a  manufactured  glass  substance.  The  glass 
substance  is  subsequently  processed  into  articles.  In  this  circumstance,  the  boron 
substances are completely transformed and not present as such in the final glass article. 
Consequently,  there  is  no  obligation  to  notify  under  Art.  7(2)  of  REACH,  nor  to 
communicate information down the supply chain under Art. 33 of REACH. 

Source: Interview with a REACH expert from the European Commission. 

of 

76 Glass Alliance Europe (www.glassallianceeurope.eu/en/reach). 
77 ECHA, Questions and answers on Regulation (EC) No 1272/2008 on classification, labelling and 
packaging 
2009 
(https://echa.europa.eu/documents/10162/13643/questions_and_answers_clp_20090526_en.pdf)
. 
78 For further details, see Glass Alliance Europe (www.glassallianceeurope.eu/en/reach). 
79 REACH Regulation, Art. 66: If you are a downstream user that uses a substance that is on the 
Authorisation List (Annex XIV) based on  an authorisation granted to an applicant up your supply 
chain, you have to notify your use to ECHA. 
80 Interview with a REACH expert from the European Commission. 

substances 

mixtures, 

and 

57 

 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

The  Classification,  Labelling  and  Packaging  (CLP)  Regulation  obliges 
manufacturers and importers of substances, downstream users, including formulators of 
mixtures and re-importers of substances or mixtures benefiting from an exemption from 
Article  2  REACH,  to  classify,  label  and  package  substances  and  mixtures.81  The  most 
common tool for hazardous communication is the labelling on the packaged substance or 
mixture,  but  also  the  Safety  Data  Sheet  that  is  provided  to  other  companies  in  the 
supply chain. Manufacturers and importers placing a hazardous substance on the market 
also have to notify certain information to ECHA, in particular the substance identity and 
its classification and labelling, unless this information has already been submitted as part 
of a registration under REACH.82 

5.2.2  Methodological aspects 

Regulatory costs generated by this area of legislation are difficult to estimate, due to a 
very limited number of cost data provided by respondents to the questionnaire. In fact, 
for most companies interviewed, no costs occur for both hollow glass and flat glass. 

The  Research  Team  investigated  whether  firms  submitted  and  updated  registration 
dossiers  to  ECHA  between  2006  and  2015,  and  requested  a  quantification  of  costs 
related to these activities, in the form of personnel time, out of pocket expenses or fees. 
The Research Team similarly collected data on costs, if any, generated by the notification 
of  substances  of  very  high  concern  (SVHC)  or  substances  used  in  process-oriented 
research  and  development  (PPORD).  Feedback  on  these  two  areas  was  limited  to 
isolated responses. 

Most  of  the  replies  provided  were  related  to  the  costs  of  information  to  downstream 
users, e.g. additional information on safe use and disposal placed on the packaging, and 
to workers, e.g. warning signs at work. 

Almost all the cost items listed can be classified as administrative burdens, generated 
by the implementation of administrative procedures, e.g. the provision of information to 
users  on  safe  use  and  disposal  placed  on  the  packaging.  The  fees  to  be  paid  to  ECHA 
were  accounted  as  direct  charges.83  However,  a  very  limited  number  of  companies 
reported costs of this nature. This part of the questionnaire was the same across all the 
sectors considered, as the legislation similarly applies to firms operating in the flat glass 
sector as well as in the hollow glass sector (packaging glass and glass tableware). 

Regarding  the  costs  generated  by  the  CLP  Regulation,  we  inquired  whether  companies 
reported costs of various nature (labour, investment, operational costs) as related to the 
provision of information to downstream users as well as to comply with the requirements 
imposed. All costs reported in this section were considered administrative burdens.  

Data collected for glass tableware cannot be presented, due to confidentiality reasons. 

5.2.3  General findings relevant to all glass subsectors 

According  to  a  study  done  by  DG  GROW,84  manufacturers  and  formulators  tend  to 
allocate  more  resources  to  comply  with  the  Regulations  than  downstream  users,  even 
though some article suppliers and  end users also allocate significant  resources. In fact, 
according  to  our  findings,  both  the  REACH  and  the  CLP  Regulations  have  proven  to 

of 

81 ECHA, Questions and answers on Regulation (EC) No 1272/2008 on classification, labelling and 
packaging 
2009 
(https://echa.europa.eu/documents/10162/13643/questions_and_answers_clp_20090526_en.pdf)
. 
82 Ibid. 
83  Note:  Direct  fees  to  ECHA  are  usually  not  paid  by  downstream  users  such  as  the  ceramics  or 
glass industry. 
84 DG GROW (2015), Monitoring the Impacts of REACH on Innovation, Competitiveness and SMEs.  

substances 

mixtures, 

and 

58 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

generate  only  administrative  burdens,  and  only  in  terms  of  becoming  familiar  with 
information obligations and preparation of documentation. After all, the glass industry is 
largely  exempted  from  the  majority  of  obligations  set  out  by  REACH;  in  addition,  this 
industry  is  hardly  producing  any  substances/mixtures  falling  under  the  scope  of  CLP 
Regulation. The vast majority of interviewed companies did not have to substitute any of 
the substances used in the glass production process due to the REACH Regulation. As a 
result,  both  Regulations  are  of  limited  relevance  for  the  glass  industry.  Against 
this  background,  due  to  the  limited  number  of  responses  and  related  confidentiality 
issues, the cost assessment for the CLP Regulation cannot be presented. 

5.2.4  Cost assessment – Packaging glass 

Sample 

The  sample  used  for  cost  estimates  in  this  area  of  legislation  comprises  the  following 
number of plants, divided across the three defined regions. 

Table 12. Packaging glass: Sample size by geographic region  

Regions 

Packaging glass/ 
REACH 

Number of plants 
in the sample 

NWE 

CEE 

3 

2 

SE 

5 

Source: Authors’ own elaboration. 

EU 

10 

Ten  plants  provided  costs  data.  However,  the  breakdown  of  replies  at  a  regional  level 
does  not  present  a sufficient  number to  disclose data  for NWE  and  CEE:  only  Southern 
Europe  fulfils  the  requirements  of  confidentiality  and  reaches  the  target  of  five 
responses.  

Direct regulatory costs 

The  direct  regulatory  costs  generated  by  REACH  on  the  EU  packaging  glass  subsector 
consist  only  of  administrative  burdens,  which  are  estimated  at  €0.01/tonne  of 
production  output  in  a  typical  year;  similar  values  are  registered  in  the  SE 
region.  The  cost  estimate  confirms  the  assumption  that  EU  legislation  on  REACH 
generates  only  very  limited  costs  on  hollow  glass  producers,  given  that  glass  is 
exempted from the majority of obligations set out by REACH. Company responses on the 
amount of costs across the EU show little variance. The total of costs generated by the 
REACH  legislation  are  due  to  the  obligations  generated  by  the  duty  to  communicate 
information  to  downstream  users  and  to  workers.  Some  plants  also  mentioned  the 
implementation  of  training  activities  and  the  set-up  of  a  system  of  warning  signs.  The 
BAU factor is about 55% which indicates that some of the obligations, even if classified 
as administrative burdens, are expected to also be required, e.g. by downstream clients 
in  absence  of  REACH.  Individual  responses  concerning  the  BAU  factor  tend  to  polarise 
along  two  extreme  interpretations:  a  subgroup  of  plants  states  that  none  of  the  costs 
would  have  been  paid  in  the  absence  of  the  legislation,  while  another  subgroup  claims 
that costs would have been paid anyway. Plants belonging to the same company tend to 
provide  a  uniform  interpretation.  This  underlines  that  individual  policies  of  companies, 

59 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

their  specific  type  of  business  function  and  organisation  as  well  as  the  location  of  their 
business appear to impact significantly on the perception of the effects of the legislation.  

Cumulative regulatory costs  

The  following  table  summarises  the  cumulative  regulatory  costs  for  packaging  glass  in 
the area of the REACH Regulation. 

Table  13.  Packaging  glass:  Regulatory  costs  generated  by  REACH  Regulation 
(€/tonne – Typical year – averages) 

Regions 

EU 

NWE 

CEE 

SE 

Confidential 

Confidential 

0.01 

0.01 

Administrative 
burdens  
Substantive 
compliance 
costs 

Direct 
regulatory 
costs 

Direct charges 

Confidential 

Confidential 

Confidential 

Confidential 

0 

0 

0 

0 

Indirect regulatory costs 

Confidential 

Confidential 

NA 

NA 

Total regulatory costs 

Confidential  Confidential 

0.01 

0.01 

Source: Authors’ own elaboration. 

60 

 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

5.2.5  Cost assessment – Flat glass 

Sample 

The  sample  used  to  estimate  costs  in  this  area  of  legislation  consists  of  the  following 
number of plants, split across the three defined regions (Table 14). 

Table 14. Flat glass: Sample size by geographic region  

Regions 

Flat glass /REACH 

NWE 

CEE 

Number of plants 
in the sample 

3 

3 

SE 

3 

Source: Authors’ own elaboration. 

EU 

9 

Similarly  to  the  case  of  packaging  glass  plants,  nine  plants  serve  as  a  basis  to 
investigate  the  costs  faced  by  a  typical  plant.  Data  for  the  NWE  and  the  SE  regions 
cannot  be  presented  due  to  confidentiality  reasons  (data  were  provided  only  by  two 
independent companies). In CEE numbers can be shown, but need to be discussed with 
special care as they are based on three observations.  

Direct regulatory costs 

Direct  regulatory  costs  of  the  REACH  Regulation  for  the  EU  flat  glass  producers  are 
estimated  at  €0.02/tonne  of  production  output  in  a  typical  year.  These  costs 
consist  entirely  of  administrative  burdens  due  to  the  obligations  generated  by  the 
duty to inform (a) downstream users and (b) workers. The overall BAU for the sector is 
about 60%, and responses by company and across regions appear generally uniform. A 
possible explanation for this rather uniform BAU is that some activities conducted due to 
REACH legislation would potentially still be demanded by downstream clients in absence 
of  legislation.  To  illustrate  this  point,  those  companies  which  only  experience  costs 
related  to  providing  information  to  workers  report  a  lower  BAU  than  those  companies 
which also face costs in providing information to downstream users. 

Cumulative regulatory costs  

The following table summarises the cumulative regulatory costs for the flat glass sector 
generated by the REACH Regulation. 

61 

 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table 15. Flat glass: Regulatory costs generated by REACH Regulation (€/tonne 
– Typical year – averages) 

Administrative 
burdens  
Substantive 
compliance 
costs 

Direct 
regulatory 
costs 

Regions 

EU 

NWE 

CEE 

SE 

Confidential 

0.017* 

Confidential 

0.019 

Confidential 

0* 

Confidential 

0 

0 

Direct charges 

Confidential 

0* 

Confidential 

Indirect regulatory costs 

Confidential 

NA 

Confidential 

NA 

Total regulatory costs 

Confidential 

0.017* 

Confidential 

0.019 

Note: *Number below sample target, but can be presented as being above confidentiality 
threshold. 
Source: Authors’ own elaboration. 

62 

 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

5.3  Measuring Instruments Directive  

5.3.1  Description of the Act 

Directive  2004/22/EC  on  Measuring  Instruments  (MID)  was  adopted  by  the  European 
Parliament and Council on 31 March 2004, for application by EU Member States from 30 
October 2006. The Measuring Instruments Directive harmonises the requirements of 
10  different  types  of  devices  and  systems  with  a  measuring  function,  including 
capacity  serving  measures  made  of  glass.  This  Directive  established  that  measuring 
instruments  must  meet  essential  requirements,  satisfy  specific  conformity 
assessment procedures and have MID markings.  

The  main  challenge  for  the  industry  posed  by  the  MID  is  the  inconsistent  approach  of 
notified  bodies  in  interpreting  essential  requirements.  Consequently,  the  legislation  can 
cause  administrative  burdens  in  dealing  with  notified  bodies  and  conducting  tests, 
especially due to international differences.  

During the Inception Phase, sectoral associations have confirmed that, in the context of 
this  Study,  the  MID  is  relevant  only  to  producers  involved  in  the  production  of  glass 
tableware.85  

5.3.2  Methodological aspects 

Plants  were  asked  to  assess  the  costs  of  complying  with  conformity  assessments  and 
technical documentation, conformity marking and the provision of additional information. 
Given that costs are either investment costs (longer-term investments) or ongoing staff 
or operational costs, costs were estimated for a typical year. 

It  is  also  worth  noting  that  for  glass  tableware,  costs  expressed  in  €/tonne  tend  to  be 
higher  than  in  other  sectors,  as  glass  tableware  items  are  generally  high-cost  high-
margin products. Consequently, €/tonne estimates are quite high, but shares out of, e.g. 
total production costs and EBITDA, are comparable to other sectors.  

5.3.3  Cost assessment – Glass tableware 

Sample 

The sample used for cost estimates for this area of legislation includes five plants across 
the EU. 

Table 16. Glass tableware: Sample size by geographic region 

Glass tableware/ 
MID 

Number of plants 
in the sample 

EU 

5 

Source: Authors’ own elaboration. 

85 Consultation with glass and ceramics associations. 

63 

 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Direct regulatory costs 

The  direct  regulatory  costs  generated  by  the  MID  on  EU  glass  tableware  producers 
include only administrative burdens, which derive from: (a) the procedure of conformity 
assessment  and  producing  the  technical  documentation  related  to  measuring 
instruments (in terms of workers involved or outsourced expenses); and (b) application 
of  conformity  marking  (‘CE’)  and  ‘supplementary  metrology  marking’  on  measuring 
instruments (in terms of acquisition of special machines, software or similar investment 
as well as associated operational costs). These costs are estimated at €2.29/tonne of 
production  output  in  a  typical  year.  This  estimate  is  obtained  after  deducting  an 
estimated 80% BAU factor. Given  that all costs are classified  as administrative burden, 
this  BAU  factor  can  be  considered  surprisingly  high.  A  reason  might  be  that  companies 
attach  costs  related  to  similar  activities  under  the  same  cost  provisions  as  the 
requirements to comply with EU legislation. Variance between plants is somewhat higher 
than for other regulatory cost items.  

Cumulative regulatory costs  

The  following  table  summarises  the  cumulative  regulatory  costs  for  glass  tableware  in 
the area of MID. 

Table  17.  Glass  tableware:  Regulatory  costs  generated  by  MID  (€/tonne  – 
Typical year – averages) 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

EU 

2.29 

0 

0 

Indirect regulatory costs 

NA 

Total regulatory costs 

2.29 

Source: Authors’ own elaboration. 

64 

 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

6  Energy legislation 

This Chapter is structured as follows: 

 

In the beginning of the Chapter, the overview of global developments impacting 
energy  prices  and  a  description  of  the  EU  legislation  and  their  expected  impact 
are presented. 

  Section  6.2  presents  details  on  methodological  choices  specific  to  energy 

legislation as well as data collection and validation. 

  Section  6.3  provides  an  overview  of  the  impact  of  energy  costs,  including 

electricity and gas costs, on production costs. 

  Section 6.4 provides a cost assessment of energy legislation in relation to use of 
electricity  by  the  EU  glass  sector.  Cost  assessments  for  i)  packaging  glass,  ii) 
glass  tableware  and  iii)  flat  glass  sectors  are  presented.  Each  cost  assessment 
first sets the scene with analysis of electricity intensity and electricity costs, then 
turns  to  the  impact  of  regulation  on  electricity  price  components,  then  provides 
the regulatory cost assessment for glass producers. 

  Section 6.5 provides a cost assessment of energy legislation in relation to use of 
natural  by  the  glass  sector.  Cost  assessment  for  i)  packaging  glass,  ii)  glass 
tableware and iii) flat glass sectors is presented. Each cost assessment first sets 
the  scene  with  analysis  of  natural  gas  intensity  and  natural  gas  costs,  then 
discusses  the  impact  of  regulation  on  natural  gas  price  components,  then 
provides the regulatory cost assessment for glass producers. 

  Section  6.6  provides  a  cost  assessment  of  the  Energy  Efficiency  Directive  for  i) 

packaging glass, ii) glass tableware and iii) flat glass sectors.  

6.1  Overview and relevance of energy policy for the EU glass sector 

In the last two decades, energy legislation in the EU has mainly pursued the objective of 
unbundling energy suppliers from network operators, privatising parts of the value chain 
and creating an Internal Market subject to cross-border competition.  In parallel, energy 
legislation  was  introduced  to  move  away  from  fossil  fuels,  fully  restructure  the  sector 
and  moderate  energy  demand.  In  addition  to  EU  and  national  legislation,  global 
developments  drive  the  costs  of  energy.  As  the  international  trends  impacting  costs  of 
energy for industry influence the cost of energy for the glass sector, the recent trends in 
energy prices are here discussed. 

Energy bill of the industry typically consists of four parts: 

  energy component; 

  network costs; 

 

renewable energy support levies for electricity; 

  other taxes, levies and fees and charges. 

The  costs  of  the  energy  component  are  usually  affected  by  the  prices  of  the  energy 
commodities. Network costs, renewable energy scheme (RES) levies and other taxes are 
the result of the EU and national legislation. This section will present price trends of the 
energy commodities in the EU. 

65 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

6.1.1  Global developments in energy prices 

Oil,  natural  gas  and  coal  are  the  three  most  consumed  fuels  in  the  EU86  and  their 
interconnected price trends have significant impact on electricity prices in the EU. Figure 
12  shows  the  normalised  price  trends  for  oil,  natural  gas  and  coal  in  the  EU,  showing 
that the three fuels follow similar price trends.  

Figure  12.  Normalised  price  trends  of  oil,  natural  gas  and  coal,  2006-15; 
2006=1 

2,50

2,00

1
=
6
0
0
2

1,50

1,00

0,50

0,00

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Oil

Natural Gas

Coal

Source: BP (2016).87 

Oil price developments 2006-15 

Oil is by far the most consumed fuel in the EU88 and although it is not typically used to 
generate  electricity,  its  price  affects  the  price  of  other  fossil  fuels,  such  as  natural  gas 
and coal.  

In the period between 2006 and 2015 there were several oil price developments:89 

  2006-08: the price of oil increased from about $60 to $100 per barrel. The main 
reason  was  growing  energy  consumption  in  developing  countries,  mainly  China 
and India. 

  2008-09:  due  to  the  global  economic  crisis,  oil  consumption  decreased,  which 

led to a drop in oil prices to below $60 per barrel.  

inland 

EU-28, 

consumption, 

86  Gross 
(http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Gross_inland_consumption,_EU-
28,_1990%E2%80%932014_(%25_of_total_consumption)_YB16.png). 
87 BP Statistical Review of World Energy 2016 (www.bp.com/content/dam/bp/pdf/energy-
economics/statistical-review-2016/bp-statistical-review-of-world-energy-2016-full-report.pdf). 
88 Gross inland consumption, EU-28, 1990–2014 (% of total consumption) 
(http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Gross_inland_consumption,_EU-
28,_1990%E2%80%932014_(%25_of_total_consumption)_YB16.png). 

1990–2014 

total 

(% 

of 

consumption) 

89 BP Statistical Review of World Energy 2016 (www.bp.com/content/dam/bp/pdf/energy-
economics/statistical-review-2016/bp-statistical-review-of-world-energy-2016-full-report.pdf). 

66 

 
 
 
 
 
 
 
                                          
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

  2009-13:  the  recovery  from  the  global  economic  crises  led  to  the  growing 

demand for oil and prices rose to around $100 per barrel. 

  Since 2013: in 2013 the prices moderately went down and since 2014 there was 
a  constant  and  sharp  decline  in  oil  prices  to  around  $50  per  barrel.  The  main 
reasons  were  the  decrease  of  demand  in  China  (due  to  slowing  economic 
growth), and the shale gas and oil revolution in the US.  

Natural Gas market developments, 2006-15 

Natural  gas,  a  fuel  consumed  mostly  by  industry  and  the  residential,  commercial  and, 
more recently, electricity sectors, is the second-most consumed fuel in the EU90 and has 
followed a similar trend to that of oil.  

Traditionally,  natural  gas  markets  were  regional  markets  where  natural  gas  was 
delivered  mainly  via  pipelines  under  oil-price-linked  long-term  contracts.  However,  gas 
markets  have  significantly  evolved  over  the  last  15  years,  mainly  due  to  the  following 
developments: 

  Sophistication  of  liquefaction  technologies  and  development  of  Liquefied  Natural 

Gas (LNG) infrastructures helped globalise natural gas markets. 

  Shale  gas  revolution  in  North  America  increased  the  natural  gas  supply, 

consequently reducing natural gas prices. 

  Spot pricing partly replaced traditional oil-price-linked long-term contracts. 

  The  price  of  oil  significantly  dropped  in  2015-16,  affecting  gas  markets,  yet 
important  volumes  of  gas  are  still  being  delivered  under  long-term  contracts 
destined for identified buyers. 

These  developments  have  significantly  lowered  the  natural  gas  prices  in  the  (import 
dependent) EU.91   

Coal market developments, 2006-15 

Coal is used mostly to generate electricity and represents the third most consumed fuel 
in  the  EU92.  It  followed  the  similar  price  trend  to  that  of  oil  and  gas,  dropping  from  its 
peak  in  2008  of  around  $150  per  tonne  to  around  $70  per  tonne  in  2009  due  to  the 
global economic crisis, followed by a recovery and subsequent drop to even lower levels 
in 2015 (below $60 per tonne).   

6.1.2  Summary of the legislation covered  

The  EU  objectives  of  unbundling  energy  suppliers  from  network  operators  and  creating 
an  Internal  Market  with  cross-border  competition  are  present  in  several  pieces  of  EU 
legislation. These legislative acts have an impact on the manufacturing industry, such as 
the  glass  sector.  The  following  legislative  acts  were  identified  as  having  potential  to 
generate a cost impact on the glass industry:  

90  Gross 
(http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Gross_inland_consumption,_EU-
28,_1990%E2%80%932014_(%25_of_total_consumption)_YB16.png). 

consumption, 

1990–2014 

consumption) 

EU-28, 

inland 

total 

(% 

of 

BP 

Statistical 

91 
(www.bp.com/content/dam/bp/pdf/energy-economics/statistical-review-2016/bp-statistical-
review-of-world-energy-2016-full-report.pdf). 
92  Gross 
(http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Gross_inland_consumption,_EU-
28,_1990%E2%80%932014_(%25_of_total_consumption)_YB16.png). 

consumption, 

1990–2014 

Review 

Energy 

EU-28, 

inland 

World 

total 

(% 

of 

of 

consumption) 

2016  

67 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

  Internal Energy Market: 

  Directive 2009/72/EC of the European Parliament and of the Council of 13 July 
2009  concerning  common  rules  for  the  Internal  Market  in  electricity  and 
repealing Directive 2003/54/EC; 

  Regulation  (EC)  No  714/2009  of  the  European  Parliament  and  of  the  Council 
of  13  July  2009  on  conditions  for  access  to  the  network  for  cross-border 
exchanges in electricity and repealing Regulation (EC) No 1228/2003; 

  Directive 2009/73/EC of the European Parliament and of the Council of 13 July 
2009  concerning  common  rules  for  the  Internal  Market  in  natural  gas  and 
repealing Directive 2003/55/EC; 

  Regulation  (EC)  No  715/2009  of  the  European  Parliament  and  of  the  Council 
of  13  July  2009  on  conditions  for  access  to  the  natural  gas  transmission 
networks and repealing Regulation (EC) No 1775/2005. 

  Renewable Energy:  

  Directive  2009/28/EC  of  the  European  Parliament  and  of  the  Council  of  23 
April 2009 on the promotion of the use of energy from renewable sources and 
amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC 
Energy Efficiency Directive (Directive 2012/27/EC); 

  Guidelines  on  State  Aid  for  environmental  protection  and  energy  2014-2020 
are ‘soft’ legislation and relevant to assess the cost impact of the Renewable 
Energy Directive. 

  Energy Taxation: 

  Council  Directive  2003/96/EC  of  27  October  2003  restructuring  the 
Community framework for the taxation of energy products and electricity. 

  Energy Efficiency Directive: 

  Directive  2012/27/EU  of  the  European  Parliament  and  of  the  Council  of  25 
October  2012  on  energy  efficiency,  amending  Directives  2009/125/EC  and 
2010/30/EU  and  repealing  Directives  2004/8/EC  and  2006/32/EC  Text  with 
EEA relevance. 

The impacts of these acts are described in more detail in sections 6.4, 6.5 and 6.6. 

6.2  Methodological aspects 

This  section  explains  the  methodological  choices  specific  to  the  analysis  of  regulatory 
costs generated by energy legislation for the glass sector.  

6.2.1  General aspects  

Data on costs of EU energy legislation was collected via interviews with industry players. 
The  questionnaire  surveyed  energy  consumption  and  energy  prices  paid  by  the  plant 
(both in terms of electricity and natural gas prices and consumption), the components of 
energy  bills,  i.e.  1)  energy  component,  2)  network  costs,  3)  RES  levies  and  4)  other 
taxes,  fees  and  levies,  costs  of  passing  energy  audits  and  carrying  out  a  cost-benefit 
analysis  to  assess  the  option  of  introducing  co-generation  in  heating.  In  addition,  data 
on  the  annual  production  output  of  the  plant  was  used  for  the  analysis  on  the  energy 
intensity of production. 

Table 18 shows the total number of questionnaires including data on costs generated by 
EU energy legislation per subsector and those used in this Chapter. As the data collected 
at plant level needs also to be validated, the Research Team complemented the bottom-
up  data  collection  with  data  validation  via  follow-up  interviews.  When  gaps  in  data 
provided  by  the  respondents  were  detected,  plant  managers  were  approached  with 

68 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

follow-up  questions  to  ensure  the  quality  of  the  data.  The  Research  Team  also  used 
triangulation for data validation: secondary sources such as Eurostat data and previously 
conducted studies were used to assess the validity of the data.  

Table 18. Total number of questionnaires received and used in the Chapter 

Sector 

Packaging 
glass 
Glass 
tableware 

Flat glass 

Number of responding plants 

Total EU 

NWE 

CEE 

SE 

21 

5 

15 

7 

- 

5 

6 

- 

5 

8 

- 

5 

Source: Authors’ own elaboration. 

Number of 
questionnaires 
used 

21 (electricity), 
21  (natural gas) 
5 (electricity), 
5  (natural gas) 
15 (electricity), 
 15 (natural gas) 

Missing data points 

For a number of plants, data for some years was not provided. Where data was missing 
for  particular  years,  the  Research  Team  relied  on  methods  of  extrapolation  based  on 
data  from  other  plants  in  the  sample  and  secondary  sources.  The  following  provides  a 
more detailed description of the methodology: 

  Consumption  missing  (MWh):  The  average  energy  intensity  (MWh/tonne)  was 
calculated for the plant from the closest two available years to the missing data 
point. The average energy intensity value along with the annual plant production 
value for that year allowed the missing data point to be calculated. This method 
was only used if one to four consecutive years were missing. 

  Total  energy  cost  missing  (€):  If  a  plant  in  the  sample  has  a  similar  production 
value  and  is  in  the  same  Member  State,  then  the  trend  in  annual  energy  prices 
was  used  and  applied  to  the  plant  with  missing  energy  cost  data,  using  the 
available data points.  If a plant in the sample does not have a similar production 
value  and  is  in  the  same  Member  State  then  energy  price  trend  data  for  that 
Member  State  from  a  previous  study  was  used.93  This  method  was  only  used  if 
one to four consecutive years were missing. 

  Component costs missing (€): If one to two consecutive years were missing, the 
average of the share of components from the same plant in the two closest years 
to the missing year were used. If more than two years were missing, the average 
share of components from sampled plants in the same Member State were used. 
In  the  rare  case  where  data  was  not  available  from  our  sample,  component 
shares from a previous study were used.94  

93 Marcu, A. et al. (2016), “Composition and Drives of energy prices and costs for energy intensive 
industries”, CEPS. 
94 Ibid. 

69 

 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Data presentation 

The Chapter uses box plots so as to display cost ranges and consumption ranges in the 
sectors. An exemplary box plot is presented in Figure 13. Graphs were prepared both to 
present values for electricity and natural gas.  

The grey box is divided into two parts with a horizontal line, which indicates the median 
of the sample. The upper and lower boundary line of the grey box represent the first and 
third quartile  of  the  data  set  meaning  that  box  contains  50%  of  the  sample.  The  lower 
border  of  the  box  represents  the  first  (lower)  quartile  of  the  sample.  It  separates  the 
lowest  25%  of  the  data  sample  from  the  highest  75%.  Correspondingly,  the  upper 
border of the box indicates the third (upper) quartile of the sample, thus separating the 
highest 25% of data from the lowest 75%.  

The vertical lines below and above the box represent the minimum and maximum value 
of the sample. The green, blue and red figures present weighted regional averages.  

Figure 13. Example plot 

Source: Authors’ own elaboration. 

6.2.2  Electricity specific aspects 

The  electricity  intensity  of  production  was  measured  by  summing  i)  electricity 
purchased from the grid; and ii) electricity self-generated; then subtracting iii) electricity 
sold to the grid; and iv) dividing by production.  

When  calculating  net  electricity  costs,  the  ‘electricity  costs’  section  takes  into 
consideration: i) interruptibility schemes; ii) self-produced electricity; iii) electricity sold 
to  the  grid;  and  iv)  reimbursements  from  RES  levies  and  other  taxes,  fees  and  levies. 
The  ‘electricity  cost  components  section’  takes  into  account  reimbursements  from  RES 
levies  and  taxes  but  not  i)  interruptibility  schemes;  ii)  self-produced  electricity;  iii) 
electricity sold to the grid.  

When calculating direct costs from energy taxation legislation, the Study takes into 
account i) the minimum rate presented in legislation ii) multiplied by consumption. Self-
generated electricity is not taken into account. 

When  calculating  indirect  costs  for  electricity,  the  impact  of  EU  legislation  on  i) 
network costs and ii) RES levies needs to be considered. The impact of EU legislation on 
both cost components is considered separately. 

70 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Both  Internal  Market  legislation  and  the  Renewable  Energy  Directive  generate 
costs present in network costs: 

  Internal  Market 

legislation  has  a  cost 

impact  due  to  cross-border 
interconnector projects. This is particularly true for projects taking place in areas 
with the weakest links to the EU market (Italy, the Iberian Peninsula, Ireland and 
the UK and Baltic states). The Renewable Energy Directive can generate costs 
as  part  of  transmission  fees  due  to  the  need  for  new  infrastructure  required  to 
integrate  renewable  energy  into  the  grid.  Costs  generated  by  this  Directive  are 
also  included  in  distribution  fees  as  connecting  increasing  variable  renewable 
electricity  generation  to  the  grid  requires  significant  upgrades  to  existing 
infrastructure. 

  The  delivery  of  new  grid  investments  took  place  after  the  entry  into  force  of 
Internal Market legislation and the Renewable Energy Directive. The cost of new 
investment  is  demonstrated  in  the  network  cost  developments  present  in  the 
primary  data:  network  costs  remained  quite  stable  with  a  slight  increase  in  the 
beginning  of  the  study period but  increased  more  significantly  in  absolute terms 
from 2010 onwards. The primary data collection from glass manufacturers shows 
that,  for  example,  in  the  glass  tableware  sector  costs  increased  from  €7.7/MWh 
(2006) to €8.9/MWh (2015).  

  Since  the  Internal  Market  legislation  (714/2009)  and  the  Renewable  Energy 
Directive (2009/28/EC) became effective, the Research Team suggests that 50% 
of networks can be attributable to EU legislation in the years 2010-15. It is 
estimated that 50% of network costs would have been incurred in the absence of 
EU legislation.  

  The  Research  Team  estimates  that  30%  of  networks  can  be  attributable  to 
EU  legislation  in  the  years  2006-09  for  repealed  legislation  and  Directives, 
namely  the  Internal  Market  legislation  (1228/2003)  and  the  Renewable  Energy 
Directive (2001/77/EC).  

  These  estimates  are  based  on  combined  studies  by  ENTSO-E95  and  IEA,96  the 
share of variable renewables in the electricity mix for each time period and data 
collected from plants. 

The  Renewable  Energy  Directive  generates  costs  present  in  the  RES  support 
component: 

  Since the introduction of the Renewable Energy Directive (2001/77/EC) that was 
replaced by the Renewable Energy Directive (2009/28/EC), Member States have 
implemented support schemes to subsidise less mature low-carbon technologies. 
Many  of  these  support  schemes  are  funded  through  levies  on  consumer  energy 
bills.  

costs 

would 

95  The  CCA  is  a  retrospective  analysis,  whereas  the  ENTSO-E  TYNDP  looks  forward  to  2012-30. 
However, the estimations from ENTSO-E are particularly for the time period 2012-15 and can also 
provide  information  on  past  developments.  The  study  estimates  that  the  investment  in 
transmission 
2012-20 
correspond 
(www.entsoe.eu/publications/market-reports/Documents/ENTSO-E%20Overview%20of%20 
Transmission%20tariffs%202015_FINAL.pdf). 
96  The  results  from  this  study  show  that  distribution  grid  infrastructure  costs  associated  with 
upgrading the grid can be estimated in the range of €0.50-3/MWh for a 20-30% renewable share 
in  annual  electricity  generation  within  a  system.  System  operating  costs  incurred  in  the 
conventional  part  of  the  power  system  range  from  €2-4/MWh  for  below  a  10%  share  of  variable 
renewable  generation  in  total  generation  and  €5-6/MWh  for  a  share  of  variable  renewable 
generation  above  20%  in  total  generation.  Applying  this  to  the  share  of  variable  renewable 
generation  in  Europe,  it  is  possible  to  approximate  the  cost  of  renewables  on  distribution  costs 
(http://iea-etsap.org/E-TechDS/PDF/E15_Ren_integr_FINAL_Dec2013_GSOK.pdf). 

€1.50-2/MWh 

to 

in 

71 

 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

  The  more  recent  Renewable  Energy  Directive  (2009/28/EC)  sets  aggressive 
renewable  energy  targets  for  Member  States  and  it  can  therefore  be  assumed 
that  since  it  became  effective,  most  of  the  RES  levies  on  electricity  bills  are 
due  to  obligations  set  by  EU  legislation.  This  is  supported  by  evidence 
gathered  from  glass  manufacturers,  as  RES  levies  have  increased  dramatically 
over the study period. For example, in the flat glass sector, RES levies increased 
from  €5.40/MWh  (2006)  to  €18.90/MWh  (2015),  representing  approximately  a 
72% increase in the RES levy over 2006-15. Based on the data collected and the 
Directive,  it  is  estimated  that  85%  of  the  RES  support  can  be  attributed  to 
EU  legislation  in  the  period  2010-15,  since  the  more  recent  Directive  became 
effective. 

  RES levies were reported by plants on electricity bills since the start of the study 
period in 2006, though they were considerably lower in the years prior to 2010. 
When  considering  RES  levy  costs  attributable  to  EU  legislation  prior  to  2010,  a 
share  of  these  costs  is  due  to  the  Directive  2001/77/EC  that  sets  non-legally 
binding targets for renewable generation in Europe. However, this Directive sets 
much  less  aggressive  targets  than  its  succeeding  Directive,  hence, the  Research 
Team deems 50% of the RES support can be attributable to EU legislation 
in the period 2006-09. It is estimated that 50% of these costs would have been 
incurred in the absence of EU legislation as a result of national initiatives. 

6.2.3  Natural gas specific aspects 

The  natural  gas  intensity  of  production  was  measured  by  summing  i)  natural  gas 
purchased from the grid ii) divided by production.  

When presenting net natural gas costs, the Study takes into account reimbursements 
from taxes and levies in the ‘gas costs’ and in the ‘gas components’ sections.  

When calculating direct costs from energy taxation legislation, the Study takes into 
account i) the minimum rate presented in legislation ii) multiplied by consumption.  

When  calculating  indirect  costs  for  natural  gas,  the  cost  of  EU  legislation  on 
network costs needs to be considered: 

  The  Internal  Energy  Market  legislation  aims  to  promote  the  cross-border  flow  of 
natural  gas  and  thus  advance  the  building  of  cross-border  infrastructure.  The 
costs  of  new  infrastructure,  present  in  network  costs,  can  be  passed  on 
to natural gas bills creating costs for industrial consumers. 

  The  delivery  of  investment  needed  for  new  gas  infrastructure  slowed  due  to  the 
economic  crisis  and  uncertainty  of  gas  demand.  Network  costs  have,  however, 
stayed  quite  stable  before  and  after  the  entry  into  force  of  the  Third  Energy 
Package.  For  example,  in  the  flat  glass  sector,  network  costs  represented 
€0.85/MWh of the total bill in (2006). By 2015, network costs have increased to 
€1.10/MWh (2015).  

  Therefore, we estimate the cost of Internal Market legislation present in network 
costs to be modest as most network costs would anyway occur in the absence of 
EU legislation. This Study uses an estimate  that  15% of natural gas network 
costs  are  generated  due  to  EU  Internal  Market  legislation  for  the  entire 
study period 2006-15. 

6.2.4  Energy efficiency specific aspects 

72 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

When calculating direct costs from the Energy Efficiency Directive, the Study takes 
into  account  i)  total  costs  of  the  audit  in  2012-2015  (payments  to  auditors  and  labour 
costs) and dividing them by ii) total production in 2012-2015. 

Some  plants  reported  costs  related  to  employees  preparing  the  energy  audit  and 
accompanying the auditors in the plant. These employees are assumed to be technicians 
and  associate  professionals.  The  hourly  earnings  of  technicians  and  associate 
professionals are therefore applied.  

As a small amount of plants reports having carried out an energy efficiency audit prior to 
the entry into force of the obligation in 2012, not all costs generated by 2012-15 audits 
can be attributed to the Energy Efficiency Directive. Therefore, we attribute 85% of the 
costs  of  the  audits  to  the  Energy  Efficiency  Directive,  assuming  that  when  plants 
report having carried out energy efficiency audits, it is likely that some of the activities 
would have taken place in the absence of EU legislation.  

6.3  Overview of the impact of energy costs on production costs 

This section includes information from responding glass plants concerning the impact of 
energy costs – for both natural gas and electricity – over production costs.97 As the glass 
sector  is  an  energy-intensive  sector,  the  impact  of  energy  costs  on  production  costs 
sheds light on the role energy costs play on the sectors’ competitiveness.  

Packaging glass 

What follows below  is an analysis on the impact of energy costs on production costs in 
the packaging glass subsector. 

Table 19. Packaging glass: Total number of questionnaires received and used in 
the Chapter 

Subsector 

Packaging 
glass 

Number of responding plants 

Total EU 

NWE 

CEE 

SE 

Number of 
questionnaires 
used 

21 

7 

6 

8 

21 

Source: Authors’ own elaboration. 

The  impact  of  electricity  and  gas  costs  on  production  costs  in  the  packaging  glass 
subsector  fluctuated  somewhat  over  the  study  period.  The  share  of  electricity  costs  on 
total  production  costs  decreased:  in  2006  electricity  costs  represented  8.3%  of 
production  costs,  while  in  2015  they  represented  a  share  of  6.7%  of  total  production 
costs. The share of natural gas costs on production costs fluctuated over time. In 2006, 
natural  gas  costs  were  responsible  for  a  share  of  12.5%,  increasing  to  14.6%  in  2013 
and going down to 12.3% in 2015.  

Some  regional  differences  were  present.  While  in  the  SE  and  CEE  region  energy  costs 
(both electricity and natural gas costs) represented similar shares of production costs, in 
the NWE region, the role of energy costs was less significant. In 2015, energy costs were 

97  Production  costs  include  all  costs,  both  OPEX,  CAPEX  and  other  expenses,  borne  by  the  plant 
and directly relating to the manufacturing process. 

73 

 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

at 23.6% of production costs in the SE region and at 25.4% in the CEE while in the NWE 
region they stood at 15.5%.  

74 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 14. Packaging glass: Impact of energy costs on production costs €/tonne of production (2006-15) 

350

300

250

200

150

Other
costs

Gas

Electricity

100

50

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU average

Northern-Western Europe

Southern Europe

Central-Eastern Europe

Other costs 219 213 230 232 233 241 242 244 250 258 231 218 238 234 244 257 258 260 266 281 222 225 230 248 230 236 237 236 230 243 164 171 195 179 195 172 177 188 224 193

Gas

Electricity

35

23

35

23

42

24

42

25

35

25

36

23

45

25

46

24

44

22

39

21

32

23

35

23

41

22

43

23

32

23

31

21

40

22

41

21

38

19

34

17

31

25

32

28

40

29

35

28

36

27

42

28

51

31

51

30

53

26

46

29

52

20

41

18

53

22

54

24

51

23

49

24

56

25

56

25

55

23

45

21

Source: Authors’ own elaboration. 

75 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 15. Packaging glass: Impact of energy costs on production costs % (2006-15) 

100%

Other costs

Gas

Electricity

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU average

Northern-Western Europe

Southern Europe

Central-Eastern Europe

Other costs

Gas

Electricity

79

13

8

78

13

9

78

14

8

78

14

8

80

12

8

80

12

8

77

14

8

78

15

8

79

14

7

81

12

7

81

11

8

79

13

8

79

14

7

78

14

8

82

11

8

83

10

7

81

12

7

81

13

6

82

12

6

84

10

5

80

11

9

79

11

10

77

13

10

11

2

1

78

12

9

77

14

9

74

16

10

74

16

9

74

17

9

76

14

9

69

22

8

74

18

8

72

20

8

70

21

9

72

19

9

70

20

10

69

22

10

70

21

9

74

18

8

75

17

8

Source: Authors’ own elaboration. 

76 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Glass tableware 

What  follows  is  an  analysis  on  the  impact  of  energy  costs  on  production  costs  in  the 
glass tableware subsector. 

Table 20. Glass tableware: Total number of questionnaires received and used in 
the Chapter 

Subsector 

Glass 
tableware 

Number of responding plants 

Total EU 

5 

Source: Authors’ own elaboration. 

Number of 
questionnaires 
used 

5 

The share of gas costs fluctuated over the study period. An increase in the share of gas 
costs over production costs can be observed from 2006 to 2015. While in 2006 gas costs 
represented a share of 7.5% on total production costs, by 2015, the share increased up 
to  9.3%.  The  share  of  electricity  costs  remained  more  stable  throughout  the  study 
period.  In  2006,  the  costs  represented  a  share  of  3.2%  of  total  costs  and  in  2015  the 
share was at 3.8%. Both natural gas costs and electricity costs as a share of production 
costs increased in absolute value over the period 2006-15. 

Figure  16.  Glass  tableware:  Impact  of  energy  costs  on  production  costs 
€/tonne of production (2006-15) 

1800

1600

1400

1200

1000

800

600

Other
costs

Gas

Electricity

400

200

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU average

Other costs

1258

1186

1274

1329

1413

1442

1434

1357

1194

1256

Gas

Electricity

106

45

122

44

127

51

168

63

163

56

160

57

168

62

161

63

147

57

134

55

Source: Authors’ own elaboration. 

77 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 17. Glass tableware: Impact of energy costs on production costs % 
(2006-15) 

Other costs

Gas

Electricity

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU average

Other costs

89,3

87,7

87,8

Gas

Electricity

7,5

3,2

9,0

3,3

8,7

3,5

85,2

10,8

4,0

86,6

10,0

3,5

86,9

9,6

3,5

86,2

10,1

3,8

85,8

10,2

4,0

85,4

10,5

4,1

86,9

9,3

3,8

Source: Authors’ own elaboration. 

78 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Flat glass 

What follows below  is an analysis on the impact of energy costs on production costs in 
the flat glass sector. 

Table  21.  Flat  glass:  Total  number  of  questionnaires  received  and  used  in  the 
Chapter 

Sector 

Number of responding plants 

Total EU 

NWE 

CEE 

SE 

Number of 
questionnaires 
used 

Flat glass 

15 

5 

5 

5 

15 

Source: Authors’ own elaboration. 

In  2006,  energy  costs  represented  a share  of  19.8%  of  total costs,  while  in  2015  their 
share was 24.4%. Energy costs per tonne of output were at their highest level in 2012: 
€92.70/tonne. From 2012 to 2015, the costs decreased to €69.40/tonne. Electricity costs 
as a share of production costs stayed relatively stable over the 10-year study period: in 
2006, electricity costs were 4% of production while in 2015 their share was 5.2%. Gas 
costs  as  a  share  of  production  costs  were  at  a  higher  level  in  2015  than  in  2006:  in 
2006, gas costs were responsible for 15.8% of production costs while in 2015 their share 
was 19.2%.   

Some  regional  differences  were  present.  Energy  costs  as  a  share  of  production  costs 
were the highest in the CEE and SE regions, where energy costs were 31.2% (CEE) and 
32.9%  (SE)  of  production  costs  in  2015.  The  share  was  less  significant  in  the  NWE 
region  in  2015,  accounting  for  17.7%  of  production  costs.  In  the  SE  region,  gas  costs 
were  responsible  for  an  increasing  share  of  production  costs:  while  in  2006  gas  costs 
represented  15.1%  of  total  costs,  their  share  increased  to  25.6%  in  2015.  Note, 
however,  that  total  production  costs  in  the  SE  region  decreased  over  the  period  2006-
15.  

79 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 18. Flat glass: Impact of energy costs on production costs €/tonne of production (2006-15) 

Other costs

Gas

Electricity

450

400

350

300

250

200

150

100

50

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU average

Northern-Western Europe

Southern Europe

Central-Eastern Europe

Other costs 247 247 260 252 247 255 245 227 213 216 223 245 270 253 247 243 281 250 239 255 293 268 280 283 293 216 236 207 195 176 181 191 197 191 237 192 166 166 156

Gas

Electricity

49

12

46

13

57

14

50

16

47

15

56

18

74

19

74

19

62

16

55

15

38

10

36

11

48

12

42

15

38

12

46

14

68

16

70

16

52

12

44

11

60

13

73

16

65

18

64

17

74

21

94

23

87

24

82

21

75

21

54

16

59

17

71

20

60

20

56

19

61

24

67

22

67

20

62

19

55

16

Source: Authors’ own elaboration. 

80 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 19. Flat glass: Impact of energy costs on production costs % (2006-2015) 

100%

90%

80%

70%

60%

50%

Other
costs

Gas

Electricity

40%

30%

20%

10%

0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU average

Northern-Western Europe

Southern Europe

Central-Eastern Europe

Other costs

Gas

Electricity

80

16

4

81

15

4

79

17

4

79

16

5

80

15

5

78

17

5

73

22

6

71

23

6

73

21

5

76

19

5

82

14

4

84

12

4

82

14

4

82

14

5

83

13

4

80

15

5

77

19

4

75

21

5

79

17

4

82

14

3

80

16

4

75

21

4

12

3

1

78

18

5

76

19

5

65

28

7

68

25

7

67

27

7

67

26

7

72

22

6

70

23

7

68

25

7

71

22

7

72

21

7

74

19

7

68

24

8

66

27

8

67

25

8

69

24

7

Source: Authors’ own elaboration.

81 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

6.4  Electricity 

Glass  manufacturing  is  an  energy-intensive  industry.  While  natural  gas  is  the  main 
energy  source  in  the  sector,  glass  manufacturers  also  consume  electricity.98  A  cost 
assessment of EU legislation on electricity for packaging glass, glass tableware  and flat 
glass producers is presented in this section.  

The price of electricity is split into four components, of which the last three can be partly 
caused by the regulatory framework (regulated components): 

  energy supply; 

  network costs; 

 

renewable support; 

  other taxes, fees, levies and charges (excluding recoverable taxes, such as VAT). 

Data  on  components  of  the  electricity  bill  shed  light  on  the  trends  of  regulatory 
components,  which  are  set  by  both  the  EU  and  national  regulators.  While  not  all 
regulated components are a result of EU Regulation, an EU driven component is 
present in network costs, renewable support as well as other taxes, fees, levies 
and charges.  

Note  that  there  are  differences  between  the  electricity  costs  and  electricity  cost 
components presented under each cost assessment. These differences are caused by i) 
the revenues respondents gained from selling self-generated electricity to the grid and ii) 
by  remunerations  for  those  plants  that  have  taken  part  in  an  interruptibility  scheme. 
Both  revenues  from  self-generation  and  interruptibility  scheme  remuneration  are  taken 
into  account  in  net  electricity  costs  section  whereas  these  revenues  are  not  accounted 
for  in  electricity  bill  component  analysis.  Note  that  reimbursement  from  RES  and  for 
taxes, fees and levies (excluding VAT) are taken into account both in net electricity costs 
and in electricity bill components section.  

In this section, the analysis of electricity legislation is described via box plots. Where box 
plots  have  not  been  used  due  to  confidentiality  reasons,  line  graphs  are  provided 
instead. 

6.4.1  Description of the Acts 

What  follows  is  a  description  of  electricity  related  legislation  with  an  expected  cost 
impact on the glass sector. 

Internal  Energy  Market.  Directives  and  Regulations  setting  rules  for  the  Internal 
Energy  Market  constitute  the  so-called  ‘Third  Energy  Package’  (hereinafter  Third 
Package). Completing the Internal Market requires both ‘software’, i.e. common rules for 
trading  electricity,  as  well  as  ‘hardware’,  i.e.  cross-border  infrastructure.  This  package 
replaced  the  ‘Second  Energy  Package’,  which  enabled  new  gas  and  electricity  suppliers 
entering  national  markets  and  customers  choosing  their  own  gas  and  electricity 
suppliers. 

The Directive (whose transposition was required by 2011) included in the ‘Third Package’ 
envisages  interventions  in  both  the  ‘software’  and  ‘hardware’  dimensions.  Directive 
2009/72/EC concerning common rules for the Internal Market in electricity defines rules 
along  which  the  EU  market  in  electricity  is  established.  This  Directive  replaced  the 
repealed  Directive  2003/54/EC  that  had  the  objective  of  creating  conditions  more 
conducive  to  genuine,  fair  competition  and  putting  in  place  a  true  single  market, 

98  Ecorys  et  al.  (2008),  FWC  Sector  Competitiveness  Studies  -  Competitiveness  of  the  Glass 
Sector, 
111 
(http://ec.europa.eu/DocsRoom/documents/1989/attachments/1/translations/en/renditions/pdf). 

p 

82 

 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

advancing common rules for the Internal Market in electricity. The legislation established 
rules, inter alia, related to access to the market, and that distribution and transmission 
systems  are  operated  through  legally  separate  entities.  Both  Directives  aim  at 
creating  common  rules  for  the  generation,  transmission  and  distribution  of 
electricity and for the organisation and functioning of the electricity sector in the EU. In 
order  to  mainly  achieve  the  objective  of  the  security  of  supply,  the  Directive  requires 
Member  States  to  develop  necessary  network  infrastructure,  including  interconnection 
capacity.  

In addition, the Directive 2009/72/EC requires a phase-out of regulated energy 
prices. Interestingly, in 2014, electricity prices for non-household consumers were still 
regulated  in  10  EU  Member  States.  The  Regulation  completing  the  ‘Third  Package’ 
entered into force in 2009 and mainly concerns the ‘software’ part of the Internal Energy 
Market. Regulation (EC) No 714/2009 sets fair rules for cross-border exchanges 
in  electricity  in  order  to  enhance  competition  within  the  Internal  Market  in  electricity, 
taking  into  account  the  particular  characteristics  of  national  and  regional  markets.  This 
involves  inter  alia:  i)  the  establishment  of  a  compensation  mechanism  for  cross-border 
flows of electricity; ii) the setting of harmonised principles on cross-border transmission 
charges;  and  iii)  the  allocation  of  available  capacities  of  interconnections  between 
national  transmission  systems.  This  Regulation  replaced  Regulation  (EC)  No 1228/2003 
that entered into force in 2003 and was in place with the purpose of intensifying trade in 
electricity  by  means  of  putting  in  place  conditions  for  access  to  the  network  for 
cross-border  exchanges  in  electricity.  Both  Regulations  aim  at  facilitating  the 
emergence of a well-functioning and transparent wholesale market in the EU with a high 
level of security of supply in electricity.  

Renewable  Energy  Directive.  The  Renewable  Energy  Directive,  whose  transposition 
was due by 2010, establishes a common framework for the promotion of energy 
from  renewable  sources.  In  particular,  this  Directive  sets  mandatory  targets  for 
renewables at national level, consistent with a target of at least a 20% share of energy 
from renewable sources in the EU’s gross final consumption of energy in 2020. Member 
States shall ensure that the share of energy from renewables in gross final consumption 
of energy reaches the national overall targets. To ensure this, EU countries have set up 
dedicated  support  policies  for  renewables.  Measures  of  cooperation  between  Member 
States  and  with  third  countries  for  achieving  the  national  overall  target  can  also  be 
introduced. This Directive replaced Directive 2001/77/EC that was in place to promote 
electricity  produced  from  renewable  energy  sources  in  the  internal  electricity 
market.  The  repealed  legislation  included  national  renewable  energy  targets  for  EU 
Member States to meet an EU wide target of 12% gross inland energy consumption from 
renewables by 2010. These targets were, however, indicative and were not enforced by 
the EU. 

The  application  of  the  Renewable  Energy  Directive  is  affected  by  the  “Guidelines  on 
State  Aid  for  environmental  protection  and  energy  2014-2020”  providing 
criteria on how Member States can exempt energy intensive companies that are 
particularly  exposed  to  international  competition  from  charges  levied  for  the 
support  of  renewables.  Annex  III  of  the  guidelines  lists  the  sectors  covered  in  this 
Study  among  those  industries  where  exemptions  may  be  granted.  Such  exemptions 
existed  before  the  adoption  of  the  guidelines  but  were  subject  to  national  legislation. 
Moreover,  the  guidelines  address  the  market distortions  that  may  result  from  subsidies 
granted to renewable energy sources. For this reason, the guidelines prescribe a gradual 
move to market-based support for renewable energy. Both sets of rules have an impact 
on the actual costs of implementing the Renewables Energy Directive and will therefore 
be  assessed  in  this  Study.  Nonetheless,  as  these  new  guidelines  are  applicable  from  1 
July  2014,  their  impact  on  the  timeframe  covered  by  this  Study  is  expected  to  be 
limited. 

83 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Energy  Taxation  Directive.  The  current  Energy  Taxation  Directive  came  into  force  in 
2003,  setting  a  minimum  level  of  taxation  for  energy  products  (Art.  4).  It  is  the  basis 
for  an  EU-wide  harmonised  minimum  taxation  of  electricity  and  energy 
products, including natural gas. 

The  Directive  sets  minimum  rates  for  EU-wide  harmonised  taxation  for  electricity.  For 
electricity,  the  minimum  tax  rate  amounts  to  €0.5/MWh.  This  rate  can  be  used  to 
estimate the potential cost of the Energy Taxation Directive.  

Note that according to Article 17, Member States may apply tax reductions in favour of 
energy-intensive businesses, if “purchases of energy products and electricity amount to 
at least 3.0 % of the production value or the national energy tax payable amounts to at 
least 0.5 % of the added value.” In case exemptions are in place, the above-mentioned 
direct costs might not occur or they might be due to national legislation. 

6.4.2  Categories of regulatory costs  

Internal  Market  legislation.  With  regard  to  the  ‘hardware’  dimension  of  the  Internal 
Market,  the  deployment  of  cross-border  infrastructure  requires  significant  investment. 
The associated costs may be passed on to consumers and charged in their electricity bill, 
thus causing indirect compliance costs borne by industry players in both sectors. The 
‘software’  part  is  mainly  driven  by  network  codes,  which  are  a  set  of  rules  to  facilitate 
the harmonisation, integration and efficiency of EU energy markets.  

Minor indirect costs could arise when adopting these new market rules. However, these 
are  considered  to  be  negligible  in  absolute  terms.  For  instance,  liquid  markets  are  an 
important  prerequisite  for  entering  into  long-term  contracts,  which  are  used  to  hedge 
the price risk of short-term markets. The impact of phasing out regulated energy prices 
can  be  ambiguous.  While  the  deregulation  of  energy  prices  is  important  to  ensure  the 
functioning  of  liberalised  energy  markets,  in  those  countries  where  energy  intensive 
industries used to benefit from favourable ‘industrial tariffs’, deregulation may have led 
to  higher  energy  prices,  thus  generating  other  indirect  compliance  costs  that  might 
weigh on glass industry players.  

Renewable  Energy  Directive.  Support  schemes  for  renewable  sources  are  typically 
funded by imposing surcharges on end-consumers in their electricity bill, thus generating 
indirect  compliance  costs.  However,  energy  intensive  industries  may  be  entitled  to 
exemptions, thus shouldering only a reduced burden of these costs in some EU Member 
States.  The  main  share  falls  on  other  consumers  such  as  on  households  and  industries 
not  entitled  to  exemptions.  Further  costs  may  also  arise  due  to  the  need  to  reinforce 
networks for the system integration of renewables, insofar as such costs are passed on 
to end-consumers (indirect compliance costs).  

Energy Taxation Directive. This Directive may generate direct charges depending on 
taxation set by EU Member States. 

6.4.3  Cost assessment – Packaging glass 

Sample 

A short overview of the number of questionnaires received can be found below in Table 
22.  In  total,  the  sample  covers  21  respondents  from  the  packaging  glass  subsector. 

84 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

More than three plants from each geographical region provided data enabling the 
Research Team to present regional cost assessments in the packaging glass subsector.  

Table 22. Packaging glass: Total number of questionnaires received and used in 
the Chapter 

Subsector 

Packaging 
glass 

Number of responding plants 

Total EU 

NWE 

CEE 

SE 

Number of 
questionnaire
s used 

21 

7 

6 

8 

21 

Source: Authors’ own elaboration. 

Electricity prices and costs 

All  electricity  costs  reported  in  this  section,  and  used  throughout  the  analysis  are  net 
costs: reimbursements from interruptibility schemes, renewable support reimbursements 
and self-generated electricity sold to the grid have been taken into account.  

Electricity intensity 

What  follows  here  is  an  analysis  of  electricity  intensity  of  production  as  reported  by 
responding  plants.  An  assessment  of  the  industry’s  electricity  intensity  helps  to 
understand what role costs generated by consumption of electricity play for the sector.  

All plants in the sample provided the relevant information allowing the Research Team to 
assess  the  electricity  intensity  based  on  21  plants.  Note  that  none  of  the  respondents 
uses self-generation of electricity. 

The respondents’ electricity intensity remained relatively stable over the period 
2006-15,  with  an  EU  weighted  average  ranging  between  0.29-0.31  MWh/tonne  of 
production  over  the  study  period.  In  2015,  the  EU  weighted  average  of  electricity 
intensity was at 0.30 MWh/tonne of production. The years between 2006 and 2015 only 
show  minor fluctuations.  The  EU  weighted  average  was  lower  than  the  median  in  most 
years.  Crossed-checked  with  previous  research,  these  results  are  in  line  with  literature 
on electricity intensity of production in the packaging glass subsector.99 

Plants  reported  heterogeneous  electricity  intensities.  The  minimum  intensity  (0.15 
MWh/tonne of production) reported by a plant in 2015 was half of the electricity intensity 
reported  by  the  most  electricity-intensive  plant  (0.44  MWh/tonne  of  production). 
Dispersion was greater in the beginning of the study period and then decreased.  

Some regional differences were present, demonstrated by lower values for the NWE 
region and highest electricity intensity for the SE region. Intensity in the NWE region was 
below  the  median  in  all  years.  Respondents  from  the  NWE  region  reported  stable 
electricity  intensities  for  all  years  (0.29  MWh/  tonne  of  production  both  in  2006  and  in 
2015). The trend was equally stable in the CEE region while more fluctuations took place 
in the SE region, where electricity intensity went from 0.31 MWh/ tonne of production in 
2006  to  0.34  MWh/tonne  of  production  in  2009  and  finally  to  0.32  MWh/tonne  of 
production in 2015.  

99  Ecofys  (2009),  “Methodology  for  the free  allocation  of  emission  allowances in  the EU  ETS  post 
2012: Sector report for the glass Industry” (www.ecofys.com/files/files/091102_glass.pdf). 

85 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Figure 20. Packaging glass: Electricity intensity per tonne of production (2006-
15) 

)
e
n
n
o
t
/
h
W
M
(

y
t
i
s
n
e
t
n
I

y
t
i
c
i
r
t
c
e
l
E

0,50

0,45

0,40

0,35

0,30

0,25

0,20

0,15

0,10

0,05

0,00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU (boxplot)

Central-Eastern Europe (weighted average)

Northern-Western Europe (weighted average) Southern Europe (weighted average)

EU weighted average

Source: Authors’ own elaboration. 

Electricity costs 

All  plants  in  the  sample  provided  their  electricity  costs  allowing  the  Research  Team  to 
assess  the  net  electricity  costs  based  on  a  sample  of  21  plants.  Five  plants  out  of  the 
sample  of  21  reported  that  they  received  reimbursements  from  taking  part  in  an 
interruptibility scheme, six respondents reported reimbursements from RES levies while 
five respondents showed reimbursements from other taxes, fees and levies. No plants in 
the sample reported use of self-generated electricity. 

Net electricity costs fluctuated over the period 2006-15. Costs show an upward 
trend  for  weighted  EU  averages  from  2006  (€76.50/MWh)  to  2010 
(€85.60/MWh). With the exception of 2012 (€84/MWh), data shows decreasing 
net  electricity  costs  from  2011  onward  with  respondents  paying  €73.50/MWh 
for  electricity  in  2015.  The  period  2011-15  shows  a  downward  trend,  bringing  the 
costs  below  the  2006  level  in  2015.  This  finding  is  in  line  with  the  global  energy  price 
developments  in  2006-15  presented  in  Figure  12.  Note,  however,  that  otherwise  the 
electricity cost developments do not show trends as stark as Figure 12 presents. 

Regional  comparison  shows  great  price  dispersion,  possibly  due  to  the  higher 
weight  of  regulated  components  and  higher  fragmentation  of  national  policies.  The 
regional  differences  are  characterised  by  the  differences  in  costs  SE  producers  faced  in 
relation  to  producers  in  the  NWE  and  CEE  regions.  Price  dispersion  was  great  in 
particular between NWE and SE producers. SE producers reported costs higher than the 
EU-weighted  average  in  all  years  except  2009  and  2010.  While  the  recent  trend  of 

86 

 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

decreasing  costs  was  true  for  the  NWE  and  CEE  regions,  the  development  did  not 
manifest itself in the SE region in 2011-15, when costs fluctuated from €81.10/MWh in 
2011  to  €91.50/MWh  in  2015.  In  the  NWE  region,  costs  decreased  from  €80.50/MWh 
(2011)  to  €61.80/MWh  (2015)  and  in  the  CEE  region  from  €81.30/MWh  (2012)  to 
€75.05 (2015).  

Figure 21. Packaging glass: Costs of electricity paid by respondents (2006-15) 

)
h
W
M
/
€
(

s
t
s
o
c

y
t
i
c
i
r
t
c
e
l
E

160

140

120

100

80

60

40

20

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Northern-Western Europe (weighted average) Southern Europe (weighted average)

Central-Eastern Europe (weighted average)

EU weighted average

Source: Authors’ own elaboration. 

Components of the electricity bill 

In  this  section,  the  components  of  the  price  paid  by  respondents  for  electricity  are 
discussed.  The  energy  component  is  the  largest  component  present  in  the 
electricity bill. In 2006, the energy component accounted for €61.50/MWh whereas in 
2015 the amount was at €59.30/MWh. 

The  regulatory  component  has  a  large  impact  on  the  electricity  price  paid  by 
respondents: in 2015, 41% of the EU-weighted average electricity price was due 
to the regulatory component. The share of the regulatory component has been on the 
rise.  As  a  comparison,  the  impact  of  the  regulatory  component  was  in  2006  at  around 
28% and increased in the following years.  

While  the  share  of  taxes  and  levies  and  network  costs  on  average  EU  costs 
stayed  relatively  stable  between  2006  and  2015,  the  share  of  renewable 
support  increased.  Though  RES  costs  were  present  in  2006-09,  they  show  a  steep 
increase  in  the  post-2009 period.  The  average  RES  support  paid  by manufacturers was 
€6.20/MWh  in  2006,  which  increased  to  €12.50/MWh  in  2011  and  further  to 
€20.40/MWh in 2015. Network costs show a slight increase: the EU average of network 
costs present in the electricity bill was €12/MWh in 2006 and increased to €13/MWh in 

87 

 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

2015.  These  trends  were  behind  indirect  costs  of  electricity  legislation  faced  by  plants 
and described in more detail in the section entitled ‘Indirect regulatory costs’ below.  

The  impact  of  the  different  regulated  components  varies  across  regions.  In 
2015,  the  regulatory  components  made  for  some  54%  of  the  electricity  bill  for 
manufactures in the SE region while for respondents in the NWE region, the non-energy 
component  represented  around  29%  of  the  energy  bill.  In  the  CEE  region,  non-energy 
components made up for 46% of the total electricity bill in 2015.  

RES  levies,  network  costs,  and  taxes  and  other  levies  differ  in  importance  across 
regions.  In  both  the  CEE  and  SE  regions,  the  increase  of  the  regulatory  share 
was driven by the growing role of renewable energy support. In the CEE region, 
the renewable energy support component steadily increased from 2.2% (2006) to 21.5% 
(2015), while in the SE region the share increased from 10.6% (2006) to 36.2% (2015). 
A share of the increase in RES levy can be attributed to EU legislation. 

In the NWE region, the share of regulatory components remained quite steady over the 
study  period,  going  up  from  2006  (24.4%)  to  2015  (28.9%).  Taxes,  fees  and  levies 
represented  a  larger share  of  the  electricity  bill  in  the  NWE  region  than in  the 
two  other  regions.  In  2015,  taxes,  fees  and  levies  covered  €11.60/MWh  of  the 
electricity bill in the NWE region, while for SE manufactures the cost was at €2.60/MWh 
and  in  the  CEE  region  at  €0.04/MWh.  A  low  level  of  taxes,  fees  and  levies  in  the  CEE 
region might imply that some plants in the sample were exempted from the tax set out 
in the Energy Taxation Directive with a minimum level of €0.50/MWh. 

Network  costs  increased  in  the  CEE  and  SE  regions  while  in  the  NWE  region 
they  decreased.  In  the  CEE  region,  manufacturers  paid  on  average  €14.80/MWh  in 
2006  while  by  2015  the  costs  had  gone  up  to  €21.30/MWh.  In  the  SE  region,  network 
costs increased from €17.70/MWh (2006) to €21.30/MWh (2015). Network costs show a 
more stable trend in the NWE region and in 2015 (€6.50/MWh) were actually below 2006 
level (€8.60/MWh).  

The  data  on  electricity  bill  components  shows  that  the  share  of  regulatory  costs 
increased.  However,  the  overall  electricity  price  decreased  beginning  in  2011  due  to 
falling energy supply costs, which outweighed the increase in regulatory costs.  

88 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  22.  Packaging  glass:  Relative  costs  of  components  of  the  electricity  bills  paid  by  respondents  (%,  weighted 
averages, 2006-15) 

100%

90%

80%

70%

Other taxes, fees,
levies and charges
(excl. VAT)

Renewable support

60%

Network costs

Energy supply
costs

50%

40%

30%

20%

10%

0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU average

Northern-Western Europe

Southern Europe

Central-Eastern Europe

Other taxes, fees, levies and charges (excl. VAT)

Renewable support

Network costs

Energy supply costs

7

7

14

72

7

8

14

71

5

8

15

72

7

7

13

73

7

9

13

71

7

13

12

69

5

15

12

68

6

15

12

66

8

20

13

59

8

20

13

59

8

7

9

76

8

8

10

75

8

8

10

74

9

6

9

9

7

9

10

8

7

9

5

7

9

5

7

15

14

5

6

8

7

8

5

11

20

63

3

10

21

66

0

0

1

3

3

16

18

63

3

20

18

58

2

28

17

53

3

26

16

54

2

38

16

45

2

36

16

46

0

2

26

72

0

2

24

74

0

2

23

75

0

3

22

75

0

8

24

68

0

17

23

60

0

18

22

60

0

24

22

54

0

21

25

55

0

21

25

54

11

20

64

76

75

75

79

78

72

71

Source: Authors’ own elaboration. 

89 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 23. Packaging glass: Absolute costs of components of the electricity bills paid by respondents (weighted averages, 
2006-15, €/MWh)  

Other taxes, fees,
levies and
charges (excl.
VAT)

Renewable
support

Network costs

Energy supply
costs

h
W
M
r
e
p
€

160

140

120

100

80

60

40

20

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU average

Northern-Western Europe

Southern Europe

Central-Eastern Europe

Other taxes, fees, levies and charges (excl. VAT)

Renewable support

Network costs

Energy supply costs

6

6

12

62

6

7

13

63

5

7

13

64

6

7

13

69

6

9

13

69

6

13

12

68

6

15

13

70

6

15

12

66

8

20

13

60

8

20

13

8

6

9

8

7

9

7

7

9

9

6

9

10

7

9

9

8

7

8

5

7

8

5

6

12

12

5

7

5

6

4

9

18

69

69

56
59
Source: Authors’ own elaboration.

79

68

67

73

60

76

75

58

5

11

19

59

3

10

20

63

3

10

17

59

3

14

17

58

3

22

19

62

3

36

21

66

4

33

21

69

2

49

21

59

3

50

21

63

0

1

15

41

0

1

15

47

0

2

18

58

0

2

18

60

0

6

19

55

0

15

21

54

0

17

20

56

0

23

21

52

0

18

22

49

0

18

21

46

90 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Direct regulatory costs 

This section addresses direct charges generated by Energy Taxation legislation.  

Direct charges 

The  figures  below  present  the  direct  costs  generated  by  the  Energy  Taxation  Directive. 
Costs generated by EU legislation, linked to electricity consumption of plants, remained 
stable  over  the  study  period  2006-15.  This  is  to  be  expected  as  EU  legislation  sets  a 
minimum  level  of  tax  per  MWh,  which  stayed  the  same  throughout  the  study  period. 
Note that Member States might have put in place Energy tax schemes, which generated 
more costs to the sector than the EU minimum. 

In 2015, the average costs generated by the Energy Taxation Directive were at 
€0.16/tonne  of  production  in  NWE  region,  €0.14/tonne  of  production  in  CEE 
region  and  €0.16/tonne  of  production  in  the  SE  region.  Note  that  in  case 
exemptions were in place, the above-mentioned direct costs might not have occurred. A 
low level of taxes, fees and levies in the CEE region might imply that some plants in the 
sample were exempted from the tax.  

Indirect regulatory costs 

What  follows  is  an  analysis  of  indirect  regulatory  costs  presented  by  EU  energy 
legislation to the sector. Following the analysis on the relevance of EU energy legislation, 
this  section  looks  at  indirect  compliance  costs  generated  by  the  three  following 
legislative acts and their repealed acts: 

  Directive  2009/72/EC  which  aims  at  creating  common  rules  for  the  generation, 

transmission and distribution of electricity, repealing Directive 2003/54/EC; 

  Regulation  (EC)  No  714/2009  which  aims  at  setting  fair  rules  for  cross-border 

exchanges in electricity, repealing Regulation (EC) No 1228/2003; 

  Renewable Energy Directive 2009/28/EC which sets a common framework for the 
promotion  of  energy  from  renewable  sources,  repealing  Directives  2001/77/EC 
and 2003/30/EC. 

Internal  Market  legislation  generates  costs  via  the  investment  put  in  place  due  to 
Internal Market legislation.  

The  Renewable  Energy  Directive  can  generate  indirect  regulatory  costs  in  a  two-fold 
manner: 

  By specific renewable energy support levies added to electricity bills. 

  By  the  need  to  reinforce  networks  for  the  system  of  integration  on  renewable 
energy.  These  costs  are  also  passed  on  to  the  electricity  bills  and  added  to  the 
network cost component.   

The  graphs  below  show  indirect  costs  generated  by  the  Internal  Market  legislation  and 
the  Renewable  Energy  Directive.  Indirect  costs  present  more  than  90%  of  the  cost 
generated by electricity related legislation.  

At  the  EU  level,  the  costs  increased  through  the  period  2006-15  and  peaked  at 
€3.40/tonne  of  production  in  2012.  Indirect  costs  were  highest  in  the  SE  region, 
ranging from €2.20/tonne (2006) to €6.30/tonne (2015). Costs in the CEE region 

91 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

peaked in 2012 (€5/tonne) and decreased to €4.90/tonne in 2015. Costs of electricity 
legislation were considerably lower in the NWE region compared to the CEE and 
SE regions, ranging between €1-2/tonne in 2006-15.   

The  reasons  behind  regional  differences  and  particularly  in  the  lower  costs  incurred  by 
electricity legislation in the NWE region can be explained by the differing importance in 
regulatory  components  in  the  three  geographic  regions.  In  2015,  the  regulatory 
components  were  some  54%  of  the  electricity  bill  for  manufactures  in  the  SE  region, 
while for respondents in the NWE region the  regulatory component represented around 
29% of the energy bill. In the CEE region, regulatory components made up 46% of the 
total electricity bill in 2015.  

Furthermore, while in both the CEE and SE regions the increase of the regulatory share 
were driven by the growing role of renewable energy support, in the NWE region, taxes, 
fees  and  levies  represented  a  larger  share  of  the  electricity  bill.  The  prominence  of 
RES support in the SE and CEE regions therefore mostly explains the difference 
in the regulatory costs present in the SE and CEE regions compared to the NWE 
region.  

Table  23  presents  the  direct  and  indirect  costs  of  the  most  recent  year  (2015),  which 
also has the most available data; 2015 can be considered a typical year for the sector, 
as production has recovered following the economic crisis.  

The 2014-20 Guidelines on State Aid for Environmental Protection and Energy prescribe 
a gradual move to market-based support for renewable energy and thus can bring down 
renewable  support  exemptions,  generating  a  cost  impact  on  the  sector.  These  new 
guidelines  are  applicable  from  1  July  2014  and  therefore  their  impact  can  only  be 
assessed  for  years  2014-15.  The  State  Aid  Guidelines  may  lead  to  a  decrease  in 
renewable  support  levy  exemptions,  which  could  translate  to  higher  renewable  support 
costs. 

As shown in Figure 23, the RES component increased in 2014-15, up from €20/MWh to 
€20.40/MWh.  In  the  absence  of  data  on  the  evolution  on  national  exemption  schemes, 
the cost impact of State Aid Guidelines is possible but cannot be quantified. At any rate, 
no  strong  conclusion  can  be  drawn  due  to  the  limited  time  (2014-15)  that  State  Aid 
Guidelines have been in place. 

92 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  24.  Packaging  glass:  Cumulative  regulatory  costs  of  electricity 
legislation 2006-15 for the CEE, NWE and SE regions (€/tonne of production) 

7

6

5

4

3

2

1

0

DC

IC

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

CEE

SE

NWE

Source: Authors’ own elaboration. 

Figure  25.  Packaging  glass:  Cumulative  regulatory  costs  of  electricity 
legislation 2006-15, EU average (€/tonne of production) 

4

3,5

3

2,5

2

1,5

1

0,5

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

IC DC

Source: Authors’ own elaboration. 

93 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table 23. Packaging glass: Cumulative regulatory costs of electricity legislation 
2015 (€/tonne of production) 

Regions 

NWE 

CEE 

SE 

Administrative 
burdens  

Substantive 
compliance costs 

0 

0 

Direct 
regulatory 
costs 

0 

0 

0 

0 

Direct charges 

0.16 

0.14 

0.16 

EU 

0 

0 

0.16 

Indirect regulatory costs 

1.50 

4.73 

6.17 

3.28 

Total regulatory costs 

1.66 

4.87 

6.33 

3.44 

Source: Authors’ own elaboration. 

6.4.4  Cost assessment – Glass tableware 

Sample 

A brief overview of the number of questionnaires received can be found below in  Table 
24. The sample covers five respondents from the glass tableware subsector. 

Table 24. Glass tableware: Total number of questionnaires received and used in 
the Chapter 

Subsector 

Glass 
tableware 

Number of responding plants 

Total EU 

5 

Source: Authors’ own elaboration. 

Number of 
questionnaire
s used 

5 

Electricity prices and costs 

All  electricity  costs  reported  in  this  section,  and  used  throughout  the  analysis  are  net 
costs: reimbursements from interruptibility schemes, renewable support reimbursements 
and self-generated electricity sold to the grid have been taken into account.  

94 

 
 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Electricity intensity 

What  follows  is  an  analysis  of  electricity  intensity  of  production  as  reported  by 
responding  plants.  An  assessment  of  the  industry’s  electricity  intensity  helps  us  to 
understand what role costs generated by consumption of electricity play for the sector.  

Due  to  the  limited  number  of  respondents  from  glass  tableware  manufacturers,  data 
cannot be displayed via a box plot. Instead, a line graph is used. All plants in the sample 
provided  the  relevant  information  allowing  the  Research  Team  to  assess  the  electricity 
intensity  based  on  the  sample  of  five  plants.  Note  that  none  of  the  respondents  uses 
self-generation of electricity. 

Compared  to  packaging  glass  and  flat  glass  producers,  glass  tableware 
producers  are  more  electricity-intensive.  The  respondents’  electricity  intensity 
shows  an  increasing  trend  over  the  period  2006-15.  While  the  EU-weighted 
average  of  electricity  intensity  was  at  0.36  MWh/tonne  of  production  in  2006,  in  2015 
the figure stood at 0.51 MWh/tonne of production.  

Figure 26. Glass tableware: Electricity intensity per tonne of production (2006-
15) 

)
e
n
n
o
t
/
h
W
M
(

y
t
i
s
n
e
t
n
I

y
t
i
c
i
r
t
c
e
l
E

0,60

0,50

0,40

0,30

0,20

0,10

0,00

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU weighted average

Source: Authors’ own elaboration. 

Electricity costs 

All  plants  in  the  sample  provided  their  electricity  costs  allowing  the  Research  Team  to 
assess the net electricity costs based on a sample of five plants. Two plants out of five 
levies.  No  plant  reported  RES 
reported  reimbursement 
reimbursements.  One  plant  reported  to  have  received 
interruptibility  scheme 
reimbursements.  

from  taxes, 

fees  or 

95 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Net  electricity  costs  for  glass  tableware  producers  are  lower  than  for  flat  glass  and 
packaging glass producers. This observation is in line with results from previous studies 
that  indicate  lower  electricity  costs  for  more  electricity-intensive  plants.  Net  electricity 
costs  increased  over  the  period  2006-15.  Costs  show  an  upward  trend  for  EU 
weighted average from 2006 (€41.80/MWh) to 2015 (€57.30/MWh).  

The  trends  presented  here  do  not  follow  the  global  coal  and  oil  price  developments 
shown in Figure 12. Due to the small sample size, no solid conclusion can be drawn from 
this sample. 

Figure 27. Glass tableware: Costs of electricity paid by respondents (2006-15) 

)
h
W
M
/
€
(

s
t
s
o
c

y
t
i
c
i
r
t
c
e
l
E

70

60

50

40

30

20

10

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU weighted average

Source: Authors’ own elaboration. 

Components of the electricity bill 

In  this  section,  the  components  of  the  price  paid  by  respondents  for  electricity  are 
discussed.  

The energy component represents the largest component in the electricity bill. 
It increased from €38.80/MWh in 2006 to €45.90/MWh in 2015. Both the energy 
component and the regulatory component seem to have driven the increase in the EU 
weighted average electricity costs.  

The  regulatory  component  had  a  large  impact  on  the  electricity  price  paid  by 
respondents: in 2015, 30% of the EU weighted average electricity price was due to the 
regulatory component. The regulatory component was on the rise. As a comparison, the 
regulatory  component  was  around  €9.30/MWh  in  2006  and,  with  some  fluctuations, 
increased to €20.10/MWh in 2015.  

96 

 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Network  costs  show  an  upward  trend  during  the  period  2006-13,  as  they 
increased  from  €7.70/MWh  to  €11.50/MWh  (2012),  then  decreased  to  €8.90/MWh  in 
2015.  The  share  of  renewable  energy  support  of  the  electricity  bill  grew  the 
most,  from  0%  (2006)  to  14.1%  (2015),  in  absolute  values,  meaning  an  increase 
from  €0/MWh  to  €9.30/MWh.  Other  taxes  and  levies  on  average  EU  costs  stayed 
relatively  stable  during  2006-15,  with  a  share  of  €1.50/MWh  in  2006  to  €1.90/MWh  in 
2015.  

The data on electricity bill components shows that all four components increased across 
the  2006-15  period.  Due  to  the  limited  size  of  the  sample,  no  solid  conclusions  on  the 
component trends can be drawn.  

Figure 28. Glass tableware: Relative costs of components of the electricity bills 
paid by respondents (%, weighted averages, 2006-15) 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Other taxes, fees,
levies and charges
(excl. VAT)

Renewable support

Network costs

Energy supply costs

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU average

Other taxes, fees, levies and charges
(excl. VAT)

Renewable support

Network costs

Energy supply costs

3,1

0,0

16,1

80,7

3,0

0,0

16,5

80,5

2,7

0,0

16,6

80,8

3,2

0,4

15,0

81,5

2,5

1,2

15,8

80,4

2,7

1,3

17,4

78,5

2,6

5,3

18,3

73,8

3,9

4,9

18,2

73,0

3,3

8,5

15,1

73,2

2,9

14,1

13,4

69,6

Source: Authors’ own elaboration. 

97 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 29. Glass tableware: Absolute costs of components of the electricity bills 
paid by respondents (weighted averages, 2006-15, €/MWh) 

Other taxes, fees,
levies and charges
(excl. VAT)

Renewable support

Network costs

70,0

60,0

50,0

40,0

30,0

20,0

h
W
M
r
e
p
€

Energy supply costs

10,0

0,0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU average

Other taxes, fees, levies and charges
(excl. VAT)

Renewable support

Network costs

Energy supply costs

1,5

0,0

7,7

1,5

0,0

8,2

1,3

0,0

8,3

1,8

0,2

8,7

1,4

0,7

8,8

1,6

0,7

9,9

38,8

40,1

40,5

47,6

44,6

44,4

1,6

3,3

11,5

46,5

2,5

3,1

11,4

46,0

2,1

5,3

9,4

1,9

9,3

8,9

45,5

45,9

Source: Authors’ own elaboration. 

Direct regulatory costs 

This section address direct charges generated by energy taxation legislation.  

Direct charges 

The  figures  below  present  the  direct  costs  generated  by  the  Energy  Taxation  Directive. 
Costs generated by EU legislation, linked to electricity consumption of plants, remained 
stable  over  the  study  period  2006-15.  This  is  to  be  expected  as  EU  legislation  sets  a 
minimum level of tax per MWh which stayed the same throughout the study period. Note 
that  Member  States  might  have  put  in  place  Energy  tax  schemes  that  generated  more 
costs for the sector than the EU minimum. In 2015, the average costs generated by 
the  Energy  Taxation  Directive  were  €0.52/tonne  of  production  in  the  EU  level. 
Note  that  in  case  exemptions  are  in  place,  the  above-mentioned  direct  costs  might  not 
occur.  

Indirect regulatory costs 

What  follows  is  an  analysis  of  indirect  regulatory  costs  presented  by  EU  energy 
legislation to the sector. Following the analysis on the relevance of EU energy legislation, 
this  section  looks  at  indirect  compliance  costs  generated  by  the  three  following 
legislative acts and their repealed acts: 

  Directive  2009/72/EC  which  aims  at  creating  common  rules  for  the  generation, 

transmission and distribution of electricity, repealing Directive 2003/54/EC; 

98 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

  Regulation  (EC)  No  714/2009  which  aims  at  setting  fair  rules  for  cross-border 

exchanges in electricity, repealing Regulation (EC) No 1228/2003; 

  Renewable  Energy  Directive  2009/28/EC,  which  sets  a  common  framework  for 
from  renewable  sources,  repealing  Directives 

the  promotion  of  energy 
2001/77/EC and 2003/30/EC. 

Internal  Market  legislation  generates  costs  via  the  investment  put  in  place  due  to 
Internal Market legislation.  

The  Renewable  Energy  Directive  can  generate  indirect  regulatory  costs  in  a  twofold 
manner: 

  By specific renewable energy support levies added to electricity bills. 

  By  the  need  to  reinforce  networks  for  the  system  of  integration  on  renewable 
energy. These costs are also pass on the electricity bills and added to the network 
cost component.   

The  graphs  below  show  indirect  costs  generated  by  the  Internal  Market  legislation  and 
the  Renewable  Energy  Directive.  Indirect  costs  present  approximately  90%  of  the  cost 
incurred by electricity related legislation.  

At  the  EU  level,  the  costs  increased  from  2006  onwards  and  peaked  at 
€6.80/tonne of production in 2013. Table 25 presents the direct and indirect costs of 
the  most  recent  year  (2015),  which  also  has  the  most  data  available;  2015  can  be 
considered  a  typical  year  for  the  sector,  as  production  has  recovered  following  the 
economic crisis.  

The 2014-20 Guidelines on State Aid for Environmental Protection and Energy prescribe 
a gradual move to market-based support for renewable energy and thus can bring down 
renewable  support  exemptions  generating  a  cost  impact  on  the  sector.  These  new 
guidelines  are  applicable  from  1  July  2014  and  therefore  their  impact  can  only  be 
assessed  for  2014-15.  The  State  Aid  Guidelines  may  lead  to  a  decrease  in  renewable 
support levy exemptions, which could translate into higher renewable support costs. 

As  shown  in  Figure  29,  the  RES  component  increased  between  2014-15,  from 
€5.30/MWh  to  €9.30/MWh.  In  the  absence  of  data  on  the  evolution  of  national 
exemption  schemes,  the  cost  impact  of  State  Aid  Guidelines  is  possible  but  cannot  be 
quantified. At any rate, no solid conclusion can be drawn due to the limited time (2014-
15) that State Aid Guidelines have been in place. 

99 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  30.  Glass  tableware:  Cumulative  regulatory  costs  of  electricity 
legislation 2006-15, EU average (€/tonne of production) 

8

7

6

5

4

3

2

1

0

DC

IC

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: Authors’ own elaboration. 

Table 25. Glass tableware: Cumulative regulatory costs of electricity legislation 
for 2015 (€/tonne of production) 

Administrative burdens  

Direct regulatory 
costs 

Substantive compliance costs 

Direct charges 

Indirect regulatory costs 

Total regulatory costs 

Source: Authors’ own elaboration. 

EU 

0 

0 

0.52 

5.08 

5.60 

100 

 
 
 
  
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

6.4.5  Cost assessment – Flat glass 

Sample 

A short overview of the number of questionnaires received can be found below in Table 
26.  In  total,  the  sample  covers  15  respondents  from  the  flat  glass  sector.  More  than 
three plants from each geographical region provided data enabling the Research Team to 
present regional cost assessments in the flat glass sector. 

Table  26.  Flat  glass:  Total  number  of  questionnaires  received  and  used  in  the 
Chapter 

Sector 

Number of responding plants 

Total EU 

NWE 

CEE 

SE 

Number of 
questionnaires 
used 

Flat glass 

15 

5 

5 

5 

15 

Source: Authors’ own elaboration. 

Electricity prices and costs 

All  electricity  costs  reported  in  this  section,  and  used  throughout  the  analysis  are  net 
costs: reimbursements from interruptibility schemes, renewable support reimbursements 
and self-generated electricity sold to the grid have been taken into account. 

Electricity intensity 

What  follows  is  an  analysis  of  electricity  intensity  of  production  as  reported  by 
responding  plants.  An  assessment  of  the  industry’s  electricity  intensity  helps  us  to 
understand what role costs generated by EU legislation on electricity play for the sector.  

Assessment  of  electricity  intensity  is  based  on  15  responding  plants.  Note  that  none  of 
the respondents uses self-generation of electricity. 

Compared  to  the  packaging  glass  and  glass  tableware  subsector  in  particular,  the  data 
from  flat  glass  respondents  shows  a  somewhat  lower  electricity  intensity  per  tonne  of 
production.  The  respondents’  electricity  intensity  remained  relatively  stable  over 
the  period  2006-15,  with  an  EU  weighted  average  fluctuating  between  0.20 
MWh/tonne  of  production  (2007)  and  0.23  MWh/tonne  of  production  (2012). 
The  EU  weighted  average  was  0.22  MWh/tonne  of  production  in  the  beginning  of  the 
study  period  and  0.21  MWh/tonne  of  production  in  2015.  As  observations  fluctuate 
between  years,  no  clear  trend  can  be  identified.  Crossed-checked  with  previous 
research, these results are in line with literature on electricity intensity of production in 
the hollow glass sector.100 

Contrary  to  trends  in  other  subsectors,  the  EU  weighted  average  was  higher  than  the 
median in most years. This is explained by a high electricity intensity of one large plant 
with large production output.  

Regional differences are present in the data.  In all years, plants in the NWE region 
reported lower electricity intensity than their peers in the CEE and SE regions. 

100 Ibid.  

101 

 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

The  weighted  average  for  NWE  plants  was  below  median  in  all  years,  whereas  SE  and 
CEE plants were above the 2006-15 median.  

The  trend  in  the  CEE  region  is  interesting  to  analyse,  in  particular  during  2012-15. 
Plants  based  in  CEE  reported  higher  electricity  intensities  than  those  in  NWE 
and SE in 2006-11 but demonstrated a decreasing trend in electricity intensity 
in  2012-15.  The  electricity  intensity  of  CEE  plants  decreased  from  0.33 MWh/tonne  of 
production  (2011)  to  0.25  MWh/tonne  (2015),  while  manufacturers  in  SE  regions 
showed  stable  electricity  intensity,  0.24  MWh/tonne  both  in  2011  and  in  2015.  While 
slight  changes  can  be  identified,  this  difference  in  electricity  intensities  over  this 
relatively short period cannot be identified as a robust trend.   

102 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 31. Flat glass: Electricity intensity per tonne of production (2006-15)  

)
e
n
n
o
t
/
h
W
M
(

y
t
i
s
n
e
t
n
I

y
t
i
c
i
r
t
c
e
l
E

0,80

0,70

0,60

0,50

0,40

0,30

0,20

0,10

0,00

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU (boxplot)

Central-Eastern Europe (weighted average)

Northern-Western Europe (weighted average)

Southern Europe (weighted average)

EU weighted average

Source: Authors’ own elaboration.

103 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Electricity costs 

All  plants  in  the  sample  provided  their  electricity  costs  allowing  the  Research  Team  to 
assess  the  net  electricity  costs  based  on  a sample  of  15  plants.  Three  plants  out  of  15 
reported 
respondents  showed 
reimbursements  from  other  taxes,  fees  and  levies.  Two  plants  indicated  the  usage  of 
self-generated  electricity  in  their  production  process.  No  plants  in  the  sample  reported 
having received reimbursements from taking part in an interruptibility scheme. 

reimbursements 

levies  while 

from  RES 

three 

The  flat  glass  sector  reports  lower  electricity  costs  than  those  of  the  glass 
tableware  and  packaging  glass  subsectors.  Net  electricity  costs  fluctuated 
significantly over the period 2006-15. There was a clear increasing trend in the EU 
weighted  average  electricity  costs  from  2006  (€53.80/MWh)  to  2013 
(€86/MWh). The last years of the study period show that costs decreased, and 
in 2015 average costs of electricity for EU producers was €73.60/MWh. As shown in next 
section,  the  increasing  trend,  particularly  in  2010-13,  is explained  by  higher  regulatory 
cost components. 

Regional comparison shows dispersion, possibly due to higher fragmentation of national 
policies.  Average  net  costs  were  lowest  in  the  CEE  region,  where  producers  paid 
€62.70/MWh in 2015, while in SE region the weighted average was €89.80/MWh and in 
the NWE region €66.40/MWh. Electricity costs of SE manufactures are between €8.40 to 
€27.10/MWh  higher  than  those  of  CEE  producers  during  the  study  period,  and  in  the 
NWE  region  between  €2.50/MWh and  €14.50/MWh  higher  than  in  the  CEE  region  (with 
the  exception  of  2008  when  the  costs  were  lower  in  the  NWE  region).  The  electricity 
costs presented here somewhat follow the global energy price trends presented in Figure 
12 but with far more moderate fluctuations.  

104 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 32. Flat glass: Costs of electricity paid by respondents (2006-15) 

160

140

120

100

80

60

40

20

0

)
h
W
M
/
€
(

s
t
s
o
c

y
t
i
c
i
r
t
c
e
l
E

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU (boxplot)

Central-Eastern Europe (weighted average)

Northern-Western Europe (weighted average)

Southern Europe (weighted average)

EU weighted average

Source: Authors’ own elaboration.

105 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Components of the electricity bill 

In  this  section,  the  components  of  the  price  paid  by  respondents  for  electricity  are 
discussed.  

The  energy  component  is  the  largest  component  present  in  the  energy  bill.  It 
fluctuated during the study period mostly following the electricity cost trends described 
in  the  previous  section. The  energy  component  increased  between 2006  (€41.00/MWh) 
and 2012 (€64.70/MWh), then decreased.  

The  regulatory  component  had  a  large  impact  on  the  electricity  price  paid  by 
respondents: in 2015, 39% of the EU weighted average electricity price was due to the 
regulatory  component.  The  share  of  the  non-energy  component  increased 
between  2006  (30%)  and  2015  (39%)  in  absolute  terms,  from  €18/MWh  to 
€32/MWh.  

Network costs, renewable energy support and other taxes and levies increased 
over  the  study  period  with  some  fluctuations.  Network  costs  fluctuated  over  the 
period but on average increased. While in 2006 network costs were €8.80/MWh, in 2015 
they stood at €10/MWh. RES support fluctuated the most. RES support increased steeply 
from  2009  (€7.20/MWh)  to  2010  (€11/MWh)  and  2011  (€16.30/MWh)  and  since  then 
increased  to  €19/MWh  in  2015.  At  the  EU  level,  taxes  and  levies  remained  relatively 
stable, decreasing between 2006 (€3.50/MWh) and 2015 (€3/MWh). 

The  impact  of  regulated  components  also  varies  across  regions.  Data  from  SE 
producers show  that to  some extent the sharp  increase  in RES  support can  be 
attributed  to  the  trends  in  the  SE  regions  where  the  RES  support  increased 
from €5.10/MWh (2009) to €11.60/MWh (2012). As under the same time period, 
variable renewable energy increased in the SE region from 6.9% of production to 10.9% 
of production;101 the increase in the RES levy can be linked to increase use of renewable 
energy.  In  the  CEE  regions,  RES  support  increased,  with  some  fluctuations  between 
2006 (€10.80/MWh) and 2015 (€13.70/MWh).  

In  2009,  average  RES  support  in  the  NWE  region  was  €7.80/MWh,  increased  to 
€22.60/MWh  in  2011  and  then  decreased  in  2012  to  €14.70/MWh  before  increasing 
again,  to  €24/MWh,  in  2015.  The  rapid  cost  fluctuations  were  accompanied  by 
fluctuations in taxes and levies in the NWE region. While in 2006, plants reported paying 
€3.80/MWh  in  taxes  and  levies,  in  2015  they  reported  taxes  and  levies  covered 
€2.80/MWh of the electricity bill.  

The  data  on  electricity  bill  components  shows  that  the  share  of  regulatory  costs 
increased and, in particular, the introduction of the Renewable Energy Directive seems to 
be reflected in the increase of RES support schemes. Part of this share can be attributed 
to  EU  legislation  and  therefore  the  analysis  provides  a  starting  point  for  the  regulatory 
cost  assessment  shown  later  in  this  Chapter.  However,  the  overall  electricity  price  has 
been  decreasing  since  2013  due  to  falling  energy  supply  costs,  which  outweigh  the 
costs.
increase 

regulatory 

in 

101 Eurostat. 

106 

 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Figure  33.  Flat  glass:  Relative  costs  of  components  of  the  electricity  bills  paid  by  respondents  (%,  weighted  averages, 
2006-15) 

Other taxes, fees,
levies and charges
(excl. VAT)

Renewable
support

Network costs

Energy supply
costs

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Other taxes, fees, levies and charges (excl. VAT)

Renewable support

Network costs

Energy supply costs

EU average

Northern-Western Europe

6

9

15

70

6

7

13

74

5

9

12

74

5

9

12

74

3

13

12

72

3

18

11

69

3

14

11

72

3

18

12

67

3

22

14

61

4

23

12

61

7

9

14

70

7

8

14

72

6

9

13

72

6

9

13

72

3

16

13

69

3

22

10

64

2

16

10

72

3

22

11

65

3

28

13

56

4

30

12

54

5

3

8

5

3

8

3

7

8

Southern Europe

4

6

7

3

7

7

3

3

10

12

7

8

84

84

82

83

82

80

77

Central-Eastern Europe

3

12

10

75

2

15

14

69

3

14

9

73

5

18

24

53

3

12

22

63

3

12

17

68

4

12

17

67

3

14

17

67

3

12

17

68

5

13

17

65

6

15

17

62

5

18

16

61

5

21

18

55

107 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Source: Authors’ own elaboration. 

Figure 34. Flat glass: Absolute costs of components of the electricity bills paid by respondents (weighted averages, 2006-
15, €/MWh) 

Other taxes,
fees, levies and
charges (excl.
VAT)
Renewable
support

Network costs

h
W
M
r
e
p
€

Energy supply
costs

120

100

80

60

40

20

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU average

Northern-Western Europe

Southern Europe

Central-Eastern Europe

Other taxes, fees, levies and charges (excl. VAT) 3,5 3,7 3,6 4,3 2,6 2,7 2,7 3,0 2,7 3,0 3,8 4,2 4,3 5,1 2,9 2,8 2,2 2,5 2,7 2,8 3,1 3,8 2,6 3,2 2,5 2,6 2,9 3,0 2,0 3,0 3,1 1,9 2,1 2,7 1,7 2,3 3,7 4,4 3,3 3,4

Renewable support

Network costs

Energy supply costs

5,4 4,5 6,1 7,2 11,0 16,3 12,8 17,0 18,2 18,9 4,9 5,0 6,0 7,8 13,4 22,6 14,7 21,9 23,1 24,0 1,7 1,9 5,2 5,1 6,2 8,8 11,6 12,3 14,3 14,1 10,8 7,0 8,4 8,2 8,9 8,0 9,6 11,1 12,3 13,7

8,8 8,6 9,0 10,2 9,8 9,8 9,7 10,9 11,5 10,0 8,1 9,0 9,3 11,5 10,8 10,7 9,5 10,6 11,1 9,6 4,9 5,4 6,2 6,4 6,2 6,7 7,6 9,8 13,0 9,1 14,8 12,6 12,4 11,2 11,2 11,2 12,3 13,0 10,7 11,7

41,0 47,1 53,3 61,7 58,8 63,4 64,7 63,6 50,3 48,9 40,1 45,5 50,0 61,6 59,0 65,5 67,2 63,7 47,0 43,3 50,1 57,5 64,9 71,1 68,3 72,8 75,5 77,5 65,4 71,7 32,2 35,9 48,8 45,2 43,7 45,4 47,4 46,9 40,8 35,6

Source: Authors’ own elaboration.

108 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Direct regulatory costs 

This section addresses direct charges generated by energy taxation legislation.  

Direct charges 

The  figures  below  present  the  direct  costs  generated  by  the  Energy  Taxation  Directive. 
Costs generated by EU legislation, linked to electricity consumption of plants, remained 
stable  over  the  study  period  2006-15.  This  is  to  be  expected  as  EU  legislation  sets  a 
minimum  level  of  tax  per  MWh  which  stayed  the  same  throughout  the  study  period 
2006-15.  Note  that  Member  States  might  have  put  in  place  energy  tax  schemes  which 
would have generated more costs to the sector than the EU minimum. 

In  2015,  the  average  costs  generated  by  the  Energy  Taxation  Directive  were 
€0.08/per  tonne  of  production  in  the  NWE  region,  €0.12/per  tonne  of 
production  in  the  CEE  region  and  €0.12/tonne  of  production  in  the  SE  region. 
Note  that  in  case  exemptions  are  in  place,  the  above-mentioned  direct  costs  might  not 
occur.  

Indirect regulatory costs 

What  follows  is  an  analysis  of  indirect  regulatory  costs  presented  by  EU  energy 
legislation to the sector. Following the analysis of the relevance of EU energy legislation, 
this  section  addresses  indirect  compliance  costs  generated  by  the  three  following 
legislative acts and their repealed acts: 

  Directive  2009/72/EC  which  aims  at  creating  common  rules  for  the  generation, 

transmission and distribution of electricity, repealing Directive 2003/54/EC; 

  Regulation  (EC)  No  714/2009  which  aims  at  setting  fair  rules  for  cross-border 

exchanges in electricity, repealing Regulation (EC) No 1228/2003; 

  Renewable  Energy  Directive  2009/28/EC,  which  sets  a  common  framework  for 
from  renewable  sources,  repealing  Directives 

the  promotion  of  energy 
2001/77/EC and 2003/30/EC. 

Internal  Market  legislation  generates  costs  via  the  investment  put  in  place  due  to 
Internal Market legislation.  

The  Renewable  Energy  Directive  can  generate  indirect  regulatory  costs  in  a  twofold 
manner: 

  By specific renewable energy support levies added to electricity bills. 

  By  the  need  to  reinforce  networks  for  the  system  of  integration  on  renewable 
energy. These costs are also pass on the electricity bills and added to the network 
cost component.   

The  graphs  below  show  indirect  costs  generated  by  the  internal  market  legislation  and 
the Renewable Energy Directive. The costs are more substantial in the CEE region 
and  less  present  in  the  SE  and  NWE  regions  where,  electricity  intensity  of 
production is higher than in other regions. In the CEE region, costs peaked in 2011 
(€5.40/tonne) while both in the SE (€2.90/tonne) and NWE (€2.10/tonne) regions costs 
were highest in 2014. At the EU level, the costs peaked at €3/tonne of production 
in 2014.  

109 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table  27  presents  the  direct  and  indirect  costs  of  the  most  recent  year  (2015),  which 
also has the most available data available; 2015 can be considered a typical year for the 
sector, as production has recovered following the economic crisis.  

The 2014-20 Guidelines on State Aid for Environmental Protection and Energy prescribe 
a gradual move to market-based support for renewable energy and thus can bring down 
renewable  support  exemptions  generating  a  cost  impact  to  the  sector.  These  new 
guidelines  are  applicable  from  1  July  2014  and  therefore  their  impact  can  only  be 
assessed  for  2014-15.  The  State  Aid  Guidelines  may  lead  to  a  decrease  in  renewable 
support levy exemptions, which could translate into higher renewable support costs. 

As  shown  in  Figure  34,  the  RES  component  slightly  increased  in  2014-15,  from 
€18.20/MWh  to  €18.90/MWh.  In  the  absence  of  data  on  the  evolution  on  national 
exemption  schemes,  a  cost  impact  of  State  Aid  Guidelines  is  possible  but  cannot  be 
quantified. At any rate, no solid conclusion can be drawn due to the limited time (2014-
15) that State Aid Guidelines have been in place. 

Figure  35.  Flat  glass:  Cumulative  regulatory  costs  of  electricity  legislation 
2006-15, CEE, NWE and SE regions (€/tonne of production) 

6

5

4

3

2

1

0

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

CEE

SE

NWE

Source: Authors’ own elaboration. 

DC

IC

110 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 36. Flat glass: Cumulative regulatory costs of electricity legislation 
2006-15, EU average (€/tonne of production) 

3,5

3

2,5

2

1,5

1

0,5

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

IC DC

Source: Authors’ own elaboration. 

Table 27. Flat glass: Cumulative regulatory costs of electricity legislation 2015 
(€/tonne of production) 

Regions 

NWE 

CEE 

SE 

Administrative 
burdens  

Substantive 
compliance costs 

0 

0 

Direct 
regulatory 
costs 

0 

0 

0 

0 

Direct charges 

0.08 

0.12 

0.12 

EU 

0 

0 

0.10 

Indirect regulatory costs 

1.86 

4.51 

2.43 

2.65 

Total regulatory costs 

1.94 

4.63 

2.55 

2.75 

Source: Authors’ own elaboration. 

111 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

6.5  Gas 

Glass  manufacturing  is  an  energy-intensive  industry  and  uses  natural  gas  as  its  main 
energy source.102 A cost assessment of EU legislation on gas for packaging glass, glass 
tableware and flat glass producers is presented in this section.  

The price of natural gas is divided into three components, of which the last two can be 
partly induced by the regulatory framework (regulated components): 

  energy supply; 

  network costs; 

  other taxes, fees, levies and charges (excluding recoverable taxes, such as VAT). 

Note that the  reimbursement from taxes, fees and levies are taken into account in this 
section.  Data  on  components  of  the  natural  bill  shed  light  on  the  trends  of  regulatory 
components which are set by the EU and national regulators. While not all regulated 
components are a result of EU regulation, an EU driven component is present in 
network costs as well as other taxes, fees, levies and charges (Energy Taxation 
Directive),  thus  making  an  analysis  of  the  components  relevant  for  the  purpose  of 
assessing  cumulative  costs.  Note  that  not  all  plants  provided  data  for  the  entire  period 
2006-15.  The  Research  Team  used  estimates  to  improve  the  quality  of  data  (see 
methodology section of this Chapter). 

6.5.1  Description of the Acts 

What  follows  is  a  description  of  natural  gas  related  legislation  with  an  expected  cost 
impact on the glass sector. 

Internal  Energy  Market.  Directives  and  regulations  setting  rules  for  the  Internal 
Energy  Market  constitute  the  so-called  ‘Third  Energy  Package’  (hereinafter  Third 
Package).  This  package  repealed  the  ‘Second  Energy  Package’  (hereinafter  Second 
Package) that entered into force in 2003. Completing the Internal Market requires both 
‘software’,  i.e.  common  rules  for  trading  gas,  as  well  as  ‘hardware’,  i.e.  cross-border 
infrastructure.  

The Directive (whose transposition was required by 2011) included in the ‘Third Package’ 
envisages  interventions  on  both  the  ‘software’  and  ‘hardware’  dimensions.  Directive 
2009/73/EC  concerning  common  rules  for  the  Internal  Market  in  natural  gas  defines 
rules  along  which  the  EU  market  in  natural  gas  is  established.  This  Directive  replaced 
Directive  2003/55/EC  that  was  part  of  the  Second  Package  and  was  put  in  place  to 
advance common rules for the Internal Market in natural gas. These Directives 
aim at establishing common rules for the transmission, distribution, supply and 
storage of natural gas. Particularly Directive 2009/73/EC lays down the rules relating 
to the organisation and functioning of the natural gas sector, access to the market, the 
criteria  and  procedures  applicable  to  the  granting  of  authorisations  for  transmission, 
distribution, supply and storage of natural gas and the operation of systems. In order to 
mainly  achieve  the  objective  of  the  security  of  supply,  both  Directives  require  Member 
States to develop necessary network infrastructure, including interconnection capacity.  

Regulation (EC) No 715/2009 provides non-discriminatory rules for access conditions 
to  natural  gas  transmission  systems,  liquefaction,  re-gasification  and  storage  facilities 
with  a  view  to  ensuring  the  proper  functioning  of  the  Internal  Market  in  gas.  In  this 
respect, it also provides mechanisms  to harmonise the  network access rules for 
cross-border  exchanges  in  gas.  This  Regulation  replaced  Regulation  (EC)  No 

102  Ecorys  et  al.  (2008),  “FWC  Sector  Competitiveness  Studies  -  Competitiveness  of  the  Glass 
Sector”, 
111 
(http://ec.europa.eu/DocsRoom/documents/1989/attachments/1/translations/en/renditions/pdf). 

p 

112 

 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

1775/2005  that  aimed  to  provide  conditions  for  non-discriminatory  access  by 
third  parties  to  the  gas  transmission  networks  and  achieve  structural  changes  in 
the  regulatory  framework  to  tackle  barriers  to  the  completion  of  the  Internal  Market 
regarding the trade of gas. 

Energy  Taxation  Directive.  The  current  Energy  Taxation  Directive  came  into force 
in 2003, setting a minimum level of taxation for energy products (Art. 4). It is the basis 
for  an  EU-wide  harmonised  minimum  taxation  of  electricity  and  energy 
products, including natural gas. 

The Directive sets minimum rates for EU-wide harmonised taxation for natural gas. The 
minimum  tax  rate  amounts  to  €0.15/GJ  for  natural  gas,  which  converts  to  a  rate  of 
€0.54/MWh.  This  rate  is  used  to  estimate  the  potential  cost  of  the  Energy  Taxation 
Directive.  

Note that according to Article 17, Member States may apply tax reductions in favour of 
energy-intensive businesses, if “purchases of energy products and electricity amount to 
at least 3.0 % of the production value or the national energy tax payable amounts to at 
least 0.5 % of the added value.” In case exemptions are in place, the above-mentioned 
direct costs might not occur or they might be due to national legislation. 

6.5.2  Categories of regulatory costs  

Internal  Market  legislation.  With  regard  to  the  ‘hardware’  dimension  of  the  Internal 
Market,  the  deployment  of  cross-border  infrastructure  requires  significant  investments. 
The  associated  costs  may  be  passed  on  to  consumers  and  charged  in  their  natural  gas 
bill, thus causing indirect compliance costs borne by industry players in both sectors. 
The  ‘software’  part  is  mainly  driven  by  network  codes,  which  are  a  set  of  rules  to 
facilitate  the  harmonisation,  integration  and  efficiency  of  EU  energy  markets.  Minor 
indirect costs  could  arise  when  adopting  these  new  market  rules.  However,  these  are 
considered  to  be  negligible  in  absolute  terms.  For  instance,  liquid  markets  are  an 
important  prerequisite  for  entering  into  long-term  contracts,  which  are  used  to  hedge 
the price risk of short-term markets. The impact of phasing out regulated energy prices 
can  be  ambiguous.  While  the  deregulation  of  energy  prices  is  important  to  ensure  the 
functioning  of  liberalised  energy  markets,  in  those  countries  where  energy  intensive 
industries used to benefit from favourable ‘industrial tariffs’, deregulation may have led 
to  higher  energy  prices,  thus  generating  other  indirect  compliance  costs  that  might 
weigh on glass industry players.  

Energy Taxation Directive. This Directive may generate direct charges depending on 
taxation set by EU Member States. 

6.5.3  Cost assessment – Packaging glass 

Sample 

A short overview of the number of questionnaires received can be found below in Table 
28. In total, the sample covers 21 respondents from the packaging glass subsector. More 
than  three  plants  from  each  geographical  region  provided  data  enabling  the  Research 
Team to present regional cost assessments in the packaging glass subsector. 

113 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table 28. Packaging glass: Total number of questionnaires received and used in 
the Chapter 

Number of responding plants 

Total EU 

NWE 

CEE 

SE 

Number of 
questionnaires 
used 

21 

7 

6 

8 

21 

Source: Authors’ own elaboration. 

Subsector 

Packaging 
glass 

Gas prices and costs 

Natural  gas  is  the  main  energy  source  for  the  glass  sector  as  it  is  used  in  the  melting 
process.  Natural  gas  costs  are  the  key  driver  of  the  sector’s  competitiveness.  This 
section presents information gathered from responding plants on their i) gas intensity ii) 
net gas costs and ii) components present in the natural gas bills.  

Gas intensity 

What  follows  is  an  analysis  of  natural  gas  intensity  of  production  as  reported  by 
responding plants.  

All plants in the sample provided the relevant information allowing the Research Team to 
assess the electricity intensity based on the sample of 21 plants. 

Glass manufacturing has a natural gas-intensive production  process.  This  is manifested 
by  the  data  received  from  respondents.  Natural  gas  intensity  remained  relatively 
stable  over  the  period  2006-15,  with  an  EU  weighted  average  between  1.51-
1.62 MWh/tonne of production. While the EU weighted average of electricity intensity 
was  1.51  MWh/tonne  of  production  in  2006,  in  2015  the  average  stood  at  1.59 
MWh/tonne of production. In all years, the weighted EU average was below the median.  

Plants  reported  heterogeneous  natural  gas  intensities.  The  minimum  intensity  (1 
MWh/tonne  of  production)  reported  by  a  plant  in  2015  was  half  of  the  natural  gas 
intensity  reported  by  the  most  natural  gas  intensive  plant  (2.2  MWh/tonne  of 
production).  Dispersion  was  greater  in  2006-09  and  since  then  decreased.  While  all 
respondents  reported  producing  packaging  glass,  the  gas  intensity  of  the  production 
process  can  differ,  for  example  due  to  diverging  shares  of  recycled  glass  used  in  the 
production process. 

Some  regional  differences  are  present.  SE  respondents  show  lower  natural  gas 
intensities than respondents in other regions in almost all years. Note, however, 
that the natural gas intensity in the SE region constantly increased between 2006 (1.24 
MWh/tonne  of  production)  and  2015  (1.55  MWh/tonne  of  production).  Data  from  CEE 
respondents  shows  an  opposite  trend,  with  decreasing  natural  gas  intensity  between 
2006  (1.95  MWh/tonne  of  production)  and  2015  (1.58  MWh/tonne  of  production). 
Respondents  from  the  NWE  region  reported  stable  natural  gas  intensities  for  all  years 
(1.54 MWh/tonne of production in 2006 and 1.56 MWh/tonne of production 2015). This 
is to say that regional differences decreased throughout the 10-year study period. 

114 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 37. Packaging glass: Natural gas intensity per tonne of production (2006-15) 

)
e
n
n
o
t
/
h
W
M
(

y
t
i
s
n
e
t
n
I

s
a
G

3,5

3,0

2,5

2,0

1,5

1,0

0,5

0,0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU (boxplot)

Central-Eastern Europe (weighted average)

Northern-Western Europe (weighted average)

Southern Europe (weighted average)

EU weighted average

Source: Authors’ own elaboration.

115 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Gas costs 

This section presents net gas costs accounting for reimbursements from taxes reported 
by  responding  plants.  Three  plants  in  the  NWE  region  reported  reimbursements  from 
taxes.  

The  weighted  average  of  natural  gas  cost  for  EU  packaging  glass  producers  fluctuated 
over  the  study  period  (2006-15).  Costs  increased  till  2008  (€27.40/MWh), 
decreased  thereafter  till  2010  (€22.80/MWh),  increased  again  till  2012 
(€29.30/MWh),  and decreased  again  till 2015 (€25.80/MWh).  The  median  costs 
were  higher  than  the  EU  weighted  average  in  most  years,  showing  that  plants  with 
larger production output have lower natural gas costs.  

Data  from  respondents  shows  some  regional  differences.  Plants  in  the  SE  region 
reported  higher  gas  costs  in  almost  all  years  than  plants  in  CEE  and  NWE 
regions,  while  plants  in  the  NWE  region  incurred  the  lowest  costs  in  almost  all  years. 
The  declining  trend  in  gas  costs  held  for  all  three  regions  in  2012-15,  with  SE  plants 
paying €29.60/MWh, CEE plants €28.10/MWh and NWE plants €22.30/MWh in 2015.  

This data collection from glass manufacturing plants demonstrates the global natural gas 
price trends presented in Figure 12. This is because the energy supply costs make up a 
large  share  of  the  gas  bill,  with  regulatory  components  having  a  much  less  significant 
share  when  compared  with  electricity  bills,  as  is  discussed  later  in  this  section.  Note, 
however,  that  data  from  manufactures  shows  that  in  2015,  costs  were  below  the  2008 
level and above the 2006 level. 

116 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 38. Packaging glass: Cost of natural gas paid by respondents (2006-15) 

)
h
W
M
/
€
(

s
t
s
o
c

s
a
G

45

40

35

30

25

20

15

10

5

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU (boxplot)

Central-Eastern Europe (weighted average)

Northern-Western Europe (weighted average)

Southern Europe (weighted average)

EU weighted average

Source: Authors’ own elaboration.

117 

 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Components of the gas bill 

In  this  section,  the  components  of  the  price  paid  by  respondents  for  natural  gas  are 
discussed.  

The  energy  component  has  the  biggest  impact  on  the  natural  gas  bill  at  EU  level, 
representing  approximately  90-92%  of  gas  costs  in  2006-15:  while  the  regulatory 
components remained relatively stable, the energy components fluctuated over 
time, following the trends described in the previous section on net natural gas 
costs. The energy supply component peaked at €28.80/MWh in 2012, then declined to 
€24.90/MWh  in  2015.  Network  costs  at  EU  level  show  an  increase  from  €1.30/MWh  in 
2006  to  €1.70/MWh  in  2015.  On  average,  taxes,  fees  and  levies  decreased  both  in 
absolute  and  relative  terms:  while  in  2006  taxes  and  levies  represented  €1/MWh,  in 
2015 they stood at €0.9/MWh.  

Regional  level  analysis  shows  large  differences  between  geographical  areas.  In  the 
NWE  region,  network  costs  represented  only  a  small  share  of  the  natural  gas 
bill (2.2% in 2015), while in the SE network costs accounted for 10.4% of the 
bill (2015) and in the CEE region 12.3% (2015).  

Taxes  and  levies  however  were  more  substantial  in  the  NWE  region,  where 
manufacturers paid €1.46/MWh on taxes and levies in 2015. In the SE region, the cost 
of  taxes  and  levies  amounted  to  €0.25/MWh  while  for  CEE  manufacturers  taxes  and 
levies represented less than €0.01 of their natural gas bill. These differences were likely 
a result of the various national tax schemes in place.  

Data received from respondents on their natural gas cost components shows that unlike 
in  the  case  of  electricity  cost  components,  the  energy  component  is  the  driver  of  the 
natural  gas  costs.  In  all  regions,  regulatory  costs  present  less  than  15%  of  the 
natural  gas cost.  Part  of  the network  costs as well as taxes  generated  by  the  Energy 
Taxation  Directive  are  a  result  of  EU  legislation.  Therefore,  this  outlook  on  natural  gas 
bill components serves to shed light on the cost assessment that follows in the section. 

118 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 39. Packaging glass: Components of the natural gas bills paid by respondents (%, weighted averages, 2006-15) 

100%

Other taxes, fees,
levies and charges
(excl. VAT)

Network costs

Energy supply costs

95%

90%

85%

80%

75%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU average

Northern-Western Europe

Southern Europe

Central-Eastern Europe

Other taxes, fees, levies and charges (excl. VAT)

Network costs

Energy supply costs

4

5

4

5

4

5

4

4

4

6

3

5

2

5

3

5

3

5

3

6

6

2

6

2

6

2

6

2

7

2

5

2

4

2

4

2

5

2

6

2

3

8

2

7

0

7

1

7

1

9

1

8

1

9

90

91

91

92

90

92

92

92

92

90

92

92

91

92

91

93

94

94

93

92

89

91

92

93

91

92

91

1

10

89

1

9

91

1

10

89

0

13

87

0

14

86

0

13

87

0

12

88

0

15

85

0

13

87

0

11

89

0

11

89

0

10

90

0

12

88

Source: Authors’ own elaboration. 

119 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  40.  Packaging  glass:  Components  of  the  natural  gas  bills  paid  by  respondents  (€/MWh,  weighted  averages,  2006-
15) 

Other taxes,
fees, levies and
charges (excl.
VAT)

Network costs

Energy supply
costs

h
W
M
r
e
p
€

40,0

35,0

30,0

25,0

20,0

15,0

10,0

5,0

0,0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU average

Northern-Western Europe

Southern Europe

Central-Eastern Europe

Other taxes, fees, levies and charges (excl. VAT) 1,0 1,0 1,0 1,1 0,9 0,7 0,8 0,9 0,9 0,9 1,4 1,5 1,7 1,8 1,5 1,1 1,2 1,3 1,4 1,5 0,7 0,5 0,1 0,1 0,1 0,2 0,2 0,3 0,3 0,2 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0

Network costs

Energy supply costs

1,3 1,3 1,5 1,2 1,5 1,4 1,6 1,6 1,6 1,7 0,5 0,5 0,6 0,5 0,5 0,5 0,5 0,5 0,5 0,6 2,2 2,0 2,2 1,7 2,2 2,3 3,0 3,2 2,8 3,1 3,0 3,2 3,7 3,5 4,1 3,7 3,5 3,4 3,3 3,5

21,5 22,3 25,9 26,1 22,3 23,5 28,8 28,5 27,9 24,9 20,9 22,2 24,9 27,8 21,3 21,1 27,8 28,0 25,7 23,3 23,5 24,4 28,3 23,4 23,6 28,1 31,0 29,7 29,8 26,4 20,3 18,8 25,0 24,9 23,9 24,3 28,2 28,4 28,6 24,7

Source: Authors’ own elaboration. 

120 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Direct regulatory costs 

This section addresses direct charges generated by energy taxation legislation.  

Direct charges 

Direct  charges  attributable  to  EU  legislation  make  up  approximately  two-thirds  of  all 
regulatory  costs  of  natural  gas  legislation.  These  charges  remained  relatively 
constant throughout the study period, as they were a tax per unit of gas consumed. In 
2015,  the  direct  costs  for  the  EU  hollow  glass  sector  were  €0.76/tonne  of 
production. 

For this Study, the minimum recommended tax value was applied to the data, but it is 
the responsibility of the regulatory board at Member State level to deduce a gas taxation 
for  the  packaging  glass  industry.  As  a  result,  these  charges  may  not  be  entirely 
represented,  particularly  in  the  regional  analysis.  Note  that  in  case  exemptions  are  in 
place, the above-mentioned direct costs might not occur. This can be the case in the CEE 
region,  where  manufacturers’  taxes  and  levies  represented  less  than  €0.01  of  their 
natural gas bill in 2015. 

Indirect regulatory costs 

What  follows  is  an  analysis  of  indirect  regulatory  costs  presented  by  EU  energy 
legislation  to  the  packaging  glass  subsector.  Following  the  analysis  of  the  relevance  of 
EU  energy  legislation  to  the  packaging  glass  subsector,  this  section  looks  at  indirect 
compliance costs generated by internal market legislation. 

Two legislative acts and repealed acts on the Internal Energy Market have the potential 
to generate indirect regulatory costs for the glass sector: 

  Directive  2009/73/EC  which  aims  at  creating  common  rules  for  the  generation, 

transmission and distribution of gas repealing Directive 2003/55/EC; 

  Regulation  (EC)  No  715/2009  which  aims  at  setting  fair  rules  for  cross-border 

exchanges in gas, repealing Regulation (EC) No 1775/2005. 

The  potential  costs  generated  by  the  legislation  translate  into  higher  network  costs  for 
the  industry.  This  is  due  to  the  need  to  finance  new  infrastructure.  Since  this  Study 
observes  the  effect  of  the  Internal  Energy  Market  for  gas,  charges  are  shown  from  the 
beginning of the study period and repealed acts are included.  

Indirect  charges  attributable  to  EU  legislation  are  approximately  one-third  of 
all cumulative regulatory costs on gas bills. Regional differences are demonstrated 
in  Figure  52.  Indirect  costs  represent  the  largest  share  of  costs  incurred  in  the 
CEE region, where they cover around 50% of the costs. In the SE region indirect 
costs  account  for  around  40-45%  of  costs  whereas  in  the  NWE  region  the  share  is 
approximately 10%. In 2015, the estimated costs of Internal Market legislation stood at 
€0.11/tonne  in  the  NWE  region, €0.84/tonne  in  the  CEE  region  and  €0.73/tonne  in  the 
SE region. 

121 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  41.  Packaging  glass:  Cumulative  regulatory  costs  of  natural  gas 
legislation 2006-15 for the CEE, NWE and SE regions (€/tonne of production) 

2,5

2

1,5

1

0,5

0

DC

 IC

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

CEE

SE

NWE

Source: Authors’ own elaboration. 

Figure  42.  Packaging  glass:  Cumulative  regulatory  costs  of  natural  gas 
legislation 2006-15, EU average (€/tonne of production) 

1,4

1,2

1

0,8

0,6

0,4

0,2

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

IC DC

Source: Authors’ own elaboration. 

122 

 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table  29.  Packaging  glass:  Cumulative  regulatory  costs  of  natural  gas 
legislation 2015 (€/tonne of production) 

Regions 

NWE 

CEE 

SE 

Administrative 
burdens  

Substantive 
compliance costs 

0 

0 

Direct 
regulatory 
costs 

0 

0 

0 

0 

EU 

0 

0 

Direct charges 

0.70 

0.85 

0.84 

0.76 

Indirect regulatory costs 

0.11 

0.84 

0.73 

0.38 

Total regulatory costs 

0.81 

1.69 

1.57 

1.14 

Source: Authors’ own elaboration. 

6.5.4  Cost assessment – Glass tableware 

Sample 

A short overview of the number of questionnaires received can be found below in Table 
30. In total, the sample covers five respondents from the glass tableware sector. 

Table 30. Glass tableware: Total number of questionnaires received and used in 
the Chapter 

Subsector 

Glass 
tableware 

Number of responding plants 

Total EU 

5 

Source: Authors’ own elaboration. 

Number of 
questionnaire
s used 

5 

Gas prices and costs 

Natural  gas is the  main  energy  source  for the  glass  sector,  as it  is  used in  the  melting 
process.  Natural  gas  costs  are  the  key  driver  of  the  sector’s  competitiveness.  This 
section presents information gathered from responding plants on their i) gas intensity, ii) 
net gas costs and ii) components present in the natural gas bills.  

123 

 
 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Gas intensity 

What  follows  is  an  analysis  of  natural  gas  intensity  of  production  as  reported  by 
responding plants.  

All plants in the sample provided the relevant information allowing the Research Team to 
assess the gas intensity based on the sample of five plants. 

Glass manufacturing has a natural gas-intensive production process. This is particularly 
true  for  the  glass  tableware  subsector,  which  is  considerably  more  gas-intensive  than 
flat  glass  and  hollow  glass  subsectors.  This  is  manifested  by  the  data  received  from 
respondents.  Natural  gas  intensity  in  the  glass  tableware  subsector  fluctuated 
over the period 2006-15. It first decreased from 4.9 MWh/tonne of production in 2006 
to 4.1 MWh/tonne in 2011 and then increased back to above the 2006 level in 2015 (5 
MWh/tonne of production).  

Due to the limited size of this sample, the fluctuations presented are mostly explained by 
fluctuations  in  individual  plants.  Therefore,  no  solid  conclusions  on  the  development  of 
natural gas intensity of the glass tableware subsector throughout the 10-year period can 
be drawn.  

Figure 43. Glass tableware: Natural gas intensity per tonne of production 
(2006-15) (MWh/tonne) 

)
e
n
n
o
t
/
h
W
M
(

y
t
i
s
n
e
t
n
I

s
a
G

5,5

5,0

4,5

4,0

3,5

3,0

2,5

2,0

1,5

1,0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU weighted average

Source: Authors’ own elaboration.

124 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Gas costs 

This section presents net gas costs accounting for reimbursements from taxes reported 
by responding plants. One plant reported reimbursements from taxes or levies. 

The  weighted  average  of  natural  gas  cost  for  EU  glass  tableware  producers 
fluctuated  over  the  study  period,  following  to  some  extent  the  global 
developments in natural gas costs presented in section 6.1.1 (Figure 12). Costs 
increased starkly to €33.30/MWh in 2012, then decreased to €24.40/MWh in 2015. 

Figure  44.  Glass  tableware:  Cost  of  natural  gas  paid  by  respondents,  €/tonne 
(2006-15) 

)
h
W
M
/
€
(

s
t
s
o
c

s
a
G

35

30

25

20

15

10

5

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU weighted average

Source: Authors’ own elaboration. 

125 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Components of the gas bill 

In  this  section,  the  components  of  the  price  paid  by  respondents  for  natural  gas  are 
discussed.  

The  energy  component  has  the  biggest  impact  on  the  price  of  natural  gas  at  EU  level, 
representing  around  90-95%  of  the  natural  gas  bill  in  2006-15:  while  the  regulatory 
components  have  remained  stable,  the  energy  components  fluctuated  over  time, 
following  the  trends  described  in  the  previous  section  on  net  natural  gas  costs.  The 
energy  supply  component  peaked  in  2011  at  €31/MWh  and  then  reduced  to 
€23.30/MWh in 2015. Network costs at EU level show small fluctuations and an 
increase  from  €0.90/MWh  in  2006  to  €1.34/MWh  in  2015.  On  average,  taxes, 
fees  and  levies  have  showed  minor  fluctuations.  While  in  2006  taxes  and  levies 
represented €0.58/MWh of the natural gas costs, in 2015 they stood at €1.17/MWh.   

Data received from respondents on their natural gas cost components shows that unlike 
in the case of electricity cost components, the energy component is the driver of the 
natural  gas  costs.  Regulatory costs  presented  a  share of the natural gas  costs 
ranging from 5% to 10%.  

Figure  45.  Glass  tableware:  Components  of  the  natural  gas  bills  paid  by 
respondents (%, weighted averages, 2006-15) 

Other taxes, fees,
levies and charges
(excl. VAT)

Network costs

Energy supply
costs

100%

98%

96%

94%

92%

90%

88%

86%

84%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU average

Other taxes, fees, levies and charges (excl.
VAT)

Network costs

Energy supply costs

2,8

4,4

2,6

4,4

2,8

4,6

2,6

4,9

3,0

4,3

2,8

3,8

1,9

3,3

3,0

4,8

3,3

4,3

4,5

5,2

92,8

92,9

92,7

92,5

92,7

93,3

94,8

92,2

92,4

90,3

Source: Authors’ own elaboration. 

126 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  46.  Glass  tableware:  Components  of  the  natural  gas  bills  paid  by 
respondents (€/MWh, weighted averages, 2006-15) 

Other taxes, fees,
levies and charges
(excl. VAT)

Network costs

h
W
M
r
e
p
€

Energy supply
costs

35,00

30,00

25,00

20,00

15,00

10,00

5,00

0,00

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU average

Other taxes, fees, levies and charges (excl.
VAT)

0,58

0,64

0,68

0,82

0,92

0,94

0,62

0,91

0,94

1,17

Network costs

Energy supply costs

0,90

1,08

1,12

1,55

1,33

1,27

1,09

1,45

1,23

1,34

19,10

22,53

22,79

29,13

28,70

30,96

31,05

27,92

26,19

23,28

Source: Authors’ own elaboration. 

Direct regulatory costs 

This section looks at the direct charges generated by energy taxation legislation.  

Direct charges 

Direct  charges  attributable  to  EU  legislation  make  up  approximately  two-thirds  of  all 
regulatory  costs  of  natural  gas  legislation.  These  charges  remained  relatively  constant 
throughout the study period, as they are a tax per unit of gas consumed. For this Study, 
the minimum recommended tax value was applied to the data, but it is the responsibility 
of  the  regulatory  board  at  Member  State  level  to  deduce  gas  taxation  for  the  glass 
tableware  industry.  As  a  result,  these  charges  may  not  be  entirely  represented, 
particularly in the regional analysis. 

Note  that  in  case  exemptions  are  in  place,  the  above-mentioned  direct  costs  might  not 
occur.  

Indirect regulatory costs 

What  follows  is  an  analysis  of  indirect  regulatory  costs  presented  by  EU  energy 
legislation to the glass tableware subsector. Following the analysis of the relevance of EU 
energy  legislation  to  the  glass  tableware,  this  section  addresses  indirect  compliance 
costs generated by Internal Market legislation. 

127 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Two  legislative  acts  and  repealed  acts  on  Internal  Energy  Market  have  the  potential  to 
generate indirect regulatory costs for the glass sector: 

  Directive  2009/73/EC  which  aims  at  creating  common  rules  for  the  generation, 

transmission and distribution of gas repealing Directive 2003/55/EC; 

  Regulation  (EC)  No  715/2009  which  aims  at  setting  fair  rules  for  cross-border 

exchanges in gas, repealing Regulation (EC) No 1775/2005. 

The  potential  costs  generated  by  the  legislation  translate  into  higher  network  costs  for 
the industry. This is due to the need to finance new infrastructure.  

Indirect  charges  attributable  to  EU  legislation  are  approximately  one-third  of 
all cumulative regulatory costs on gas bills. Since this Study observes the effect of 
the Internal Energy Market for gas, charges are shown from the beginning of the study 
period  and  repealed  acts  are  included.  In  2015,  the  indirect  costs  amounted  to 
€1.06/tonne.  

Figure 47. Glass tableware: Cumulative regulatory costs of natural gas 
legislation 2006-15, EU average (€/tonne of production) 

4,5

4

3,5

3

2,5

2

1,5

1

0,5

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: Authors’ own elaboration. 

DC

IC

128 

 
 
 
 
 
  
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table  31.  Glass  tableware:  Cumulative  regulatory  costs  of  natural  gas 
legislation 2015 (€/tonne of production) 

Administrative burdens  

Direct regulatory 
costs 

Substantive compliance costs 

Direct charges 

Indirect regulatory costs 

Total regulatory costs 

6.5.5  Cost assessment – Flat glass 

Source: Authors’ own elaboration. 

Sample 

EU 

0 

0 

2.94 

1.06 

4.00 

A short overview of the number of questionnaires received can be found below in Table 
32. In total the sample covers 15 respondents from the flat glass sector. More than three 
plants  from  each  geographical  region  provided  data  enabling  the  Research  Team  to 
present regional cost assessments in the flat glass sector. 

Table  32.  Flat  glass:  Total  number  of  questionnaires  received  and  used  in  the 
Chapter 

Sector 

Flat glass 

Number of responding plants 

Total EU 

NWE 

CEE 

SE 

Number of 
questionnaires 
used 

5 
15 
Source: Authors’ own elaboration. 

5 

5 

15 

Gas prices and costs 

Natural  gas is the  main  energy  source  for the  glass  sector,  as it  is  used in  the  melting 
process.  Natural  gas  costs  are  the  key  driver  of  the  sector’s  competitiveness.  This 
section presents information gathered from responding plants on their i) gas intensity, ii) 
net gas costs and ii) components present in the natural gas bills.  

Gas intensity 

What  follows  is  an  analysis  of  natural  gas  intensity  of  production  as  reported  by 
responding plants.  

Glass manufacturing has a natural gas-intensive production  process.  This  is manifested 
by  the  data  received  from  respondents.  Natural  gas  intensity  of  the  flat  glass  sector 

129 

 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

shows  a  trend  of  slightly  increasing  natural  gas  intensity  from  2006  to  2015.  EU 
weighted average decreased from 2.1  MWh/tonne of production  (2006)  to 1.9 
MWh/tonne  of  production  (2008),  increased  to  2.4  MWh/tonne  of  production 
(2013),  and  then  decreased  to  2.3  MWh/tonne  of  production  (2015).  The  low 
natural  gas  intensities  in  2007-08  are  mostly  explained  by  data  from  individual  plants 
reporting low gas intensities. Based on this dataset, the flat glass sector is more natural 
gas-intensive  in  comparison  packaging  glass  industry  but  less  gas-intensive  than  the 
glass tableware industry. 

As shown in Figure 48, the weighted average is lower than the median in all years. This 
reflects the lower natural gas intensity of larger plants in the sample.  

A regional comparison shows some variations between NWE, SE and CEE regions. Data 
from  respondents  shows  NWE  plants  reporting  considerable  lower  natural  gas 
intensities  than  their  peers  in  the  CEE  and  SE  regions.  While  the  average 
natural  gas  intensity  of  NWE  plants  was  2  MWh/tonne  of  production  in  2015, 
the figure was 2.7 MWh/tonne of production for the SE and 2.3 MWh/tonne of 
production for the CEE region.  

Gas intensities in all three regions fluctuated over the period 2006-15. In 2006, the SE 
natural gas intensity was 2.8 MWh/tonne of production, dropped in 2007 and 2008 and 
then increased back to the 2006 level (2.7 MWh/tonne of production). The average gas 
intensity in the CEE region reflected a decreasing trend. While plants in the CEE region 
had on average an intensity of 2.5 MWh/tonne of production in 2006, in 2015 the plants 
consumed  2.3/MWh  per  tonne  of  production.  Data  from  NWE  producers  reflects  an 
opposite  trend,  as  their  natural  gas  intensity  increased  from  1.6/MWh  per  tonne  of 
production to 2.0/MWh per tonne of production.  

130 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 48. Flat glass: Natural gas intensity per tonne of production (2006-15) 

)
e
n
n
o
t
/
h
W
M
(

y
t
i
s
n
e
t
n
I

s
a
G

4,0

3,5

3,0

2,5

2,0

1,5

1,0

0,5

0,0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU (boxplot)

Central-Eastern Europe (weighted average)

Northern-Western Europe (weighted average)

Southern Europe (weighted average)

EU weighted average

Source: Authors’ own elaboration. 

131 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Gas costs 

This section presents net gas costs accounting for reimbursements from taxes reported 
by  responding  plants.  Five  plants  in  the  reported  reimbursements  from  taxes,  levies, 
fees or other charges.  

The weighted average of natural gas costs for EU flat glass producers fluctuated over the 
study  period  of  2006-15.  Costs  increased  to  €28/MWh  in  2008,  decreased 
€22.80/MWh  in  2010,  increased  to  €31.10/MWh  in  2013,  and  decreased  to 
€23.90/MWh  in  2015.  The  trend  is  similar  to  that  reported  by  packaging  glass 
manufacturers.  The  trend  in  natural  gas  costs  to  a  large  extent  reflects  the  global 
development in natural gas pricing described in section 6.1.1.  

Data from  respondents  shows  some  regional differences.  Producers in the SE region 
report  the  highest  natural  gas  costs  for  most  years  of  the  study  period.  The 
years  2012-15  are  interesting  to  analyse,  as  the  regional  data  demonstrates  the 
decreasing trend in costs. The costs decreased in the NWE region, from €30/MWh (2012) 
to €22.40/MWh (2015). Gas costs in the CEE region declined from €29.20/MWh in 2012 
to  €23.30/MWh  in  2015,  while  costs  in  SE  region  decreased  from  €32.90/MWh  in  2012 
to €27.20/MWh in 2015.  

Data  collection  from  glass  manufacturing  plants  somewhat  corresponds  to  the  global 
trends described in 6.1.1. This is because the energy supply costs make up a large share 
of the gas bill, with regulatory components having a much smaller share when compared 
with  electricity  bills,  which  is  discussed  later  in  this  section.  Note,  however,  that  data 
from manufactures shows that in 2015, costs were below the 2008 level and above the 
2006 level.  

Cross-checked  with  previous  research,  these  findings  reflect  observations  in  the  2013 
CEPS Report “Composition and drivers of energy prices for energy-intensive industries”, 
on natural gas costs for the flat glass sector.103 

103  Some  differences  between  findings  of  the  2013  study  and  the  current  results  manifest 
themselves.  The  differences  are  likely  to  manifest  themselves  due  to  different  definitions  of 
geographical  regions.  Moreover,  the  2013  study  shows  data  on  gas  prices  whereas  the  current 
study reports net costs. 

132 

 
 
 
 
 
  
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Figure 49. Flat glass: Cost of natural gas paid by respondents (2006-15) 

)
h
W
M
/
€
(

s
t
s
o
c

s
a
G

60

50

40

30

20

10

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

EU (boxplot)

Central-Eastern Europe (weighted average)

Northern-Western Europe (weighted average)

Southern Europe (weighted average)

EU weighted average

Source: Authors’ own elaboration. 

133 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Components of the gas bill 

In  this  section,  the  components  of  the  price  paid  by  respondents  for  natural  gas  are 
discussed.  

The  energy  component  has  the  biggest  impact  on  the  price  of  natural  gas  at  EU  level 
representing  around  87-91%  of the  natural  gas bill  in  2006-15: while the regulatory 
components  remained  relatively  stable,  the  energy  components  fluctuated, 
following the trends described in the previous section on net natural gas costs. 
The  energy  supply  component  increased  to  €25.90/MWh  in  2008,  decreased  to 
€21.70/MWh  in  2009,  peaked  to  €28.90/MWh  in  2013,  and  then  declined  to 
€22.10/MWh  in  2015.  The  cost  variations  described  in  the  previous  section  reflect  the 
change in the cost of the energy supply component. 

The  regulatory  component  represented  a  small  share  of  the  natural  gas  bill, 
accounting  for  approximately  9-13%.  Data  on  both  network  costs  as  well  as  taxes 
and levies show a small but noticeable increase during 2006-15. Network costs at EU 
level increased from €1.20/MWh in 2006 to €1.40/MWh in 2013 and then back 
down to €1.20/MWh in 2015. Taxes, fees and levies increased slightly during the 10-
year study period: in 2006 taxes and levies represented €1.50/MWh; in 2015 they stood 
at €1.70/MWh.  

Regional  level  analysis  shows  large  differences  between  geographical  areas.  It  is  clear 
from  the  data  that  in  the  NWE  region,  taxes  and  levies  play  a  bigger  role  in 
natural  gas  costs  than  in  the  CEE  and  SE  regions.  While  NWE  paid  approximately 
€2.80/MWh of taxes and levies in 2015, the figure was less than €0.01/MWh in the CEE 
region  and  at  €0.90/MWh  in  the  SE  region.  The  limited  presence  of  taxes  and  levies  is 
particularly  notable  in  the  CEE  region,  where  respondents  reported  no  taxes  and  levies 
until 2012.  

While  more  taxes  and  levies  are  present  in  the  natural  gas  bill  in  the  NWE 
region, the network costs generate a larger share of natural gas costs in the SE 
and CEE regions. In 2015, SE producers’ network costs were at €1.50/MWh and in the 
CEE  region  the  average  stood  at  €1.60/MWh.  Network  costs  were  smaller  in  NWE, 
reported  by  plants  on  average  to  cover  €0.90/MWh  in  2015.  The  differences  across 
regions could possibly be due to higher fragmentation of national policies. 

Data received from respondents on their natural gas cost components shows that unlike 
in the case of electricity cost components, the energy component is the driver of the 
natural gas costs. Part of the network costs as well as taxes generated by the Energy 
Taxation  Directive  are  a  result  of  EU  legislation.  Therefore,  this  outlook  on  natural  gas 
bill components serves to shed light on the cost assessment that follows. 

134 

 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 50. Flat glass: Components of the natural gas bills paid by respondents (%, weighted averages, 2006-15) 

100%

95%

Other taxes, fees, levies
and charges (excl. VAT)

Network costs

Energy supply costs

90%

85%

80%

75%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU average

Northern-Western Europe

Southern Europe

Central-Eastern Europe

Other taxes, fees, levies and charges (excl. VAT) 6,5 7,2 6,5 7,7 8,5 6,5 5,3 6,0 6,9 6,6 10,4 10,6 9,0 11,3 12,7 9,9 7,9 9,5 11,7 11,5 3,2 3,4 2,8 2,9 2,8 2,9 2,8 2,6 2,7 3,4 0,0 0,0 0,0 0,0 0,0 0,0 1,8 1,4 1,6 0,0

Network costs

Energy supply costs

4,9 5,0 5,5 5,2 4,6 4,3 4,2 4,2 4,6 4,9 4,4 5,4 5,7 4,8 3,8 3,2 2,8 3,0 3,5 3,8 4,0 3,9 4,4 5,0 4,7 4,2 5,0 4,9 5,0 5,4 7,4 5,5 6,2 7,0 8,0 7,9 6,4 6,6 6,4 6,7

88,6 87,7 88,1 87,1 86,9 89,3 90,6 89,8 88,6 88,5 85,2 84,0 85,3 83,9 83,5 86,9 89,3 87,6 84,8 84,7 92,7 92,7 92,8 92,1 92,4 92,9 92,1 92,5 92,3 91,2 92,6 94,5 93,8 93,0 92,0 92,1 91,8 92,0 92,1 93,3

Source: Authors’ own elaboration. 

135 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 51. Flat glass: Components of the natural gas bills paid by respondents (€/MWh, weighted averages, 2006-15) 

Other taxes, fees,
levies and charges
(excl. VAT)

Network costs

h
W
M
r
e
p
€

Energy supply
costs

40,0

35,0

30,0

25,0

20,0

15,0

10,0

5,0

0,0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EU average

Northern-Western Europe

Southern Europe

Central-Eastern Europe

Other taxes, fees, levies and charges (excl. VAT) 1,5 1,7 1,9 1,9 2,1 1,8 1,6 1,9 1,9 1,7 2,6 2,6 2,7 2,9 3,2 2,9 2,4 3,2 3,3 2,8 0,8 0,8 0,8 0,7 0,7 0,8 0,9 0,8 0,8 0,9 0,0 0,0 0,0 0,0 0,0 0,0 0,5 0,4 0,4 0,0

Network costs

Energy supply costs

1,2 1,2 1,6 1,3 1,1 1,2 1,3 1,4 1,3 1,2 1,1 1,3 1,7 1,2 0,9 1,0 0,9 1,0 1,0 0,9 0,9 1,0 1,3 1,2 1,2 1,1 1,7 1,5 1,5 1,5 1,6 1,1 1,7 1,6 1,8 2,0 1,9 1,9 1,7 1,6

21,1 20,8 25,9 21,7 21,2 25,2 28,1 28,9 25,1 22,1 21,3 20,2 25,4 21,2 20,8 26,0 27,3 29,6 23,8 20,8 21,7 22,9 27,5 23,0 22,5 25,1 30,4 29,3 28,2 24,8 20,0 19,3 25,7 21,7 20,6 23,4 27,3 27,0 24,4 21,9

Source: Authors’ own elaboration.

136 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Direct regulatory costs 

This section addresses direct charges generated by energy taxation legislation.  

Direct charges 

Direct charges attributable to EU legislation make up approximately two-thirds 
of all regulatory costs of natural gas legislation. These charges remained relatively 
constant throughout the study period, as they are a tax per unit of gas consumed. Due 
to the more limited role of indirect costs in the NWE region, the direct costs represent a 
larger share of costs in the NWE region than in CEE and SE regions.  

For this Study, the minimum recommended tax value was applied to the data, but it is 
the responsibility of the regulatory board at Member State level to deduce gas taxation 
for  the  flat  glass  industry.  As  a  result,  these  charges  may  not  be  entirely  represented, 
particularly  in  the  regional  analysis.  Note  that  in  case  exemptions  are  in  place,  the 
above-mentioned direct costs might not occur. 

Indirect regulatory costs 

What  follows  is  an  analysis  of  indirect  regulatory  costs  presented  by  EU  energy 
legislation to the  flat glass sector. Following the analysis of the relevance of EU energy 
legislation  to  the  flat  glass  sector,  this  section  addresses  indirect  compliance  costs 
generated by internal market legislation. 

Two legislative acts and repealed acts on the Internal Energy Market have the potential 
to generate indirect regulatory costs for the glass sector: 

  Directive  2009/73/EC  which  aims  at  creating  common  rules  for  the  generation, 

transmission and distribution of gas repealing Directive 2003/55/EC; 

  Regulation  (EC)  No  715/2009  which  aims  at  setting  fair  rules  for  cross-border 

exchanges in gas, repealing Regulation (EC) No 1775/2005. 

The  potential  costs  generated  by  the  legislation  translate  into  higher  network  costs  for 
the industry. This is due to the need to finance new infrastructure.  

Indirect  charges  attributable  to  EU  legislation  are  approximately  one-third  of 
all cumulative regulatory costs on gas bills. Since this Study observes the effect of 
the Internal Energy Market for gas, charges are shown from the beginning of the study 
period and repealed acts are included.  

Regional differences are demonstrated in Figure 52. While in the CEE and SE regions 
indirect costs accounted for around 30% of costs, in the NWE region the share 
was  approximately  15%.  In  2015,  the  estimated  costs  of  Internal  Market  legislation 
stood at €0.22/tonne in the NWE region, €0.56/tonne in the CEE region and €0.62/tonne 
in the SE region. 

137 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  52.  Flat  glass:  Cumulative  regulatory  costs  of  natural  gas  legislation 
2006-15 for the CEE, SE and NWE regions (€/tonne) 

2,5

2

1,5

1

0,5

0

DC

 IC

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

CEE

SE

NWE

Source: Authors’ own elaboration. 

Figure  53.  Flat  glass:  Cumulative  regulatory  costs  of  natural  gas  legislation 
2006-15, EU average (€/tonne of production) 

2

1,8

1,6

1,4

1,2

1

0,8

0,6

0,4

0,2

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

IC DC

Source: Authors’ own elaboration. 

138 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table 33. Flat glass: Cumulative regulatory costs of natural gas legislation 2015 
(€/tonne of production) 

Regions 

NWE 

CEE 

SE 

Administrative 
burdens  

Substantive 
compliance costs 

0 

0 

Direct 
regulatory 
costs 

0 

0 

0 

0 

EU 

0 

0 

Direct charges 

1.08 

1.26 

1.47 

1.22 

Indirect regulatory costs 

0.22 

0.56 

0.62 

0.41 

Total regulatory costs 

1.30 

1.82 

2.09 

1.63 

Source: Authors’ own elaboration. 

139 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

6.6  Energy efficiency  

6.6.1  Description of the Acts 

While the section on electricity and natural gas addresses the regulatory costs related to 
electricity and gas used by the plants in their production process, this section shows the 
costs  generated  by  working  toward  the  EU’s  goal  of  promoting  the  industry’s  energy 
efficiency. Unlike in previous areas, costs are generated by one piece of legislation only. 
Below  is  a  description  of  the  energy  efficiency  legislation  with  an  expected  cost  impact 
on the glass sector. 

Energy  Efficiency  Directive.  The  Energy  Efficiency  Directive  aims  at  supporting  the 
transition  of  the  EU  to  a  more  energy  efficient  economy.  The  directive  establishes  a 
common framework of measures for the promotion of energy efficiency within the Union 
in order to ensure the achievement of the Union’s 2020 20% headline target on energy 
efficiency  and  to  pave  the  way  for  further  energy  efficiency  improvements  beyond  that 
date. Member States were required to transpose this Directive by 2014. 

The  Energy  Efficiency  Directive  includes  provisions  that  incentivise  large  enterprises  to 
make investments in energy efficiency improvements and may be associated with some 
direct and indirect costs for energy-intensive producers. In particular, every fourth year, 
from 2012 onwards, industrial players are obliged to pass energy audits and implement 
the  energy  efficiency  recommendations  of  the  audits.  This  entails  direct  costs,  which 
involves substantive compliance costs, e.g. one-off costs to comply with the EED, the 
cost of implementing the auditors’ recommendations and cooperating with auditors.  

6.6.2  Categories of regulatory costs  

Article  8  of  the  Energy  Efficiency  Directive  required  large  companies  to  pass  the 
obligatory energy audit by 5 December 2015. The four-year audit cycle means that the 
substantive compliance cost per MWh generated by the legislative obligation is to be 
spread across four years. Costs can occur in terms of purchased services and in terms of 
labour  costs,  as  working  hours  might  be  allocated  to  carrying  out  the  audit  or 
accompanying external auditors in the plant. The energy audit obligation applies to large 
companies.  After  5  June  2014,  the  Directive  requires  industrial  players,  in  case  of 
refurbishment  of  industrial  installations  generating  waste  heat  at  a  useful  temperature 
level  with  a  total  thermal  input  >20  MW,  to  carry  out  a  cost-benefit  analysis  to  assess 
the option of introducing co-generation in heating. This provision can generate additional 
direct compliance costs. Finally, some indirect compliance costs can stem from the 
obligation of energy companies to achieve end-use energy savings of 1.5% of the annual 
energy sales to final customers insofar as such companies pass on related costs to their 
customers.  Member  States  have  the  option  to  exclude  industrial  players,  hence  at  the 
moment it is not possible to assess whether any indirect costs will materialise.  

6.6.3  Cost assessment – Packaging glass 

Sample 

A short overview of the number of questionnaires received can be found below in Table 
34. In total, the sample covers 21 respondents from the packaging glass subsector. More 
than  three  plants  from  each  geographical  region  provided  data  enabling  the  Research 
Team to present regional cost assessments in the packaging glass subsector.  

140 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table 34. Packaging glass: Total number of questionnaires received and used in 
the Chapter 

Subsector 

Packaging 
glass  

Number of responding plants 

Total EU 

NWE 

CEE 

SE 

Number of 
questionnaires 
used 

21 

7 

6 

8 

21 

Source: Authors’ own elaboration. 

Direct regulatory costs 

This  section  addresses  substantive  compliance  costs  generated  by  the  Energy 
Efficiency Directive.  

Substantive compliance costs 

The  Energy  Efficiency  Directive  can  generate  substantive  compliance  costs  for  the 
packaging glass manufacturers. Both the i) obligation to pass an energy audit and ii) the 
requirement  of  a  cost-benefit  analysis  are  expected  to  lead  to  substantive  compliance 
costs.  These  costs  are  presented  below  based  on  the  data  acquired  from  responding 
plants. 

Energy audit 

The  Energy  Efficiency  Directive  can  generate  substantive  compliance  costs  for  the 
packaging  glass  subsector  due  to  the  obligatory  energy  audit  that  has  been  in  place 
since 2012.  

To assess the indirect costs generated by the directive, respondents from the packaging 
glass subsector were asked about the costs of hiring external auditors and the amount of 
time their employees104 spend preparing the audit and to accompany the auditors in the 
plant. As there were no SMEs among respondents, all respondents were included in this 
sample.  

Out of 21 packaging glass manufacturers, 15 reported having passed an energy 
audit for 2012-15. Three responding plants carried out the energy efficiency audit prior 
to 2012. These audits are not taken into account in the cost assessment, as they were 
passed prior to the EU obligation, put in place in 2012.  

104  These  employees  are  assumed  to  be  technicians  and  associate  professionals.  The  hourly 
earnings of technicians and associate professionals are therefore applied. 

141 

 
 
 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Table  35.  Packaging  glass:  Number  of  plants  that  have  carried  out  the  energy 
efficiency audit 2012-15 

Number of responding plants 

Total EU 

NWE 

CEE 

SE 

15 

6 

5 

2 

2 

4 

8 

0 

Source: Authors’ own elaboration. 

Energy 
efficiency audit 
carried out 
Energy 
efficiency audit 
not carried out 

The  weighted  average  costs  incurred  at  EU  level  were  at  €0.03/tonne  of 
production.  

In  most  cases  when  a  plant  carried  out  an  energy  audit,  employees  of  the  plants  took 
part in preparing the audit, or in case of an external audit, accompanied auditors in the 
plant.  This  time  spent  by  employees  is  counted  as  part  of  the  cost  of  the  audit.  The 
time  that  respondents  reported  their  employees  had  spent  in  preparing  the 
audit  varies  from  three  working  days  to  up  to  30  working  days.  As  labour  costs 
vary  from  one  Member  State  to  another,  the  cost  impact  measured  in  the  amount  of 
working days varies. 

One company foresaw an energy audit in 2016. Some regional differences were present: 
while all SE plants reported having carried out at least one energy audit in 2012-15, two 
plants  in  the  NWE  region  and  four  plants  in  the  CEE  region  had  not  yet  conducted  the 
obligatory  audit.  As  the  legislation  entered  into  force  in  2012,  it  is  possible  that  the 
indirect cost generated by the Energy Efficiency Directive can increase in the future.  

The  energy  efficiency  audit  generated  minor  costs  for  producers.  Data  shows  that  the 
most  recent  year,  2015,  generated  the  highest  costs  for  EU  producers,  as  most  audits 
were carried out in that year. No solid conclusions can be drawn from the sample, as the 
time period of analysis is limited to 2012-15.  

Cost-benefit analysis 

After  5  June  2014,  the  Energy  Efficiency  Directive  requires  that  industrial  players,  in 
case  of  refurbishment  of  industrial  installations  generating  waste  heat  at  a  useful 
temperature level with a total thermal input >20 MW, carry out a cost-benefit analysis to 
assess  the  option  of  introducing  co-generation  in  heating.  This  provision  can  generate 
additional  direct  costs.  What  follows  is  an  assessment  of  these  substantive  compliance 
costs generated by the requirement for cost-benefit analysis.  

Responding glass manufacturers were asked whether they had done any refurbishments 
of their industrial installations generating waste heat (at a useful temperature level with 
a total thermal input >20 MW) in 2015. One of the respondents reported to have done 
refurbishments fitting the description of the Energy Efficiency Directive in 2015.  

Due  to  confidentiality  reasons,  no  further  assessment  of  costs  generated  by  the  cost-
benefit analysis to the packaging glass subsector can be shown. 

142 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

As  the  requirement  for  cost-benefit  analysis  entered  into force  only  on  June  2014,  it  is 
likely that costs will be incurred in the future.  

Figure  54.  Packaging  glass:  Cumulative  regulatory  costs  of  energy  efficiency 
legislation 2006-15 for the CEE, NWE and SE regions (€/tonne of production) 

0,07

0,06

0,05

0,04

0,03

0,02

0,01

0

SCC

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

CEE

SE

NWE

Source: Authors’ own elaboration. 

Figure  55.  Packaging  glass:  Cumulative  regulatory  costs  of  energy  efficiency 
legislation 2006-15, EU average (€/tonne of production) 

0,04

0,035

0,03

0,025

0,02

0,015

0,01

0,005

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

SCC

Source: Authors’ own elaboration. 

143 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table  36.  Packaging  glass:  Cumulative  regulatory  costs  of  energy  efficiency 
legislation 2015 (€/tonne of production) 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

Regions 

NEW 

CEE 

0 

0 

SE 

0 

EU 

0 

0.03 

0.01 

0.06 

0.03 

0 

0 

0 

0 

0 

0 

0 

0 

Total regulatory costs 

0.03 

0.01 

0.06 

0.03 

Source: Authors’ own elaboration. 

6.6.4  Cost assessment – Glass tableware 

Sample 

A short overview of the number of questionnaires received can be found below in Table 
37. In total the sample covers five respondents from the glass tableware subsector.  

Table 37. Glass tableware: Total number of questionnaires received and used in 
the Chapter 

Subsector 

Glass 
tableware 

Number of responding plants 

Total EU 

5 

Source: Authors’ own elaboration. 

Number of 
questionnaires 
used 

5 

Direct regulatory costs 

This  section  addresses  substantive  compliance  costs  generated  by  the  Energy 
Efficiency Directive.  

Substantive compliance costs 

Energy audit 

The Energy Efficiency Directive can generate substantive compliance costs for the glass 
tableware  subsector  due  to  the  obligatory  energy  audit  which  has  been  in  place  since 
2012.  

144 

 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

To  assess  the  indirect  costs  generated  by  the  directive,  respondents  from  the  glass 
tableware  subsector  were  asked  about  the  costs  of  hiring  external  auditors  and  about 
the  amount  of  time  their  employees105  spent  to  prepare  the  audit  and  accompany  the 
auditors in the plant. As there were no SMEs among respondents, all respondents were 
included in this sample. Note that the glass tableware sample is limited to five plants and 
therefore no solid conclusions can be drawn.  

Out of five glass tableware manufacturers, one plant reported having passed an 
energy  audit  during  2012-15.  Due  to  confidentiality  reasons,  no  further 
assessment of costs generated by the  energy audit to  the glass tableware can 
be shown.  

Table  38.  Glass  tableware:  Number  of  plants  that  have  carried  out  the  energy 
efficiency audit 2012-15 

Number of responding plants 

Total EU 

1 

4 

Source: Authors’ own elaboration. 

Energy 
efficiency audit 
carried out 
Energy 
efficiency audit 
not carried out 

Cost-benefit analysis 

After  5  June  2014,  the  Energy  Efficiency  Directive  requires  that  industrial  players,  in 
case  of  refurbishment  of  industrial  installations  generating  waste  heat  at  a  useful 
temperature level with a total thermal input >20 MW, carry out a cost-benefit analysis to 
assess  the  option  of  introducing  co-generation  in  heating.  This  provision  can  generate 
additional  direct  costs.  What  follows  is  an  assessment  of  these  substantive  compliance 
costs generated by the requirement for cost-benefit analysis.  

Responding glass manufacturers were asked whether they had done any refurbishments 
to their industrial installations generating waste heat (at a useful temperature level with 
a total thermal input >20 MW) in 2015. None of the respondents reported having done 
refurbishments fitting the description of the Energy Efficiency Directive in 2015.  

Consequently, no plant reported to have carried out a cost-benefit analysis to assess the 
option  of  introducing  co-generation  in  heating.  Therefore, this requirement is likely 
not to have generated any direct costs. As this requirement, however, entered into 
force only on June 2014, it is likely that costs will be incurred in the future.  

Due to confidentiality reasons, no further assessment of costs generated by the energy 
audit to the glass tableware can be shown. 

105 Ibid. 

145 

 
 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

6.6.5  Cost assessment – Flat glass 

Sample 

A short overview of the number of questionnaires received can be found below in Table 
39. In total the sample covers 15 respondents from the flat glass sector. More than three 
plants  from  each  geographical  region  provided  data  enabling  the  Research  Team  to 
present regional cost assessments in the flat glass sector. 

Table  39.  Flat  glass:  Total  number  of  questionnaires  received  and  used  in  the 
Chapter 

Sector 

Flat glass 

Number of responding plants 

Total EU 

NWE 

CEE 

SE 

Number of 
questionnaires 
used 

5 
15 
Source: Authors’ own elaboration. 

5 

5 

15 

Direct regulatory costs 

This  section  addresses  substantive  compliance  costs  generated  by  the  Energy 
Efficiency Directive.  

Energy audit 

The  Energy  Efficiency  Directive  can  generate  substantive  compliance  costs  for  the  flat 
glass sector due to the obligatory energy audit that has been in place since 2012.  

To assess the indirect costs generated by the Directive, respondents from the flat glass 
sector  were  asked  about  the  costs  of  hiring  external  auditors  and  about  the  amount  of 
time  their  employees106  spent  to  prepare  the  audit  and  accompany  the  auditors  in  the 
plant. As there were no SMEs among respondents, all respondents were included in this 
sample.  

Out  of  15  flat  glass  manufacturers,  10  report  having  passed  an  energy  audit 
2012-15.  Four  of  the  plants  that  carried  out  audits  during  2012-15  reported  having 
undergone an audit already prior to 2012. These audits are not taken into account in the 
cost assessment as they were passed prior to the EU obligation, put in place in 2012.  

106 Ibid. 

146 

 
 
 
 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Table  40.  Flat  glass:  Number  of  plants  that  have  carried  out  the  energy 
efficiency audit 2012-15 

Number of responding plants 

Total EU 

NWE 

CEE 

SE 

10 

5 

4 

1 

3 

2 

3 

2 

Source: Authors’ own elaboration. 

Energy 
efficiency audit 
carried out 
Energy 
efficiency audit 
not carried out 

The  weighted  average  costs  incurred  at  EU  level  were  at  €0.02/tonne  of 
production.  

In  most  cases  when  a  plant  carried  out  an  energy  audit,  employees  of  the  plants  took 
part in preparing the audit, or in case of an external audit, accompanied auditors in the 
plant. This time spent by employees is counted as part of the cost of the audit. The time 
that respondents reported their employees had spent in preparing the audit varies from 
three  working  days  to  up  to  50  working  days.  Plants  have  reported  that  carrying 
the energy audit in a facility with high production capacity is more labour-intensive than 
an audit in a smaller plant. Therefore, differences in plant sizes may explain the variation 
on the amount of days employees spent preparing the audit. As labour costs vary from 
one Member State to another, the cost impact measured in the amount of working days 
varies. 

However,  five  responding  plants  reported  no  energy  efficiency  audits  during  the  first 
compliance period of 2012–15. As the legislation entered into force in 2012, it is possible 
that  the  indirect  cost  generated  by  the  Energy  Efficiency  Directive  can  increase  in  the 
future.  

Cost-benefit analysis 

After  5  June  2014,  the  Energy  Efficiency  Directive  requires  that  industrial  players,  in 
case  of  refurbishment  of  industrial  installations  generating  waste  heat  at  a  useful 
temperature level with a total thermal input >20 MW, carry out a cost-benefit analysis to 
assess  the  option  of  introducing  co-generation  in  heating.  This  provision  can  generate 
additional  direct  costs.  What  follows  is  an  assessment  of  these  substantive  compliance 
costs generated by the requirement for cost-benefit analysis.  

Responding glass manufacturers were asked whether they had done any refurbishments 
to their industrial installations generating waste heat (at a useful temperature level with 
a total thermal input >20 MW) in 2015. None of the respondents reported having done 
refurbishments fitting the description of the Energy Efficiency Directive in 2015.  

Consequently, no plant reported having carried out a cost-benefit analysis to assess the 
option  of  introducing  co-generation  in  heating.  Therefore, this requirement is likely 
not to have generated any direct costs. As this requirement, however, entered into 
force only on June 2014, it is likely that cost will be incurred in the future.  

147 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  56.  Flat  glass:  Cumulative  regulatory  costs  of  energy  efficiency 
legislation 2006-15, CEE, SE and NWE regions (€/tonne of production) 

0,03

0,025

0,02

0,015

0,01

0,005

0

SCC

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

CEE

SE

NWE

Source: Authors’ own elaboration. 

Figure  57.  Flat  glass:  Cumulative  regulatory  costs  of  energy  efficiency 
legislation 2006-15, EU average (€/tonne of production) 

0,02

0,018

0,016

0,014

0,012

0,01

0,008

0,006

0,004

0,002

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

SCC

Source: Authors’ own elaboration. 

148 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table 41. Flat glass: Cumulative regulatory costs of energy efficiency legislation 
2015 (€/tonne of production) 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

Regions 

NWE 

CEE 

0 

0 

SE 

0 

EU 

0 

0.02 

0.02 

0.02 

0.02 

0 

0 

0 

0 

0 

0 

0 

0 

Total regulatory costs 

0.02 

0.02 

0.02 

0.02 

Source: Authors’ own elaboration. 

149 

 
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

7  Climate legislation 

The present Chapter focuses on the impacts on the glass industry of four different 
acts: 

  Directive  2003/87/EC  of  the  European  Parliament  and  of  the  Council  of  13 
October 2003 establishing a scheme for greenhouse gas emission allowance (also 
known as the EU ETS Directive); 

  Commission  Regulation  No  600/2012  of  21  June  2012  on  the  verification  of 
greenhouse  gas  emission  reports  and  tonne-kilometre  reports  and  the 
accreditation  of  verifiers  pursuant  to  Directive  2003/87/EC  of  the  European 
Parliament and of the Council; 

  Commission  Regulation  No  601/2012  on  the  monitoring  and  reporting  of 
greenhouse  gas  emissions  pursuant  to  Directive  2003/87/EC  of  the  European 
Parliament and of the Council; 

  Commission  Decision  determining  transitional  Union-wide  rules  for  harmonised 
free  allocation  of  emission  allowances  pursuant  to  Article  10a  of  Directive 
2003/87/EC of the European Parliament and of the Council (2011/278/EU). 

All  the  acts  listed  above  are  regarded  at  the  same  time  below,  as  they  are  intrinsically 
linked.  In  fact,  the  EU  ETS  Directive  is  the  main  EU  climate  change  legislation  for  the 
glass industry; the other acts are to be seen as implementing legislation. Further details 
on the EU ETS Directive and the other acts can be found in what follows. 

7.1  Description of the Acts 

The  European  Union  Emissions  Trading  Scheme  (EU  ETS)  Directive  (Directive 
2003/87/EC)  established  a  cap-and-trade  system  (starting  in  2005)  as  a  cost-
effective  tool  to  reach  the  greenhouse  gas  (GHG)  targets  the  EU  had  committed 
to. The EU ETS was expanded to the non-EU members of the European Economic Area – 
Lichtenstein, Norway and Iceland – in 2007.  

EU ETS compliance is managed at the installation level. More than 11,000 installations in 
the manufacturing and power generation sector as well as aviation within the borders of 
the EU and EEA are covered by the scheme. Though the emissions of several gasses are 
covered  by  the  scheme,  the  large  majority  is  carbon  dioxide  (CO2),  and  therefore  all 
gasses  are  converted  into  CO2  equivalent  units  according  to  their  warming  potential 
(known as CO2e). To simplify matters, the present Study will use the terms ‘carbon’ and 
‘emissions’ to address all GHG emissions under the EU ETS. 

The  total  cap  for  emissions  is  equal  to  the  total  amount  of  European  Union  Allowances 
(EUAs) made available  each year through free allocation  or auctioning. Under that cap, 
market participants, including covered installations, are free to trade allowances. This is 
meant  to  maintain  the  cost-effectiveness  of  emissions  reductions  by  ensuring  that  the 
cheapest  reductions  will  be  undertaken  first.  The  EU  ETS  is  based  on  the  principle  that 
operators  of  industrial  and  power  installations  covered  by  the  EU  ETS  Directive  and 
subsequent amendments surrender allowances to cover their emissions. Each year, each 
installation must surrender a number of emission permits equal to its carbon emissions 
during the past year. This policy thereby seeks to put a price on carbon with a view 
to reducing GHG emissions. The total cap of the EU ETS is set to decrease every year 
by a linear reduction factor of 1.74%. 

The EU ETS is now in its third phase, and the scope of this Cumulative Cost Assessment 
extends  to  all  three  phases.  Below  is  a  brief  summary  of  some  of  the  main  differences 
between the three phases. 

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7.2  Phase 1 (2005-07) 

During  the  first  phase,  which  was  a  pilot  phase,  caps  were  set  at  the  national  level 
through the National Allocation Plans (NAPs), which had to be approved by the European 
Commission.  A  maximum  of  5%  of  the  allowances  could  be  auctioned;  the  rest  was 
allocated  free  of  charge  on  the  basis  of  estimates  of  historical  emissions  (so-called 
‘grandfathering’). Due to a lack of good quality data and no banking provisions between 
phases, this resulted in a sizable over-supply of EUAs, driving prices close to zero at the 
end of the phase.  

Although a pilot phase, Phase 1 resulted in significant outcomes. A price for carbon was 
established.  It  helped  create  the  necessary  infrastructure  for  future  phases:  at  the 
installation level this included monitoring, reporting and verification (MRV); while in the 
marketplace  National  Registries,  the  Community  Independent  Transaction  Log  and 
carbon exchanges were founded. 

7.3  Phase 2 (2008-12) 

In  Phase  2,  allocation  was  granted  on  the  basis  of  the  reported  emissions  in  the  first 
phase.  This  process  of  grandfathering  was  considered  fit  to  solve  the  problem  of  over-
supply  observed  in  Phase  1.  However,  the  economic  crisis  had  a  clear  impact  and 
substantially decreased emissions in Phase 2. The European Commission estimates that 
between  1.5  and  2  billion  EUAs  were  carried  over  to  Phase  3.107  The  amount  of 
allowances  that  could  be  auctioned  was  also  increased,  to  a  maximum  of  10%  of  the 
total. 

7.4 

 Phase 3 (2013-20) 

Major amendments for Phase 3 include the Phase 3 Directive (Directive 2009/29/EC), 
determining  the  expansion  of  the  EU  ETS  to  new  sectors  and  gases,  and  procedural 
improvements  made  through  the  Benchmarking  Decision  (Commission  Decision 
2011/278/EU), setting out harmonised rules for free allocation. 

The EU ETS is now in its third phase.  The major characteristic of the functioning of the 
ETS  in  this  phase  is  an  increase  in  auctioning  of  allowances  –  more  than  40%  of  all 
allowances  will  be  auctioned  (including  full  auctioning  for  the  power  sector).  Energy-
intensive industries, however, continue to receive a large part of their needed allowances 
for free, and will have to buy any shortfall on the market (as was the case during Phases 
1 and 2).  

Allocation  to  energy-intensive  industries  is  largely  determined  by  using  benchmarks, 
established  per  product,  according  to  the  Benchmarking  Decision.  In  general,  the 
average carbon-intensity of the top 10% (as measured by their emissions performance) 
of  installations  represents  the  benchmark  for  allocating  free  emissions.  Every 
installations  producing  the  same  product  has  the  same  benchmark,  and  receives  the 
same amount of free allocation per produced unit. Installations that are more emission-
intensive  than  the  benchmark  thus  receive  a  smaller  percentage  of  free  allowances 
relative to their total emissions than less emission-intensive installations. The former are 
thereby  incentivised  to  catch  up  to  their  best-performing  peers.  This  approach  also 
rewards early action by industry towards reducing emissions.  

The  benchmarks  are  determined  as  the  number  of  allowances  received  per  tonne  of 
production at the installation. However, the level of production at an installation is based 
on historical levels: the median production during the period from 1 January 2005 to 31 
December 2008, or, where it is higher, the median production during the period from 1 
January 2009 to 31 December 2010. Changes in production are currently only taken into 

107  European  Commission  (2012),  “The  state  of  the  European  carbon  market  in  2012”,  COM 

(2012)652. 

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account if production is scaled back to less than 50% of the historical  level. Production 
increases  beyond  historical  levels  (and  thus  emission  increases)  are  not  taken  into 
account  during  free  allocation  of  allowances.  However,  allocation  can  be  increased  in 
case of investments to increase production capacity. 

Sectors  that  are  deemed  to  be  at  risk  of  carbon  leakage,  and  which  are  listed  in  the 
Carbon Leakage List  (Commission Decision 2010/2/EU), receive for free 100% of the 
allocation  determined  based  on  the  benchmarks  and  production  levels.  The  list  was 
updated in 2014 and is valid for the period 2015-19. Sectors not on the list receive 80% 
of the calculated allocation for free in 2013, a share that annually decreases up to 30% 
in  2020.  The  various  glass  sectors  included  in  the  TOR  for  this  Study  are  all  on  the 
carbon leakage list.  

in 
Monitoring,  Reporting  and  Verification  (MRV)  obligations  are  defined 
Commission  Regulations  No  600/2012  and  No  601/2012.  All  installations  and  aircraft 
operators  under  the  ETS  need  to  have  an  approved  plan  for  monitoring  and  reporting 
emissions. The operators must report annual emissions data, which must be verified by 
an  accredited  verifier.  Once  the  reported  emissions  are  verified,  the  installation 
surrenders allowances in order to comply with the EU ETS.  

As explained above, the EU ETS has been amended various times since its inception, and 
major amendments are expected the coming years, such as the inclusion of the Market 
Stability Reserve and the results of the ongoing revision. 

7.5  Categories of regulatory costs  

The  EU  ETS  generates  three  types  of  regulatory  costs:  direct  (both  substantive 
compliance costs and administrative burdens and indirect. If a plant is covered by the EU 
ETS,  the  ETS  generates  a  direct  cost  that  is  linked  to  the  surrender  of  EUAs  to  cover 
GHG  emissions.  The  direct  costs  for  an  installation  are  directly  related  to  (a)  the 
emission-intensity  of  the  plant  and  (b)  the  number  of  EUAs  that  the  plant  receives  for 
free.  In  the  context  of  this  Study,  the  direct  costs  are  to  be  defined  as  substantive 
compliance costs, and not as direct charges. 

It is important to note that the EU ETS is meant to generate costs for installations that 
emit  GHGs  in  order  to  change  behaviour,  incentivise  different  production  technologies 
and make sure GHG emissions receive attention both in board rooms and in production 
process decisions. In this aspect climate change is a rather unique area of legislation. 

Each  production  plant  based  in  the  EU  (whether  covered  by  the  EU  ETS  or  not)  faces 
indirect costs as electricity producing installations pass on the costs of EUAs they have 
bought  to  their  customers,  in  the  form  of  higher  electricity  bills.  Indirect  costs  are 
therefore  directly  related  to  the  electricity-intensity  of  a  plant.  In  a  limited  number  of 
Member  States,  operators 
financial 
compensation  for  indirect  costs  (following  state  aid  guidelines).  No  plants  in  the  glass 
samples indicated that they received indirect cost compensation. 

in  electricity-intensive  sectors  can  receive 

In addition, two kinds of administrative burdens can be identified under the EU ETS: 
one-off costs for the start-up of the process, and recurring costs, mostly related to the 
MRV process and the yearly compliance procedures. The start-up costs are generated by 
the  investments  necessary  for  monitoring  compliance.  For  illustrative  purposes,  the 
infrastructure needed for the correct calculation of emissions would represent a one-off 
start-up  cost.108  MRV  costs  are  the  additional  burdens  placed  on  installations  for 
continued compliance with monitoring duties, for example the wages of the staff dealing 
with  the  administrative  aspects,  or  the  cost  of  hiring  a  verifier.  Administrative  burdens 
are incurred internally, through staff time, or externally by retaining help and advice, in 
some  cases  mandatory,  such  as  verifying  activities.  Administrative  burdens  are  only 

108  Detailed  Information  Obligations  are  spelled  out  in  the  Commission  Regulation  (EU)  No 
601/2012  on  the  monitoring  and  reporting  of  greenhouse  gas  emissions  pursuant  to  Directive 
2003/87/EC. 

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relevant  for  plants  covered  by  the  EU  ETS.  Previous  CCAs  by  CEPS  in  the  steel  and 
aluminium  industries  have  shown  that  administrative  burdens  are  minor,  compared  to 
the direct and indirect costs.  

In  addition,  it  proved  complex  and  laborious  to  collect  data  on  start-up  costs  for  the 
entire  sample,  especially  as  these  costs  can  be  considered  minor;  many  plants  have 
been in the EU ETS since 2005 (beyond the scope of this  project) and a large share of 
plants  in  the  glass  sectors  indicated  that  instead  of  buying  equipment  for  MRV,  they 
rented  it  yearly  from  external  verification  companies.  Therefore,  the  one-off  start-up 
costs were not included in this assessment. If companies hired equipment on an annual 
basis for checks, it was included in the recurring administrative costs. 

7.6  Methodological aspects 

This section starts with an analysis of the model used for calculating the regulatory costs 
of  the  EU  ETS.  A  description  of  the  data,  its  sources  and  issues  related  to  data 
availability is also included. The results of the assessment are presented in the final part 
of the Chapter for each of the subsectors under analysis. 

It is difficult to pinpoint a typical year for the EU ETS in the time horizon covered by the 
Study. The rules for the EU ETS changed significantly twice in the period under analysis 
(2008  and  2012),  while  free  allocation  of  EUAs  to  installations  in  most  cases  started 
decreasing  significantly  from  2013  onwards.  Additionally,  EUA  prices  were  not  stable, 
leading  to  very  different  impacts  even  in  years  without  changes  to  the  EU  ETS 
functioning or free allocation rules. The year 2015 has been chosen as a ‘typical’ year, as 
it is the most representative of the current functioning, and, though this exercise is not 
forward looking, how the costs related to the EU ETS might evolve in the future. 

Note  that  regulatory  costs  incurred  in  the  past  might  not  be  a  good  proxy  for  future 
costs. The EU ETS is a system that is undergoing changes, and the main cost alleviation 
mechanism for the glass sectors (free allocation for sectors on the carbon leakage list) is 
being reviewed and could change significantly in the coming years. 

7.6.1  Data validation 

In the area of climate change many sources of data are used, however, only two sources 
of  data  are  not  public  Commission  sources  but  come  from  plant  questionnaires: 
production output and electricity consumption. The validation of this data is discussed in 
depth in previous Chapters. 

Data validation was also used to identify accounts linked to plants in the sample in the 
EU  Transaction  Log  (the  registry  for  emission  and  allocation  data  from  all  EU  ETS 
installations).  Companies  were  asked  to  provide  the  details  of  accounts  linked  to  their 
installation, and the research team used the EU TL to assess whether other accounts are 
also linked to those installations. 

7.6.2  Model 

The ultimate objective of this Study is to provide one figure: the cost of the EU ETS per 
tonne of product.  

The model for the cost of EU ETS is defined as: 

Total ETS Cost (€/Tonne of product) = Substantive compliance cost (€/Tonne)  

+ Indirect cost (€/Tonne) 
+ Administrative burden (€/Tonne) 

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As  mentioned  before,  no  direct  charges  were  identified.  Substantive  compliance  costs 
and administrative burdens are the only considered direct costs throughout this section. 

7.6.3  Substantive compliance costs 

Substantive compliance costs (€) = Emissions (tonnes of CO2)   

- Allocations (tonnes of CO2) 
* CO2Price (€/tonne of CO2) 

Where: 

-  Emissions are the verified emissions of the installation. 
-  Allocations are the EUAs freely allocated to the installation.  
-  CO2Price is the average yearly market price of CO2. 

The sources we use for this calculation are: 

-  Emissions:  National  Allocation  Plans  (NAPs),  National  Registries  and  the  EU 

Transaction Log. 

-  Allocations: NAPs, National Registries and the EU Transaction Log. 
-  CO2Price:  

o  Yearly  averages  of  the  daily  settlement  prices  for  EUA  Dec  Future 
contracts  for  delivery  in  that  year.  The  daily  settlement  prices  were 
reported by the European Energy Exchange.109 

Table 42. Average yearly prices per tonne of CO2 (euros) 

Year  2006 

2007  2008 

2009 

2010  2011  2012  2013  2014  2015 

CO2 
Price 

18.62 

0.74 

23.03 

13.31  14.48  13.77  7.56 

4.50 

5.92 

7.61 

Source: Authors’ own elaboration on European Energy Exchange. 

-  Total  production  (tonnes  of  product):  this  data  is  necessary  for  converting  the 
price per installation into a price per tonne of product. These figures were made 
available by companies, and were included in the questionnaires received. 

This  results  in  an  estimate  of  substantive  compliance  costs.  In  order  to  have  a  more 
exact  calculation  of  EU  ETS  substantive  compliance  costs  it  would  be  necessary  to 
analyse  all  trades  in  EUAs  by  plants  under  consideration.  However,  the  data  for  this 
analysis is currently not available and is considered too sensitive for plants to share. 

7.6.4  Indirect costs 

Indirect cost (€/tonne of product) = Purchased electricity (kWh/tonne of product) 

*Carbon intensity of electricity (CO2/kWh)  
* CO2Price (€/tonne of CO2)  
*Pass-on rate 

Where: 

-  Purchased electricity: the amount of electricity to produce one tonne of product. 

This amount is plant and technology specific. 

109 This CO2 price variable is a proxy and might result in imperfect results. To fully validate EUAs, a 
plant by plant analysis of transfers and trading strategies would be necessary. 

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- 

 Carbon intensity of electricity generation indicates the number of tonnes of CO2 
emitted by utilities to generate one kWh. 

-  CO2Price is the average yearly market price of CO2. 

-  Pass-on rate: the proportion of direct costs incurred by utilities (disregarding any 
mitigating effects from free allocation) that they pass on to electricity consumers. 
For this Study two pass-on rates are used: 0.6 and 1. 

Sources: 

-  Purchased  electricity:  these  figures  were  made  available  by  companies  via  the 

questionnaire. 

-  Carbon intensity of electricity generation: the maximum regional carbon intensity 
of  electricity  is  utilised,  provided  by  the  Commission’s  Guidelines  on  State  Aid 
Measures.110  Note  that  these  figures  are  not  national.  Member  States  that  are 
highly  interconnected  or  have  electricity  prices  with  very  low  divergences  are 
regarded as being part of a wider electricity market and are deemed to have the 
same  maximum  intensity  of  generation  (for  example,  Spain  and  Portugal).  It 
must  be  noted  that  the  maximum  regional  carbon  intensity  of  electricity 
generation  is  much  higher  for  certain  jurisdictions  than  the  national  average 
intensity, e.g. for France it is  nine  times higher. Additionally, these figures have 
not been updated since they were published in 2012 and do not take into account 
the  significant  gains  in  renewable  and  low-carbon  electricity  generation  since 
then.  This  means  that  indirect  costs  are  likely  to  be  overestimated  when  using 
these regional carbon intensities of electricity generation. 

-  CO2Price:  the  same  data  is  utilised  as  in  the  previous  section  to  create  a  yearly 

average price. 

7.6.5  Administrative burdens 

Administrative burden (€/tonne of product) = Start-up costs (€/tonne of product) 

+ MRV costs (€/tonne of product) 

Where:  

-  Start-up  costs  are  the  initial  costs  linked  to  entering  the  EU  ETS.  Such  costs 

include obtaining and installing monitoring equipment. 

-  MRV  costs  are  the  yearly  extra  cost  for  an  installation  when  it  comes  to 

monitoring, reporting and verification obligation in the EU ETS. 

Source:  

-  All  data  for  administrative  sources  was  obtained  through  the  questionnaire.  It 
must be noted that start-up costs were incurred by plants before the start of the 
period  that  this  Study  analyses.  Most  installations  were  covered  from  the  first 
year  of  the  EU  ETS  (2005),  while  this  Study  analyses  regulatory  costs  over  the 
2006-15 period.  

110 Communication from the Commission (2012), Guidelines on certain State aid measures in the 
context of the greenhouse gas emission allowance trading scheme post-2012 (2012/C 158/04). 

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Additionally,  it  proved  difficult  for  plants  to  provide  numbers  on  start-up  costs: 
many  used  equipment  from  external  reviewers  to  monitor  emissions  and, 
therefore,  costs  that  would  be  seen  as  start-up  costs  were  considered  recurring 
administrative burdens. 

As  the  effort  required  to  report  yearly  MRV  costs  (both  internally  in  terms  of 
hours invested and externally through external consultants) via the questionnaire 
was  deemed  excessive,  plants  were  requested  to  report  administrative  burdens 
for  2015.  The  research  team  understands  that  these  costs  have  changed 
somewhat,  but  not  significantly,  since  2006.  Therefore,  administrative  burdens 
reported below are relatively constant, and are correlated directly with production 
output. 

Administrative  burdens  that  are  labour-related  were  monetised  using  the  hourly 
rates  in  the  various  Member  States  as  provided  by  SecGen  (see  Part  A  above). 
When  companies  mentioned  the  position  of  employees  working  on  MRV,  these 
positions  were  used.  In  all  other  cases  the  employees  were  considered  ISCO  3 
level  employees,  i.e.  technicians  and  associate  professions.  Interviews  with 
stakeholders  indicated  that  the  MRV  requirements  for  installations  are  usually 
fulfilled  by  technical  officers.  A  small  number  of  questionnaires  indicated  that 
managers and directors are involved, but this involvement is very limited in time. 

7.7  Cost assessment – Packaging glass 

7.7.1  Sample 

The  sample  in  this  section  is  the  same  as  in  other  areas  of  legislation,  and  has  been 
discussed in depth in earlier Chapters (see Part A). Relevant for this Chapter on climate 
change is that the EU ETS covered all plants in this sample for all years.  

7.7.2  Direct regulatory costs 

Two types of direct regulatory costs are relevant for packaging glass plants:  

 

substantive  compliance  costs  linked  to  the  buying  and  selling  of  EUAs  to  cover 
emissions beyond free allocation; 

  administrative  burdens  related  to  monitoring,  reporting  and  verification  of 
allowances, and the yearly procedures related to installation-level compliance. 

Substantive compliance costs 

Substantive  compliance  costs  varied  significantly  between  plants  and  years,  and  are 
negative  for  exactly  50%  of  all  observations  in  this  subsector.  This  means  that  many 
plants  were  over-allocated  EUAs  for  at  least  one  year,  and  therefore  could  have  sold 
surplus EUAs on the market.  

For  one  plant  this  over-allocation  was  so  large  that  potential  revenues  were  –
€10.08/tonne for one year of the period. The EU simple average of all plants and for 
all years for substantive compliance costs was –€0.20/tonne. 

Regional averages of substantive compliance costs are very different across regions, and 
show  different  trends.  In  CEE,  substantive  compliance  costs  started  very  low  (–
€3.33/tonne  in  2006),  which  steadily  increased  to  €0.45/tonne  in  2015.  The  trend  is 
defined  by  the  new  free  allocation  rules  implemented  in  2013,  which  reduced  over-
allocation and made  substantive compliance costs positive for the CEE average starting 
in 2013. In SE  substantive compliance costs started negative as well, at  –€0.38/tonne. 

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However,  this  decreased  steadily  by  2008,  reaching  –€1.73/tonne.  Also  in  this  region 
Phase 3 allocation rules changed the trend, and caused substantive compliance costs to 
be  positive  from  2013  onwards  (in  2015  it  reached  €0.88/tonne).  In  NWE,  substantive 
compliance  costs  were  positive  for  most  years,  only  becoming  negative  between  2009 
and 2012. In 2015 they stood at €0.82/tonne. 

On the regional level we can therefore conclude that substantive compliance costs were 
negative  for  most  regions  and  years,  but  that  from  2013  to  2015  each  regional 
average was positive.  

Administrative burdens 

As  indicated  above,  administrative  burdens  are  consistent  across  years  and  plants,  as 
most installations reported MRV costs only for a typical year. The administrative burdens 
in CEE and SE were relatively stable at around €0.03/tonne across the entire period. In 
NWE it was slightly lower for the entire period at around €0.025/tonne. 

7.7.3  Indirect regulatory costs 

Indirect costs are the most relevant costs for the packaging glass plants in  this sample 
over  this  period.  As  noted  before,  the  methodology  used  here  will  likely  lead  to  an 
overestimation  of  indirect  costs  as  the  carbon  intensities  of  electricity  generation  could 
potentially be overstated in several Member States.  

Two pass-on rates for indirect costs passed through by electricity providers to consumers 
were used in the analysis: 0.6 and 1. Of course, this had a direct impact on the results. 
When  using  a  pass-on  rate  of  0.6,  indirect  costs  vary  between  €0.05/tonne  and 
€5.12/tonne, with an EU average of €1.50/tonne over the period. When using a pass-on 
rate  of  1,  indirect  costs  vary  between  €0.09/tonne  and  €8.53/tonne,  with  an  EU 
average of €2.51/tonne of hollow glass over the period.  

There are three main determinants for the indirect cost (beyond pass-on rates): 

  Carbon intensity of electricity generation: in the case of this sample of packaging 
glass  producers  there  was  a  large  difference  in  carbon  intensity  of  electricity 
generation.  

  Purchased  electricity  intensity  of  production:  the  packaging  glass  subsector  is 
characterised  by  relatively high  electricity  purchases:  the  average  of  the  sample 
is  0.31  MWh/tonne  of  product.  However,  there  are  large  differences  between 
installations: the most electricity efficient consume 0.14 MWh/tonne and the least 
electricity  efficient  consume  0.47  MWh/tonne.  A  more  detailed  analysis  on  this 
issue can be found in the energy Chapter of this Study. 

  EUA prices: the prices  of EUAs are one of the major factors in the estimation of 
indirect costs. Unsurprisingly, the year with lowest EUA prices (2007: €0.74, just 
3%  of  EUA  price  in  2008)  had  by  far  the  lowest  indirect  costs,  while  the  years 
with the highest EUA prices (2006 and 2008) had high indirect costs. 

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7.7.4  Cumulative regulatory costs  

Figure  58.  Yearly  overview  of  regulatory  costs  generated  by  the  EU  ETS  and 
linked  implementing legislation, EU weighted average (€/tonne  –  indirect cost 
pass-on rate 1), packaging glass subsector. 

6

5

4

3

2

1

0

-1

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

AB

SCC DC

IC

Source: Authors’ own elaboration. 

Figure  58  clearly  indicates  that  direct  charges  are  non-existent  and  administrative 
burdens  are  not  significant.  Substantive  compliance  costs  are  also  not  significant  for 
most years when compared to indirect costs. 

Substantive  compliance  costs  were  negative  for  a  number  of  years,  but  were  positive 
between 2006 and 2008, and from 2013 onwards. They ended up at €0.55/tonne in 
2015. This evolution is due to three factors: evolution of EUA prices, reforms in the free 
allocation rules for Phase 3 of the EU ETS, and the impact of the economic crisis between 
2009 and 2012.  

Indirect  costs  are  far  more  significant  for  installations,  and  the  changes  over  time  are 
mostly due to the evolution of EUA prices. The low prices in 2007 at the end of Phase 1 
resulted  in  very  low  indirect  costs,  which  rebounded  together  with  the  EUA  price.  The 
decline  of  EUA  prices  between  2008  and  2013  saw  indirect  costs  decrease  from 
€5.10/tonne in the EU in 2008 to around €1.02/tonne in 2013. Subsequently, the slowly 
rising  EUA  prices  resulted  in  moderate  increases  in  indirect  costs.  In  2015  indirect 
costs  with  pass-on  rate  1  were  an  estimated  €1.66/tonne  (pass-on  rate  0.6: 
€1/tonne).  

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Cumulative Cost Assessment of the EU Glass Industry 

Figure  59.  Yearly  overview  of  regulatory  costs  generated  by  the  EU  ETS  and 
linked  implementing  legislation,  regional  weighted  averages  (€/tonne  – 
indirect cost pass-on rate 1), packaging glass subsector 

8

6

4

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7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

E
W
N

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

AB

SCC

DC

IC (pass-on 1)

Source: Authors’ own elaboration. 

There  were  significant  differences  between  regions,  as  can  be  observed  in  Figure  59 
above. Substantive compliance costs were substantially lower in CEE up to 2012 than in 
NWE.  In  SE  on  the  other  hand,  substantive  compliance  costs  remained  low  and  stable 
throughout the period, fluctuating around €0.37/tonne. 

Indirect  costs  were  more  significant  for  all  regions  over  the  period,  and  show  a  very 
comparable trend: decreasing between 2008 and 2013 as EUA prices tumbled, and then 
rebounding slowly as EUA prices picked up again.  

Administrative  burdens  were  stable  in  all  regions:  between  €0.025  (NWE)  and 
€0.035/tonne (SE and CEE) for the entire period.   

Table  43  shows  the EU  ETS  related regulatory costs  for 2015  as  regional  and  weighted 
EU averages. As mentioned before, it is difficult to pinpoint a typical year for the EU ETS 
in this period due to significant changes in both the legislation and the EUA prices. The 
year  2015  has  been  chosen  as  a  ‘typical’  year,  as  it  is  the  most  representative  of  the 
current  functioning,  and,  though  this  exercise  is  not  forward-looking,  how  the  costs 
related to the EU ETS will evolve in the future. 

On  the  EU  level,  administrative  burdens  were  indeed  not  high  (€0.03/tonne), 
while substantive compliance obligations (€0.55/tonne) were more significant. 
Indirect  costs  (€1  or  €1.66/tonne  depending  on  the  pass-on  rate)  were  the 
most relevant EU ETS related cost for EU packaging glass installations. 

On the regional level some clear differences emerge. Substantive compliance costs were 
very  low  in  SE  when  compared  to  CEE  and  especially  NWE.  This  difference  was  due  to 
plants receiving relatively more free allocation in SE and thereby not needing to buy as 
many  additional  EUAs.  Indirect  costs  were  highest  in  CEE  as  carbon  intensity  of 
electricity generation is substantially higher in the countries in that region than in most 
other countries in the EU. 

159 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Overall EU ETS related costs were substantive: €2.24/tonne in 2015. Indirect costs were 
responsible for nearly 75% of that amount. 

Table  43.  Regulatory  costs  generated  by  the  EU  ETS  and  linked  implementing 
legislation  in  the  EU  (€/tonne  –  average  costs),  2015,  packaging  glass 
subsector 

Regions 

EU 

NWE 

CEE 

SE 

Administrative 
burdens  

0.03 

0.03 

0.03 

0.03 

Direct 
regulatory 
costs 

Substantive 
compliance 
costs 

0.82 

€0.46 

0.04 

0.55 

Direct charges 

0 

0 

0 

0 

Pass-on: 0.6 

1.02 

1.26 

0.84 

1.00 

Pass-on: 1 

1.69 

2.10 

1.40 

1.66 

Indirect 
regulatory 
costs 

Total regulatory costs 
(pass-on rate 1) 

€2.54  

€2.59 

€1.47 

€2.24 

Source: Authors’ own elaboration. 

7.8  Cost assessment – Glass tableware 

7.8.1  Sample 

The  sample  in  this  section  is  the  same  as  in  other  areas  of  legislation,  and  has  been 
discussed  in  depth  in  earlier  Chapters  (Part  A).  Relevant  for  this  Chapter  on  climate 
change is that two out of the five plants in this sample were not covered by the EU ETS 
in the first year of the period (2006).  

All  plants  are  included  for  the  entire  analysis,  as  the  aim  of  this  Study  is  to  quantify 
average  regulatory  costs  for  samples  in  the  industry,  independent  of  which  areas  of 
legislation  are  directly  impacting  them.  These  two  plants  did  not  face  substantive 
compliance costs or administrative burdens in the years that they were not covered, but 
did face indirect costs throughout the period studied. 

7.8.2  Direct regulatory costs 

Two types of direct regulatory costs are relevant for refractories plants:  

 

substantive  compliance  costs  linked  to  the  buying  and  selling  of  EUAs  to  cover 
emissions beyond free allocation;  

  administrative  burdens  related  to  monitoring,  reporting  and  verification  of 
allowances, and the yearly procedures related to installation-level compliance. 

160 

 
 
 
 
  
  
  
  
 
Cumulative Cost Assessment of the EU Glass Industry 

Substantive compliance costs 

Substantive  compliance  costs  varied  significantly  between  plants,  regions  and  years, 
were  negative  for  60%  of  the  observations.  This  means  that  plants  were  overallocated 
EUA,  and  therefore  could  have  sold  surplus  EUAs  on  the  market.  For  one  plant  this 
overallocation was so large that potential revenues were –€12.95/tonne for one specific 
year. However, one plant faced very large underallocation (beyond what other plants in 
other subsectors observed) and potential substantive compliance costs of €17.67/tonne 
in  one  specific  year.  The  same  plant  was,  however,  also  substantially  overallocated  in 
other  years.  Overallocation  remained  an  issue  over the  entire  period  for most  plants  in 
the sample. 

Administrative burdens 

As  indicated  above,  administrative  burdens  were  mostly  consistent  across  years  within 
plants  as  most  installations  reported  MRV  costs  only  for  a  typical  year.  EU  weighted 
averages was €0.07 in 2015. 

7.8.3  Indirect regulatory costs 

Indirect  costs  are  the  most  relevant  costs for  the  glass  tableware  plants  in  this  sample 
over  this  period.  As  noted  before,  the  methodology  used  here  will  likely  lead  to  an 
overestimation  of  indirect  costs  as  the  carbon  intensities  of  electricity  generation  could 
potentially be overstated in several Member States.  

Two pass-on rates for indirect costs passed through by electricity providers to consumers 
were used in the analysis: 0.6 and 1. Of course, this had a direct impact on the results. 
When  using  a  pass-on  rate  of  0.6,  indirect  costs  vary  between  €0.13/tonne  and 
€17.02/tonne, with an EU average of €5.02/tonne over the entire period. When using a 
pass-on rate of 1, indirect costs vary between €0.22/tonne and €28.34/tonne, with an 
EU average of €8.36/tonne of glass tableware over the entire period. There are 
three main determinants for the indirect cost (beyond pass-on rates): 

  Carbon  intensity  of  electricity  generation:  in  the  case  of  this  sample  of  glass 
tableware producers there was a large difference in carbon intensity of electricity 
generation.  The  more  carbon  intensive  Member  States  have  higher  estimated 
indirect costs. 

  Purchased  electricity  intensity  of  production:  the  glass  tableware  subsector  is 
characterised by a relatively high electricity purchases: the average of the sample 
was 0.95 MWh/tonne of product. However, there were large differences between 
installations,  with  the  most  electricity  efficient  consuming  0.25  MWh/tonne  and 
the least electricity efficient consuming 1.81 MWh/tonne. These large differences 
are  explained  by  the  different  products  made  by  the  various  glass  tableware 
plants. 

  EUA prices: the prices  of EUAs are one of the major factors in the estimation of 
indirect costs. Unsurprisingly, the year with lowest EUA prices (2007: €0.74, just 
3% of the price in 2008) had by far the lowest indirect costs, while the years with 
the highest EUA prices (2006 and 2008) had high indirect costs. 

161 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

7.8.4  Cumulative regulatory costs  

Figure  60.  Yearly  overview  of  regulatory  costs  generated  by  the  EU  ETS.    EU 
weighted  average  (€/tonne  –  indirect  cost  pass-on  rate  1),  glass  tableware 
subsector 

20

15

10

5

0

-5

-10

-15

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

AB SCC DC IC (pass on=1)

Source: Authors’ own elaboration. 

Figure  60  clearly  indicates  that  direct  charges  were  non-existent  and  administrative 
burdens  were  not  significant.  On  the  other  hand,  substantive  compliance  costs  and 
indirect costs were very relevant for glass tableware producers.  

Substantive compliance costs were negative between 2008 and 2014, meaning that the 
sample  was  overallocated  free  allowances  and  could  have  sold  those  extra  allowances. 
The reforms in the free allocation rules for Phase 3 of the EU ETS decreased the absolute 
number of overallocated allowances, but did not take care of the problem in its entirety: 
substantive compliance costs remained negative throughout the entire period. 

Indirect  costs  were  significant  for installations,  and  the  changes over time  were  mostly 
due to the evolution of EUA prices. The low prices in 2007 at the end of Phase 1 resulted 
in very low indirect costs, which rebounded with the EUA price. The decline of EUA prices 
between 2008 and 2013 saw indirect costs decrease from over €17.60/tonne in 2008 to 
€3.76/tonne in 2013. Since then, slowly rising EUA prices resulted in moderate increases 
in  indirect  costs.  In  2015  indirect  costs  with  pass-on  rate  1  were  an  estimated 
€6.37/tonne (pass-on rate 0.6: €3.82/tonne).  

Table 44 shows the EU ETS related regulatory costs for 2015. As mentioned before, it is 
difficult to pinpoint a typical year for the EU ETS in this period due to significant changes 
in both the legislation and the EUA prices. The year 2015 has been chosen as a ‘typical’ 
year,  as  it  is  the  most  representative  of  the  current  functioning,  and,  though  this 
exercise  is  not  forward-looking,  how  the  costs  related  to  the  EU  ETS  will  evolve  in  the 
future. 

On  the  EU  level,  administrative  burdens  were  indeed  not  high  (€0.07/tonne),  while 
substantive  compliance  obligations  (€0.71/tonne)  were  more  significant.  Indirect  costs 
(€3.82/tonne  or  €6.37/tonne  depending  on  the  pass-on  rate)  were  the  most  relevant 
cost  for  sampled  EU  installations.  Total  EU  ETS  related  costs  for  sampled  glass 

162 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

tableware plants were the highest of all glass sectors: €7.16/tonne of product. 
This  was  mainly  caused  by  the  high  indirect  costs,  which  were  in  its  turn  due  to  high 
electricity intensity of production of glass tableware. 

Table  44.  Regulatory  costs  generated  by  the  EU  ETS  and  linked  implementing 
legislation  in  the  EU  (€/tonne  –  average  costs),  2015,  glass  tableware 
subsector 

Administrative 
burdens  

Direct 
regulatory 
costs 

Substantive 
compliance 
costs 

EU 

0.07  

0.71 

Direct charges 

0 

Pass-on: 0.6 

3.82 

Pass-on: 1 

6.37 

Indirect 
regulatory 
costs 

Total regulatory costs 
(pass-on rate 1) 

7.16  

Source: Authors’ own elaboration. 

7.9  Cost assessment – Flat Glass 

7.9.1  Sample 

The  sample  in  this  section  is  the  same  as  in  other  areas  of  legislation,  and  has  been 
discussed  in  depth  in  earlier  Chapters.  Relevant  for  this  Chapter  on  climate  change  is 
that three plants were not covered by the EU ETS for one or more years. Two of those 
entered  the  EU  ETS  starting  2007,  one  plant  entered  in  2008.  All  other  plants  were 
covered by the EU ETS for all years of interest for this Study.  

All  these  plants  are  included  for  the  entire  analysis,  as  the  aim  of  this  Study  is  to 
quantify  average  regulatory  costs  for  samples  in  the  industry,  independent  of  which 
areas  of  legislation  are  directly  impacting  them.  These  three  plants  did  not  face 
substantive  compliance  costs  in  the  years  that  they  were  not  covered  but  did  face 
indirect costs throughout the period studied. A limited number of those plants indicated 
that  they  did  face  administrative  burdens  due  to  the  necessity  of  monitoring  emissions 
levels  so  to  show  that  their  emissions  levels  were  lower  than  the  thresholds  set  to  be 
included in the EU ETS. 

7.9.2  Direct regulatory costs 

Two types of direct regulatory costs are relevant for flat glass plants:  

 

substantive  compliance  costs  linked  to  the  buying  and  selling  of  EUAs  to  cover 
emissions beyond free allocation; 

163 

 
 
 
 
  
  
 
Cumulative Cost Assessment of the EU Glass Industry 

  administrative  burdens  related  to  monitoring,  reporting  and  verification  of 
allowances, and the yearly procedures related to installation-level compliance. 

Substantive compliance costs 

Substantive  compliance  costs  varied  significantly  between  plants  and  years,  and  were 
negative  for  over  60%  of  all  observations  in  this  sector.  This  means  that  plants  were 
overallocated EUAs, and therefore could have sold surplus EUAs on the market.  

For one plant this overallocation was so large that potential substantive compliance costs 
were  –€19.10/tonne  for  one  specific  year.  The  observations  with  very  negative 
substantive  compliance  costs  are  also  linked  to  years  with  significant  drops  in  output 
such as the financial and economic crisis years of 2008 and 2009.  

Regional averages conformed to an increasing trend. The CEE average increased from –
€5.96/tonne  in  2006  to  –€0.16/tonne  in  2015.  SE  averages  started  at  €0.16/tonne  but 
dropped  substantially  till  2008  (–€4.36/tonne)  and  then  rebounded to  –€1.78/tonne  by 
2009.  Subsequently,  substantive  compliance  costs  in  SE  increased  steadily  to  –
€0.18/tonne by 2013. In 2014 and 2015 it was positive (reaching €0.40/tonne in 2015). 
In  NWE  it  started  at  –€2.19/tonne  and  reached  its  minimum  in  2010  (–€3.40/tonne). 
After  2010,  its  trend  was  unclear,  reaching  €1.45/tonne  by  2014  but  subsequently 
dropping to €0.45/tonne in 2015.  

On the regional level we can therefore conclude that substantive compliance costs were 
relatively low in all three areas at the start of the period but ended substantially higher.  

Administrative burdens 

As  indicated  above,  administrative  burdens  were  consistent  across  years  and  plants  as 
most installations reported MRV costs only for a typical year. However, there were large 
variations between plants. Several plants reported MRV costs of less than  €0.01/tonne, 
while another plant reported MRV costs of over €1.58/tonne. That plant was dropped, as 
its verification costs were substantially higher than those for its peers.111 The EU average 
over all plants and years was €0.06/tonne.  

The  difference  in  administrative  burdens  is  related  to  differences  in  procedures  and 
related  costs  between  Member  States,  as  well  as  differences  in  prices  of  external 
consultants  that  are  commonly  used  by  companies.  Also  smaller  plants  observe  larger 
administrative  burdens  per  tonne  of  product  as  fixed  costs  such  as  plant  visits, 
laboratory  expenses  and  fees  for  consultants  are  the  same  order  of  magnitude  as  for 
larger  plants  while  production  output  is  significantly  lower.  At  the  same  time,  smaller 
companies  have  less  bargaining  power  when  outsourcing  MRV  costs  compared  to 
companies with a large number of plants. 

111 Outliers for MRV costs are expected, as not all installations need to follow the same MRV rules. 
Some  Member  States  are  more  stringent  than  others  and  require  different  MRV  procedures. 
Installations  with  variable  process  emissions  are  in  some  Member  States  required  to  have  third-
party  accredited  laboratories  sample  and  analyse  the  different  materials  and  mixes  used  during 
each time period (time periods also vary widely between Member States). Installations that need 
regular analysis have high laboratory costs and therefore high  MRV costs. These installations are 
considered  outliers  because  they  are  not  representative  of  the  entire  EU  industry,  and  have 
therefore  been  left  out  of  the  analysis  of  administrative  costs.  Verifying  which  MRV  procedures 
each  installation  has  to  fulfil  in  depth  is  considered  outside  the  scope  of  this  analysis,  and  too 
time-consuming given the tight deadlines. 

164 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

7.9.3  Indirect regulatory costs 

Indirect costs were the most relevant costs for the flat glass plants in this sample over 
this  period.  As  noted  before,  the  methodology  used  here  will  likely  lead  to  an 
overestimation  of  indirect  costs  as  the  carbon  intensities  of  electricity  generation  could 
potentially be overstated in several Member States.  

Two pass-on rates for indirect costs passed through by electricity providers to consumers 
were used in the analysis: 0.6 and 1. Of course, this had a direct impact on the results. 
When  using  a  pass-on  rate  of  0.6,  indirect  costs  vary  between  €0.03/tonne  and 
€6.67/tonne,  with  an  EU  average  of  €1.12/tonne  over  the  entire  period.  When  using  a 
pass-on rate of 1, indirect costs vary between €0.05 €/tonne and €11.12 €/tonne, with 
an EU average of €1.87/tonne of flat glass over the entire period.  

There are three main determinants of indirect costs (beyond pass-on rates): 

  Carbon intensity of electricity generation: in the case of this sample of flat glass 
producers  there  was  a  large  difference  in  carbon  intensity  of  electricity 
generation.  

  Purchased electricity intensity of production: the flat glass sector is characterised 
by  a  relatively  low  electricity  purchases:  the  average  of  the  sample  was  0.21 
MWh/tonne  of  product.  However,  there  were 
large  differences  between 
installations, with the most electricity efficient plants consuming 0.07 MWh/tonne 
and the least electricity efficient plants consuming more than 0.76 MWh/tonne. A 
more  detailed  analysis  on  this  issue  can  be  found  in  the  energy  section  of  this 
Study. 

  EUA prices: the prices  of EUAs are one of the major factors in the estimation of 
indirect costs. Unsurprisingly, the year with lowest EUA prices (2007: €0.74, just 
3%  of the 2008  EUA  price)  had  by  far the  lowest  indirect  costs,  while  the  years 
with the highest EUA prices (2006 and 2008) had high indirect costs. 

7.9.4  Cumulative regulatory costs  

Figure  61.  Yearly  overview  of  regulatory  costs  generated  by  the  EU  ETS  and 
linked  implementing legislation, EU weighted average (€/tonne  –  indirect cost 
pass-on rate 1), flat glass sector 

4

3

2

1

0

-1

-2

-3

-4

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

AB

SCC DC

IC

Source: Authors’ own elaboration. 

165 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  61  clearly  indicates  that  direct  charges  were  non-existent  and  administrative 
burdens  were  not  significant.  On  the  other  hand,  substantive  compliance  costs  and 
indirect costs were very relevant for flat glass producers.  

Substantive compliance costs were negative until the introduction of new free allocation 
rules  in  2013.  This  means  that  up  to  that  point  the  sample  was  overallocated  free 
allowances  and  could  have  sold  those  extra  allowances.  Starting  in  2013  the 
overallocation  had,  however,  decreased  significantly,  and  potential  substantive 
compliance costs turned positive. This evolution was due to two factors: evolution of EUA 
prices and reforms in the free allocation rules for Phase 3 of the EU ETS. In 2006 the EU 
average  (weighted  regionally)  substantive  compliance  costs  was  –€2.50/tonne,  which 
decreased to –€3.05/tonne by 2010, and since then increased significantly and in 2015 
stood at €0.29/tonne. 

Indirect costs are significant for installations, and the changes over time are mostly due 
to the evolution of EUA prices. The low prices in 2007 at the end of Phase 1 resulted in 
very low indirect costs, which rebounded together with the EUA price. The decline of EUA 
prices  between  2008  and  2013  put  downward  pressure  on  indirect  costs.  On  the  other 
hand,  lower  production  volumes  in  2009  and  2010  led  to  higher  electricity  intensity  of 
production  and  somewhat  mitigated  the  downward  pressure  of  dropping  EUA  prices  on 
indirect  costs.  Indirect  costs  (pass-on  rate  1)  increased  from  €3.06/tonne  in  the  EU  in 
2006 to €3.25/tonne in 2008. Indirect costs fell to €0.73 by 2013 due to tumbling EUA 
prices.  Since  2013,  slowly  rising  EUA  prices  resulted  in  moderate  increases  in  indirect 
costs.  In  2015  indirect  costs  with  pass-on  rate  1  were  an  estimated 
€1.17/tonne (pass-on rate 0.6: €0.70/tonne).  

Figure  62.  Yearly  overview  of  regulatory  costs  generated  by  the  EU  ETS  and 
linked  implementing  legislation,  regional  weighted  averages  (€/tonne  – 
indirect cost pass-on rate 1), flat glass sector 

8

6

4

2

0

-2

-4

-6

-8

E
E
C

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

E
S

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

E
W
N

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

IC (pass-on 1)
DC
SCC
AB

Source: Authors’ own elaboration. 

At the regional level there were significant differences, as can be observed in Figure 62 
above.  Indirect  costs  in  CEE  were  substantively  higher  than  in  NWE  and  SE.  This  was 
mostly due to higher carbon intensity of electricity generation in that region and higher 
electricity intensity of production in a number of CEE plants.  

166 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Substantive compliance costs were also substantially different in the three regions. While 
the trend was very comparable (low substantive compliance costs until 2013, then minor 
increases  and  close  to  zero  –  except  for  NWE  in  2014),  substantive  compliance  costs 
were  very  low  in  CEE  up  to  2013,  and  never  became  positive.  They  ended  at  –
€0.16/tonne in 2015. In 2014, substantive compliance costs in NWE was very much an 
outlier, also when compared to other glass sectors. The significantly higher  substantive 
compliance costs in NWE in 2014 than in 2015 was due to one plant being undersupplied 
in 2014, which was compensated in 2015: allocation for this plant was more than twice 
as  high  in  2015  when  compared  to  2014.  The  impact  of  the  Phase  3  allocation  rules  is 
clearly  observed  in  all  three  regions  as  overallocation  decreased  sharply  between  2012 
and 2013. 

Administrative  burdens  were  stable  in  CEE:  around  €0.01/tonne.  In  SE  however, 
decreasing  production  volumes  influenced  administrative  burdens  during  the  period. 
Administrative  burdens  in  2006  was  also  €0.01/tonne,  but  this  increased  to  nearly 
€0.02/tonne  in  2015.  While  not  a  large  increase  in  absolute  terms,  in  relative  terms 
administrative burdens increased by around 60% over that period. In NWE it was stable 
at around €0.02/tonne for the entire period. 

Table  45  shows  the EU  ETS  related regulatory costs  for 2015  as  regional  and  weighted 
EU averages. As mentioned before, it is difficult to pinpoint a typical year for the EU ETS 
in this period due to significant changes in both the legislation and the EUA prices. The 
year  2015  has  been  chosen  as  a  ‘typical’  year,  as  it  is  the  most  representative,  and, 
though  this  exercise  is  not  forward-looking,  how  the  costs  related  to  the  EU  ETS  will 
evolve in the future. 

On  the  EU  level,  administrative  burdens  were  indeed  not  high  (€0.02/tonne),  while 
substantive  compliance  obligations  (€0.29/tonne)  were  more  significant  for  producers. 
Indirect costs (€0.70 or €1.17/tonne, depending on the pass-on rate) were the 
most relevant EU ETS related costs for EU flat glass installations. 

On the regional level some clear differences emerge. As discussed above, administrative 
burdens  in  NWE  were  significantly  higher  than  in  CEE  and  SE.  Indirect  costs  were 
substantially  higher  in  CEE  than  in  SE  and  NWE  due  to  higher  carbon  intensity  of 
electricity  generation  in  that  region,  linked  with  high  electricity  intensity  of  production. 
Indirect costs in CEE were approximately twice as high as those in SE. 

Substantive  compliance  costs  were  comparable  between  SE  and  NWE:  €0.40-
0.45/tonne.  However,  due  to  continued  overallocation  in  CEE,  substantive  compliance 
costs  were  –€0.16/tonne  in  2015.  Total  EU  ETS  costs  were  substantial  at  €1.48 
€/tonne on average in EU. 

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Table  45.  Regulatory  costs  generated  by  the  EU  ETS  and  linked  implementing 
legislation in the EU (€/tonne – average costs), 2015, flat glass sector 

Administrative 
burdens  

Direct 
regulatory 
costs 

Substantive 
compliance 
costs 

Regions 

EU 

NWE 

CEE 

SE 

0.03 

0.01 

0.02 

0.02 

0.45 

–0.16 

0.40 

0.29 

Direct charges 

0 

0 

0 

0 

Pass-on: 0.6 

0.51 

1.18 

0.62 

0.70 

Pass-on: 1 

0.85 

1.97 

1.03 

1.17 

Indirect 
regulatory 
costs 

Total regulatory costs 
(pass-on rate 1) 

1.32  

1.82 

1.45 

1.48  

Source: Authors’ own elaboration. 

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8  Environmental legislation for the glass sector 

8.1  Description of the Act 

The Industrial Emission Directive (IED)112 is currently the main piece of EU legislation 
in  the  area  of  industrial  emissions  to  air,  water  and  land.  The  IED  applies  the 
integrated  pollution  prevention  and  control  (IPPC)  framework  to  industrial 
activities by laying down “rules designed to prevent or, where that is not practicable, to 
reduce  emissions  […]  in  order  to  achieve  a  high  level  of  protection  of  the  environment 
taken as a whole”.113  

The IED entered into force in subsequent steps between 2014 and 2016,114 replacing the 
Integrated Pollution and Prevention Control (IPPC) Directive,115 which, therefore, applied 
for a significant part of the period in the scope of this Study. In any case, the scope and 
objective  of  the  IPPC  Directive  were  similar  to  those  of  the  IED,  with  a  set  of  common 
rules for allowing and controlling emissions from industrial installations.116  

Both the IED and the IPPC Directive require operators of industrial installations to obtain 
and  renew  an  integrated  environmental  permit  to  operate  from  national  or  local 
competent  authorities.117  In  the  permit,  Emission  Limit  Values  (ELVs)  are  set  based  on 
the  so-called  Best  Available  Techniques  (BAT).  The  BAT  and  the  associate  emission 
levels (the so called BAT-AELs) applicable to the various lines of business covered by the 
Directive  are  to  be  specified  in  technical  documents,  the  so-called  BAT  Reference 
Documents (BREF), whose conclusions are formally adopted by the Commission through 
an  Implementing  Decision  (the  so-called  BAT  Conclusions).  These  technical  documents 
are progressively drafted and updated for the various sectors falling in the scope of the 
IED118  by  the Commission  and  the  industry stakeholders,  under the  coordination  of  the 
JRC;  under  the  IED  regime,  BREFs  are  then  adopted  via  Commission  implementing 
decisions.  

Finally,  the  IED  includes  provisions  on  monitoring  and  compliance,  mandating 
emission levels to be monitored and environmental inspections to be carried out by the 
competent authorities at different intervals (at least every one to three years) depending 
upon the level of risk. The competent authorities shall base the period between two site 
visits on a systematic appraisal of the environmental risks of the installations concerned 
and  the  period  shall  not  exceed  one  year  for  installations  posing  the  highest  risks  and 
three years for installations posing the lowest risks.119  

Legislation on industrial emissions is relevant for all glass sectors and applies to 
the  vast  majority  of  installations  of  the  glass  industry,  which  are  included  among 
industries listed in Annex I of IED and have their own approved BREF document.120 The 

112  Directive  2010/75/EU  of  the  European  Parliament  and  of  the  Council  on  industrial  emissions 
(integrated pollution prevention and control) (Industrial Emissions Directive, IED). 
113 Art. 1 IED. 
114 IED provisions became applicable from January 2014 for existing industrial installations, while 
the minimum requirements for Large Combustion Plants came into effect on January 2016. 
115 Council Directive 96/61/EC concerning integrated pollution prevention and control (IPPC). 
116 The IED also recasts six other pieces of EU legislation concerning industrial emissions: (i) the 
three  Titanium  Dioxide  Directives  (78/176/EEC,  82/883/EEC  and  92/112/EEC  on  waste  from  the 
titanium dioxide industry); (ii) the Volatile Organic Compounds Solvents Directive (99/13/EC); (iii) 
the  Waste  Incineration  Directive  (2000/76/EC);  and  (iv)  the  Large  Combustion  Plants  Directive 
(2001/80/EC). 
117 Art. 4 and Art. 5 IED. 
118 Art. 13 IED. 
119 Art. 16 and 23 IED. 
120  European  Commission  (2013),  Best  Available  Techniques  (BAT)  Reference  Document  for  the 
Manufacture of Glass.  

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IED  and  the  BREFs  specifically  apply  to  the  manufactures  of  glass,  including  glass 
fibre, with a melting capacity exceeding 20 tonnes per day.121 

The  BREF  for  glass  regulates  emissions  to  air,  water  and  waste,  as  well  as  noise  and 
odours.  The  most  important  emissions  produced  by  the  glass  industry  are  those  to  air, 
from  both  the  raw  material  preparation  phase  (dust  emissions),  and  the  melting  phase 
(fossil  fuels,  particulate  matter,  and  gas  emitted  by  melting  raw  materials).  Coating, 
cutting and polishing may also result in emissions to air.122 In addition to that, water is 
used as a coolant in float glass manufacturing and in the recycling process for cleaning 
crushed used glass, and must be subsequently disposed of. Furthermore, liquid solvents 
are used in some finishing processes, e.g. coating. Nonetheless, emissions to water from 
the  glass  industry  are  relatively  low.  As  for  waste  production,  most  of  the  internally 
generated glass waste is recycled to the furnace (except for the production high-quality 
glass). This notwithstanding, the glass industry produces other waste, such as residues 
from raw materials, deposits (sulphates), gas flues and refractory materials.123 

The  BREF  identifies  a  series  of  BATs  for  the  prevention  or  minimisation  of  pollution 
applicable to the various stages of the glass production process. These BATs concern the 
introduction  of  certain  technologies  for  pollution  abatement  (typically,  in  the  form  of 
end-of-pipe  devices)  and/or  the  modification  of  production  processes,  e.g.  through  a 
modification  in  the  composition  of  inputs,  and/or  the  adoption  of  enhanced  process 
control  methods  of  a  general,  e.g.  the  implementation  of  environmental  management 
systems, or specific nature, e.g. the adoption of measures to control fugitive emissions. 
Given  the  nature  of  the  production  process,  the  BATs  largely  focus  on  the 
reduction/minimisation  of  energy  consumption  and  the  prevention  and  control  of  air 
emissions,  with  special  emphasis  on  dust  emissions  from  the  storage  and  handling  of 
solid  materials  as  well  as  nitrogen  and  sulphur  oxides  (NOx  and  SOx)  and  hydrogen 
chloride  and  fluoride  (HCl  and  HF)  from  melting  furnaces.  However,  in  line  with  the 
integrated  approach  inspiring  the  EU  legislation,  the  BATs  also  concern  water 
consumption and the treatment of effluent water, the minimisation of waste generation 
and noise control. The techniques listed and described in the BAT conclusions are neither 
prescriptive  nor  exhaustive  and  other  techniques  may  be  used  that  ensure  at  least  an 
equivalent level of environmental protection. 

8.2  Categories of regulatory costs 

The  IED  and  the  IPPC  Directive,  together  with  the  attached  BREFs,  may  have  a 
substantive impact on the activities of companies falling within their scope, depending on 
the  level  of  company  readiness  with  respect  to  the  implementation  of  the  BATs.124  In 
particular, the impact of the acts is considerable both from a substantive point of view, 
concerning  the  regulation  of  industrial  processes,  and  from  an  administrative  point  of 
view,  concerning  the  application  and  renewal  of  permits,  as  well  as  monitoring  and 
verification duties. More in detail, the facilities subject to the IED (and, formerly, to the 
IPPC) have to incur the following direct costs:  

121 Annex I to the IED, § 3.3. 
122 At any rate, it is worth mentioning that downstream processing of flat glass (NACE rev. 23.12) 
is out of the scope of the present Study. 
123 See JRC (2013), Best Available Techniques (BAT) Reference Document for the Manufacture of 
Glass, pp. 85-90 (http://eippcb.jrc.ec.europa.eu/reference/BREF/GLS_Adopted_03_2012.pdf). 
124  The  BATs  laid  out  in  the  BAT  conclusions  are  defined  as  techniques  developed  on  a  scale 
allowing  implementation  in  the  relevant  industrial  sector,  under  economically  (meaning  not 
entailing excessive costs) and technically viable conditions, taking into consideration the costs and 
advantages.  

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  administrative burdens, i.e. those incurred to obtain a permit (or to renew the 
existing  permit  within  specified  deadlines)  based  on  the  BAT-AELs  as  well  as  to 
comply with monitoring and inspection requirements;125 and 

  substantive  compliance  costs,  i.e.  those  costs  incurred  for  fulfilling  the 
obligations  spelled  out  in  EU  legislation  and/or  in  the  permit  in  terms  of 
prevention  and  control  of  air  emissions,  effluent  waters,  waste  generation,  etc. 
Three  categories  of  substantive  compliance  costs  are  considered,  namely:  i) 
investment costs, i.e. the resources invested in the retrofitting of plants and/or 
in  the  adoption  of  more  environmentally  friendly  technologies  (these  costs  are 
gross  of  subsidies  that  could  be  granted  by  Member  States  to  invest  in 
environmental  protection  technologies,  whose  incidence  was,  however,  assessed 
as  almost  negligible  in  the  glass  sector,  as  illustrated  in  Box  11);  ii)  financial 
costs,  represented  by  the  opportunity  cost  of  the  capital  invested;  and  iii) 
operating  costs,  which  include  the  incremental  expenses  associated  with 
environmental  protection  measures,  e.g.  for  the  maintenance  of  new  equipment 
or facilities. 

Box 11. The Role of the Environmental Subsidies in the Glass Sector 

All  surveyed  plants  were  asked  to  provide  (i)  information  on  whether  they  received 
support from national or local authorities to reduce the costs linked to environmental 
expenditures  (‘environmental  subsidies’)  during  the  2006-15  period;  and  (ii)  their 
evaluation of the role played by environmental subsidies in their sector.  

All in all, 31 out of 41 plants replied to this additional questionnaire, indicating that the 
impact of these subsidies in the glass industry was minimal. Indeed, almost half of the 
respondents  (14)  reported  a  total  absence  of  environmental  subsidies  in  the  sector. 
Seven  plants  assessed  their  role  as  marginal,  while  seven  plants  were  not  able  to 
provide  an  accurate  assessment  due  to  their  limited  knowledge  of  the  topic  (which 
seems to further confirm the limited occurrence of these subsidies). Thus, only three 
respondents  considered  the  role  of  the  environmental  subsides  in  the  glass  sector 
‘moderate’.  Coherently,  only  five  plants  claimed  to  have  received  an  environmental 
subsidy  between  2006  and  2015.  When  compared  with  the  total  estimate  of 
environmental  investment  made  by  the  31  plants,  the  incidence  of  these 
environmental subsidies was estimated at 2.2% of these costs.  

Such  a  result  is  confirmed  by  the  review  of  secondary  sources.  Indeed,  in  the  “state 
aid transparency public search page”, which gives access to state aid individual award 
data  provided  by  Member  States  in  compliance  with  the  European  transparency 
requirements, no relevant results for the glass sector was found. However, this is not 
surprising  considering  that  in  the  case  of  glass  industry,  only  aid  greater  than  €7.5 
million  per  firm  and  €15  million  as  of  2014  are  notified,  and  these  values  are  much 
greater than our estimated environmental protection measures.  

More  important,  according  to  the  Impact  Assessment  of  the  2014  Guidelines  on 
Energy and Environmental State Aids, the value of state aids granted to undertakings 
exceeding  Community  standards  (or  increasing  the  level  of  environmental  protection 
in the absence of Community standards) amounted to €1.4 billion for the period 2008-
12.  Unfortunately,  there  is  no  sectoral  allocation  of  environmental  state  aid, 
preventing a more accurate assessment for the glass industry. Still, assuming that the 
sector under review  has  benefited  to  the  same  degree  as  other  industries,  when  this 
figure  is  compared  with  the  total  estimate  of  environmental  expenditures  in  the 

125 The costs assessed in this study are evaluated against a 'No Legislation' counterfactual, i.e. the 
absence of any kind of (pre-existing) national legislation. Consequently, the estimated total costs 
are costs resulting from  any  kind of legislation  regardless of  its origin, which, in  this case, is the 
IED. These costs are not to be mistaken with additional costs arising from EU legislation. 

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manufacturing  sector  (NACE  B,  C  and  D35),  set  at  €160  billion,  subsidies  are 
estimated  to  account  for  as  low  as  1%  of  these  expenditures  (a  value  in  line 
with the estimates provided above, based on information retrieved from companies). 

Source: Authors’ own elaboration on data from plants and secondary sources.  

Seven  major  regulatory  obligations  were  identified  in  the  IED.  Four  of  them  are 
information  obligations  linked  to  the  obtaining,  renewal  and  updating  of  the  Integrated 
Environmental Permit (IEP), including the preparation of accompanying documents, such 
as  the  baseline  report  on  soil  and  groundwater.  Two  additional  information  obligations 
concern i) the monitoring of emissions and reporting to competent authority, and ii) the 
periodical  environmental  inspections.  Finally,  one  of  them  is  a  substantive  obligation 
concerning  the  investments  (and  related  operating  and  financial  costs  borne)  by  glass 
companies  to  comply  with  the  applicable  environmental  standards  specified  in  BAT 
conclusions.  

In the context of the IED, it is also necessary to explore the role of national and sub-
national  public  administrations.  Firstly,  EU  legislation  allows  national  and  local 
administrations flexibility in the implementation of emission limits. However, in no case 
can  the  minimum  emission  limits  set  directly  in  the  Annexes  to  the  IED  be  derogated. 
Secondly, implementation and enforcement, e.g. the burdensomeness of the application, 
and the frequency of renewals and inspections, are again partly left to national or local 
public administrations and rules.  

Box 12. Evidence on the Relevance of National and Local Factors 

During the interviews, several instances of national and local factors were discussed with 
companies.  

Several respondents argued that national or local administrations might be considerably 
stricter with respect to limits, prescriptions, and enforcement than the minimum floor set 
by the IPPC/IED. This may be problematic for operators in case a level playing field for 
various  installations  is  not  ensured.  Several  operators  complained  about  limits  and 
production prescriptions being different across Member States, and even attributed plant 
relocation to differences in severity and timeliness of the implementation of the IPPC for 
certain products.  

In Member States where the administration and enforcement of the IED is demanded by 
local authorities, operators reported different treatments even within the same country. 
Differences, again, concern both substantive aspects, i.e. limits and prescriptions set out 
in  the  permit,  as  well  as  administrative  procedures,  e.g.  duration  of  the  permit 
procedure, frequency of inspections.  

However,  the  above  plants’  feedback  was  challenged  by  the  European  Commission, 
which  stressed  that,  although  flexibility  is  indeed  part  of  the  IED,  Member  States  only 
set stricter emission limits if the local environmental quality requires it. According to the 
European  Commission,  this  flexibility  has  been  only  limitedly  used,  and  the  number  of 
granted derogations reported by Member States to the Commission is small. 

Source: Authors’ own elaboration. 

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8.3  Methodological aspects 

To  estimate  regulatory  compliance  costs  generated  by  environmental  legislation,  a 
cumulated  approach  was  chosen  as  the  most  correct  in  order  to  adequately  account 
for the fact that, in any given year, each plant bears costs related to investments made 
in  the  same  year  as  well  as  costs  linked  to  investments  previously  made.  Indeed,  i) 
investments  made  in  previous  years  continue  to  affect financial  accounts  until  they  are 
fully  depreciated;  ii)  operating  costs  related  to  investments  made  in  a  certain  year 
continue  to  be  incurred  also  in  subsequent  years;  and  iii)  the  financing  of  investments 
made in prior years continue to generate costs over time, although on a declining basis 
as part of the financing has been reimbursed. However, this also means that a realistic 
cost estimate is possible only for the last year of the period under analysis, i.e. 2015. In 
practice, in 2015, cumulated compliance costs included: i) the depreciation for that year 
as well as depreciation for all the investments made since 2006, ii) the operating costs 
linked  to  the  investments  between  2006  and  2015;  and  iii)  the  financial  costs  incurred 
for the financing of all investments made since 2006.  

To measure the regulatory costs associated to the environmental legislation, companies 
were submitted three sets of questions: 

1.  Questions  on  the  substantive  costs  incurred  in  connection  with 

emissions limits. 

2.  Questions  on  the  administrative  burdens  due  to  the  monitoring  of  and 

inspections to verify compliance with emissions limits. 
3.  Questions on the administrative burdens linked to the IEP. 

With  respect  to  the  measurement  of  the  substantive  costs,  plants  were  asked  to 
provide  detailed  information  on  the  investments  made  to  comply  with  applicable 
environmental  standards  (‘environmental  protection  expenditures’)  over  the  2006-15 
period, including i) the type of technology acquired, e.g. electrostatic precipitator, filter, 
scrubber,  etc.,  ii)  the  investment  year  and  value,  as  well  as  iii)  an  indication  of  the 
importance of the environmental legislation as a motivation of these investments (on  a 
1-5  scale).  Information  on  the  incremental  operating  expenses  associated  with  these 
environment-related  investments  in  the  form  of  maintenance  costs,  extra  energy 
consumption, e.g. in the case of electrostatic precipitator, use or costs of raw materials 
and consumables (such as chemical agents), were also collected.  

In order to measure the annual, cumulated substantive costs borne by the glass plants 
the following steps were followed:  

1)  Plants’ investment costs (CAPEX) were discounted by the BAU factor (see section 
2.3)  to  estimate  the  value  of  the  investments  attributable  to  the  EU  legislation. 
The  minimum  applied  BAU,  even  when  companies  report  that  an  investment  is 
fully motivated by environmental legislation, was set at 15% in order to take into 
account  the  non-measurable  role  played  by  local  and  national  factors  (see  Box 
13),126  as  well  as  the  normal  replacement  of  equipment.  After  deducting  the 
portion  of  the  environmental  investments  due  to  other  company  motivations, 
such  as  equipment  replacement  due  to  obsolescence  or  the  achievement  of 
energy  savings,  based  on  the  plant’s  own  assessments  and,  whenever 
appropriate,  applying  ad-hoc  corrections,127  the  average  share  of  CAPEX 

126  During  the  pilot  phase,  companies  proved  unable  to  distinguish  between  EU  and  national 
burdens  (as  they  usually  face  only  local  or  national  norms);  however,  they  proved  able  to 
distinguish,  although  over  a  qualitative  scale,  between  business-as-usual  decisions  and  legal 
requirements.  For  this  reason,  the  former  distinction  was  incorporated  in  a  question  that 
companies could understand. 
127 For instance, prescriptions by local authorities may also go beyond the remit of the IPPC/IED, 
e.g. by taking into account energy efficiency and greenhouse gas emissions. While greenhouse gas 

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attributable  to  EU  legislation  was  set  at  75%  for  the  plants  surveyed  in 
both flat glass and hollow glass sectors.  

Box 13. BAU Factor and National and Local Legislation 

During  the  Cumulated  Cost  Assessment  of  the  Steel  and  Aluminium  Industries,  the 
Research  Team  faced  the  same  problem,  i.e.  distinguishing  between  BAU  costs,  EU 
burdens  and  national/local  burdens.  The  approach  taken  was  simpler,  as  companies 
were not  asked about the link of each investment with the environmental legislation. 
Rather,  a  global  discount  factor  which  incorporated  both  the  role  of  national/local 
legislation  and  normal  business  practices  was  applied,  and  it  was  set,  under  two 
scenarios,  at  50%  and  80%  of  reported  costs.  The  approach  adopted  in  this  Study, 
though  different  and  more  granular,  led  to  comparable  results  to  the  overall  BAU 
factor for the glass subsectors fall within the range used in the other Studies. 

Source: Cumulated Cost Assessment of the Steel and Aluminium Industries (CEPS & EA, 2013)/ 

2)  Total investment costs attributable to EU legislation were annualized, considering 
an  average  life  of  the  assets  of  15  years,  a  fairly  typical  value  for  capital 
expenditure  in  the  glass  industry  (as  indicated  by  interviewees  as  well  as 
secondary  sources,  such  as  the  general  depreciation  rates  adopted  by  national 
revenue authorities128). 

3)  Annual  operating  costs  (OPEX)  were  accounted  for  starting  from  the  year 
following  of  the  relevant  investment.  To  verify  the  accuracy  and  sensitivity  of 
figures collected, the value of operating costs as a share of connected investment 
expenditure was preliminary computed and compared with external sources129;   
4)  Financial costs have to be computed by applying the sectoral WACC (7.40%) (see 

section 2.3).  

5)  Finally,  OPEX,  CAPEX,  as  well  as  financial  costs,  were  cumulated  over  the  10-

years period.  

The  measurement  of  the  administrative  burdens  associated  with:  i)  the  issuance, 
renewal  and  updating  of  the  IEP;  and  ii)  the  costs  connected  with  monitoring  and 
reporting on emission limits, as well as with the carrying out of inspections for checking 
compliance with the conditions based on which the IEP was issued, is done for a typical 
year. Plants were asked for information on the following cost and resource items: 

1)  The  occurrence  of  relevant  obligations,  such  as  i)  the  number  of  IEP 
issuance/renewal/updating;  and  ii)  the  frequency  of  environmental  inspections, 
during the 2006-15 period. 

2)  Amount of personnel (in FTE) per each obligation or on annual basis working on 
different relevant activities, namely: i) the preparation of applications for the IEP; 
ii)  the  periodical  monitoring  of  the  emissions  limits;  and  iii)  the  preparation, 
participation  in  and  follow-up  of  the  environmental  inspections.  FTE  were 
converted  in  monetary  values  through  the  SecGen  elaboration  of  the  Eurostat 
Earnings  Structure  (see  section  2.3).  Based  on  replies  to  the  questionnaire  and 

emissions  are  not  covered  by  the  IPPC/IED  (Art.  9.1),  recital  (10)  allows  Member  States  to 
introduce  more  stringent  measures  with  respect  to  them  as  well.  In  these  cases,  the  related 
investments  and  other  costs  were  not  accounted  for,  as  they  cannot  be  attributed  to  the  EU 
legislation.  
128 The retained value is also broadly in line with the assumptions made in a recent EC study that 
examined  how  EU  business  spending  on  environmental  protection  has  changed  over  time,  which 
allocated the investment expenditures in equipment and civil construction over a period of 10 and 
25 years, respectively (see EC, Environmental Expenditures in EU industries, November 2015).  
129 In particular, Chapter 4 and Annex 8 of  the BREF document  provide extensive information on 
the economics of BATs.  

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qualitative  information  retrieved  from  the  interviews,  the  personnel  time  was 
allocated across two categories of personnel, i.e. managerial and technical staff. 
3)  Out-of-pocket  expenses  that  may  have  been  incurred,  in  particular  for  i) 
consulting  services  for  issuance/renewal/updating  of  the  IEP;  and  ii)  monitoring 
/auditing emission limits. 

4)  Annual investment and operational costs for monitoring emission limits.   

8.4  Cost assessment – Hollow glass (packaging glass and glass tableware) 

8.4.1  Sample 

The  sample  includes  21  plants  manufacturing  container  glass  and  five  producing  glass 
tableware, which are jointly treated in this section to facilitate cross-sector comparisons 
and,  at  the  same,  avoid  repeating  common  pieces  of  analysis  (especially  as  far  as  the 
measurement  of  the  administrative  burdens  is  concerned).  Still,  separate  estimates  for 
each  subsector  were  computed  and  are  duly  presented  here  below.  Questionnaires 
received  from  container  producers  offer  an  adequate  coverage  of  different  regions,  i.e. 
six from CEE, seven from NWE and eight from SE; hence, regional estimates can also be 
presented. As for the glass tableware subsector, only EU average can be presented.   

8.4.2  Substantive compliance costs 

For  the  substantive  costs  incurred  in  connection  with  emission  limits,  estimated  cost 
parameters are briefly illustrated here below.  

  Over  three-fourths  of  the  container  glass  plants  surveyed  (17)  reported  to  have 
made  environment-related  investments  over  the  2006-15  period,  for  a  total 
of some €51 million (with average value of €1.9 million per plant, and most of the 
values falling between €500,000 and €4.5 million). Investments somewhat more 
sizable  were  reported  by  the  five  operators  producing  glass  tableware,  totalling 
€16.1  million,  i.e.  €3.7  million  per  plant.  When  only  the  share  of  these 
investments  motivated  by  compliance  with  EU  legislation  is  taken  into  account, 
these values decrease to €38.4 million (with an average value of €1.6 million per 
plant)  and  €12.5  million  (average  per  plant  of  €2.4  million)  for  container  glass 
and  glass 
respectively.  Electrostatic  precipitators, 
sometimes  in  connection  with  SOx  or  NOx  reduction  systems,  were  by  far  the 
investments  made.  Other  kinds  of 
most  common  environment-related 
investments  reported  by  surveyed  operators  concern  waste  water  treatment 
systems,  low  NOx  burners,  and  measures  to  increase  the  availability  of  suitable 
cullet. 

tableware  producers, 

  Additional  operating  costs  were  reportedly  associated  with  these  environment-
related  investments,  typically  including  extra  energy  consumption,  replacing 
filters and de-SOx raw materials. On average, the OPEX/CAPEX ratios have been 
estimated  in  the  4-5%  range,  leading  to  an  annual  average  value  of  OPEX 
during the 2006-15 period of about €40,000 and €60,000 per plant for container 
glass and glass tableware producers, respectively.   

  When  the  financial  costs  incurred  in  connection  with  environmental  protection 
investment  are  added  to  the  above  cost  components,  the  cumulated 
substantive  compliance  costs  for  the  container  glass  producers  were  an 
estimated  €2.12/tonne  at  EU  (weighted  average) 
in  2015. 
Differences  across  regions  were  rather  minor,  going  from  €1.42/tonne  in  SE 
region  to  €2.55/tonne  in  NWE  region  (the  CEE  region  stands  somewhere  in 
between, with a value of €1.77/tonne). Consistent with the comparatively higher 
investments reported, on the one hand, and the smaller production levels, on the 
other  hand,  the  estimated  value  of  the  cumulated  substantive  compliance 

level 

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costs  for  the  glass  tableware  producers  over  the  2006-15  period  at  EU 
level was significantly higher, i.e. €5.69/tonne in 2015.   

8.4.3  Administrative Costs 

For  administrative  costs  associated  with  the  environmental  legislation,  estimated  cost 
parameters are briefly illustrated here below.  

  A tiny majority (15 out of 26) of the hollow glass plants surveyed, including four 
glass tableware producers, were issued a new IEP between 2006 and 2015. The 
remainder of the operators obtained the permit in the first half of 2000s. The vast 
majority of the hollow glass operators (20) had to update and/or renew the IEP at 
least  once  during  the  period  of  analysis,  typically  due  to  an  expansion  of  the 
plant’s  capacity  or  a  modification  of  the  production  process,  or  the  expiration  of 
the  permit  validity  period.  In  most  of  the  cases  (14),  the  permit  had  to  be 
updated and/or renewed only once, but a handful of operators reported a higher 
frequency of this practice. Almost all hollow glass plants paid external experts to 
assist them in the preparation of technical documents. The amount of these out-
of-pocket  expenses  incurred  to  obtain  the  IEP  for  the  first  time  typically  falls  in 
the  €3,500-40,000  range,  with  an  average  value  of  about  €20,000  per  plant. 
Somewhat smaller amounts were paid for each renewal/updating of the IEP, i.e. 
some  €15,000,  on  average.  Overall,  annual,  administrative  costs  linked  to 
the  issuance/renewal/updating  of  the  IEP  incurred  by  hollow  glass 
producers  over  the  2006-15  period  have  been  estimated  in  the  €1,500-12,000 
range,  with  an  average  value  of  some  €6,000.  No  significant  differences  in 
absolute  terms  were  detected  between  container  glass  and  glass  tableware 
producers.    

  All  the  hollow  glass  producers  surveyed  reported  to  be  subject  to  inspections  to 
verify  the  fulfilment  of  conditions  specified  in  the  IEP.  The  frequency  of 
inspections  varies,  although  in  most  cases  it  occurs  every  two  years  (11)  or  on 
annual  basis  (9).  Related  administrative  costs  are  negligible,  i.e.  about  €2,000 
per  year.  Almost  all  the  operators  surveyed  (24)  resorted  to  external  service 
providers for monitoring and/or auditing emission limits. The value of the annual 
fees  paid  to  these  providers  by  the  hollow  glass  producers  surveyed  largely 
varies, going from as low as €2,000 up to €50,000-70,000, with an average value 
of  some  €12,000  per  plant.  Rather  expectedly  smaller  values  were  detected  in 
the CEE region (below €5,000, on average), while more expensive services were 
charged  to  plants  located  in  the  NWE  region  (more  than  €20,000,  on  average). 
Overall,  annual  costs  linked  to  compliance  inspections  and  monitoring  of 
emissions  typically  range  between  about  €10,000  and  €90,000  per  plant,  with 
an average value of some €40,000. 

  Summing  up  the  above  annual,  administrative  costs  and  dividing  them  by  the 
average  output  production,  the  administrative  costs  incurred  by  container 
glass producers in 2015 has been estimated at €0.22/tonne at EU (weighted 
average)  level.  As  in  the  case  of  substantive  costs,  cross-regional  differences 
are minor, going from €0.19-20/tonne in the CCE and NWE to €0.27/tonne in the 
SE.  As  for  the  glass  tableware  producers,  the  annual  administrative 
burden in 2015 at EU level has been estimated at €1.05/tonne.   

8.4.4  Cumulative regulatory costs  

Table  46  and  Table  47  show  the  regulatory  costs  per  tonne  generated  by  the 
environmental  legislation  costs  over  the  10-year  period  of  the  analysis  on  the  hollow 
glass  subsectors,  for  the  EU  and,  whenever  feasible,  for  the  three  regions.  The  EU 
weighted  average  of  the  cumulated  regulatory  costs  in  the  packaging  glass 
subsector  in  2015  has  been  estimated  at  €2.34/tonne,  essentially  driven  by  the 
substantive  compliance  costs,  which  account  for  90%  of  the  total.  The  estimated  costs 

176 

 
 
 
 
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are  below  the  results  of  the  Commission  report  on  the  costs  of  environmental 
legislation,130 which, in 2012, set the environmental protection expenditure at about 2% 
of  value  added  of  the  manufacturing  sector.  According  to  an  ILO  working  paper,131  in 
2013,  the  EU  produced  25  million  tonnes  of  container  glass.  Thus,  based  on  the 
estimated  unitary  costs,  the  environmental  protection  expenditures  can  be 
assessed  at  about  €25  million,  which  represents  0.5%  of  sector  value  added  at 
factor  costs.  Overall,  the  cumulated  regulatory  costs  per  tonne  generated  by  the 
environmental  legislation  in  2015  represents  0.8%  of  total  production  costs  and  3%  of 
EBITDA  (which  represents  an  underestimated  proxy  of  the  value  added)132  in  the 
packaging glass sector. 

In  the  case  of  the  glass  tableware  subsector,  the  cumulative  regulatory  costs 
have been estimated at €6.73/tonne, a value significantly higher than the other 
glass  subsectors.  The  cumulated  regulatory  costs  per  tonne  generated  by  the 
environmental legislation in 2015 represents 0.5% of total production costs and 5.5% of 
EBITDA in the glass tableware subsector, as a result of the higher production costs and 
lower profitability compared to the container glass subsector.  

Table  46.  Regulatory  costs  generated  by  the  environmental  legislation  on  the 
packaging glass subsector (€/tonne, 2015)  

Administrative 
burdens  

Direct 
regulatory 
costs 

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

Regions 

EU 

NWE 

CEE 

SE 

0.20 

0.19 

0.27 

0.22 

2.55 

1.77 

1.42 

2.12 

0 

0 

0 

0 

0 

0 

0 

0 

Total regulatory costs 

2.75 

1.96 

1.69 

2.34 

Source: Authors’ own elaboration. 

130 EC, Environmental Expenditures in EU industries, November 2015.  
131  ILO  (2015),  “The  glass  industry:  Recent  trends  and  changes  in  working  conditions  and 
employment relations.”  
132 The value added is closely approximated by EBITDA, as well as compensation of employees.  

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Table  47.  Regulatory  costs  generated  by  the  environmental  legislation  on  the 
glass tableware subsector (€/tonne, 2015) 

EU 

Administrative burdens  

1.05 

Direct regulatory 
costs 

Substantive compliance 
costs 

Direct charges 

Indirect regulatory costs 

5.69 

O 

O 

Total regulatory costs 

6.73 

Source: Authors’ own elaboration. 

8.5  Cost assessment – Flat glass  

8.5.1  Sample 

The  analysis  covers  all  15  flat  glass  plants  that  responded  to  the  questionnaire. 
Questionnaires received evenly cover the three regions, i.e. five plants per region, hence 
regional estimates can also be presented. 

8.5.2  Substantive compliance costs 

For  the  substantive  costs  incurred  in  connection  with  emission  limits,  estimated  cost 
parameters are briefly illustrated here below.  

  A  tiny  majority  of  the  operators  surveyed  (eight)  reported  to  have  made 
environment-related  investments  over  the  2006-15  period,  for  a  total  of 
€45.7  million,  giving  an  average  value  of  some  €3  million  per  plant.  From  a 
regional perspective, more sizable investments were reported by plants located in 
the  CEE  region,  suggesting  a comparatively  lower diffusion  of  BAT equipment  at 
the start of the period. Indeed, most of the plants in the other regions reportedly 
made  similar  investments  in  the first half of  the 2000s (while a couple  of plants 
just  made  them  in  2016).  Compliance  with  the  EU  legislation  was  indeed  rather 
unanimously identified as the key motivation for these investments. Nonetheless, 
when  corrected  for  the  BAU  factor,  the  total  value  of  environment-related 
investments decreases to €34.4 million (with an average value of €2.3 million per 
plant). As in the case of hollow glass producers, electrostatic precipitators are by 
far the most commonly reported type of investment. However, systems to reduce 
NOx  and,  to  a  lesser  extent,  SOx  emissions  were  also  mentioned  by  surveyed 
operators. 

  Additional operating costs associated with these environment-related investments 
were reported as slightly higher than in the case of hollow glass producers. Still, 
OPEX/CAPEX  ratios  provided  by  the  producers  surveyed  are  fairly  consistent  in 
the  case  of  electrostatic  precipitators,  in  most  of  the  cases  falling  in  the  6-8% 
range. These ratios are also in line with low-end estimates provided in the BREF 
document,  typically  setting  the  ratio  between  annual  operating  costs  and  total 

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investment  for  air  pollution  control  systems  with  electrostatic  precipitators  plus 
dry  scrubbing  in  the  8-20%  range.133  The  annual  average  value  of  OPEX 
during the 2006-15 period was set at €90,000 per plant.  

  When  the  financial  costs  incurred  in  connection  with  environmental  protection 
into  account,  the  cumulated  substantive 
investment  are  also  taken 
compliance  costs  for  the  flat  glass  producers  has  been  estimated  at 
about  €1.69/tonne  at  EU  (weighted  average)  level  in  2015.  This  value  is 
the  result  of  rather  significantly  different  regional  estimates,  going  from  €1.1-
1.2/tonne in SE and NWE regions, up to €3.5 per tonne in CEE region (consistent 
with above considerations).    

8.5.3  Administrative Costs 

For  administrative  costs  associated  with  the  environmental  legislation,  estimated  cost 
parameters are briefly illustrated here below.  

  Eleven  out  of  15  surveyed  operators  were  issued  a  new  IEP  between  2006  and 
2015. In the case of the few remaining plants, permits were obtained in previous 
years.  The  majority  of  operators  (10)  had  to  update  and/or  renew  the  IEP 
(typically  once)  due  to  an  expansion  of  the  plant’s  capacity  or  to  permit 
expiration. Besides internal staff costs, all the plants that got and/or updated the 
IEP  incurred  out-of-pocket  expenses,  which  refer  primarily  to  fees  paid  to 
consultants for the preparation of the technical documentation to be submitted to 
competent authorities, with an average value of about €11,000. Overall, annual 
administrative costs linked to the issuance/renewal/updating of the IEP 
incurred  by  operators  over  the  2006-15  period  have  been  estimated  at  some 
€6,000 per plant, on average (typically falling in the €1,500-9,000 range).   

  Flat glass producers are regularly subject to inspections to verify the fulfilment of 
conditions  specified  in  the  IEP,  typically  on  an  annual  basis.  Still,  a  couple  of 
plants reported a higher frequency of inspections, i.e. on quarterly or semi-annual 
basis;  while  three  plants  indicated  a  lower  frequency,  every  two  or  three  years. 
Irrespective  of  the  frequency  of  the  inspections,  related  administrative  costs  for 
the  flat  glass  producers  have  been  estimated  below  €2,500  per  year. 
Comparatively  more  significant  are  the  costs  incurred  by  plants  to  monitor 
emissions. Besides internal staff costs, most of the plants (11) made recourse to 
external contractors for monitoring (and auditing) emission limits, to whom they 
paid  an  annual  amount  typically  falling  between  €2,500  and  €20,000.  A  tiny 
majority of the operators surveyed (eight) also reported incurring investment and 
related-operating  costs  to  the  same  purpose.  The  annual  value  of  these 
investments  usually  ranges  between  €5,000  and  €20,000,  while  their  annual 
operational costs, including equipment maintenance and regular calibration, fall in 
the  €2,000-10,000  range.  Overall,  annual  costs  linked  to  compliance 
inspections  and  monitoring  of  emissions  typically  range  from  €10,000  to 
some €65,000 per plant (with an average of €35,000). 

  Based  on  the  above,  in  2015,  the  annual  value  of  administrative  costs 
incurred  by  flat  glass  producers  expressed  in  terms  of  unit  of  output  has  been 
estimated  at  €0.21/tonne  at  EU  (weighted  average)  level.  Regional 
estimates  fall  in  a  rather  narrow  range,  going  from  €0.12/tonne  in  CEE,  to 
€0.16/tonne in NWE and up to €0.39/tonne in SE. 

133 For more information, see Table 8.3 of Annex 8 of the BREF document (pp. 421-422).  

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Cumulative Cost Assessment of the EU Glass Industry 

8.5.4  Cumulative regulatory costs  

Table  48  shows  the  regulatory  costs  per  tonne  generated  by  the  environmental 
legislation costs over the 10-year period of the analysis on the flat glass sector, for the 
EU  as  well  as  for  the  three  regions.  The  costs  for  the  flat  glass  producers  are  very 
consistent  with  the  estimates  previously  illustrated  for  the  packaging  glass  subsector. 
Indeed,  the  EU  weighted  average  of  the  cumulated  regulatory  costs  in  this 
sector in 2015 has been estimated at €1.9/tonne (compared to €2.3/tonne for the 
packaging glass subsector). Also in this case, substantive compliance costs represent the 
bulk of regulatory costs, accounting for almost 90% of the total. Regional differences are 
significant,  as  the  estimated  cumulative  regulatory  costs  in  the  CEE  region  are  about 
three times greater than in the other regions, essentially due to a larger share of plants 
having  made  environmental  protection  investment  (of  a  bigger  size)  during  the  period 
under investigation.  

Table  48.  Regulatory  costs  generated  by  the  environmental  legislation  on  the 
flat glass sector (€/tonne, 2015) 

Administrative 
burdens  

Direct 
regulatory 
costs 

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

Regions 

EU 

NWE 

CEE 

SE 

0.16 

0.12 

0.39 

0.21 

1.10 

3.50 

1.16 

1.69 

0 

0 

0 

0 

0 

0 

0 

0 

Total regulatory costs 

1.26 

3.62 

1.55 

1.90 

Source: Authors’ own elaboration. 

As  in  the  case  of  hollow  glass  subsectors,  the  estimated  costs  are  broadly  significantly 
below  the  values  reported  by  the  Commission  report  on  the  costs  of  environmental 
legislation  for  the  manufacturing  sector,134  which,  in  2012,  set  the  environmental 
protection  expenditure  at  about  2%  of  value  added.  Indeed,  according  to  a  recent  ILO 
working paper,135 in 2013, the EU produced 8 million tonnes of flat glass. Thus, based on 
the  estimated  unitary  costs,  the  environmental  protection  expenditures  can  be 
assessed  at  about  €10  million,  which  represents  0.6%  of  sector  value  added  at 
factor costs. 

134 EC, Environmental Expenditures in EU industries, November 2015.  
135  ILO  (2015),  “The  glass  industry:  Recent  trends  and  changes  in  working  conditions  and 
employment relations.”  

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9  Waste legislation  

This  section  presents  the  identified  costs  generated  by  and  the  relevance  for  the  EU 
glass industry of the following acts belonging to the waste legislation area:136 

  Directive  2008/98/EC  of  the  European  Parliament  and  of  the  Council  of  19 

November 2008 on waste (Waste Framework Directive); 

  Council Directive 1999/31/EC of 26 April 1999 on the landfill of waste; 

  European  Parliament  and  Council  Directive  94/62/EC  of  20  December  1994  on 

packaging and packaging waste (Packaging and packaging waste Directive). 

The section is thereby split into waste legislation relevant for both flat glass and hollow 
glass (Directive 2008/98/EC and Council Directive 199/31/EC) and a section on Directive 
94/62/EC  only  relevant  for  hollow  glass.  Cost  estimates  for  flat  glass  are  presented  at 
the  end  of  the  first  section,  hollow  glass  at  the  end  of  both  waste  legislation  sub-
chapters (aggregating all costs for hollow glass). 

9.1  Waste Framework Directive and Landfill of Waste Directive 

9.1.1  Description of the Acts  

The  Waste  Framework  Directive  is  the  overarching  legislation  governing  the 
management  of  all  waste  in  the  EU.  This  Directive  sets  the  basic  concepts  and 
definitions  related  to  waste  management,  such  as  those  on  waste,  recycling  and 
recovery.  It  explains  when  waste  ceases  to  be  waste  and  becomes  a  secondary  raw 
material (according to so-called ‘end-of-waste criteria’), and how to distinguish between 
waste  and  by-products.  The  Directive  introduces  the  "polluter  pays  principle"  and  the 
"extended producer responsibility".  

The  Landfill  of  Waste  Directive,  approved  in  1999  and  amended  in  2003,  2008  and 
2014,  is  intended  to  prevent  or  reduce  the  adverse  effects  of  the  landfill  of 
waste  on  the  environment.  It  defines  the  various  categories  of  waste  and  sets  the 
requirements for the establishment and operations of landfills.  

9.1.2  Categories of regulatory costs  

The  Waste  Framework  Directive  provides  definitions  of  “waste”,  which  is  crucial  for 
businesses as it influences the associated regulatory costs. In case a certain product or 
substance is defined as a “by-product” (Article 5), different rules apply and the products 
do not have to be treated according to the Framework Directive’s guidelines (as it is not 
“waste”).  Accordingly,  they  do  not  have  to  be  treated  by  a  certified  waste  operator  (a 
certified  recycler  or  waste  manager,  for  example),  which  reduces  costs  significantly. 
Similarly, the Waste Framework Directive sets out (Article 6) when waste ceases to be a 
‘waste’ product. After such criteria have been met, the handling of the product tends to 
be much less costly and easier. However, to date, only a few end-of-waste criteria have 
been  developed  and  adopted for the  glass  industry,  notably  for glass  cullet.  The  Waste 
Framework Directive also stipulates that the costs of waste disposal must be borne 
by the holder of  waste, by previous holders or by the producers of the product from 
which the waste came (so-called ‘polluter-pays principle’). This is important, because it 
instructs Member States to levy (at least part of) the costs onto the producer of waste. 
Member States do this in different ways, with different consequences for the cost burden 

136  Costs  generated  by  the  EU  Regulation  No  1179/2012  establishing  criteria  determining  when 
glass cullet ceases to be waste have not been measured because the expected cost impacts of the 
Regulation  were  identified  as  marginal  during  the  Inception  Phase  of  the  Study;  accordingly,  the 
Regulation  has  not  been  covered  by  the  questionnaire.  Neither  were  these  costs  mentioned  as 
relevant by any respondent at the end of the waste legislation section of the questionnaire, where 
companies were asked to provide further cost insights. 

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of  industries  involved.  Concerning  glass,  the  share  of  costs  for  producing  waste  could 
therefore vary slightly across countries.  

When assessing the costs for waste management in the glass segment, recycling needs 
to  be  taken  into  consideration.  Glass  can  in  principle  be  recycled  almost  up  to  100%. 
This  means  that  all  glass  plants  have  systems  in  place  to  recycle  (at  least  their  own) 
glass. Depending on the national and local setting, the amount of glass from outside the 
factory  included  in  the  production  varies.  The  high  use  of  recycled  glass  in  the 
production  causes  a  high  BAU  score  when  assessing  costs  of  waste  management 
systems. 

Box 14. Waste management in an average glass plant 

Based  on  the  questionnaire  responses,  in  most  glass  plants  waste  management  is 
done  partially  by  internal  employees,  e.g.  collection  of  waste  within  company, 
preparation  of  documentation,  preparation  for  transport,  and  partially  by  external 
companies, e.g. provision of containers for waste collection, disposal of waste. In the 
glass industry, a high percentage of waste is recycled: interviews confirm that up 
to  99%  of  glass  cullet  can  be  recycled  into  new  products,  thus  keeping  the  costs  for 
waste  disposal  and  landfilling  low  in  comparison  to  other  industries.  Further  waste 
streams  include:  packaging  waste  (paper,  wood,  plastics),  glass  mixture  that  cannot 
be recycled, municipal waste and hazardous waste (oils, fluorescent lamps, laboratory 
waste, etc.).  

Source: Authors’ own elaboration on interviews 

The  remaining  costs  added  by  EU  legislation  to  the  BAU  waste  management  system 
consist  of  substantive  compliance  costs  for  waste  collection,  segregation,  reuse, 
recycling and disposal and landfilling. According to some of the interviewed glass plants, 
waste management would take place even in the absence of any specific legal obligation, 
but  in  such  cases  it  would  be  done  at  a  lower  cost,  e.g.  if  a  special  liquidation  method 
would  not  be  required  by  the  legislation,137  waste  disposal  would  be  handled  in  a  less 
costly manner. 

The Waste Framework Directive from 2006  was updated in 2008.  Based on the sample 
interviewed, no major changes in costs were identified. It was stated that the new 
Directive  obliges  the  companies  to:  1)  recycle  their  waste  and  2)  promote  waste 
prevention  (for  example,  through  educational  activities).  Most  of  the  activities  seem  to 
be performed internally; yet, some of the interviewed glass manufacturers reported that 
they outsource some activities, such as cleaning and waste disposal. 

The  Directive  on  Landfilling  Waste  distinguishes  three  separate  classes  of  landfill: 
inert  waste,  non-hazardous  waste  and  hazardous  waste.  In  the  Directive,  waste  glass-
based fibrous materials, bricks, tiles and ceramics are on the “list of wastes acceptable 
at landfills for inert waste without testing”.138 In case of suspicion of contamination, 
testing should be applied or the waste refused.139 If the listed wastes are contaminated 
or  contain  other  material  or  substances  such  as  metals,  asbestos,  plastics,  chemicals, 
etc., to an extent which increases the risk associated with the waste sufficiently to justify 
their disposal in other classes of landfills, they may not be accepted in a landfill for inert 
waste.140  This  Directive  is  more  relevant  for  downstream  users  of  glass  products,  e.g. 
construction  companies  involved  in  building  demolition,  than  for  the  industry  itself. 
Based  on  the  questionnaire  findings,  the  glass  industry  is  landfilling  a  relatively  small 
amount of its waste and the landfilling costs relate to direct charges on the waste being 

137 Directive 2008/98/EC (Waste Framework Directive). 
138 Directive 1999/31/EC on the Landfill of Waste. 
139 Ibid. 
140 Ibid. 

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landfilled, what is seen as BAU. Thus, this Directive is of low relevance for the glass 
industry. 

9.1.3  Methodological aspects 

This  assessment  aims  at  quantifying  the  costs  registered  by  companies  to  comply  with 
the  Waste  Framework  Directive.  The  Research  Team  investigated  and  produced  an 
estimate of costs for a typical year. More specifically, information on the costs related to 
the management of (a) generic waste and (b) hazardous waste were collected. For 
both areas, the data collection was structured in a similar way. 

Regarding generic waste, the Research Team first collected data on labour costs, namely 
investigating  the  number  of  employees  working  on  assuring  recovery,  reuse,  recycling 
and  disposal  of  waste.  Costs  were  indicated  by  surveyed  plants  in  heterogeneous 
formats. In fact, respondents were allowed to provide information related either to 

 

 

the number of employees and their share of yearly working time with respect to 
waste management, or 

the tonnes of waste processed per hour and how they relate to the total tonnes of 
waste/the tonnes of output per hour. 

We  allowed  for  more  elasticity  in  answers,  to  ensure  a  higher  rate  of  response. 
Completeness of primary replies was privileged over exact consistency. Responses were 
then elaborated and standardised, to derive a stock of hours required to undertake the 
operations,  and  hence  the  number  of  people  involved  annually,  wherever  such 
information  was  not  already  directly  provided  in  the  survey.  Indeed,  firms  were  also 
allowed to provide additional information on the professional qualification and the share 
of yearly working time of personnel involved, e.g. one plant official dedicates 50% of his 
yearly working time to ensure waste disposal. Whenever such a detailed breakdown was 
not possible, firms usually delivered an estimate of the average share of yearly working 
time. 

Replies  which  included  a  detailed  breakdown  of  labour  costs  provided  evidence  to 
extrapolate  standard  scenarios,  namely  the  breakdown  of  workers  that  an  average 
efficient  firm  would  assign  to  the  aforementioned  operations.  The  standard  scenarios 
served  to  refine  the  determination  of  total  labour  costs.  Three  scenarios  were 
determined:  if  a  company  declares  to  involve  one  worker,  it  is  assumed  to  be  of 
managerial  category  (corresponding  to  level  1  of  ISCO  classification141);  if  15  or  fewer 
workers are involved, it is reasonable to consider the higher panels to be involved (ISCO 
1  and  ISCO  3  workers  categories,  with  a  share  of  total  work  of  30%  and  70%, 
respectively);  if  more  than  15  people  are  involved,  then  it  can  be  considered  as  if  a 
broad share of plant staff participate in the operation (ISCO 1, ISCO 3, ISCO 8 and ISCO 
9,  with  shares  of  10%,  30%,  50%  and  10%  of  total  time,  respectively).  Once  the 
breakdown  was  applied  to  the  number  of  total  hours  specified  by  the  company,  the 
Research  Team  computed  the  total  cost,  by  matching  the  information  with  average 
salary estimates for ISCO categories at country level, to derive overall labour costs. 

The  Research  Team  additionally  investigated  operational  costs  (excluding  staff 
costs).  This  entailed  the  computation  of  costs  of  systems  for  waste  collection,  reuse, 
recycling,  disposal  and  cost  directly  related  to  landfilling,  e.g.  preparation  of 
documentation.  In  case  the  operations  related  to  waste  are  outsourced  to  external 
subjects, firms were asked to provide an estimate of such cost.  

141 International Standard Classification of Occupation, International Labour Organization, UN. 

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Cumulative Cost Assessment of the EU Glass Industry 

Regarding  to  investment  costs,  e.g.  special  machines  or  containers  for  waste 
disposal, we applied a linear depreciation rate to determine the annual share of CAPEX. 
On  the  basis  of  desk  research  as  well  as  on  the  ad  hoc  information  provided  by 
companies,  we  decided  to  consider  two  broad  investment  categories:  investments 
on high-value and long-term assets are expected to last over 15 years, while low-value 
short-term  investments  are  expected  to  last  five  years.  We  also  took  into  account 
incremental  operational  expenditures  which  are  paid  annually  by  firms,  in  terms  of 
maintenance,  increased  energy  consumption,  cost  of  consumables,  etc.  Investments 
made in years preceding 2006 were excluded.  

The  Research  Team  computed  the  cost of  capital  used  for  investment,  by  elaborating 
an estimate of the average weighted cost of capital in the sectors analysed, on the basis 
of economic literature on WACC in the EU (see Chapter 2.3 above).  

Computation of costs for processing of hazardous waste followed a parallel structure, 
entailing  collection  of  data  over  labour  costs,  outsourcing  costs,  operational  costs  and 
investments. 

Finally, the Research Team asked companies to report BAU factors by adopting a Likert 
Scale  from  1  to  5  (see  Chapter  2.3  above).  This  information  was  specifically  requested 
for different groups of questions, in order to identify the share of costs generated solely 
by the legislation. Whenever an answer was not provided we interpolated the figure with 
the average of the answers provided by other respondents. 

All the cost items listed are considered substantive compliance costs, incurred while 
ensuring  the  implementation  of  the  legislative  prescriptions.  Even  if  administrative 
burdens  were  expected,  they  were  not 
identifiable  by  plants. 
Consequently, they were included in the substantive compliance costs estimates. 

independently 

This  part  of  the  questionnaire  was  the  same  across  the  considered  sectors,  as  the 
legislation similarly applies to firms operating in the flat glass industry as well as in the 
hollow glass industry. 

9.1.4  Cost assessment – Packaging glass 

Sample 

The  sample  used  to  estimate  costs  for  this  area  of  legislation  in  the  packaging  glass 
sector comprises the following plants, divided into the three defined regions. 

Table 49. Packaging glass: Sample size by geographic region  

Packaging glass: 
Waste Framework 
Directive, Landfill of 
Waste Directive  

Number of plants in 
the sample 

Regions 

NWE 

CEE 

SE 

EU 

7 

7 

8 

22 

Source: Authors’ own elaboration. 

The target sample of five plants per geographic area was reached for all regions.  

184 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Direct regulatory costs 

The  cost  assessment  shows  only  substantive  compliance  costs.  Companies  did  not 
report on specific administrative burdens. It can, however, be assumed that some level 
of  administrative  burdens  is  integrated  in  the  cost  estimates  provided  for  compliance. 
The costs are estimated to  be €1.24/tonne of production output in a typical year 
at the EU level. Differences occur between geographic areas: whereas in NWE the costs 
are estimated to be €1.66/tonne of production output, in CEE the costs are estimated to 
be €1.22/tonne of production output and in SE €0.42/tonne of production output. Plants 
operating  in  SE  tend  to  have  lower  costs  in  both  of  the  two  thematic  areas  analysed 
under the Waste Framework Directive. Operations regarding  management of general 
waste  (which  include  recovery,  reuse,  recycling  and  disposal)  appear  more  costly  for 
plants  from  NWE  (examples  indicated  higher  costs  in  terms  of  a  higher  share  of  yearly 
working  time  of  workers,  higher  operational  costs  –  such  as  system  costs  for  waste 
reuse  –  and  significant  investment).  Plants  in  CEE  have  higher  costs  when  it  comes  to 
managing  hazardous  waste  (examples  experienced  higher  investment  expenses  and 
more extensive labour costs). The combination of these two dimensions results in overall 
lower  costs  per  tonne  in  SE  plants,  relative  to  the  implementation  of  the  Waste 
Framework Directive. BAU covers more than half of the costs (between 50% and 65%, 
depending  on  the  region).  Given  the  high  importance  of  recycling  glass  for  packaging 
glass  production,  it  might  appear  striking  that  the  BAU  factor  is  not  higher  than 
reported.  An  explanation  for  this  can  be  that  companies  would  organise  their  waste 
management  systems  differently  in  the  absence  of  legislation.  Alternatively,  firms  may 
have complied with waste management procedures to a lesser extent compared to what 
is prescribed by waste legislation. The BAU is the highest in SE and the lowest in CEE. In 
CEE,  EU  legislation  caused  greater  changes  than  in  the  other  regions,  which  might 
explain  the  low  BAU.    Differences  in  the  BAU  might  also  be  explained  by  the  different 
transposition of Directives into national law, which differs from Member State to Member 
State. 

Cumulative regulatory costs  

The  following  table  summarises  the  cumulative  regulatory  costs  for  producers  of 
Packaging glass due to Waste legislation. 

Table  50.  Packaging  glass:  Regulatory  costs  generated  by  waste  legislation 
(€/tonne, typical year, averages) 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

Regions 

NWE 

CEE 

0 

0 

SE 

0 

EU 

0 

1.66 

1.22 

0.42 

1.24 

0 

0 

0 

0 

0 

0 

0 

0 

Total regulatory costs 

1.66 

1.22 

0.42 

1.24 

Source: Authors’ own elaboration. 

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9.1.5  Cost assessment – Glass tableware 

Sample 

The sample adopted for cost estimates in this area of legislation consists of the following 
glass tableware plants. 

Table 51. Glass tableware: Sample size   

Glass tableware/ Waste 
Framework Directive, Landfill of 
Waste Directive  

EU 

Number of plants in the sample 

5 

Source: Authors’ own elaboration. 

Direct regulatory costs 
Direct regulatory costs of waste legislation for glass tableware consist only of substantive 
compliance  costs,  which  are  estimated  at  €2.12/tonne  of  production  in  a  typical 
year  at  the  EU  level.  Variance  of  costs  reported  is  high,  but  not  as  high  as  in  other 
legislative  areas.  In  principle,  this  is  not  surprising  given  the  heterogeneity  of  the 
products  and  therefore  the  differences  in  production  and  the  expression  of  costs  in  per 
tonne  values.  The  BAU  factor  is  at  about  50%.  Contrary  to  the  dispersion  observed  on 
the  amount  of  costs,  the  opinions  on  the  business-as-usual  tend  to  be  uniform, 
especially with regards to general waste management. 

Cumulative regulatory costs  

The following table summarises the cumulative regulatory costs generated by the waste 
legislation on glass tableware producers. 

Table  52.  Glass  tableware:  Regulatory  costs  generated  by  waste  legislation 
(€/tonne, typical year, averages) 

EU 

0 

2.12 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

186 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Direct charges 

Indirect regulatory costs 

0 

0 

Total regulatory costs 

2.12 

Source: Authors’ own elaboration. 

9.1.6  Cost assessment – Flat glass 

Sample 

The  sample  used  for  cost  estimates  for  this  area  of  legislation  consists  of  the  following 
number of plants, divided into the three defined regions. 

Table 53. Flat glass: Sample size by geographic reason  

Flat glass: 
Waste 
Framework 
Directive, Landfill 
of Waste 
Directive  
Number of plants 
in the sample 

Regions 

NWE 

CEE 

SE 

EU 

4 

5 

5 

14 

Source: Authors’ own elaboration. 

The target sample of at least five plants per geographic area was reached in CEE and SE. 
NWE estimates can also be shown (even though these are to be treated with additional 
care) given that they fulfil the confidentiality  requirement of being provided by  at least 
three independent companies.  

Direct regulatory costs 

Direct regulatory costs of waste legislation for the EU flat glass industry are estimated to 
be  €0.62/tonne  of  production  output  in  a  typical  year.  Identified  direct  costs  are 
classified  as  substantive  compliance  costs  (as  stated  above,  these  might  also  contain 
some  administrative  burden).  The  main  costs  observed  based  on  our  sample  contain 
mainly CAPEX and OPEX related to waste disposal and recycling systems. Costs in terms 
of  person-days  are  relatively  limited.  The  reason  for  this  is  the  large  extent  of 
automation of waste disposal systems. Usually, plants have automated control systems 
sorting  out  and  reintegrating  their  own  glass  that  does  not  comply  with  the  standards 
required  to  sell  the  product.  In  addition,  they  have  recycling  machines  to  sort  out 
unwanted  materials  in  cullet.  Person  inputs  are  more  and  more  limited  and  mainly 
needed to oversee the machines and to extract or assess larger pieces. Cost estimates of 
individual  companies  do  not  differ  largely  (variance  of  estimates  is  low).  But  there  are 
visible  differences  when  comparing  geographic  areas:  whereas  in  NWE  costs  are 
estimated  to  be  €0.82/tonne,  in  CEE  costs  are  estimated  at  €0.50/tonne  and  in  SE  at 
€0.37/tonne.  The  BAU  factor  is  not  an  explanatory  factor  for  regional  difference,  given 
that  it  is  almost  the  same  across  regions  –  almost  80%  of  the  identified  substantive 
compliance  costs  are  also  expected  to  occur  in  the  absence  of  any  EU  rule.  This  is  not 

187 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

surprising  as  glass  can  be  recycled  to  almost  100%  and  hence,  fully  fledged  waste 
disposal  systems  are  also  supported  by  market  mechanisms.  In  addition,  it  is  part  of 
good  business  conduct  (or  corporate  social  responsibility)  to  avoid  causing harm  to  the 
environment due to large amounts of waste.142 A possible factor in explaining the higher 
regulatory  costs  in  NWE  may  lie  in  the  height  of  landfill  taxes.  According  to  a study by 
Bio,143  the  level  of  landfill  taxes  in  place  for  the  disposal  of  non-hazardous  municipal 
waste sent to  legal  landfills ranges very widely,  from  €3  per tonne in  Bulgaria  to  up  to 
€107.49 per tonne in the Netherlands. The analysis suggests that there is a relationship 
between higher landfill taxes (and higher total landfill charges) and lower percentages of 
waste being sent to landfill. Three broad groups of Member States emerge: 

 

 

 

those  with  high  total  charges  for  landfill  and  low  percentages  of  landfilled 
municipal waste (AT, BE, DE, DK, LU, NL, SE); 

those with mid- to high-range total charges and mid-range percentages landfilled 
(FI, FR, IE, IT, SI, UK); and 

those with low total charges and high percentages landfilled (BG, CZ, GR, HU, LT, 
LV,  PL,  PT,  RO,  SK,  CY,  EE,  and  ES).  All  except  the  last  three  of  these  Member 
States  have  total  landfill  charges  of  less  than  €40  and  are  landfilling  more  than 
60% of their municipal waste. 

A  similar  trend  is  also  visible  for  inert  waste  (including  construction  and  demolition 
waste).  

Cumulative regulatory costs  

The following table summarises the cumulative regulatory costs  generated on flat glass 
producers by EU waste legislation. 

Table 54. Flat glass: Regulatory costs generated by waste legislation (€/tonne, 
typical year, averages) 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

Regions 

NWE 

CEE 

0 

0 

SE 

0 

EU 

0 

0.82 

0.50 

0.37 

0.62 

0 

0 

0 

0 

0 

0 

0 

0 

Total regulatory costs 

0.82 

0.50 

0.37 

0.62 

Source: Authors’ own elaboration. 

142 Based on interviews. 
143  BIO  (2012),  “Use  of  economic  instruments  and  waste  management  performances” 
(http://ec.europa.eu/environment/waste/pdf/final_report_10042012.pdf). 

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9.2  Packaging and packaging waste  

9.2.1  Description of the Acts  

The  Packaging  and  Packaging  Waste  Directive  lays  down  essential  requirements 
related to all packaging placed on the EU market as well as requirements related to 
markings  and  identification  (labelling  of  materials).  The  Directive  entered  into  force  in 
1994.  

In  2004,  the  Packaging  and  Packaging  Waste  Directive  was  amended  to  increase  the 
targets for recovery and recycling of packaging waste and provide criteria clarifying the 
definition  of  the  term  “packaging”.  The  Directive  was  revised  in  2005  to  provide  new 
Member  States  transitional  periods  for  attaining  the  recovery  and  recycling  targets. 
Annex I to the Directive, containing the list of illustrative examples of items that are or 
are not to be considered packaging, was revised in 2013 with the purpose of providing 
more clarity by adding a number of examples to the list.144  

9.2.2  Categories of regulatory costs  

The  Packaging  and  Packaging  Waste  Directive  is  relevant  for  packaging  glass  products, 
which themselves serve as a type of packaging.145 Annex II to the Directive specifies the 
essential  requirements  which  relate  to:  1)  the  manufacturing  and  composition  of 
packaging; 2) the reusable nature of packaging; 3) the recoverable nature of packaging 
(recycling,  energy  recovering,  composting  and  biodegradable  packaging).146  The 
Directive sets maximum concentration levels for certain metals (100 ppm by weight for 
lead,  cadmium,  hexavalent  chromium  and  mercury).147  In  case  of  glass  packaging 
produced from recycled material, it can exceed the limit of 100 ppm by weight if none of 
the covered substances are added during the recycling process. However, if the content 
of the metals exceeds 200 ppm, the company placing the product on the market has to 
submit a report to the competent authorities in the EU Member States, where it places 
its product on the market. In order to fulfil this requirement, glass manufacturers have 
to  regularly  test  their  product  on  heavy  metal  content  (measuring  of  chemical 
composition, taking samples and sample preparation for external lab analysis, doing an 
analysis  of  heavy  metal  content,  entering  results  into  databases  and  verification  with 
internal and external labs), which creates additional substantive compliance costs.  

To  facilitate  collection,  reuse  and  recovery  (including  recycling),  packaging  can  be 
marked  in  such  a  way  that  it  is  possible  to  identify  and  classify  the  nature  of  the 
packaging material.148 At the moment, this identification system is on a voluntary basis; 
companies use a system of numbers and abbreviations to specify the types of recyclable 
materials  in  the  packaging.  Even  if  the  marking  is  voluntary,  some  of  the  interviewed 
glass  manufacturers  stated  that  they  use  the  identification  system  because  their 
consumers  ask  for  it.  Thus  the  Directive  creates  administrative  burdens  (putting 
appropriate  marking  on  glass  packaging),  and  substantive  compliance  costs 
(purchase  of  special  printer).  The  adaptation  of  the  packaging  to  the  requirements  of 

and 

144 For further details, see:  
http://ec.europa.eu/environment/waste/packaging/index_en.htm. 
145  For  further  details,  see  Ministry  of  Foreign  Affairs  of  the  Netherlands  (2011),  EU  legislation: 
Packaging 
(www.s-
packaging 
ge.com/sites/default/files/EU%20legislation%20Packaging%20and%20packaging%20waste.pdf). 
146 Ibid. 
147 Some companies report a lack of understanding for requirements set out in the Directive given 
that  glass  can  be  up  to  100%  recycled.  Also,  companies  argue  that  glass  does  not  dissolve  in 
water  and  hence  even  if  thrown  away  has  no  negative  impact  on  groundwater.  They  claim  that 
given  the  existing  legislation,  to  avoid  increasing  levels  of  metal  content  (which  risks  occurring 
when using cullet), companies need to mix recycled glass with sufficient raw materials. Using only 
or mainly recycled glass would otherwise increase the metal content of the final bottle. 
148 Directive 94/62/EC. 

waste 

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Cumulative Cost Assessment of the EU Glass Industry 

each  individual  country  causes  additional  costs  which  may  differ  from  Member  State  to 
Member State. 

Box  15.  Transposition  of  the  Packaging  and  Packaging  Waste  Directive  into 
national laws of the Member States 

“The  requirements  of  the  Packaging  and  Packaging  Waste  Directive  have  been 
transposed properly into the national laws of Member States. Progress has been made to 
achieve  both  the  Internal  Market  objective  as  well  as  the  environmental  objective,  but 
implementation  issues  remain  for  both  objectives.  For  the  Internal  Market  objective 
some  problems  still  occur  due  to  the  requirement  on  market  operators  to  adapt  their 
packaging  to  the  requirements  of  each  individual  country.  For  the  environmental 
objective recycling and recovery targets have generally been met, but some uncertainty 
exists about the accuracy of the reported data”.149 

9.2.3  Methodological aspects 

The assessment of costs related to Packaging and Packaging Waste was assessed along 
the  lines  of  three  thematic  areas:  we  investigate  the  costs  pertaining  to  (a)  marking 
and  identification  systems,  (b)  requirements  on  the  nature  of  packaging  and 
(c) derogation for glass packaging from the heavy metals concentration limits. 

This  legislation  creates  costs  for  firms  both  in  the  forms  of  administrative  burden,  e.g. 
ensuring the proper marking of glass packaging, in term of labour and investment, and 
substantive  compliance  cost,  e.g.  workers  ensuring  compliance  with  Art.  11  of  the 
Packaging  and  Packaging  Waste  Directive.  Precisely,  costs  incurred  under  (a)  were 
considered to be administrative burden while those under (b) and (c) were considered 
as substantive compliance costs. 

Regarding (a) we collected information for the costs incurred in assuring proper marking 
of glass packaging in terms of labour costs, investment costs and operational costs. We 
first  asked  firms  to  indicate  the  number  of  employees  involved  and  the  share  of  their 
working  time  to  carry  out  such  operations.  Some  firms  provided  additional  information 
on  the  professional  qualification  and  the  individual  share  of  yearly  working  time  of 
personnel  involved,  e.g.  13  employees  dedicate  5%  of  their  yearly  working  time  to 
labelling  pallets  loads.  Whenever  such a detailed  breakdown could not  be  extrapolated, 
firms  usually  delivered  an  estimate  of  the  average  share  of  yearly  working  time. 
Respondents  who  presented  a  detailed  breakdown  provided  evidence  to  extrapolate 
baseline  scenarios.  They  provided  information  on  the  breakdown  of  workers  that  an 
average  efficient  firm  would  assign  to  the  aforementioned  operations.  The  baseline 
scenario  served  to  refine  the  determination  of  total  labour  costs.  Three  scenarios  were 
determined:  if  a  company  declares  to  involve  one  worker,  it  is  assumed  to  be  of 
managerial  category  (corresponding  to  level  1  of  ISCO  classification150);  if  15  or  fewer 
workers are involved, it is reasonable to consider the higher panels to be involved (ISCO 
1  and  ISCO  3  workers  categories,  with  a  share  of  total  work  of  30%  and  70%, 
respectively);  if  more  than  15  people  are  involved,  then  it  can  be  considered  as  if  a 
broad share of plant staff participate in the operation (ISCO 1, ISCO 3, ISCO 8 and ISCO 
9,  with  shares  of  10%,  30%,  50%  and  10%  of  total  time,  respectively).  Once  the 
breakdown  was  applied  to  the  number  of  total  hours  specified  by  the  company,  the 
Research  Team  computed  the  total  cost,  by  matching  the  information  with  average 
salary estimates for ISCO categories at country level, to derive overall labour costs. 

149 BIO, Arcadis, Institute for European Environmental Policy (2014), “Ex-post evaluation of certain 
waste stream Directives”. 
150 International Standard Classification of Occupation, International Labour Organization, UN. 

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The  Research  Team  additionally  investigated  operational  costs  (excluding  staff 
costs).  This  entailed  the  computation  of  costs  for  the  marking  of  glass  packaging,  e.g. 
cost of solvent, printers. Regarding investment costs, e.g. special machines, a linear 
depreciation rate was applied to determine the annual share of total value of investment. 
On  the  basis  of  desk  research  as  well  as  on  the  ad  hoc  information  provided  by 
companies,  the  Research  Team  decided  to  consider  two  broad  investment 
categories: investments on high-value and long-term assets are expected to last over 
15  years,  while  low-value  short-term  investments  are  expected  to  last  five  years.  We 
also took into account incremental operational  expenditures which are paid annually by 
firms,  in  terms  of  maintenance,  increased  energy  consumption,  cost  of  consumables, 
etc. Investments made in years preceding 2006 were excluded. 

The  Research  Team  estimated  the  cost of  capital  used  for  investment,  by  elaborating 
an estimate of the average weighted cost of capital in the sectors analysed, on the basis 
of  economic  literature  on  WACC  in  the  EU  (see  Chapter  2.3).  It  was  then  investigated 
whether  companies  face  additional  operational  costs  to  commit  to  the  essential 
requirements  (b)  set  by  the  Directive,  with  specific  regards  to  glass  packaging,  e.g. 
minimise  waste.  Finally,  the  Research  Team  collected  data  on  labour  costs,  operational 
costs  and  investment  undertaken  to  comply  with  Art.  11  of  the  directive  on 
concentration levels of heavy metals present in packaging (c). 

For  each  of  the  three  areas  analysed,  the  Research  Team  collected  information  to 
estimate the BAU factor using a Likert scale from 1 to 5 (see Chapter 2.3). Whenever an 
answer  was  missing,  the  BAU  was  based  on  the  average  of  the  answers  provided  by 
other respondents. 

9.2.4  Cost assessment – Packaging glass 

Sample 

The sample on which cost estimates for this area of legislation relies is presented in the 
table below.  

Table 55. Packaging glass: Sample size by geographic region  

Packaging glass: 
Packaging and 
Packaging Waste 
Directive 

Number of plants 
in the sample 

Regions 

NWE 

CEE 

4 

7 

SE 

6 

Source: Authors’ own elaboration. 

EU 

17 

Our  sample  reaches  the  target  of  five  companies  per  region  in  CEE  and  SE.  NWE  data 
can  also  be  shown  (but  needs  to  be  treated  with  additional  care  as  the  number  of 
observations is below the 5-plant target).  

Direct regulatory costs 

Direct  regulatory  costs  of  waste  legislation  for  packaging  glass  are  estimated  at 
€0.25/tonne  of  production  output  in  a  typical  year  at  the  EU  level.  These  costs 
include  both  substantive  compliance  costs  and  administrative  burdens,  such  as  testing 

191 

 
 
 
 
 
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and  documentation.  Regional  differences  (NWE:  €0.22/tonne;  CEE:  €0.11/tonne;  SE: 
€0.38/tonne) can be partially explained due to different BAU factors (which range from 
less  than  30%  in  SE  to  about  35%  in  NWE  and  51%  in  CEE).  A  key  reason  for  this 
variation  in  BAU  is  the  different  transposition  of  the  Directive  into  national  laws. 
Surveyed  companies  in  some  Member  States  claim  to  be  obliged  to  do  testing  which 
they  do  not  perceive  as  necessary.  Another  aspect  explaining  differences  is  that  the 
recycling rates differ between regions. The more glass is recycled, the higher the risk of 
increased metal components. 

The direct regulatory costs mainly consist of: 

 

substantive compliance costs; 

  administrative burdens. 

These sub-categories of direct regulatory costs are further elaborated in the paragraphs 
below. 

Figure 63. Packaging glass: Regulatory costs generated by Packaging and 
Packaging Waste Directive by region (typical year, breakdown per cost 
category) 

 0,45

 0,40

 0,35

 0,30

 0,25

 0,20

 0,15

 0,10

 0,05

 -

NWE

CEE

SE

EU

Administrative burdens

Substantive compliance costs

Source: Authors’ own elaboration. 

Substantive compliance costs 

Substantive  compliance  costs  (€0.14/tonne)  capture  about  56%  of  total  costs. 
Differences  occur  between  geographic  areas:  whereas  in  NWE  the  substantive 
compliance costs are estimated to be €0.06/tonne of production output, in CEE the costs 
are  estimated  to  be  €0.05/tonne  of  production  output  and  in  SE  to  be  €0.35/tonne  of 
production  output.  These  costs  arise  in  ensuring  compliance  with  Art.  11  of  the 
Packaging  and  Packaging  Waste  Directive  on  concentration  levels  of  heavy  metals 
present in packaging, in terms of allocation of workers to the necessary operations and 
other  operational  costs  in  general.  Additional  costs  are  also  generated  by  the  essential 
requirements set by the Packaging and Packaging Waste Directive as regards the nature 
of  glass  packaging.  The  majority  of  plants  surveyed  incur  labour  costs,  while  a  limited 
number  of  plants  additionally  reported  investments  in  machinery  as  x-ray  analysers  or 
inductively coupled plasma. 

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Administrative burdens 

Administrative burdens (€0.11/tonne) are responsible for 44% of total costs. In NWE the 
administrative  burden  is  estimated  to  be  €0.16/tonne  of  production  output,  in  CEE  the 
costs are estimated to be €0.06/tonne of production output and in SE to be €0.03/tonne 
of  production  output.  The  entirety  of  administrative  burdens  stems  from  the  costs 
incurred  when  assuring  the  proper  marking  of  glass  packaging.  Companies  displayed 
different  approaches  towards  the  procedure.  Some  plants  dedicate  a  limited  number  of 
personnel  for  a  significant  share  of  their  working  time,  i.e.  usually  one  or  two  people 
committing  10%  to  30%  of  yearly  working  time.  Other  plants  opt  instead  for  a 
distribution  of  functions  across  a  broader  set  of  their  staff,  employing  up  to  almost  40 
people for 1% to 5% of their working time. In this scenario workers are dedicated to UV 
printers, labelling of pallet loads or to the scanning of labels. Operational costs generate 
the largest share of costs for the vast majority of firms surveyed.  

Cumulative regulatory costs  

The  following  table  summarises  the  cumulative  regulatory  costs  for  packaging  glass  in 
the area of packaging and packaging waste legislation. 

Table  56.  Packaging  glass:  Regulatory  costs  generated  by  Packaging  and 
Packaging Waste Directive (€/tonne, typical year, averages) 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

Regions 

EU 

NWE 

CEE 

SE 

0.16* 

0.06 

0.03 

0.11 

0.06* 

0.05 

0.35 

0.14 

0* 

NA 

0 

NA 

0 

NA 

0 

NA 

Total regulatory costs 

0.22* 

0.11 

0.38 

0.25 

Note: *Number below sample target but can be presented as being above confidentiality 
threshold. 
Source: Authors’ own elaboration. 

9.2.5  Cost assessment –Glass tableware 

Sample 

The  sample  used  for  cost  estimates  for  this  area  of  legislation  consists  of  the  following 
number of plants. 

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Cumulative Cost Assessment of the EU Glass Industry 

Table 57. Glass tableware: Sample size   

Glass tableware: Packaging and 
Packaging Waste Directive 

Number of plants in the sample 

EU 

5 

Source: Authors’ own elaboration. 

No regional splits can be shown, but with four companies in the sample an EU estimate 
can be presented.   

Direct regulatory costs 

Direct  regulatory  costs  of  the  Packaging  and  Packaging  Waste  Directive  for  glass 
tableware, which comprise substantive compliance costs and administrative burdens, are 
estimated at an indicative  €0.37/tonne of production output for a typical year. The 
total  cost  can  be  split  into  50%  substantive  compliance  costs  (€0.18/tonne)  and  50% 
administrative  burdens  (€0.19/tonne).  Both  administrative  burdens  and  substantive 
compliance costs are due to the costs of workers, respectively, when following marking 
procedures  and  identification  systems,  and  when  ensuring  compliance  with  general 
prescriptions of the legislation, as on the levels of concentration of heavy metals in glass 
packaging  or  in  the  minimisation  of  packaging  waste.  The  BAU  factor  is  estimated  at 
40%, which shows that companies would expect a fair share of the costs to occur also in 
the absence of legislation, mainly due to requirements from their downstream clients. 

Figure 64. Glass tableware: Regulatory costs generated by Packaging and 
Packaging Waste Directive by region (typical year, breakdown per cost 
category) 

0,40

0,35

0,30

0,25

0,20

0,15

0,10

0,05

0,00

EU 

Administrative burdens

Substantive compliance costs

Source: Authors’ own elaboration. 

Cumulative regulatory costs  

The following table summarises the cumulative regulatory costs generated by Packaging 
and Packaging Waste Directive on glass tableware manufacturers. 

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Table  58.  Glass  tableware:  Regulatory  costs  generated  by  Packaging  and 
Packaging Waste Directive (€/tonne, typical year, averages) 

Administrative burdens  

Direct 
regulatory costs 

Substantive compliance 
costs 

Direct charges 

Indirect regulatory costs 

Total regulatory costs 

Source: Authors’ own elaboration. 

EU 

0.19 

0.18 

0 

NA 

0.37 

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10  Consumer and health legislation  

This  section  presents  the  costs  generated  on  the  EU  glass  industry by  the  following  EU 
rules belonging to the consumer and health legislation area: 

  Framework Regulation EC 1935/2004 on materials and articles intended to come 

into contact with food and repealing Directives 80/590/EEC; 

  Commission Regulation 2023/2006 on good manufacturing practice for materials 

and articles intended to come into contact with food; 

  Directive 2001/95/EC on general product safety.  

10.1  Description  of  the  Acts  (Materials  and  Articles  in  contact  with  food  and 

General Product Safety Directive) 

This section on consumer and health legislation, as well as the questionnaire submitted 
to the companies, is divided in two parts: material and articles in contact with food and 
general product safety.  

Regarding  the  legislation  on  materials  and  articles  in  contact  with  food,  the 
Framework  Regulation  sets  out  general  requirements  for  all  food  contact 
materials and articles that are intended to come into contact with food, including 
all  types  of  packaging,  bottles  (plastic  and  glass),  and  cutlery,  but  also  adhesives  and 
inks  for  printing  labels.  All  these  materials  and  articles  used  to  package  food  must 
comply  with  the  requirements  of  the  Regulation.  Annex  I  to  the  Framework  Regulation 
lists  17  groups  of  materials  and  articles  which  may  be  covered  by  specific  measures. 
Regarding glass, no specific measure has been taken yet.  

In  addition,  the  Commission  Regulation  complements  the  Framework  Regulation  by 
defining  good  manufacturing  practice  for  materials  and  articles  intended  to  come  into 
contact with food. It lays down the rules on good manufacturing practice (GMP) for 
those  groups  of  materials  and  articles  listed  in  Annex  I  to  the  Framework  Regulation. 
Also,  combinations  of  the  previous  materials  and  articles,  or  again  recycled  materials 
and articles used in those materials and articles, are covered by the previous provisions.  

Finally, with regard to general product safety, the Directive lays down a definition 
of a safe product. The main purpose of the Directive is to ensure that products placed 
on the market are safe. 

Box 16. Absence of specific measures for Glass 

Annex  I  to  the  Framework  Regulation  lists  17  groups  of  materials  and  articles, 
including glass, which may be covered by specific measures regarding food contact. In 
the absence of specific measures at European level, Member States can adopt national 
provisions  (Article  6  of  the  Framework  Regulation).  As  of  today,  five  materials  are 
covered by EU specific measures, including ceramics but not glass. 

Regarding  the  latter,  as  rules  have  not  been  harmonised  at  EU  level,  national 
legislation should apply. However, anecdotal evidence based on interviews shows that 
the  same  rules  as  for  ceramics  are  also  applied  for  glass  companies  in  some  cases. 
The  precise  origin  of  this  situation  is  not  captured  by  the  questionnaire,  but  is 
currently  under  assessment  of  the  European  Commission.  It  might  be  due  to  the 
transposition  of  Directive  84/500/EC  into  national  laws,  which  then  apply  the  same 
provisions for glass.  

Even though not yet existing at a European level, specific measures for glass are being 
prepared.  According  to  a  recent  study  published  by  the  European  Parliament,  some 
glass  manufacturers  and  processors  have  reported  that  they  are  in  a  process  of 

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revising/finalising  their  industry  guidance  on  good  manufacturing  practices  for  food 
contact materials. 

10.2   Categories of regulatory costs  

With  regard  to  rules  on  materials  and  articles  in  contact  with  food  and  more 
particularly  the  Framework  Regulation,  the  main  regulatory  costs  detected  in  the 
scoping phase are based upon three articles. The general requirements stipulate that the 
business operators have the obligation to comply with good manufacturing practices and 
to ensure that labelling, advertising and presentation of a material or an article shall not 
mislead  the  consumers  (Article  1).  Then,  companies  have  to  ensure  good  labelling, 
advertising and presentation (Article 15) regarding the material or article which is meant 
to be in contact with food. Finally, there is a traceability requirement (Article 17) which 
implies that companies must ensure that they provide sufficient traceability, by means of 
labelling or relevant documentation or information.  

In  parallel,  the  Commission  Regulation  states  that  companies  (‘business  operators’) 
must  ensure  that  manufacturing  operations  are  carried  out  in  accordance  with  the 
general  and  detailed  rules  (Article  4),  and  they  should  also  establish  and  implement  a 
quality  assurance  system  (Article  5)  as  well  as  a  quality  control  system  (Article  6). 
Finally,  business  operators  must  fulfil  documentation  requirements  (Article  7)  which 
oblige them to establish and maintain appropriate documentary evidence. 

Concerning general product safety, the overall objective of the legislation is to make 
sure  that  operators  place  only  safe  products  on  the  market  (Article  1).  However,  this 
obligation  cannot  be  only  considered  as  generating  EU  regulatory  costs,  since  specific 
obligations  can  be  established  at  national  level  by  Member  States,  e.g.  establishing 
competent authorities to monitor the compliance of products (Articles 6, 7, 8 and 9).  

Rules  affecting  materials  and  articles  in  contact  with  food  generate  administrative 
burdens  and  potentially  substantive  compliance  costs.  Administrative  burdens  involve, 
for  example,  employees  working  on  the  declaration  of  compliance  of  certain  materials 
and articles. These costs are only relevant for hollow glass. Substantive compliance costs 
linked  to  employees  working  on  general  requirements  regarding  conformity  with  good 
manufacturing practices on quality assurance systems, general requirements on labelling 
and traceability can also affect flat glass. 

An additional factor of high importance in this legislative area is the BAU factor, which is 
rather  high.  In  fact,  even  in  the  absence  of  specific  rules,  companies  tend  to 
manufacture  products  compliant  with  high  safety  standards.  Moreover,  according  to  a 
study  conducted  by  the  European  Parliament,151  companies  may  have  other  rules  to 
respect  besides  the  legal  framework  set  out  at  EU  level.  For  instance,  self-Regulation, 
exports of EU-made food contact material goods to third countries and non-binding rules 
developed by the Council of Europe that require transposition at national level to become 
binding  may  create  additional  burdens  on  companies.  Also,  it  was  reported  that  the 
current  legal  framework  is  seen  as  not  entirely  complete  and  some  issues  in  the 
implementation  of  the  current  rules  were  identified,  i.e.  day-to-day  implementation 
problems due to traceability and official controls which are not carried out with the same 
intensity across Member States.  

Finally,  it  has  to  be  stressed  that  none  of  the  companies  have  reported  recent  use  of 
RAPEX, which does not generate relevant regulatory costs for the EU glass industry.  

151  European  Parliament  (2016),  “Food  Contact  Materials  Regulation  (EC)  1935/2004  European 
Implementation Assessment Study”. 

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Cumulative Cost Assessment of the EU Glass Industry 

10.3   Methodological aspects 

Regarding  hollow  glass,  the  part  on  consumer  and  health  legislation  was  divided  into 
two sections, i.e. materials and articles in contact with food and general product safety 
requirements for all products, while for flat glass only the latter is relevant. Responses 
from  companies  point  to  the  fact  that  there  are  diverse  interpretations  of  where  to 
allocate  costs  in  the  case  of  hollow  glass  and  also  very  diverse  responses  within  their 
segments. Therefore,  the  Research  Team opted  to  combine  the  two sections  in hollow 
glass in the cost assessment and to conduct further validation of the data.  

The  impact  of  the  legislation  on  materials  and  articles  in  contact  with  food  was 
examined through the perspective of two broad themes, namely (1) the costs generated 
by  compliance  with  general  requirements  (such  as  quality  management,  consumer 
information  and 
information  and  conformity  measures)  and  (2)  the  costs  of 
documentation  obligations  to  public  authorities.  Costs  falling  into  the  former  area  were 
considered  substantive  compliance  costs,  and  costs 
latter 
administrative burdens.  

into  the 

falling 

Regarding  the  general  product  safety  requirements  set  for  all  products,  we 
distinguished  between  producers/distributors’  obligations  and  the  costs  associated  with 
rapid intervention situations, such as a product being notified in RAPEX. According to the 
companies’ responses, RAPEX does not generate significant regulatory costs.  

The  types  of  costs  assessed  were  overall  similar,  both  for  safety  requirements  for  all 
products and for contact with food requirements. The Research Team collected data on 
employees  involved,  the  costs  incurred  when  outsourcing  certain  activities  and  other 
residual  costs.  Estimates  were  discounted  on  the  basis  of  the  BAU  factor  indicated  by 
each plant. 

10.4   Cost assessment – Packaging glass 

Activities  to  fulfil  the  general  requirements  of  the  legislation,  e.g.  quality  insurance 
systems,  labelling  and  analytical  testing,  are  mainly  done  internally.  In  practice, 
employers  should  make  sure  that  the  following  activities  are  covered:  conformity  with 
good  manufacturing  practices  (implementing  quality  assurance  systems,  quality  control 
systems  and  making  sure  that  relevant  documentation  is  up  to  date  and  available), 
labelling  (for  the  consumer)  and  traceability  and  other  activities  such  as  analytical 
testing  and  information  sharing.  Depending  on  the  plant,  either  fewer  employees  work 
full  time  or  more  at  a  lower  share  of  their working  time  (about  20%)  on  such  aspects. 
Outsourcing  is rather rare  and  occurs mainly  for  maintenance,  cleaning  activities  or  for 
specific  needs  of  specialised  products  where  external  expertise  is  of  added  value  at 
specific occasions. It is also worth noting that most of the companies replied that some 
activities regarding general requirements, such as providing relevant information, would 
occur “to a full extent” in the absence of any specific legal obligation, mainly because of 
demand  from  the  customers.  Regarding  these  good  business  practices,  some  of  the 
companies  pointed  out  the  fact  that  clients’  requirements  are  sometimes  higher  than 
those of legislative provisions.   

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Cumulative Cost Assessment of the EU Glass Industry 

Sample 

The sample adopted to estimate regulatory costs in this area of legislation consists of the 
following number of plants split across the three defined regions. 

Table 59. Packaging glass: Sample size by geographic region 

Packaging glass 

Number of plants 
in the sample 

Regions 

NWE 

CEE 

6 

6 

SE 

8 

Source: Authors’ own elaboration. 

EU 

20 

Direct regulatory costs 

Total  direct  regulatory  costs  are  estimated  at  €0.33/tonne  in  a  typical  year  at  the  EU 
level.  These  costs  can  be  split  into  administrative  burdens  and  substantive  compliance 
costs.  The  BAU  factor  is  very  similar  across  regions  at  an  average  of  about  68%,  with 
minor regional differences (CEE and NWE about 64% and SE about 73%).  

The direct regulatory costs mainly consist of: 

  administrative burdens; and 

 

substantive compliance costs.  

These sub-categories of direct regulatory costs are further elaborated in the paragraphs 
below. 

Figure 65. Packaging glass: Regulatory costs generated by consumer and 
health legislation by region (typical year, breakdown per cost category) 

 0,60

 0,50

 0,40

 0,30

 0,20

 0,10

 -

NWE

CEE

SE

EU

Administrative burdens

Substantive compliance costs

Source: Authors’ own elaboration. 

199 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Administrative burdens 

Administrative burdens are responsible for about 35% of the costs in this legislative area 
and  represent  €0.12/tonne.  Differences  between  geographical  areas  show  that  in  CEE 
administrative burdens are estimated at €0.27/tonne, in SE they are €0.035/tonne and 
in NWE €0.12 €/tonne. The regional differences in costs caused by legal prescriptions on 
general requirements regarding materials and articles intended to come into contact with 
food are the main factor explaining the higher costs experienced by plants operating in 
Northern-Western  Europe.  Plants  in  NWE  tend  to  dedicate  a  small  number  of  qualified 
employees with a high share of their working time  to administrative tasks. Those tasks 
include  procedures  of  declaration  of  compliance  of  materials  and  articles,  provision  of 
information  to  public  authorities  regarding  scientific  or  technical  data,  and  provision  of 
specific documents for the authorisation of substances.  

in  CEE 

Plants  operating 
face  higher  administrative  burdens  regarding  safety 
requirements  of  general  products.  Plants  face  high  labour  costs  in  operations,  such  as 
the  provision  of  information  to  competent  authorities  and  the  processes  of  cooperation 
with them in case of risk to the consumer.  

In neither case do plants in SE report costs as high as those of their counterparts, which 
results  in  overall  lower  administrative  burdens  in  the  case  of  consumer  and  health 
legislation.  

Substantive compliance costs 

Substantive  compliance  costs  represent  about  65%  of  the  total  cost  in  this  legislative 
area with €0.21/tonne. In CEE, they are above the EU average with €0.27/tonne, in SE 
below with €0.12/tonne and in NWE just slightly below CEE with €0.26/tonne.  

The main driver behind the lower substantive compliance costs of SE plants parallels the 
explanation  provided  for  administrative  burden.  The  specific  legislation  applying  to 
materials and articles in contact with food pose higher costs in NWE, while plants in CEE 
usually face higher costs in relation to the legislation applying to general products. The 
specific legislation on materials and articles in contact with food requires the allocation of 
workers to ensure conformity with good manufacturing practices, e.g. quality control and 
assurance  systems,  compliance  with  the  requirements  on  labelling  and  traceability  and 
compliance with general rules on analytical testing. With the exception of some outliers, 
plants in SE show relatively lower costs than their NWE counterparts. 

Plants  in  CEE  put  in  a  large  volume  of  investment  to  ensure  the  compliance  of  their 
production lines and facilities with the requirements posed by the legislation on general 
products. 

200 

 
 
 
 
 
 
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Cumulative regulatory costs  

The  following  table  summarises  the  cumulative  regulatory  costs  for  packaging  glass  in 
the area of consumer and health legislation. 

Table 60. Packaging glass: Regulatory costs generated by consumer and health 
legislation (€/tonne, typical year, averages) 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

Regions 

EU 

NWE 

CEE 

SE 

0.12 

0.27 

0.035 

0.12 

0.26 

0.21 

0.12 

0.21 

0 

NA 

0 

NA 

0 

NA 

0 

NA 

Total regulatory costs 

0.38 

0.48 

0.15 

0.33 

Source: Authors’ own elaboration. 

10.5   Cost assessment – Glass tableware 

Sample 

The sample adopted to estimate regulatory costs in this area of legislation consists of the 
following number of plants. 

Table 61. Glass tableware: Sample size by geographic region 

Glass tableware 

EU 

Number of plants 
in the sample 
Source: Authors’ own elaboration. 

5 

 Direct regulatory costs 

Total  direct  regulatory  costs  are  estimated  to  be  €0.24/tonne  for  a  typical  year  in  the 
EU.  These  can  be  split  into  administrative  burdens  and  substantive  compliance  costs. 
The BAU factor is at 50%. 

The direct regulatory costs mainly consist of: 

substantive compliance costs; and  

- 
-  a very small share of administrative burden.  

201 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

These sub-categories of direct regulatory costs are further elaborated in the paragraphs 
below. 

Figure 66. Glass tableware: Regulatory costs generated by consumer and 
health legislation for the EU (typical year, breakdown per cost category) 

 0,25

 0,20

 0,15

 0,10

 0,05

 -

Administrative burdens

Substantive compliance costs

EU

Source: Authors’ own elaboration. 

Administrative burdens 

Administrative  burdens  are  responsible  for  only  7%  of  the  costs  in  this 
legislative  area  and  represent  €0.02/tonne.  In  the  case  of  glass  tableware 
producers,  burdens  arise  both  from  the  administrative  procedures  regarding  the  safety 
requirements  (a)  for  general  products  and  (b)  for  specific  products  and  materials  in 
contact with food. The fulfilling of a Declaration of Compliance, for example, is a process 
that  takes  from  a  few  minutes  to  several  hours,  depending  on  the  complexity  of  the 
case,  and  some  plants  reported  having  undertaken  this  process  for  several  hundred 
cases each year. Other plants indicated the preparation of product safety reports or the 
need  for  notification  to  public  authorities  –  such  as  national  food  agencies  –  as  an 
additional source of burden.  

The plants analysed highlighted a common approach with regards to these procedures: 
they opt to involve a limited number of workers for a limited share of their working time. 
Glass  tableware  companies  dedicate,  for  example,  only  one  to  six  workers  for  no  more 
than  6%  of  their  working  time  in  fulfilling  their  information  and  documentation 
obligations  to  public  authorities,  figures  that  are  lower  than  those  reported  by  plants 
producing  packaging  glass,  which  provides  an  explanation 
in 
administrative burdens across the two sectors. 

for  the  spread 

Substantive compliance costs 

Substantive  compliance  costs  represent  93%  of  the  total  regulatory  costs  in  this 
legislative area. They are equal to €0.22/tonne. Compliance costs originate from the 

202 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

allotting  of  worker  time  to  procedures  such  as  conformity  with  good  manufacturing 
practices,  labelling  requirements  and  analytical  testing.  Glass  tableware  plants,  unlike 
packaging  glass  producers,  exclude  outsourcing  these  operations  and  prefer  to 
implement them internally. 

Cumulative regulatory costs  

The  following  table  summarises  the  cumulative  regulatory  costs  borne  by  glass 
tableware producers due to consumer and health legislation. 

Table 62. Glass tableware: Regulatory costs generated by consumer and health 
legislation (€/tonne, typical year, averages) 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

EU 

0.02 

0.22 

0 

NA 

Total regulatory costs 

0.24 

Source: Authors’ own elaboration. 

10.6   Cost assessment – Flat glass 

Sample 

The sample adopted to estimate regulatory costs in this area of legislation consists of the 
following number of plants split across the three defined regions. 

Table 63. Flat glass: Sample size by geographic region 

Flat glass 

Number of plants 
in the sample 

Regions 

NWE 

CEE 

3 

4 

SE 

3 

Source: Authors’ own elaboration. 

EU 

10 

203 

 
 
 
 
 
 
 
 
 
 
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Direct regulatory costs 

Total  direct  regulatory  costs  are  estimated  to  be  €0.10/tonne  for  a  typical  year  in  the 
EU.  These  can  be  split  into  administrative  burdens  and  substantive  compliance  costs. 
The BAU factor is at 45%. 

The direct regulatory costs mainly consist of: 

  administrative burdens; and  

  a negligible share of substantive compliance costs.  

These sub-categories of direct regulatory costs are further elaborated in the paragraphs 
below. 

Figure 67. Flat glass: Regulatory costs generated by consumer and health 
legislation for the EU (typical year, breakdown per cost category) 

0,16

0,14

0,12

0,10

0,08

0,06

0,04

0,02

0,00

NWE

CEE

EU

Administrative burdens

Substantive compliance costs

Source: Authors’ own elaboration. 

Administrative burdens 

Administrative  burdens  are  responsible  for  almost  100%  of  the  costs  in  this 
legislative area and represent €0.10/tonne. Differences between geographical areas 
show  that  in  CEE  administrative  burdens  are  estimated  at  €0.01/tonne  while  in  NWE 
€0.14/tonne.  The  difference  registered  between  the  two  regional  groups  is  driven, 
among  other  factors,  by  the  presence  of  plants  reporting  costs  at  the  two  extremes  of 
the  distribution  (caused  by  the  final  use  of  the  product  and  hence  their  specific 
downstream clients), which push the averages of CEE and NWE regions downwards and 
upwards,  respectively.  The  reasons  for  the  presence  of  these  outliers  are  1)  the  large 
differences  in  the  share  of  working  time  of  workers  dedicated  to  the  provision  of 
information,  and  2)  cooperation  with  the  competent  authorities  in  case  of  risk  to  the 
consumer. Differences in the share of working time are further amplified by the fact that 
employees  assigned  to  these  procedures  tend  to  be  of  higher  seniority  level,  which 
entrails a higher cost per hour. Additionally, higher ISCO salary categories are those with 
the  highest  variance  between  Member  States,  a  finding  that  can  provide  additional 
evidence for cross-regional differences.  

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Substantive compliance costs 

In the present analysis, the major share of substantive compliance costs was generated 
by  the  legislation  on  safety  requirements  applying  to  specific  material  and  products  in 
contact  with  food.  Since  flat  glass  is  excluded  by  this  legislation,  costs  falling  within 
substantive compliance tend to be limited or absent.  

The  following  table  summarises  the  cumulative  regulatory  costs  borne  by  flat  glass 
producers due to consumer and health legislation. 

Table  64.  Flat  glass:  Regulatory  costs  generated  by  consumer  and  health 
legislation (€/tonne, typical year, averages) 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

Regions 

EU 

NWE 

CEE 

SE 

0.14* 

0.01* 

Confidential 

0.10 

0* 

0* 

NA 

0* 

0* 

Confidential 

Confidential 

0 

0 

NA 

Confidential 

NA 

Total regulatory costs 

0.14* 

0.01* 

Confidential 

0.10 

Note: *Number below sample target but can be presented as being above confidentiality 
threshold. 
Source: Authors’ own elaboration. 

205 

 
 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

11 Workers’ safety and health legislation  

This section discusses the costs generated by and the relevance for the EU glass industry 
of the following acts belonging to the workers’ safety and health area: 

  Council Directive of 12 June 1989 on the introduction of measures to encourage 

improvements in the safety and health of workers at work (89/391/EEC);  

  Council  Directive  of  30  November  1989  concerning  the  minimum  safety  and 

health requirements for the workplace;  

  Council  Directive  98/24/EC  of  7  April  1998  on  the  protection  of  the  health  and 

safety of workers from the risks related to chemical agents at work; 

  Directive  2003/10/EC  of  the  European  Parliament  and  of  the  Council  of  6 
February  2003  on  the  minimum  health  and  safety  requirements  regarding  the 
exposure of workers to the risks arising from physical agents (Noise Directive); 

  Directive  2013/35/EU  of  the  European  Parliament  and  of  the  Council  of  26  June 
2013 on the minimum health and safety requirements regarding the exposure of 
workers  to  the  risks  arising  from  physical  agents  (electromagnetic  fields)  (20th 
individual Directive within the meaning of Article 16(1) of Directive 89/391/EEC) 
and repealing Directive 2004/40/EC; 

  Directive 2004/40/EC on the minimum health and safety requirements regarding 
from  physical  agents 

risks  arising 

the 

to 

the  exposure  of  workers 
(Electromagnetic Directive); 

  Directive  2006/25/EC  of  the  European  Parliament  and  of  the  Council  of  5  April 
2006 on the minimum health and safety requirements regarding the exposure of 
workers to risks arising from physical agents (artificial optical radiation). 

The first two legislative acts will be assessed in the “General workers’ safety and health 
and  general  workplace  safety”  section,  and  the  remaining  five  acts  will  be  assessed  in 
the “Special workers’ safety and health” section. A main feature of this legislative area is 
that all legislative acts are directives and thus need to be transposed into national laws. 
This  means  that  the  risk  of  different  implementation  and  interpretation  as  well  as  the 
possibility for gold-plating are high. 

11.1  General workers’ safety and health and general workplace safety 

11.1.1  Description of the Acts  

During the Inception  Phase,  two main  EU  legal  instruments  regulating  general  workers’ 
health  and  general  workplace  safety  were  identified  as  sources  of  regulatory  costs  for 
the  glass  industry.  The  Council  Directive  of  12  June  1989  on  the  introduction  of 
measures  to  encourage  improvements  in  the  safety  and  health  of  workers  at  work 
(hereinafter  the  Framework  Directive  on  Workers’  Safety)  sets  out  basic  requirements; 
the  Council  Directive  of  30  November  1989  concerning  the  minimum  safety  and  health 
requirements  for  the  workplace  (hereinafter  the  Workplace  Directive)  is  the  first 
individual Directive adopted after the Framework Directive on Worker’s Safety.  

The Framework Directive on Workers’ Safety contains general principles concerning 
the prevention of occupational risks, the protection of safety and health, the elimination 
of  risk  and  accident  factors,  the  informing,  consultation,  balanced  participation  in 
accordance  with  national  laws  and/or  practices  and  training  of  workers  and  their 
representatives,  as  well  as  general  guidelines  for  the  implementation  of  the  said 
principles.  

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Cumulative Cost Assessment of the EU Glass Industry 

The  Workplace  Directive  defines  general  obligations  for  the  employer,  i.e.  traffic 
routes  to  emergency  exits  and the  exits  themselves  have to  be  kept  clear  at  all  times; 
technical  maintenance  of  the  workplace  and  of  the  equipment  and  devices  have  to  be 
carried out as quickly as possible; workplace and the equipment and devices have to be 
regularly  cleaned  to  an  adequate  level  of  hygiene;  safety  equipment  and  devices 
intended to prevent or eliminate hazards need to be regularly maintained and checked. 

11.1.2  Categories of regulatory costs  

The  main  regulatory  costs  created  by  EU  rules  are  linked  to  the  general provision  of 
the Framework Directive on Workers’  Safety, which states that the employer shall 
have  a  duty  to  ensure  the  safety  and  health  of  workers  in  every  aspect  related  to  the 
work  (Article  5),  which  implies  for  instance  that  the  employer  should  designate  one  or 
more  workers  to  carry  out  activities  related  to  the  protection  and  prevention  of 
occupational  risks  for  the  undertaking  and/or  establishment  (Article  7)  and  that  each 
worker  should  receive  adequate  safety  and  health  training,  in  particular  in  the  form  of 
information and instructions specific to his workstation or job (Article 12). Regarding the 
Workplace  Directive,  most  of  the  costs  are  engendered  by  the  list  of  requirements 
stated  in  Article  1  which  includes  technical  maintenance  of  the  workplace  and  of  the 
equipment  and  devices  and  that  for  instance  the  workplace  and  the  equipment  and 
devices are regularly cleaned to an adequate level of hygiene. 

Based  on  the  responses  provided  by  the  companies,  it  can  be  observed  that 
substantive  compliance  costs  are  mainly  engendered  by  the  general  obligation  of 
ensuring workers’ safety and health. More specifically, training is the most important in 
terms of employees involved and in terms of allocated hours. Very often, one employee 
works  for a large  share  of  his/her  time  to  arrange  different  activities  regarding  general 
workers’ safety and health. At any rate, these activities entail a high BAU factor, in fact 
“to  a  high  extent”  they  would  occur  even  in  the  absence  of  specific  legal  obligations. 
Also, some investment costs are linked, for instance, to fire alarm systems, defibrillators, 
first-aid  kits  or  emergency  lighting  systems.  Finally,  these  activities  seem  to  be 
performed internally; yet, outsourcing of some specific tasks is also quite common. For 
instance,  medical  surveillance,  first-aid  training  and  technical  prevention  were  reported 
as  the  main  outsourced  activities.  In  this  context,  most  of  the  regulatory  costs  are 
included  in  the  substantive  compliance  cost  category  (organising  training,  maintaining 
equipment, providing relevant information to employees, etc.).  

According  to  a  recent  study  ‘Evaluation  of  the  Practical  Implementation  of  the  EU 
Occupational  Safety  and  Health  (OSH)  Directives  in  EU  Member  States’  for  DG 
Employment152, several reasons for addressing health and safety can be identified across 
the  EU:  fulfilling  legal  obligations,  meeting  expectations  of  employees  by  their 
inspectorate,  maintaining  the 
representatives,  avoiding 
organisation’s  reputation  and  maintaining  or  increasing  productivity.  The  study  shows 
that  in  some  countries,  particularly  those  that  joined  the  European  Union  in  2004,  the 
most  frequently  reported  driver  to  address  health  and  safety  is  maintaining  the 
organisation’s reputation. 

from  the 

labour 

fines 

Finally,  according  to  the  same  study,  the  fact  that  Member  States  have  different 
regulatory regimes  has  an impact on  the implementation  of the Directives.  For 
instance,  countries  from  the  NWE  region  have  national  goal-setting  regulatory 
approaches to OSH management, with a strong focus on process, which largely predates 
the  Framework  Directive  by  around  20  years.  In  contrast,  other  Member  States  have, 
according  to  the  study,  a  more  traditional  management  system  with  prescriptive 
legislative  approaches.  Yet  another  regulatory  regime  can  be  found  in  Bulgaria,  where 

152  COWI,  Milieu  and  IOM  (2015),  “Evaluation  of  the  Practical  Implementation  of  the  EU 
Occupational Safety and Health (OSH) Directives in EU Member States”. 

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Cumulative Cost Assessment of the EU Glass Industry 

risk  assessment  is  regulated  by  a  specific  ordinance  which  is  effective  for  all  individual 
Directives.  In  addition,  general  requirements  can  there  be  found  in  the  national 
framework  law  while  specific  requirements  are  in  the  laws  transposing  the  individual 
Directive.  

11.1.3  Methodological aspects 

This  assessment  aims  to  quantify  the  costs  registered  by  companies  to  comply  with 
workers’ safety and health procedures. These costs are expected to be quite stable over 
the years. Hence the Research Team focused on costs incurred in a typical year.  More 
specifically,  the  Research  Team  first  investigated  (a)  the  number  of  specifically 
qualified  employees  who  are  involved  in  ensuring  workers’  health  and  safety. 
This  implies  gathering  data  on  the  number  of  people  who  provide  general  trainings  for 
plant  staff,  monitor  safety  equipment/information,  organise  session  on  first  aid,  fire-
fighting and evacuation procedures. Secondly, the Research Team collected information 
on (b) how much time those other employees who are not dedicated to safety and 
health obligations spend on familiarisation with procedures.  

Firms were also asked to provide additional information on the professional qualification 
and  the  share  of  yearly  working  time  of  personnel  involved,  e.g.  one  H&S  officer 
dedicates 30% of his yearly working time to provide training for workers. Whenever such 
a detailed breakdown was not possible, firms delivered an estimate of the average share 
of yearly working time. 

During  interviews,  the  Research  Team  asked  typical  companies  to  provide  a  further 
detailed  breakdown  of  data  to,  e.g.  assess  the  type  of  workers  (and  hence  wage 
categories)  involved  in  a  normal  efficient  company.  Such  information  was  then  used  to 
develop  a  standard  scenario  extrapolated  across  companies  for  the  aforementioned 
operations.  The  standard  scenario  served  to  refine  the  determination  of  total  labour 
costs. On the basis of plant level responses, it can be observed, for example, that plants 
prefer  to  allocate  a  limited  number  of  workers  to  organise  H&S  trainings  or  to  monitor 
safety  equipment,  while  ensuring  that  a  broad  range  of  plant  staff  attend  training  and 
information activities. 

Three  scenarios  were  determined:  if  a  company  declares  to  involve  one  worker,  it  is 
assumed  to  be  of  managerial  category  (corresponding  to 
level  1  of  ISCO 
classification153);  if  15  or  fewer  workers  are  involved,  it  is  reasonable  to  consider  the 
higher  panels  to  be  involved  (ISCO  1  and  ISCO  3  workers  categories,  with  a  share  of 
total work of 30% and 70%, respectively); if more than 15 people are involved, then it 
can be considered as if a broad share of plant staff participate in the operation (ISCO 1, 
ISCO  3,  ISCO  8  and  ISCO  9,  with  shares  of  10%,  30%,  50%  and  10%  of  total  time, 
respectively). Once the breakdown was applied to the number of total hours specified by 
the  company,  the  total  labour  cost  was  computed  by  matching  the  information  with 
average salary estimates for ISCO categories at country level.  

In  case  the  organisation  of  trainings  and  information  activities  is  outsourced  to 
external entities, firms were asked to provide an estimate of ‘out of pocket’ expenses. 
Additionally,  we  asked  companies  to  report  on  the  amount  spent  yearly  on 
information material. 

Regarding  investment  costs  on  health  and  safety  equipment,  e.g.  fire  alarm 
systems,  fire  doors,  emergency  lighting  systems,  the  Research  Team  applied  a  linear 
depreciation  rate  to  determine  the  annual  share  of  total  value  of  investment.  On  the 
basis of desk research as well as on the ad hoc information provided by companies, the 
Research Team decided to consider two broad investment categories: investments 
on high-value and long-term assets are expected to last over 15 years, while low-value 

153 International Standard Classification of Occupation, International Labour Organization, UN. 

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Cumulative Cost Assessment of the EU Glass Industry 

short-term  investments  are  expected  to  last  five  years.  The  Research  Team  also  took 
into  account  incremental  operational  expenditures  which  are  paid  annually  by  firms,  in 
terms  of  maintenance,  increased  energy  consumption,  cost  of  consumables,  etc. 
Investments made in years preceding 2006 were excluded. 

We computed the cost of capital used for investment, by elaborating an estimate of the 
average  weighted  cost  of  capital  in  the  sectors  analysed,  on  the  basis  of  economic 
literature on WACC in the EU (see Chapter 2.3).  

We finally asked companies to report how much of the aforementioned costs would 
have  occurred  in  the  absence  of  the  legislation  to  determine  the  BAU  factor. 
Answers were provided in the form of a Likert scale from 1 to 5 (see Chapter 2.3 above). 
This  information  was  specifically  requested  for  different  groups  of  answers,  in  order  to 
better identify regulatory costs generated by specific sets of obligations. Replies show on 
average a BAU equal to four, i.e. companies claim that the costs would have occurred in 
any  case  to  a  high  extent,  also  without  EU  rules  imposing  regulatory  obligations 
concerning workers and workplace safety. This implies that companies consider the H&S 
of workers to be a compelling issue. 

This  part  of  the  questionnaire  was  the  same  across  the  sectors  considered,  as  the 
legislation similarly applies to firms operating in the flat glass industry as well as in the 
hollow  glass  industry.  All  cost  items  identified  are  substantive  compliance  costs, 
incurred while ensuring the implementation of the legislative prescriptions. 

11.1.4  Cost assessment – Packaging glass  

Sample 

The sample adopted to estimate regulatory costs in this area of legislation consists of the 
following number of plants split across the three defined regions. 

Table 65. Packaging glass: Sample size by geographic region 

Packaging glass: 
General workers’ 
safety and health 
and general 
workplace safety 
Number of plants 
in the sample 

Regions 

NWE 

CEE 

7 

6 

Source: Authors’ own elaboration. 

SE 

8 

EU 

21 

Direct regulatory costs 

In  a  typical  year,  direct  regulatory  costs  of  general  workers’  safety  and  health  and 
general  workplace  safety  for  packaging  glass  are  estimated  at  €1.10/tonne  of 
production output at the EU level. All costs observed can be classified as substantive 
compliance  costs.  The  main  costs  are  the  labour  cost  for  managing/organising  workers 
safety  requirements  and  procedures  which  include  the  attendance  of  such  procedures. 
The absolute costs of such processes were substantially higher than the regulatory costs, 
as  a  high  BAU  factor  was  observed.  Companies  during  interviews,  however,  mentioned 
that they would organise related activities differently if legislation  did not exist. In fact, 
some  differences  exist  in  the  BAU  factor  when  comparing  regions.  The  share  of  costs 
expected to occur anyway was the highest in NWE (~75%), followed by SE (~65%) and 
CEE  (~60%).  This  is  not  surprising  given  that  Member  States  included  in  the  NWE 
sample  already  face  a  longer  tradition  of  stricter  health  and  safety  standards.  The 

209 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

differences in the BAU partially affect the differences in costs per region. However, they 
are  partially outbalanced  by  aspects  such  as  efficiency  in  implementation  of  health  and 
safety systems due to greater experience, better public infrastructure and support, less 
need  to  outsource  and/or  training,  etc.  In  NWE,  the  costs  are  estimated  to  be 
€1.15/tonne of production output, in CEE the costs are estimated to be  €1.25/tonne of 
production output and in SE to be €0.94/tonne of production output. 

Cumulative regulatory costs  

The  following  table  summarises  the  cumulative  regulatory  costs  for  packaging  glass 
producers in the area of general workers’ safety and health and general workplace safety 
legislation. 

Table  66.  Packaging  glass:  Regulatory  costs  generated  by  general  workers’ 
safety  and  health  and  general  workplace  safety  legislation  (€/tonne,  typical 
year, averages) 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

Regions 

NWE 

CEE 

0 

0 

SE 

0 

EU 

0 

1.15 

1.25 

0.94 

1.10 

0 

NA 

0 

NA 

0 

NA 

0 

NA 

Total regulatory costs 

1.15 

1.25 

0.94 

1.10 

Source: Authors’ own elaboration. 

11.1.5  Cost assessment – Glass tableware 

Sample 

The  sample  used  for  cost  estimates  in  this  area  of  legislation  consists  of  the  following 
number of plants. 

Table 67. Glass tableware: Sample size  

Glass tableware: 
General workers’ safety and 
health and general 
workplace safety 
Number of plants in the 
sample 
Source: Authors’ own elaboration. 

EU 

5 

210 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Direct regulatory costs 

Direct  regulatory  costs  of  general  workers’  safety  and  health  and  general  workplace 
safety  legislation  for  glass  tableware  are  indicatively  estimated  to  be  €4/tonne  of 
production  output  for  a  typical  year  at  the  EU  level.  All  costs  can  be  classified  as 
substantive compliance costs. The BAU factor covers about 50% of the costs. The main 
costs  observed  based  on  our  sample  are  similar  to  other  subsectors,  labour  cost  for 
managing/organising  workers’  safety  requirements  and  procedures  which  include  the 
management  and  attendance  of  such  procedures.  Cost  estimates  are  relatively  high  in 
comparison to other sectors when measured in €/tonne. In fact, overall production costs 
for a tonne of glass tableware is substantially higher than those for a tonne of packaging 
glass or flat glass.  

Cumulative regulatory costs  

The  following  table  summarises  the  cumulative  regulatory  costs  for  glass  tableware 
producers generated by general workers’ safety and health and general workplace safety 
legislation. 

Table  68.  Glass  tableware:  Regulatory  costs  generated  by  general  workers’ 
safety  and  health  and  general  workplace  safety  legislation  (€/tonne,  typical 
year, averages) 

Direct 
regulatory 
costs 

Administrative burdens  

Substantive compliance 
costs 

Direct charges 

Indirect regulatory costs 

Total regulatory costs 

Source: Authors’ own elaboration. 

EU 

0 

4.0 

0 

NA 

4.0 

11.1.6  Cost assessment – Flat glass 

Sample 

The  sample  used  to  estimate  costs  in  this  area  of  legislation  comprises  the  following 
number of plants split across the three different regions. 

211 

 
 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table 69. Flat glass: Sample size by geographic region 

Flat glass: 
General 
workers’ safety 
and health and 
general 
workplace 
safety 
Number of 
plants in the 
sample 

Regions 

NWE 

CEE 

SE 

EU 

5 

5 

5 

15 

Source: Authors’ own elaboration. 

Direct regulatory costs 

In a typical year, direct regulatory costs generated by general workers’ safety and health 
and general workplace safety legislation on EU flat glass producers are estimated to be 
€1.07/tonne  of  production  output;  these  costs  include  only  substantive  compliance 
costs.  The  main  costs  observed  are  the  labour  cost  for  managing/organising  workers’ 
safety  requirements  and  procedures  that  include  the  management  and  attendance  of 
training  and  information  activities.  Variance  between  companies  as  well  as  between 
regions  is  relatively  high.  This  suggests  that  companies  have  a  very  different  approach 
for  implementing  safety  and  health  and  general  workplace  safety  requirements. 
Differences occur between geographic areas: whereas in NWE the costs are estimated to 
be €1.31/tonne of production output, in CEE the costs are estimated to be €0.40/tonne 
of  production  output  and  in  SE  to  be  €1.22/tonne  of  production  output.  The  sector  is 
characterised by a very high BAU factor (between 65% in SE and about 75% in NWE and 
CEE). These differences partially explain the higher cost estimate for SE. Another aspect 
explaining the differences is differing costs for labour, externals and equipment.  

212 

 
 
 
 
 
 
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Cumulative regulatory costs  

The following table summarises the cumulative regulatory costs for flat glass producers 
in  the  area  of  general  workers’  safety  and  health  and  general  workplace  safety 
legislation. 

Table 70. Flat glass: Regulatory costs generated by general workers’ safety and 
health  and  general  workplace  safety  legislation  (€/tonne,  typical  year, 
averages) 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

Regions 

NWE 

CEE 

0 

0 

SE 

0 

EU 

0 

1.31 

0.40 

1.22 

1.07 

0 

NA 

0 

NA 

0 

NA 

0 

NA 

Total regulatory costs 

1.31 

0.40 

1.22 

1.07 

Source: Authors’ own elaboration. 

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11.2  Special workers’ safety and health  

11.2.1  Description of the Acts  

There  are  five  EU  legal  acts  which  are  of  particular  relevance  to  flat  and  hollow  glass 
sectors regarding special workers’ safety and health. These acts regulate the protection 
of health and safety of workers from the risks related to:  

  Physical agents : 

  Noise: Directive 2003/10/EC of the European Parliament and of the Council of 
6  February  2003  on  the  minimum  health  and  safety  requirements  regarding 
the exposure of workers to the risks arising from physical agents. 

  Electromagnetic fields: Directive 2013/35/EU of the European Parliament and 
of  the  Council  of  26  June  2013  on  the  minimum  health  and  safety 
requirements  regarding  the  exposure  of  workers  to  the  risks  arising  from 
physical  agents  (electromagnetic  fields)  (20th  individual  Directive  within  the 
meaning  of  Article  16(1)  of  Directive  89/391/EEC)  and  repealing  Directive 
2004/40/EC;  Directive  2004/40/EC  on  the  minimum  health  and  safety 
requirements  regarding  the  exposure  of  workers  to  the  risks  arising  from 
physical agents. 

  Artificial  optical  radiation:  Directive  2006/25/EC  of  the  European  Parliament 
and  of  the  Council  of  5  April  2006  on  the  minimum  health  and  safety 
requirements regarding the exposure of workers to risks arising from physical 
agents. 

  Chemical agents: Council Directive 98/24/EC of 7 April 1998 on the protection 
of  the health  and  safety  of workers from  the  risks  related  to  chemical  agents  at 
work. 

Regarding  physical  agents,  all  Directives  provide  minimum  health  and  safety 
requirements which oblige the employer to assure  a safe workplace. Hence, obligations 
of  assessments  and  measurements  allow  the  employer  to  determine  the  level  of 
exposure to noise, electromagnetic fields and artificial optical radiation. This needs to be 
done in accordance to the obligations laid down in the Framework Directive on Workers’ 
Safety,  which  is  the  legal  basis  for  special  workers’  safety  and  health  Directives  (see 
above).  Results  of  the  risk  assessment  have  to  be  recorded  and  updated  on  a  regular 
basis, especially if there have been significant changes which could render it out of date. 
In addition, the employer shall ensure that workers who are exposed to risks from noise 
at  work  receive  any  necessary  information  and  training  relating  to  the  outcome  of  the 
risk assessment provided for in Article 4 of the Directive.  

Regarding  the  exposure  of  workers  to  the  risks  arising  from  chemical  agents,  Directive 
98/24/EC obliges the employer to determine whether any hazardous chemical agents are 
present at the workplace as well as assess any risk to the safety and health arising from 
their presence. The employer has to make an assessment of the risk in accordance with 
Article  9  of  Directive  89/391/EEC.  This  assessment  needs  to  be  regularly  updated, 
especially  if  there  have  been  significant  changes  or  if  the  results  of  health  surveillance 
show  it  to  be  necessary.  In  addition,  the  employer  has  to  establish  procedures,  which 
can  be  implemented  in  case  of  an  accident  with  hazardous  chemical  agents  at  the 
workplace.  These  activities  can  cause  substantive  compliance  costs  and 
administrative burdens for industry. 

11.2.2 Categories of regulatory costs  

The  main  regulatory  costs  can  be  classified  in  three  categories:  i)  determination  and 
assessment  of  risk  of  hazardous  chemical  agents;  ii)  avoiding  and  reducing  exposure; 
and iii) workers information and training.  

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Based on the questionnaires, risks related to noise and chemical agents seem to create 
most  of  the  regulatory  costs  to  both  flat  and  hollow  glass  sectors.  The  other  types  of 
risks create costs when it comes to measuring the level of exposure. Even though most 
of  the  activities  are  performed  internally,  outsourcing  remains  important,  especially 
regarding  medical  surveillance  and,  more  marginally,  the  measurement  of  level  of 
exposure.  Risk  assessment  and  documentation  obligations  also  constitute  a  significant 
cost for companies, which sometimes requires a full-time employee. Therefore, the costs 
identified  are  substantive  compliance  costs  (measuring  the  level  of  exposure  and 
ensuring  health  surveillance  related  to  identified  risks  in  general,  providing  information 
and  training  regarding  risks)  and  administrative  burden,  e.g.  documentation  and 
updating  of  the  risk  assessment.  Finally,  it  was  assessed  by  the  companies  and  plants 
that  most  of  the  activities  required  by  European  legislation  would  in  any  case  occur  in 
the absence of legal obligations. 

11.2.3  Methodological aspects 

This  section  aims  to  measure  the  costs  registered  by  companies  to  follow  legislative 
prescriptions  regarding  health  and  safety  procedures  in  specific  areas,  with  a  primary 
focus on the level of exposure to noise, electromagnetic fields, artificial optical radiation 
and hazardous chemical agents. As mentioned above when dealing with general workers’ 
safety  rules,  these  costs  are  expected  to  be  rather  stable  over  the  years.  Hence,  the 
Research Team estimated costs incurred in a typical year.  

Complying with this of type legislation primarily requires the involvement of employees, 
hence  generating  labour  costs.  The  Research  Team  asked  companies  to  provide 
information, for example, on how often employees work on measuring exposure levels, 
e.g.  to  noise  or  optical  radiation,  on  establishing  and  implementing  action  plans  and 
guidelines  to  prevent  exposures  exceeding  limit  values.  Similarly,  the  Research  Team 
requested  data  on  how  often  employees  are  involved  in  training  regarding  risks 
generated  by  excessive  exposure  and  how  often  companies  consult  and  discuss  with 
employees questions related to these issues.  

For all the areas investigated, we asked companies to provide a breakdown of answers 
for  activities  individually  related  to  (a)  noise,  (b),  electromagnetic  fields,  (c) 
artificial  optical  radiation  and  (d)  chemical  agents.  This  breakdown  serves  to 
isolate  costs  components  generated  in  each  area  and  to  allow  companies  to  customise 
their answers according to the sector in which they operate, i.e. some companies did not 
report  data  on  activities  regarding  the  exposure  to  electromagnetic  fields  or  optical 
radiation, as their type of industrial operations do not entail such risks. 

Firms  were  also  asked  to  provide  additional  information  on  the  frequency  of  their 
operations,  e.g.  monthly,  annually  or  every  two  years,  on  the  professional  qualification 
and the share of yearly working time of personnel involved in the form of person-days, 
e.g.  two  plant  technicians  dedicate  one  day  each  to  the  measure  level  of  exposure  to 
noise.  Whenever  such  a  detailed  breakdown  was  not  possible,  firms  delivered  an 
estimate of the global stock of person-days registered for a task. 

Based  on  collected  evidence,  the  Research  Team  estimated  the  breakdown  of  workers 
that  an  average  efficient  firm  would  assign  to  the  aforementioned  operations.  The 
standard scenarios served to refine the measurement of total labour costs. On the basis 
of  firms’  responses,  it  can  be  observed,  for,  example  that  firms  prefer  to  allocate  a 
limited  number  of  workers  to  organise  H&S  trainings  or  to  monitor  safety  equipment, 
while ensuring that a broad range of the plant staff attend these activities. 

Three scenarios were determined: if a company declares to involve a total of 10 days, a 
task is assumed to be carried out by an employee of managerial category (corresponding 

215 

 
 
 
 
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to level 1 of ISCO classification154); if 30 or fewer days are indicated, it is reasonable to 
consider that the implementation of a task is shared by the higher panels (ISCO 1 and 
ISCO 3 worker categories, with a share of total work of 30% and 70%, respectively); if 
more  than  30  days,  then  it  can  be  considered  as  if  a  broad  share  of  plant  staff 
participate in the operation (ISCO 1, ISCO 3, ISCO 8 and ISCO 9, with shares of 10%, 
30%, 50% and 10% of total time, respectively). Once the breakdown was applied to the 
number of total days specified by the company, we computed the total cost, by matching 
the  information  with  average  salary  estimates  for  ISCO  categories  at  country  level,  to 
derive overall labour costs. 

In  case  the  aforementioned  operations  are  outsourced  to  external  providers,  firms 
were asked to provide an estimate of such outsourcing cost.   

Firms  also  indicated  operational  costs  (additional  to  staff  and  outsourcing  costs) 
generated  by  special  health  and  safety  procedures,  e.g.  annual  cost  paid  to  purchase 
hearing  protection  wear.  The  Research  Team  asked  companies  to  indicate  their  staff 
costs related to the update of risk assessments for safety and health of workers, the 
decisions  on  the  protective  measures  to  be  taken  or  the  drafting  of  reports  on 
occupational accidents suffered by workers. 

Also  in  this  area  of  legislation,  the  Research  Team  collected  information  on  the  BAU 
factor by adopting a Likert scale from 1 to 5 (see Chapter 2.3 above). This information 
was specifically requested of different groups, in order to have a more accurate estimate 
of  regulatory  costs  linked  to  specific  obligations  within  a  certain  legal  act.  Additionally, 
the  Research  Team  requested  firms  provide  individual  answers  on  the  BAU  factor  for 
each  type  of  exposure,  i.e.  a  different  answer  on  a  Likert  scale,  for  exposure  to  noise, 
electromagnetic  fields,  artificial  optical  radiation  or  chemical  agents.  Replies  show  an 
average  of  four  for  the  BAU,  i.e.  companies  claim  that  the  costs  would  have  been 
incurred in any case to a high extent, also in the case  that the relevant legislation was 
not in place. This implies that companies consider the H&S of workers to be a compelling 
issue.  

The  cost  items listed in  this  section  of the  cost  assessment  are  considered  to  be  either 
substantive  compliance  costs,  incurred  while  ensuring  the  implementation  of  the 
legislative  prescriptions,  or  administrative  burden,  incurred  while  complying  with 
tasks directly generated by the legislation on an administrative level, e.g. data collection 
on communication and exposure levels. 

This  part  of  the  questionnaire  was  the  same  across  the  considered  sectors,  as  the 
legislation similarly applies to firms operating in the flat glass industry as well as in the 
hollow glass sectors. 

154 Ibid. 

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11.2.4  Cost assessment – Packaging glass 

Sample 

Cost  estimates  for  this  area  of  legislation  rely  on  a  sample  including  the  following 
number of plants in each of the three regions in this Study. Two plants were excluded as 
respondents were not able to provide a clear-cut estimation on cost items. However, the 
descriptive  information  in  this  section  used  as  additional  qualitative  evidence  to  cross-
check the validity of our conclusions.  

Table 71. Packaging glass: Sample size by geographic region 

Packaging 
glass: Special 
workers’ safety 
and health 
legislation 
Number of 
plants in the 
sample 

Regions 

EU 

NWE 

CEE 

SE 

5 

6 

8 

19 

Source: Authors’ own elaboration. 

Direct regulatory costs 

Direct  regulatory  costs  of  special  workers’  health  and  safety  legislation  for  hollow  glass 
are  estimated  at  €0.17/tonne  in  a  typical  year  at  the  EU  level.  The  variance 
between companies is limited. Also, the regional differences in terms of BAU are within a 
bandwidth  of  about  15%  (NWE  with  77%  being  the  highest  and  SE  with  65%  the 
lowest). The BAU thus only partially explains regional differences. In NWE the costs are 
estimated  to  be  €0.14/tonne,  in  CEE  the  costs  are  estimated  to  be  €0.04/tonne  of 
production output and in SE to be €0.29/tonne of production output. NWE is the region 
with the highest variance in responses.  

The  direct  regulatory  costs  can  be  broken  down  into  substantive  compliance  costs  and 
administrative burdens. The following figure shows a split between the two categories for 
the EU. 

The direct regulatory costs mainly consist of: 

  administrative burdens; and  

 

substantive compliance costs.  

These sub-categories of direct regulatory costs are further elaborated in the paragraphs 
below. 

217 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  68.  Packaging  glass:  Regulatory  costs  generated  by  special  workers’ 
health  and  safety  legislation  by  region  (typical  year,  breakdown  per  cost 
category) 

 0,35
 0,30
 0,25
 0,20
 0,15
 0,10
 0,05
 -

NWE

CEE

SE

EU

Administrative burdens

Substantive compliance costs

Source: Authors’ own elaboration. 

Substantive compliance costs 

Substantive  compliance  costs  of  special  workers’  health  and  safety  legislation  for 
hollow glass are estimated to be  €0.11/tonne of production output at the EU level. 
Differences  occur  between  geographic  areas:  in  NWE  the  costs  are  estimated  to  be 
€0.08/tonne of production output, in CEE the costs are estimated to be  €0.02/tonne of 
production output and in SE to be €0.19/tonne of production output.  

SE  plants  display  markedly  higher  costs  in  terms  of  number  of  employees  assigned  to 
tasks,  as  implementing  practical  guidelines  to  prevent  excessive  exposure  of  workers, 
e.g.  to  chemical  agents,  noise,  artificial  optical  radiation,  or  as  providing  training  and 
information on risks related to special activities. This is driven by plants in two Member 
States which tend to particularly influence the average upwards. Conversely, CEE plants 
display  lower  labour  costs,  a  fact  partially  driven  by  the  spread  in  salaries,  recorded 
among the higher ISCO categories (as ISCO1 and ISCO3) usually associated with these 
tasks. This finding is in line with results for flat glass plants.  

Administrative burden 

Administrative  burdens  of  special  workers’  health  and  safety  legislation  for  hollow 
glass are estimated to be €0.06/tonne of production output for a typical year in the 
EU. Differences occur between geographic areas whereas in NWE the costs are estimated 
to  be  €0.06/tonne  of  production  output,  in  CEE  the  costs  are  estimated  to  be 
€0.02/tonne of production output and in SE to be €0.10/tonne of production output. 

Cumulative regulatory costs  

The following table summarises the cumulative regulatory costs generated by EU special 
workers’ health and safety legislation on packaging glass producers.  

218 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table  72.  Packaging  glass:  Regulatory  costs  generated  by  special  workers’ 
health and safety legislation (€/tonne, typical year, averages) 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

Regions 

EU 

NWE 

CEE 

SE 

0.06 

0.02 

0.10 

0.06 

0.08 

0.02 

0.19 

0.11 

0 

NA 

0 

NA 

0 

NA 

0 

NA 

Total regulatory costs 

0.14 

0.04 

0.29 

0.17 

Source: Authors’ own elaboration. 

11.2.5  Cost assessment – Glass tableware 

Sample 

The  sample  used  for  cost  estimates  for  this  area  of  legislation  consists  of  the  following 
number of plants across the EU. 

Table 73. Glass tableware: Sample size  

Glass tableware: 
Special workers’ safety 
and health legislation 
Number of plants in the 
sample 
Source: Authors’ own elaboration. 

EU 

5 

Direct regulatory costs 

Direct  regulatory  costs  generated  by  special  workers’  health  and  safety  legislation  on 
glass tableware producers in the EU are estimated at €0.66/tonne in a typical year. 
Nonetheless,  the  variance  in  responses  is  quite  high.  This  is  not  surprising  due  to  the 
very  heterogeneous  forms  of  production  and  the  high  value  production  of  glass 
tableware.  Interestingly,  the  BAU  factor  covers  about  50%  of  the  costs  generated 
through special workers requirements. 

The  direct  regulatory  costs  can  be  broken  down  into  administrative  burdens  and 
substantive  compliance  costs.  The  following  figure  shows  a  split  between  the  two 
categories at the EU level. 

The direct regulatory costs mainly consist of: 

219 

 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

  administrative burdens; and 

 

substantive compliance costs.  

These sub-categories of direct regulatory costs are further elaborated in the paragraphs 
below. 

Figure 69. Glass tableware: Regulatory costs generated by special workers’ 
health and safety legislation in the EU (typical year, breakdown per cost 
category) 

 0,80

 0,60

 0,40

 0,20

 -

Administrative burdens

Substantive compliance costs

EU

Source: Authors’ own elaboration. 

Substantive compliance costs 

Substantive  compliance  costs  of  special  workers’  health  and  safety  legislation  for 
glass  tableware  are  estimated  to  be  €0.36/tonne of  production  output  for  a  typical 
year in the EU.  

Administrative burden 

Administrative  burdens  of  special  workers’  health  and  safety  legislation  for  glass 
tableware are estimated to be €0.30/tonne of production output for a typical year in 
the EU.  

220 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Cumulative regulatory costs  

The  following  table  summarises  the  cumulative  regulatory  costs  for  glass  tableware  in 
the area of special workers’ health and safety legislation. 

Table  74.  Glass  tableware:  Regulatory  costs  generated  by  special  workers’ 
health and safety legislation (€/tonne, typical year, averages) 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

EU 

0.30 

0.36 

0 

NA 

Total regulatory costs 

0.66 

Source: Authors’ own elaboration. 

11.2.6  Cost assessment – Flat glass 

Sample 

The sample adopted to estimate regulatory costs generated by this area of legislation on 
flat  glass  producers  consists  of  the  following  number  of  plants  split  across  the  three 
defined regions.  

Table 75. Flat glass: Sample size used for cost estimates per geographic region 
in flat glass for special workers’ safety and health legislation 

Flat glass: 
Special 
workers’ safety 
and health 
legislation 
Number of 
plants in the 
sample 

Regions 

EU 

NWE 

CEE 

SE 

5 

5 

5 

15 

Source: Authors’ own elaboration. 

Direct regulatory costs 

Direct regulatory costs generated by special workers’ health and safety legislation on EU 
flat glass manufacturers are estimated to be €0.12/tonne of production output for a 

221 

 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

typical  year  in  the  EU.  Differences  between  companies  are  very  limited  and  variance 
across the EU  is low.  Variance  is also low  in  the BAU factor, within a range of  62% (in 
SE) and 77% in (CE). This partially explains  differences that occur between geographic 
areas: whereas in NWE the costs are estimated to be €0.15/tonne of production output, 
in CEE the costs are estimated to be €0.04/tonne of production output and in SE €0.14 
€/tonne of production output.  

The direct regulatory costs mainly consist of: 

  administrative burdens; and 

 

substantive compliance costs.  

These sub-categories of direct regulatory costs are further elaborated in the paragraphs 
below. 

Figure  70.  Flat  glass:  Regulatory  costs  generated  by  special  workers’  health 
and safety legislation per region (typical year, breakdown per cost category) 

 0,18

 0,16

 0,14

 0,12

 0,10

 0,08

 0,06

 0,04

 0,02

 -

NWE

CEE

SE

EU

Administrative burdens

Substantive compliance costs

Source: Authors’ own elaboration. 

Substantive compliance costs 

Substantive compliance costs for special workers’ health and safety legislation in the 
flat  glass  sector  are  estimated  to  be  €0.05/tonne  in  a  typical  year  at  the  EU  level; 
hence  represent  about  43%  of  total  regulatory  costs.  Differences  occur  between 
geographic regions: whereas in NWE the costs are estimated to be €0.04/tonne, in CEE 
€0.03/tonne and in SE €0.09/tonne.  

The  difference  in  costs  registered  by  CEE  plants  is  primarily  caused  by  the  spread  in 
labour  costs.  Tasks,  such  as  the  implementation  of  guidelines  and  action  plans  to 
prevent the exposure to noise or chemical agents above threshold limits, or procedures 
such as carrying out surveillance of risks from electromagnetic fields and artificial optical 
radiation,  tend  to  be  assigned  to  a  limited  number  of  workers,  usually  at  higher  or 
managerial  level.  Although  the  allocation  of  the  number  of  person-days  tends  to  be 
uniform  across  regions,  the  differences  in  salaries  can  produce  the  observed  spread  in 
total costs. In some cases, plants decided to allocate a comparable number of workers in 
coping  with  the  preparation  of  guidelines  to  avoid  excessive  exposure  to  chemical 

222 

 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

agents,  tasks  which  are  likely  to  be  allocated  to  ISCO  1  and  ISCO  3  salary  categories. 
Costs tend, however, to differ at a ratio of one to six and one to four, respectively. 

Administrative burdens 

Administrative burdens generated by special workers’ health and safety legislation on 
flat glass producers are estimated at €0.07/tonne of production output for a typical 
year  in  the  EU;  therefore,  they  represent  some  57%  of  total  regulatory  costs. 
Differences exist between geographic areas: whereas in NWE the costs are estimated to 
be €0.11/tonne of production output, in CEE the costs are estimated to be €0.015/tonne 
of production output and in SE to be €0.05/tonne of production output.  

The  reason  for  the  spread  in  costs  experienced  by  CEE  plants  is  similar  to  what  is 
outlined  for  substantive  compliance  costs,  in  the  differences  recorded  at  the  level  of 
labour  costs.  The  ratios  observed  in  costs  tend,  however,  to  improve  when  the  pool  of 
workers involved increases. The more workers are carrying out a task, the more they are 
distributed  across  the  different  ISCO  categories,  which  results  in  a  more  uniform 
structure of salary tables. Plants declare to involve a conspicuous number of employees 
in  tasks  updating  the  list  of  occupational  accidents  and  drawing  up  reports  on  related 
statistics.  Hence,  the  larger  pool  of  employees  participating  in  these  type  of  tasks 
partially  explains  the  lesser  difference  between  CEE  plants  and  their  European 
counterparts, as compared to the difference observed for substantive compliance costs. 

 Cumulative regulatory costs  

The following table summarises the cumulative regulatory costs for flat glass producers 
in the area of special workers’ health and safety legislation. 

Table 76. Flat glass: Regulatory costs generated by special workers’ health and 
safety legislation (€/tonne, typical year, averages) 

Regions 

EU 

NWE 

CEE 

SE 

Direct 
regulatory 
costs 

Administrative 
burdens  

Substantive 
compliance costs 

Direct charges 

Indirect regulatory costs 

0.1 

0.06 

0 

NA 

0.015 

0.05 

0.06 

0.028 

0.09 

0.06 

0 

NA 

0 

NA 

0 

NA 

Total regulatory costs 

0.15 

0.04 

0.14 

0.12 

Source: Authors’ own elaboration. 

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12  Other areas of legislation 

12.1  Trade legislation 

12.1.1  Trade analysis 

Overview 

The European glass industry faced a significant slowdown in the overall production 
caused  by  the  crisis  (mainly  led  by  a  contraction  in  the  flat  glass  sector),  but 
international  trade  flows  subsequently  regained  and  eclipsed  pre-crisis  levels. 
More  specifically,  exports  steadily  grew  after  2010  with  a  positive  impact  on  trade 
balance, at least up to 2013; imports increased in the more recent years, thus reducing 
the  positive  net  EU  trade  balance  (Figure  71).  For  instance,  between  2014  and  2015 
extra-EU  imports’  value  increased  by  €650  million  and  at  a  steeper  pace  than  exports, 
leading to a significant contraction of the trade balance (–€427 million).  

Figure 71. Extra-EU trade of the glass industry (left axis: exports and imports; 
right axis: trade balance; € billions)  

8

7

6

5

4

3

2

1

0

3

2,5

2

1,5

1

0,5

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Export

Import

Trade balance

Source: Authors’ own elaboration on COMEXT (2016). 

However, there are significant differences (due to product characteristics) between glass 
sectors  when  it  comes  to  international  trade.  Packaging  glass,  in  particular,  is 
characterised by a very low value-to-weight ratio that reduces the transport distance for 
products  included  in  this  market  segment.  Compared  to  empty  glass  containers,  in  the 
flat  glass  and  glass  tableware  segments,  transportation  costs  play  a  less  prominent 
role  and  do  not  represent  an  obstacle  to  trade.  Indeed,  in  some  cases,  maritime 
transportation  is  still  affordable  and  allows  such  products  to  be  transported  over  long 
distances.  From  interviews  with  stakeholders,  in  fact,  it  emerged  that  the  average 
distance between plant and customer location is more than 1,000 km for both flat 
glass  and  glass  tableware  producers.  For  glass  packaging,  the  average  distance  is 
approximately 400 km.155 

155 For further details, see the Chapter covering transport legislation. 

224 

 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Flat glass 

As  shown  in  Figure  72,  only  a  small  fraction  of  the  EU  production  of  flat  glass  is 
traded  outside  EU  borders.  After  2006,  almost  80%  of  trade  flows  in  flat  glass  took 
place  in  the  EU  Internal  Market,  the  remaining  20%  with  third  countries.  Figure  72 
shows  that  external  trade  was  quite  stable  over  time  compared  to  the  overall  value  of 
production,  which  in  2015  was  significantly  below  the  pre-crisis  level.  Exports  in  2015 
reached  €500  million,  while  in  the  same  year  the  production  was  at  around  €3  billion. 
Throughout the entire period under study, the EU was a net exporter of flat glass.  

Figure 72. Extra EU-28 trade and total production of flat glass (€ billions) 

4,5
4
3,5
3
2,5
2
1,5
1
0,5
0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Import Extra EU

Export Extra EU

Total production

Note: The NACE “Manufacture of flat glass” category (C2311 NACE Rev.2) corresponds to the sum 
of the following HS categories: 70.03; 70.04; 70.05. 
Source: Authors’ own elaboration on COMEXT (2016). 

As shown in Table 77, in 2015 Japanese producers were the main exporters of flat 
glass  to  the  EU,  accounting  for  19.5%  of  EU  total  import  volume,  followed  by  China 
(13.7%),  Turkey  (12%)  and  the  Unites  States  (11.8%).  The  top  10  destination 
countries  include  the  United  States  (22.8%),  followed  by  Turkey  (10.5%)  and 
Switzerland (10.2%).  

Table  77.  Top  10  trading  partners  for  flat  glass  in  2015  (%  of  overall 
export/import values)  

Top 10 Destination Markets 

Top 10 Exporters to EU 

United States 
Turkey 
Switzerland 
China 
Japan 
Hong Kong 
Thailand 
Norway 
United Arab Emirates 
Morocco 

22.8% 
10.5% 
10.2% 
4.0% 
3.8% 
3.3% 
3.1% 
3.1% 
3.0% 
2.4% 
Note: The NACE category “Manufacture of flat glass” (C2311 NACE Rev.2) corresponds to the sum 
of the following HS categories: 70.03; 70.04; 70.05. 

Japan 
China 
Turkey 
United States 
Belarus 
Israel 
Switzerland 
Thailand 
Russia 
South Africa  

19.5% 
13.7% 
12.0% 
11.8% 
7.5% 
7.1% 
6.9% 
5.6% 
5.2% 
2.7% 

225 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Source: Authors’ own elaboration on COMEXT (2016). 

Hollow glass 

As mentioned above, considering the low value-to-weight ratio,  it is no surprise that in 
the packaging glass segment, intra-EU trade also dominated over external trade (by a 
ratio of five to one). Again, the value of packaging glass traded outside EU borders was 
quite stable during the period under investigation (Figure 73). The percentage share of 
the  value  traded  outside  EU  borders  (cumulating  exports  and  imports) 
represented  less  than  20%  of  the  overall  production.  Interestingly,  packaging 
glass production grew after 2009. 

Figure  73.  Extra-EU-28  trade  and  total  production  of  packaging  glass  (€ 
billions) 

12

10

8

6

4

2

0

2003200420052006200720082009201020112012201320142015

Import Extra EU

Export Extra EU

Total production

Note: The NACE category “Manufacture of hollow glass packaging” (C2313 NACE Rev.2) 
corresponds to HS 7010. Total production includes outputs of the entire packaging glass sector to 
ensure a meaningful comparison with trade figures.156  
Source: Authors’ own elaboration on COMEXT (2016). 

Table  78  identifies  China  as  the  country  with  the  highest  share  of  exports  to  the  EU 
(28.1%)  followed  by  Switzerland  (12)  and  India  (7.8%).  The  United  States  was  the 
main destination market (25.7%), followed by Switzerland (13.7%) and Canada (4.8%). 

Table  78.  Top  10  trading  partners  for  packaging  glass  in  2015  (%  of  overall 
export/import values) 

Top 10 Destination Markets  

Top 10 Exporters to EU  

United States 
Switzerland  
Canada 

25.7% 
13.7% 
4.8% 

China  
Switzerland 
India 

28.6% 
12.0% 
7.8% 

156  Note  that  production  values  presented  in  section  3.4  cover  only  those  NACE  Rev.2  eight-digit 
codes under examination in this CCA, i.e. 23.13.11.10/20/30/40/50/60/80. 

226 

 
 
 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

 Russia 
Turkey 
Serbia  
Israel 
China  
Norway  
Algeria 

3.9% 
3.5% 
3.1% 
2.7% 
2.5% 
2.4% 
2.3% 

United Arab Emirates 
United States 
Moldova  
Turkey 
Taiwan 
Russia 
 South Korea 

7.7% 
5.6% 
4.1% 
4.0% 
3.5% 
2.4% 
1.9% 

Note: The NACE category “Manufacture of hollow glass packaging” (C2313 NACE Rev.2) 

corresponds to HS 7010.  
Source: Authors’ own elaboration on COMEXT (2016). 

Figure 74 shows the central role that extra-EU trade played in the glass tableware 
segment,  especially  when  compared  to  the  overall  EU  production  in  this  segment.  In 
fact,  with  the  beginning  of  the  financial  crisis  in  2008,  overall  production  drastically 
decreased.  For  instance,  in  2015,  European  exports  accounted  for  60%  of  overall 
production.  The  EU  was  a  net  exporter  of  glass  tableware;  yet,  the  net  positive 
trade balance shrunk by €200 million after 2006, falling to €470 million in 2015. 

Figure  74.  Extra-EU-28  trade  and  total  production  of  glass  tableware  (€ 
billions) 

3

2,5

2

1,5

1

0,5

0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Import Extra EU

Export Extra EU

Total production

Note: The NACE category “Manufacture of hollow glass tableware” (C2313 NACE Rev.2) 
corresponds to HS 7013. Total production includes outputs of the entire glass tableware sector to 
ensure a meaningful comparison with trade figures.157 Low production value for 2006 is due to 
missing information for the NACE code 23.13.12.90 “Other drinking glasses”. 
Source: Authors’ own elaboration on COMEXT (2016). 

Once again, China was the top exporter to the EU, accounting for almost two-thirds 
of  all  European  imports,  followed  by  Turkey  with  a  20.5%  market  share.  The  United 
States was the main destination market for EU exports, accounting for 23.2% of total EU 
exports in 2015. Russia and China followed with 7% and 5.9%, respectively. 

157  Note  that  the  production  values  presented  in  section  3.4  cover  only  those  NACE  Rev.2  eight-
digit codes under examination in this CCA, i.e. 23.13.12.20/40/60 and 23.13.13.50/90. 

227 

 
 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Table  79.  Top  10  trading  partners  for  glass  tableware  in  2015  (%  of  overall 
export/import values) 

Top 10 Destination Markets  

Top 10 Exporters to EU 

United States 
Russia 
China 
Switzerland  
Japan 
United Arab Emirates 
Liechtenstein 
Norway  
Australia 
Turkey 

23.2% 
7.0% 
5.9% 
5.5% 
5.4% 
4.3% 
3.5% 
3.1% 
3.1% 
2.3% 

China  
Turkey 
India 
Switzerland  
United States 
Liechtenstein 
Egypt 
Taiwan 
South Korea 
Vietnam  

60.7% 
20.5% 
3.6% 
2.9% 
2.1% 
1.9% 
1.1% 
0.8% 
0.7% 
0.6% 

Note: The NACE category “Manufacture of hollow glass tableware” (C2313 NACE Rev.2) 
corresponds to HS 7013.  
Source: Authors’ own elaboration on COMEXT (2016). 

12.1.2  Trade policy 

Due  to  the  relatively  small  exposure  of  the  industry  to  international  trade,  no  major 
trade policy initiatives have been taken in the glass sectors covered by the CCA. 
Nonetheless, specific sectors that are more exposed to international competition, such as 
glass tableware, could be subject of future initiatives. 

Custom  Union  tariffs  of  finished  products  manufactured  by  the  EU  glass  industry  are 
quite  low  (in  the  range  of  2%  to  5%).  As  Figure  75  shows,  only  glass  tableware 
(category 7013), which is indeed traded all around the world, still faces tariffs equal to 
11%. 

Figure  75.  EU  Common  Custom  Tariffs  in  the  glass  industry  by  subsector,  HS 
Code (%)  

11 

3 

3 

2,1 

4,9 

7003

7004

7005*

7010*

7013

Manufacture of flat glass

Manufacture of hollow glass

Note: *Average tariff. 
Source: Authors’ own elaboration on Official Journal of the EU, Volume 56, 31 October 2013. 

As  shown  in  Figure  76,  the  United  States  (main  destination  market)  has  a  tariff 
structure  comparable  to  the  one  applied  by  the  EU.  In  contrast,  in  China  (top 
exporter to EU) duty rates are considerably higher for both flat glass and packaging 

228 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

glass;  the  only  exception  is  represented  by  the  glass  tableware  segment  (7013)  for 
which the three regions apply similar tariffs in the range of 11% to 12.6%.  

Figure 76. Most favoured nation tariffs applied by the US and China in the glass 
industry by subsector, HS Code (%)  

13,8 

15,4 

13,8 

14 

12,6 

11,6 

2,5 

2,1 

3 

2 

7003

7004

7005

7010

7013

Manufacture of flat glass

Manufacture of hollow glass

U.S.

China

Note: Average tariffs at six-digit level. 
Source: Authors’ own elaboration based on Market Access Database (MADB). 

The  legislation  affecting  trade  in  glass  products  mainly  consists  of  the  trade  defence 
package,158  whose ultimate purpose is to ensure a fair trade environment. In a 
nutshell,  when  harmed  by  distortive  practices,  EU  companies  may  consider  trade 
defence  instruments  and  request  the  EU  to  start  an  investigation,  targeting  specific 
countries  and  companies  (and  products)  with  ad  hoc  measures.  The  impact  of  trade 
defence measures on total flows of goods between the country starting the investigation 
and  the  one  under  investigation  is  usually  limited;  in  fact,  anti-dumping  and  anti- 
subsidy  measures  target  for  a  limited  period  a  highly  specific  group  of  companies  in  a 
specific country to preserve an undistorted competitive environment in a specific product 

158 EU legislation in the field of trade defence can be broadly classified in two main groups: 
1.  Anti-Dumping and Anti-Subsidy measures: 

  Council  Regulation  (EC)  No  1225/2009  of  30  November  2009  on  protection  against 

dumped imports from countries not members of the European Community; 

  Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 
on protection against dumped imports from countries not members of the European Union 
(out of the time span covered by this CCA); 

  Council  Regulation  (EC)  No  597/2009  of  11  June  2009  on  protection  against  subsidized 

imports from countries not members of the European Community; 

  Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 
on  protection  against  subsidised  imports  from  countries  not  members  of  the  European 
Union (out of the time span covered by this CCA). 

2.  Safeguard measures: 

  Council  Regulation  (EC)  No  260/2009  of  26  February  2009  on  the  common  rules  for 

imports; 

  Council  Regulation  (EC)  No  625/2009  of  7  July  2009  on  the  common  rules  for  imports 

from certain third countries; 

  Council  Regulation  (EC)  No  427/2003  of  3  March  2003  on  a  transitional  product-specific 
safeguard  mechanism  for  imports  originating  in  the  People's  Republic  of  China  and 
amending  Regulation  (EC)  No  519/94  on  common  rules  for  imports  from  certain  third 
countries. 

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Cumulative Cost Assessment of the EU Glass Industry 

category.159 The situation slightly changes for safeguard Regulations, which, however, 
are very rarely used by the EU. 

Anti-dumping and anti-subsidy measures  

Council  Regulation  1225/2009  is  the  main  Regulation  on  protection  against 
dumped imports that was in force in the time span covered by the Study (2006-15).160 
This Regulation, in compliance with the WTO anti-dumping agreement,161 allows the EU 
to  set  an  ad  valorem  duty  to  offset  dumping,  once  there  is  sufficient  evidence  that  a 
dumped price has been applied causing injury to some specific EU companies. There are 
several elements to be proved such as the link between the dumping and the injury 
and the fact that the potential anti-dumping measure should not go against the interest 
of the Union. 

The setting of the EU anti-dumping duty follows the lesser duty rule (LDR). Based on 
this  rule,  anti-dumping  measures  are  computed  by  taking  into  account  the  smallest 
difference  between  ‘dumping  margin’  and  ‘injury  margin’.  More  specifically,  the 
dumping margin is the difference between the ‘normal value’, e.g. market price in the 
exporting country, of the good produced in the exporting country and the import price; 
whereas  the  injury  margin  is  the  difference  between  the  domestic  price  in  the 
importing country, e.g. EU, and the import price.162 As the estimate of the injury margin 
is necessary to set the EU anti-dumping duty, the methodology behind its calculation is 
imports.163  The 
crucial  to  offsetting  the  negative  effect  caused  by  dumped 
investigation usually lasts 15 months, during which (nine months after the start of 
the investigation) provisional measures can be imposed and then definitively collected at 
the end of the period, when the implementing Regulation confirms or eventually modifies 
the  conditions  set  in  the  provisional  act.  Definitive  measures  can  be  in  force  for  five 
years, after which the measure has to be reviewed and is possibly prolonged. 

The  procedure  to  impose  anti-subsidy  measures  (Council  Regulation  597/2009) 
does not differ substantially from the anti-dumping procedure, and this explains why the 
two procedures can be initiated together (see for instance the solar glass cases, AD 598 
and  AS599,  which  will  be  discussed  later).164  It  sometimes  happens  that  a  market 

159 According to the “Evaluation of the European Union’s Trade Instruments” (DG Trade 2012), the 
impact  on  bilateral  flows  hit  by  dumping  (or  the  anti-dumping  procedure)  is  not  great;  yet  the 
effect  on  the  specific  product  category  can  be  noticeable,  as  it  temporarily  reduces  ‘dumped’ 
imports.  Moreover,  Trade  Defence  Instruments  (TDIs)  may  affect  entry  decisions  and  alter  the 
probability  of  exit  from  the  market,  since  they  ensure  a  provisional  protection  against  unfair 
competitors.  As  noticed  in  past  studies,  the  effectiveness  of  TDIs  is  not  only  motivated  by  the 
possibility of restoring competitiveness, but also in terms of threat. If TDIs are used in a credible 
and thorough way, the commercial counterpart will have a higher incentive to abide by trade rules. 
160 It is worth remarking that Council Regulation 1225/2009 was recently repealed by Regulation 
2016/1036  of  the  European  Parliament  and  of  the  Council  of  8  June  2016.  Moreover,  important 
changes are expected to be introduced by Commission proposal 2016/0351 of 9 November 2016, 
which establishes new rules concerning the methodology used to determine the ‘normal value’ of 
the  dumped  product  in  the  exporting  country.  More  specifically,  the  proposal:  i)  eliminates  the 
‘analogue country’ approach for WTO members; and ii) requires that costs of production and sale 
reflecting  undistorted  prices  must  be  used  to  construct  the  ‘normal  value’  of  the  good  under 
examination  in  WTO  members  for  which  serious  market  distortions  are  present  in  the  economic 
sector  under  investigation,  e.g.  government  intervention  influencing  prices  or  costs,  and/or 
defining policies discriminating in favour of domestic producers.  
161 www.wto.org/english/docs_e/legal_e/19-adp.pdf. 
162 http://trade.ec.europa.eu/doclib/docs/2013/april/tradoc_151016.pdf. 
163 See note 160. 
164  It  should  be  noted  that  the  Council  Regulation  597/2009  was  repealed  by  the  Council 
Regulation  2016/1037  of  the  European  Parliament  and  of  the  Council  of  8  June  2016.  Moreover, 
through the proposal 2016/0351 of 9 November 2016, the latter Regulation would impose further 

230 

 
 
 
 
                                          
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distortion may arise as a result of export subsidies, allowing the exporters to set lower 
prices. In this respect, as for anti-dumping procedures, the EU can start an investigation, 
after  receiving  a  complaint  from  a  trade  association.  The  investigation  may  prove  that 
the distortive subsidy creates an injury. Once the injury is proved, the EU can impose a 
countervailing  duty  that  can  take  the  form  either  of  a  percentage  of  the  price  or  of  a 
fixed amount in euros.  

Reportedly,  in  some  circumstances,  the  trade  defence  instruments  package  has  proven 
to  be  too  soft  on  unfair  trading  practices.  Moreover,  the  15-month  investigation  period 
used by the EU authorities to retrieve relevant information may be too long, leading to 
increasing uncertainty for businesses.  

These  are  among  the  reasons  why  the  European  Commission  launched  a  public 
consultation  in  2012  to  support  the  modernisation  of  the  trade  defence  package 
formulated  in  2013,165  which  still  awaits  legislation.166  The  main  changes  in  the 
legislative  proposal  include:  i)  more  predictability  for  businesses  by  informing  them 
about  any  provisional  anti-dumping  or  anti-subsidy  measures  two  weeks  before  the 
duties are imposed; and ii) reimbursement of duties collected from importers, when the 
conclusion  of  the  investigation  after  the  provisional  measures  shows  that  there  is  no 
reason  to  maintain  the  measure.  Another  element  of  the  proposal  consists  of  the 
possibility  to  initiate  an  investigation  ex  officio  rather  than  following  a  business 
complaint,  especially  in  case  there  is  a  risk  of  retaliation.  Finally,  and  most  important, 
anti-dumping  duties  and  countervailing  measures  may  be  set  in  a more  flexible  way  to 
discourage structural distortions.  

Box  17.  The  debate  on  Market  Economy  Status:  is  it  about  law,  economics  or 
politics? 

Debate  over  granting  China  MES  (Market  Economy  Status)  in  anti-dumping  and  anti-
subsidy procedures intensified in 2016. It focused on the unclear interpretation of Article 
15  of  the  WTO  Accession  Protocol  that  China  and  other  WTO  members  agreed  upon  at 
the time of its accession in 2001. The article and its sub-paragraphs assumed that in 15 
years China would be granted the MES automatically; nonetheless, in the same article, a 
clause states that this can be done only if the sector under analysis is compliant with the 
definition  of  market  economy  as  defined  by  the  country  suffering  from  the  unfair 
practice.  Providing  a  straightforward  definition  of  MES  is  not  an  easy  task.  The  EU  has 
set five criteria recognised in the basic anti-dumping Regulation that must be respected 
to grant the status according to Article 15: 

1.  Low  degree  of  government  influence  over  the  allocation  of  resources  and 
decisions  of  enterprises,  whether  directly  or  indirectly,  e.g.  public  bodies,  for 
example, through the use of state-fixed prices, or discrimination in the tax, trade 
or currency regimes.  

2.  Absence  of  state-induced  distortions  in  the  operation  of  enterprises  linked  to 
privatisation;  absence  of  use  of  non-market  trading  or  compensation  systems 
(such as barter trade). 

3.  Existence  and  implementation  of  transparent  and  non-discriminatory  company 
law,  which  ensures  adequate  corporate  governance  (application  of  international 
accounting  standards,  protection  of  shareholders,  public  availability  of  accurate 

consultations  between  the  Commission  and  the  country  of  origin  to  better  capture  the  effect  of 
subsidies (that might have been found in the course of an investigation). 
165 http://trade.ec.europa.eu/doclib/docs/2013/april/tradoc_150837.pdf. 
166  Note  that  the  proposal  2016/0351  of  9  November  2016  only  focuses  on  the  methodology  to 
determine anti-dumping and anti-subsidies measures and does not replace the 2013 proposal, as 
stated 
see: 
http://europa.eu/rapid/press-release_IP-16-3604_en.htm. 

the  Commission.  For 

release  of 

information 

the  press 

further 

in 

231 

 
 
 
 
                                                                                                                                 
Cumulative Cost Assessment of the EU Glass Industry 

company information).  

4.  Existence  and  implementation  of  a  coherent,  effective  and  transparent  set  of 
laws,  which  ensure  the  respect  of  property  rights  and  the  operation  of  a 
functioning bankruptcy regime. 

5.  Existence  of  a  genuine  financial  sector,  which  operates  independently  from  the 
State and which, in law and practice, is subject to sufficient guarantee provisions 
and adequate supervision. 

The  last  assessment  of  the  Commission  based  on  these  five  criteria  goes  back  to  2008 
when  the  working  document167  stated  that  only  criterion  2  was  actually  met  by  China. 
Although considerable progress had been achieved by China, the other four criteria were 
not  met,  thus  granting  the  status  was  not  justified.168  The  economic  assessment  was 
also accompanied by the legal interpretation of the article acknowledging the automatic 
granting after 15 years from the entry into force of the accession protocol. 

Granting  MES  to  a  country  such  as  China  would  mean  anti-dumping  duties  would  be 
calculated  according  to  the  reference  price  set  by  the  exporting  country,  whose 
companies  dumped  the  products. However,  in  a country  with  strong  state  intervention, 
the price is kept artificially low, reducing the compensating anti-dumping duties that can 
be  set.  China  has  strongly  advocated  against  the  European  industry  perception  that  its 
economy  is  not  driven  by  market  forces  and  therefore  must  not  be  granted  the  MES; 
China also referred not only to the legal interpretation but also to a political compromise 
that can deepen into a fruitful cooperation between the two governments in the future. 
They  nevertheless  admit  that  overcapacity  accumulated  in  some  sectors,  such  as  steel 
and ceramics, affects the global supply and its price; yet, the overcapacity issue cannot 
be  solved  in  the  short  term  due  to  the  politically  charged  impact  on  the  workforce 
employed in these sectors.  

Before  the  final  decision,  the  Commission,  taking  stock  of  the  call  to  action  by  the 
European Parliament in supporting EU industries,169 issued a July 2016 press release.170 
During  the  press  conference,  Commissioner  Malmström  admitted  that  although  the  EU 
will  keep  promoting  free  trade,  it  must  also  ensure  a  ‘fair’  trade  environment  in  which 
trade defence instruments play a role to protect EU industry from structurally distorted 
low export prices. Commissioner Malmström reiterated in her speech the need for China 
to  cut  the  overcapacity  in  some  sectors  that  distort  the  price  at  global  level  and  force 
importing countries such as those in the EU to take action to protect their production.  

To  account  for  all  the  potential  consequences  of  its  decision,  the  Commission  also 
assessed  the  impacts  of  three  different  options:  i)  not  granting  MES  to  China;  ii) 
granting  the  status  and  then  adopting  the  same  calculation  as  for  other  market 
economies; and iii) granting the status in order to comply with the WTO obligations, but 
changing  the  underlying  anti-dumping  methodology  by  allowing  more  flexibility  in  case 
of structurally distorted sectors. 

As  noticed  in  a  recent  paper  published  by  the  European  Parliament,171  other  countries 
have  often  granted  MES  to  China  for  political  reasons,  without  an  effective  use  of  it  in 
the anti-dumping investigations. In this specific case, if the EU grants the status without 
being followed by other important players (such as the United States), the effect will be 

167 http://trade.ec.europa.eu/doclib/docs/2009/june/tradoc_143599.pdf. 
168 Pelkmans, J. et al. (2016), “Tomorrow’s Silk Road: Assessing the EU-China FTA”, CEPS Book. 
169www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P8-TA-2016-
0223+0+DOC+XML+V0//EN. 
170 http://europa.eu/rapid/press-release_IP-16-2567_en.htm. 
171www.europarl.europa.eu/RegData/etudes/STUD/2016/535021/EXPO_STU(2016)535021_EN.pdf
. 

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more intense, even if extremely difficult to quantify. 

On 11 December 2016, the date on which the China should have obtained the MES as a 
WTO  member  for  15  years,  neither  the  United  States  nor  the  EU  officially  granted  the 
status to China. In reaction, China brought the case to the WTO court.  

However,  the  EU  had  already  proposed  a  new  methodology  (Proposal  2016/0351  of  9 
November  2016)  to  define  anti-dumping  measures  that  eliminates  the  (non)market-
status  approach  and  repeals  it  with  a  country-neutral  approach  for  all  WTO  members. 
Nonetheless, the new methodology also sets rules on how to define the ‘normal-value’ of 
a  dumped  product  for  WTO  members  that  are  characterised  by  significant  market 
distortions. In a nutshell, the proposed provision, i.e. Article 2(6)a, states that, for WTO 
economies  with  significant  market  distortions,  costs  of  production  and  sales  reflecting 
undistorted  prices  must  be  used  to  construct  the  ‘normal  value’  of  the  good  under 
examination in the investigated economy. 

Source: Authors’ own elaboration. 

Categories of regulatory costs generated by the acts 

Regulatory  costs  generated  on  companies  by  trade  defence  instruments  such  as  anti-
dumping  and  anti-subsidy  tend  to  be  very  low  and  negligible  compared  to  costs 
generated by other policy areas. In addition, as trade complaints are not an obligation, 
but  an  opportunity,  companies  will  undertake  them  only  insofar  as  benefits  outweigh 
costs in the case at hand. In this respect, it is worth stressing that a substantive part of 
the  procedure  is  coordinated  by  trade  associations,  which  incur  the  bulk  of  regulatory 
costs.  According  to  the  DG  Trade  Evaluation  report,172  the  estimated  average  costs  of 
complaints  for  an  association  (across  all  sectors)  is  around  €60,000  (ranging  from  less 
than  €10,000  to  more  than  €200,000).  On  top  of  internal  costs,  this  amount  may  also 
include external costs, e.g. the costs of external consultants or legal support. The report 
also shows that the costs of making a complaint in the EU are lower than complaint costs 
incurred by US and Canadian companies. It is worth remarking that companies also may 
incur  some  enforcement  costs  for  having  complained.  Indeed,  the  investigation 
requires  the  company  to  devote  a  team  for  collecting  and  providing  information  to  the 
relevant trade association, e.g. by filling a questionnaire, on request by the Commission. 
In  this  context,  DG  TRADE  offers  an  online  SME  TDI  Helpdesk173  that  provides 
information  and  advice  to  reduce  the  costs  for  SMEs  affected  by  trade  defence 
investigations  abroad  and  in  the  EU.  Finally,  it  should  be  noted  that  the  length  of  the 
procedure  might  generate  an  additional  cost  for  companies.  From  the  start  of  the  data 
collection  to  the  imposition  of  provisional  measures,  companies  may  have  to  suffer 
alleged  dumping  for  about  15  months,  thus  experiencing  indirect  costs  in  the  form  of 
inefficient resource allocation.  

Relevance for the EU glass industry 

While part of the enforcement costs are included in the annual fee paid by companies to 
trade  associations,  as  previously  mentioned  glass  companies  may  incur  enforcement 
costs to provide evidence for the investigation; such costs tend to be relatively higher for 
SMEs, which at any rate play a minor role in the EU glass sectors covered by this CCA. 
On  a  more  general  note,  the  unfair  trade  practices  and  related  inefficient  resource 
allocation usually have a greater impact on SMEs. Nonetheless, as mentioned above, DG 

172 European Commission (2012), “Evaluation of the European Union’s Trade Defence Instruments” 
(http://trade.ec.europa.eu/doclib/docs/2012/august/tradoc_149882.pdf). 
173 http://ec.europa.eu/trade/trade-policy-and-you/contacts/#_trade-defence. 

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TRADE  offers an  online  SME TDI Helpdesk,174  which  provides  information  and  advice  to 
reduce the costs for SMEs affected by trade defence investigations (TDI).  

When it comes to the glass industry, very recently, the European Commission concluded 
a successful investigation against dumped and subsidised imports from China of 
solar  glass,  setting  provisional  (and  definitive)  anti-dumping  duties  in  2013  (AD 
598).175 One year later, it also imposed countervailing duties after the conclusion of the 
anti-subsidy investigation (AS 599).176  

Besides  the  solar  panels  case,  which  had  an  effect  on  the  production  of  flat  glass 
products  (although  this  specific  product  category  is  not  in  the  scope  of  this  Study),  no 
other trade defence instrument was used in the sectors under assessment. This  was to 
some  extent  because  of  the  limited  exposure  to  international  trade  of  the  sectors 
covered  by  the  Study  (with  the  exception  of  glass  tableware,  whose  exposure  to 
international competition appears to be substantial). However, this may not be the case 
in the long term, as shown by growth in imports from third countries. There is a broad 
perception  among  stakeholders  that  rising  imports,  mainly  from  China,  may  lead  in 
coming years to issues similar to those affecting sectors such as steel and ceramics. 

EU glass tableware producers expressed their concerns with regard to checking the level 
of  compliance  of  Chinese  products  with European  health and  safety rules.  Food contact 
legislation  clearly  is  the  first  candidate  as:  i)  glass  is  not  listed  among  the  specific 
material  groups  under  examination;  and  ii)  unlike  in  Europe,  Good  Manufacturing 
Practice  (GMP)  is not compulsory  for food  contact  materials  in  China.177  Mechanisms  to 
assess both non-preferential and preferential origin are another significant source of 
concerns  for  EU  glass  tableware  producers,  especially  when  the  value  added  rule  is 
applied. Reportedly, there are some doubts about the effectiveness in assessing proper 
shares  of  value  added  of  products  that  underwent  a  final  transformation  in  a  third 
country.  In  fact,  in  the  case  of  preferential  origin,  the  good  must  have  undergone  a 
certain amount of working or processing in the beneficiary country.178 The fear is that if 
the share of value added of intermediate and/or final Chinese goods is underestimated, 
misleading  EU  origin  certifications  could  be  released;  as  a  result,  some  products  would 
unfairly benefit from reduced or zero rates. On a more general note, EU glass tableware 
producers stressed that for policy purposes their production is generally included in the 
same  category  (hollow  glass)  that  encompasses  packaging  glass.  As  shown  above,  the 
two  subsectors  are  differently  exposed  to  international  trade  and  overlooking  this 
difference may lead to devising inadequate trade policy for glass tableware.  

Safeguard measures 

Safeguard  measures  can  be  imposed  when  the  EU  experiences  a  sharp  increase  of 
imports  from  non-EU  countries  that  cause  severe  injury  in  the  domestic  market.  The 
imposition  of  safeguard  measures  is  regulated  by  acts,  distinguishing  either  WTO 
(Council Regulation (EC) No 260/2009) or non-WTO countries (Council Regulation 

174 Ibid. 
175 Commission Implementing Regulation (EU) 2015/1394 of 13 August 2015 amending Regulation 
(EU) No 470/2014, as amended by Regulation (EU) 2015/588, imposing a definitive anti-dumping 
duty and collecting definitively the provisional duty imposed on imports of solar glass originating in 
the  People's  Republic  of  China  following  an  absorption  reinvestigation  pursuant  to  Article  12  of 
Council Regulation (EC) No 1225/2009. 
176  Commission  Implementing  Regulation  (EU)  No  471/2014  of  13  May  2014  imposing  definitive 
countervailing duties on imports of solar glass originating in the People’s Republic of China. 
177 www.cirs-
reach.com/China_Chemical_Regulation/Food_Contact_Regulations_Food_Contact_Materials_in_Chi
na.html. 
178 www.europarl.europa.eu/thinktank/en/document.html?reference=LDM_BRI(2013)130513. 

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Cumulative Cost Assessment of the EU Glass Industry 

(EC) No 625/2009). A third act on the transitional product-specific mechanism was an 
exception that expired in 2013: it was negotiated for products coming from China at the 
time  of  its  WTO  accession  (Council  Regulation  (EC)  No  427/2003).  Compared  to 
Regulation  No  260/2009,  the  criteria  to  establish  safeguard  measures  were  less 
stringent. 

The  investigation  period  usually  lasts  nine  months,  and  afterwards  the  EU  can  impose 
import  or  tariff  quota  for  200  days,  and  then  for  four  years  in  case  of  definitive 
measures. The import quota is generally equal to the average level of imports over the 
last three representative years (EC 2013).179 

Categories of regulatory costs generated by the acts 

Safeguard  complaints  against  third countries  can  be  initiated by  either  a Member State 
or  the  Commission  itself.  In  the  first  case,  the  industry  that  is  injured  by  the  import’s 
sharp  increase  must  provide  sufficient  information.  Although,  no  evidence  has  been 
collected  in  the  context  of  this  Study,  it  is  reasonable  to  assume  that  the  EU  business 
may incur some enforcement costs when providing information to trade associations.  

Relevance for the EU glass industry 

The European Union does not have any safeguard measures in place in the glass 
industry,  so  no  costs  for  EU  businesses  were  generated  by  EU  rules  on  safeguard 
measures. This applies to the entire period under observation. 

However, it is worth noticing that there are two safeguard measures against EU Member 
States affecting the glass industry: 

  Safeguard  measure  (definitive  in  August  2011)  on  glass  block  exported  to 

Thailand; 

  Safeguard  measure  (investigation  initiated  in  September  2014)  on  glass  bottles 

exported to Tunisia.  

179 http://trade.ec.europa.eu/doclib/docs/2013/april/tradoc_151031.pdf. 

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Cumulative Cost Assessment of the EU Glass Industry 

12.2  Competition legislation 

Competition  policy  is  a  crucial  factor  shaping  the  environment  where  European 
companies  operate  and  affecting  the  competitiveness  of  EU  businesses  vis-à-vis  their 
international  competitors.  EU  competition  law  covers  the  following  aspects:  i) 
agreements/concerted  practices;  ii)  abuses  of  dominant  position;  iii)  mergers;  and  iv) 
state  aid.  A  qualitative  assessment  of  the  regulatory  costs  generated  by  the  most 
relevant  EU  competition  legislation  follows.  More  specifically,  legislation  is  divided  into 
two main groups based on the nature of the related regulatory costs: 

  Antitrust legislation and merger control: 

  Council  Regulation  (EC)  No  1/2003  of  16  December  2002  on  the 
implementation of the rules on competition laid down in Articles 81 and 82 of 
the Treaty; 

  Council  Regulation  (EC)  No  139/2004  of  20  January  2004  on  the  control  of 

concentrations between undertakings (the EC Merger Regulation); 

  State aid control: 

  Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed 

rules for the application of Article 93 of the EC Treaty; 

  Commission  Regulation  (EC)  No  794/2004  of  21  April  2004  implementing 
Council  Regulation  (EC)No  659/1999  laying  down  detailed  rules  for  the 
application of Article 93 of the EC Treaty; 

  Council  Regulation  (EU)  No  734/2013  of  22  July  2013  amending  Regulation 
(EC) No 659/1999 laying down detailed rules for the application of Article 93 
of the EC Treaty; 

  Community  guidelines  on  state  aid  for  environmental  protection  (2008/C 

82/01); 

  Guidelines  on  State  aid  for  environmental  protection  and  energy  2014-2020 

(2014/C 200/01); 

  Guidelines on certain state aid measures in the context of the greenhouse gas 

emission allowance trading scheme post-2012 (2012/C 158/04).  

12.2.1  Antitrust legislation and merger control 

Antitrust law in the EU is mainly based on the provisions included in two articles of the 
Treaty  on  the  Functioning  of  the  European  Union  (TFEU):  i)  Article  101  TFEU 
prohibiting agreements (both horizontal and vertical), concerted practices and decisions 
by  associations  of  undertakings  that  restrict  competition;  ii)  Article  102  TFEU 
prohibiting  abuses  of  dominant  position.  The  enforcement  of  these  articles  is  governed 
by  Council  Regulation  (EC)  No  1/2003.  This  Regulation,  inter  alia,  provides 
procedural  rules  and  defines  powers  of  the  Commission,  national  courts  and  national 
competition authorities. More specifically, it obliges national bodies to apply Articles 101 
and  102  TFEU whenever they deal  with  cases  which  may  affect  trade  between Member 
States.  

Merger control in the EU is governed by Council Regulation (EC) No 139/2004 that 
applies  to  mergers  and  acquisitions  with  a  community  dimension180  and  aims  to  avoid 

180  The  EU  dimension  is  met  in  two  different  cases:  i)  the  combined  worldwide  turnover  of  the 
merging companies is higher than €5 billion and at least two companies have an EU-wide turnover 
greater  than  €250  million;  ii)  the  combined  worldwide  turnover  of  the  merging  companies  is 
greater than €2.5 billion, and the combined turnover of such companies is great than €100 million 
in  at  least  three  Member  States,  and  at  least  two  companies  have  a  turnover  greater  than  €25 
million in each of the above-mentioned Member States, and at least two companies have an EU-

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Cumulative Cost Assessment of the EU Glass Industry 

that  concentrations  between  undertakings  hamper  effective  competition  in  the 
Internal Market or in a substantial part of it. Prior notification of concentrations above a 
certain turnover threshold is required, and the Commission is in charge of assessing the 
compatibility of the notified cases with the good functioning of the Internal Market.  

Categories of regulatory costs 

As mentioned, antitrust law sets the ‘rules of the game’ for businesses operating in the 
Internal Market. In this respect, Articles 101 and 102 TFEU as well as Council Regulation 
(EC)  No  1/2003  are  not  expected  to  trigger  any  regulatory  cost  for  companies  that 
comply with antitrust legislation. Yet, companies involved in competition cases may incur 
both  administrative  burdens  insofar  as  they  are  called  to  provide  evidence  to  the 
Commission and enforcement costs in the form of litigation costs. Any quantification of 
such  regulatory  costs  based  on  specific  cases  cannot  be  extended  to  the  entire 
population  of  EU  companies.  In  fact,  it  is  fair  to  assume  that  entities  undergoing 
antitrust investigation are not representative as the majority of market players abide by 
relevant antitrust rules.  

Conversely,  merger  control  applies  to  all  merging  companies  reaching  certain  turnover 
thresholds,  irrespective  of  their  compliance  with  legislation  covering  anti-competitive 
agreements and abuse of dominant position. More specifically, such companies have to 
notify mergers and acquisitions to the Commission by following a specific procedure. In 
addition,  in  case  their  combined  market  share  is  higher  than  15%  on  any  relevant 
market  where  they  both  compete  or  25%  on  vertically  related  markets,  merging 
companies  undergo  a  full  investigation  by  the  Commission  and  are  obliged  to  provide 
further evidence. In this context, compliance with Council Regulation (EC) No 139/2004 
requires  large  companies  operating  in  the  EU  to  incur  both  administrative  burdens 
and litigation costs in case they decide to merge one another. At any rate, such costs 
are linked to a specific event in the ‘life’ of a company and their impact on overall costs 
and international cost competitiveness is expected to be very limited. 

Relevance for the EU glass industry 

In  the  context  of  EU  competition  legislation,  over  the  period  2006-15  the  glass 
industry  faced  no  sector-specific  rules.  In  the  same  way  as  any  other  sector,  they 
were  bound  by  antitrust  legislation  covering  cartels,  abuse  of  dominant  position  and 
mergers.  

The  Commission  online  tool  “Search  Competition  Cases”  allows  to  identify  antitrust 
cases  and merger  notifications under scrutiny  by  the  Commission  during  the  period 
2005-16 (Table 80).181 In the selected timespan, two cartels were detected in the glass 
industry (flat glass – 23.11; and glass bulbs – 23.19). In addition, glass manufacturers 
notified 15 mergers to the Commission, many of them involving several glass subsectors 
(23.1);  the  majority  of  mergers  were  approved  via  a  simplified  procedure  as  per 
Commission Notice 2005/C 56/04.182 This simplified approach is expected to streamline 
merger  approval  and  reduce  the  administrative  burden  and  litigation  costs  for  merging 
companies.  Against  this  background,  over  the  period  2006-15,  it  is  likely  that  Council 

wide turnover greater than €100 million. At any rate, the EU dimension is not met if each of the 
firms  archives  more  than  two-thirds  of  its  EU-wide  turnover  within  one  and  the  same  Member 
State. 
181 “Search Competition Cases” by the European Commission 

(http://ec.europa.eu/competition/elojade/isef/index.cfm?clear=1&policy_area_id=3). 

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Cumulative Cost Assessment of the EU Glass Industry 

Regulation  (EC)  No  139/2004  generated  some  minor  regulatory  costs  only  on 
specific companies operating in selected subsectors of the glass industry.  

Table  80.  List  of  antitrust  cases  and  merger  under  the  scrutiny  of  the 
Commission in the glass industry (2006-15) 

Policy 
area 

Cartel 

Cartel 

Case 
Number 

39165 

39605 

Merger 

M.4173 

Merger* 

M.4306 

Title 

Flat Glass 

CRT glass bulbs 

NIPPON SHEET GLAS / PILKINGTON 

SHELL / SAINT-GOBAIN / AVANCIS JV 

Merger* 

M.4598 

SAGARD / COGNETAS / GROUPE SAINT-GOBAIN DESJONCQUERES 

Merger* 

M.4708 

Merger* 

M.5642 

Merger* 

M.5719 

Merger 

Merger 

M.5737 

M.6025 

GERRESHEIMER / CHASE / JV 

SGGF / TRAKYA / SGGE 

OAKTREE / SGD 

SG VETRI / ZIGNAGO VETRO / ARDAGH GLASS / ECOSUD 

ARDAGH / IMPRESS 

Merger* 

M.6049 

COMPAGNIE DE SAINT-GOBAIN / TRAKYA / JV 

Merger* 

M.6489 

Merger* 

M.6532 

SAINT-GOBAIN / TRAKYA / SISECAM / JV 

SAMSUNG GROUP / CORNING GROUP 

Merger 

M.6557 

AGC GLASS EUROPE / INTERPANE INTERNATIONAL GLAS 

Merger* 

M.6734 

Merger* 

M.6893 

Merger* 

M.7693 

KOCH INDUSTRIES / GUARDIAN 

CARL ZEISS / CARL ZEISS VISION 

APOLLO / VERALLIA GROUP 

NACE 

23.11 

23.19 

23.11 

23.1 

23.1 

23.19 

23.1 

23.1 

23.1 

23.1 

23.1 

23.1 

23.1 

23.11 
– 
23.12 

23.1 

23.19 

23.1 

Note: * Simplified procedure; cases were retrieved by setting as search parameters: i) a decision 
date between t January 2006 and 31 December 2015; and ii) NACE rev.2 Code 23.1, 23.11 or 
23.13. 
Source: Authors’ own elaboration on European Commission. 

12.2.2  State aid control 

The  legal  regime  of  state  aid  in  the  EU  aims  to  avoid  distortions  of  competition  and 
trade  among  Member  States,  due  to  direct  or  indirect  government  interventions  in  the 
market. The basic principles are laid down in Article 107 TFEU. The first paragraph of 
this  article  provides  a  definition  of  state  aid  deemed  incompatible  with  the  EU 
Internal Market. In particular, aid measures granted by Member States which are able 
to  distort  competition  and  trade  in  the  EU  by  favouring  certain  undertakings  or  the 
production  of  certain  goods  are  generally  prohibited.  Based  on  Article  108  TFEU,  to 
ensure  that  the  general  prohibition  is  respected  and  exemptions  are  applied  equally 
across  the  EU,  the  European  Commission  is  responsible  for  monitoring  the  existing 
national state aid systems. Procedural rules are laid down in Council Regulation (EC) 
No  659/1999  –  implemented  by  Commission  Regulation  (EC)  No  794/2004  – 
which  sets  the  obligations  of  Member  States  to  notify  aid  measures  and  to  provide 
annual reports, as well as the powers of the Commission to carry out investigations and 
make  decisions  –  and  amended  by  Council  Regulation  (EU)  No  734/2013  –  which 
introduced the possibility of conducting state aid sector inquiries. 

182  Commission  Notice  on  a  simplified  procedure  for  treatment  of  certain  concentrations  under 
Council Regulation (EC) No 139/2004 (2005/C 56/04). 

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Cumulative Cost Assessment of the EU Glass Industry 

On the ground of Article 107(3) TFEU, several horizontal non-binding guidelines are 
set  to  define  the  Commission  position  towards  certain  categories  of  aid.  Horizontal 
environmental aid measures were covered by Community Guidelines on State Aid for 
Environmental  protection  (2008/C  82/01)  that  were  replaced  by  the  2014-20 
Guidelines  on  State  Aid  for  Environmental  Protection  and  Energy  (2014/C 
200/01). The new guidance document extends the scope of the previous guidelines to 
the  energy  field  and  covers  state  aid  to  energy  infrastructure  projects,  generation 
adequacy measures and energy intensive users. These guidelines, which are included in 
the  TOR  within  Competition  legislation,  are  relevant  to  assess  the  cost  impact  of  the 
Renewable Energy Directive and are therefore further discussed in the Chapter covering 
EU energy legislation. At any rate, they are applicable from 1 July 2014 and have a 
rather limited impact on the timespan covered by this Study. In addition, state aid in the 
context  of  the  EU  Emissions  Trading  Scheme  are  covered  by  Guidelines  on  certain 
state  aid  measures  in  the  context  of  the  greenhouse  gas  emission  allowance 
trading scheme post-2012 (2012/C 158/04).  

Categories of regulatory costs 

In principle, the EU state aid control does not generate regulatory costs for businesses. 
In  fact,  Member  States  are  in  charge  of  notifying  the  measures  they  intend  to  adopt. 
Still, some minor administrative burdens and litigation costs may affect companies 
that  are  targeted  by  specific  state  aid  intervention  and  have  to  provide  relevant 
information to the Member State in order to file the notification. In addition, companies 
might be called to share additional evidence with the European Commission in case there 
are serious doubts as regards the compatibility of the notified measure with EU state aid 
rules and an in-depth investigation is required.  

A  formal  investigation  is  opened  also  when  the  Commission  receive  information  on 
alleged  unlawful  aid,  i.e.  aid  granted  without  prior  Commission  authorisation.  More 
recently,  after  the  entry  into  force  of  Council  Regulation  (EU)  No  734/2013, 
administrative  burdens  and  litigation  costs  may  stem  from  state  aid  sector  inquiries 
where  the  Commission  can  use  its  market  investigation  tools  to  gather  information 
from public authorities and market participants. 

Finally,  horizontal  guidelines  issued  by  the  Commission  generally  aim at  streamline  the 
process  to  grant  aids,  simplify  notification  procedures  and  increase  certainty  in  the 
application of state aid rules. In this respect, no regulatory costs are expected to stem 
from  the  guidelines  in  the  scope  of  the  CCA.  Nonetheless,  their  impacts  on  costs 
generated  by  EU  energy,  climate  and  environmental  legislation  are  considered  in  the 
Chapters covering the relevant legislation. 

Relevance for the glass industry 

In the context of EU state aid control, companies operating in the EU glass industry, like 
the majority of companies operating in other sectors, were entitled to benefit from, inter 
alia,  state  support  measures  contributing  to  the  EU  2020  objectives,  e.g.  R&D  and 
innovation,  training  and  employment  aid,  SME  aid,  aid  to  increase  environmental 
protection  and  aid  under  the  de  minimis  exemptions.  More  specifically,  based  on  rules 
established  by Guidelines on State  Aid for Environmental Protection (2008/C 82/01), in 
principle  glass  producers  were  able  to  access  to  aid  measures  aiming  to  promote 
environmental protection - without adversely affecting trade between Member States 
to an extent contrary to the EU common interest. The possibility to grant environmental 
aid  allowed  balancing  the  requirements  of  environmental  protection  with  competition 
rules, thus promoting sustainable development. The glass industry is also covered by the 
2014-20 new Guidelines on State Eid for Environmental Protection and Energy that have 

239 

 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

been applied since 1 July 2014 and provide inter alia criteria on how Member States can 
exempt  energy 
intensive  companies  that  are  particularly  exposed  to 
international  competition  from  charges  levied  for  the  support  of  renewables 
(see Annex 3 of the guidelines).183  

As previously mentioned, detailed rules on state aid permissible under the ETS Directive 
were  laid  down  in  the  Commission  Guidelines  on  certain  state  aid  measures  in  the 
context  of  the  greenhouse  gas  emission  allowance  trading  scheme  post-2012  (2012/C 
158/04),  generally  applicable  to  costs  incurred  by  undertakings  as  from  January  2013. 
These  guidelines  include  an  explicit  list  of  sectors  to  which  state  aid  for  indirect  ETS 
cost could be considered applicable (Annex II), and  none  of the glass  subsectors of 
interest are mentioned therewith.184 Additionally, all EU Member State notifications to 
DG  Competition  on  the  European  Commission  of  their  intent  to  provide  state  aid  for 
indirect ETS costs have explicitly included a statement reiterating the list of sectors from 
Annex II. 

Finally,  the  Commission  online  tool  “Search  Competition  Cases”  provides  a  list  of  state 
aid  notified  to/registered  by  the  Commission  over  the  period  2006-15  and  affecting 
individual  companies  in  the  glass  industry.  The  Commission  approved  the  majority  of 
notified  measures  without  starting  a  formal  investigation  (Table  81).  As  mentioned 
above  and  in  light  of  this  qualitative  analysis,  it  appears  that  state  aid  rules  did  not 
generate substantial regulatory costs on glass companies over the timespan covered by 
the CCA. 

Table 81. List of state aid cases notified to/registered by the Commission in the 
glass industry (decision date between 2006 and 2016) 

Policy 
area 
State Aid 
(A) 
State Aid 
(A) 

State Aid 
(A) 

State Aid 
(A) 
State Aid 
(F) 

Case 
Number 

Member 
State 

Title 

C15/2006 

France 

MSF 98 - Pilkington/Interpane 

N191/200
8 

Germany 

LIP - DE - F|glass 

SA.34756 

Poland 

Program wieloletni pomocy - dotacja celowa 
na inwestycję Pittsburgh Glass Works 
(Poland) Sp. z o.o. 

SA.36510 

Poland 

Poland - LIP - Euroglas Polska Sp. z o.o. 

SA.39990 

Belgium 

Alleged aid to Ducatt NV 

NACE 

23.1 

23.1 

23.11 

23.11 - 
23.12 

23.11 

Note: A: approved without investigation – F: Formal investigation ongoing; cases were retrieved 
by setting as search parameters: i) a decision date between 1 January 2005 and 31 December 
2016; and ii) NACE rev.2 Code 23.1, 23.11 or 23.13. 
Source: Authors’ own elaboration on European Commission. 

183 The majority of subsectors covered by the CCA are included in Annex 3 and therefore eligible 
for aid in the form of reductions in the funding of support for energy from renewable sources. By 
reason  of  the  high  extra-EU  trade  intensity  registered  in  these  subsectors  (Annex  5  of  the 
guidelines), individual companies can still be eligible for this aid in case their electricity-intensity is 
at least 20%. 
184  According  to  some  stakeholders  interviewed  for  this  Study,  this  may  penalise  producers  of 
hollow  glass  for  packaging  vis-à-vis  producers  of  competing  packaging  materials  such  as 
aluminium and, to a minor extent, steel. 

240 

 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

12.3  Transport legislation  

12.3.1  Description of the Acts 

Directive 2002/15/EC on the organisation of the working time of persons performing 
mobile road transport activities entered into force in March 2002. This Directive includes 
specific  provisions  concerning  the  hours  of  work  in  road  transport  in  order  to 
ensure both the safety of transport and the health and safety of the persons involved.  

Similarly  to  the  Directive  above,  Regulation  561/2006/EC  on  the  harmonisation  of 
certain social legislation relating to road transport gives an overview of a common set of 
EU rules for maximum daily and fortnightly driving times, and daily and weekly minimum 
rest periods for all drivers of road haulage and passenger transport vehicles, subject to 
specified exceptions and national derogations.185 Transport companies are obliged to 
put in place continuous monitoring and control systems, which are carried out on 
national and international level via checking tachograph records. 

Through the Directive 2006/22/EC on minimum conditions for the implementation of 
Council  Regulations  (EEC)  No  3820/85  and  (EEC)  No  3821/85  concerning  social 
legislation  relating  to  road  transport  activities  and  repealing  Council  Directive 
88/599/EEC,  the  EU  has  developed  a  comprehensive  policy  on  inspecting  and 
checking  compliance  with  social  road  transport  legislation.  This  Directive  sets 
technical  standards,  establishes  the  rules  on  the  use,  type  of  approval,  installation  and 
inspection  of  tachographs.  It  therefore  creates  a  range  of  legal  obligations  for 
manufacturers, authorities, transport operators and drivers. 

12.3.2  Categories of regulatory costs  

Based on the above legislation the average weekly working time in road transport should 
not  exceed  48  hours.  Member  States  have  to  ensure  that  daily  working  time  may  not 
exceed  eight  hours  (10  hours  only  if  an  average  of  eight  hours  a  day  is  not  exceeded 
within two months) for night workers. EU rules require keeping records of the workers' 
working time, thus generating administrative burdens for the transport companies.  

Transport  Regulation  might  cause  direct  costs  for  companies,  which  have  transport 
integrated in their activities, and (depending on the market power) indirect costs if not 
integrated.  In  fact,  glass  producers  might  have  agreements  with  transport  providers  to 
move their products and this can lead to indirect regulatory costs. 

Based  on  this,  more  strictly  enforced  and  reduced  working  hours  can  generate  also 
substantive  compliance  costs.  In  fact,  glass  producers  or  they  transport  service 
providers  might  have  to  hire  more  drivers  in  order  to  transport  the  same  amount  of 
resources/products during the same time. More drivers are equivalent to direct costs for 
those glass companies whose upstream and/or downstream logistics are integrated, and 
indirect  costs  for  those  glass  companies  that  outsource  road  transportation  of  raw 
materials or finished products. 

12.3.3  Relevance for the sectors 

Transport  logistics  constitutes  an  important  activity  and  source  of  costs  for  the  glass 
industry, especially for products that are transported over long distances. Interestingly, 
the  lion’s  share  of  interviewed  glass  manufacturers  outsource  their  transport  activities; 
hence,  it  was  not  possible  to  collect  data  on  costs  generated  by  the  relevant  EU 
legislation.  

185 
(http://ec.europa.eu/transport/modes/road/social_provisions/driving_time/index_en.htm). 

Commission, 

European 

Mobility 

and 

Transport 

241 

 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Figure  77.  Average  distance  between  plant  and  customer’s  location  and 
between plant and main materials (transport legislation) 

1400

1200

1000

800

600

400

200

0

Flat glass

Hollow glass packaging Hollow glass tableware

Average distance between plant and customer's location (km)

Average distance between plant and main raw materials (km)

Source: Authors’ own elaboration. 

The  figure  above  outlines  the  average  distance  by  sector  for  the  plants  considered. 
Variations across sectors can be explained by the differences in the types of production 
as  well  as  in  the  structure  of  the  market.  Whereas  distance  between  the  plant  and 
source  of  raw  material  is  more  or  less  constant  across  the  three  type  of  products,  the 
distance from customers is considerably lower in packaging glass than in both flat glass 
and glass tableware. 

At any rate, based on interviews with EU associations and information collected via the 
scoping  questionnaire,  transport  legislation  is  not  seen  to  be  a  major  source  or 
regulatory  costs  for  the  industry.  Overall  feedback  from  industry  suggests  that  the 
Directives  are  of  low  relevance  for  their  industry.  The  interviewed  companies  did  not 
experience  any  increase  of  transportation  costs  due  to  changes  in  the  European 
legislation. That means that even if the legislative changes caused some additional costs 
for transport providers, the pass-on of such costs might have been quite limited. 

According to some glass producers, regulatory costs are not generated by EU rules but 
rather by differences in national legislation across the EU. For instance, costs stem 
from differences in legislation regarding technical dimensions of vehicles and trailers. In 
addition,  some  Member  States  limit  the  circulation  of  heavy  vehicles  during  the 
weekend, thus making cross-border deliveries more complex. Finally, any reintroduction 
of  checkpoints  at  national  borders  would  further  impinge  on  the  efficiency  of  pan-
European transport networks.  

242 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Part C. Cumulative Cost Assessment 

243 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

13  Cumulative cost assessment 

Part  C  of  the  Study  presents  cumulative  regulatory  costs  generated  by  EU  rules  for 
the  EU  glass  industry  between  2006  and  2015.  More  specifically,  for  each  sector  and 
subsector  in  the  scope  of  the  assessment,  i.e.  hollow  glass,  including  packaging  glass 
and glass tableware; and flat glass, the following information over the period 2006-2015 
is provided: 

  Cumulative  regulatory  costs  per  category  of  costs,  i.e.  i)  administrative 
burdens  (AB),  ii)  substantive  compliance  costs  (SCC),  iii)  direct  charges  (DC), 
and iv) indirect costs (IC). 

  Cumulative  regulatory  costs  per  piece/area  of  legislation,  i.e.  i)  Internal 
Market for chemicals, ii) Internal Market for construction products, iii) electricity, 
iv)  gas,  v)  energy  efficiency,  vi)  climate,  vii)  environment,  viii)  waste,  ix) 
packaging waste, x) general worker’s health and safety and workplace safety, xi) 
special  worker’s  health  and  safety,  xii)  consumers  and  health  and  xiii)  the 
Measuring Instruments Directive. 

  Cumulative cost versus production costs186 incurred by EU glass producers. 

  Cumulative  cost  versus  EBITDA  registered  by  EU  glass  producers;  EBITDA 
(earnings  before  interest,  taxes,  depreciation  and  amortisation)  measure  the 
profitability of a company before covering yearly depreciation and amortisation of 
CAPEX, financial costs and national taxes.187  

  Cumulative cost versus EBIT registered by EU glass producers; EBIT (Earnings 
Before  Interest  and  Taxes)  measure  the  profitability  of  a  company  before 
covering financial costs and national taxes.188 

As  mentioned  in  Chapter  2,  margins  measured  in  this  Study  are  expected  to  be  higher 
than  average  margins  experienced  by  the  EU  glass  industry  across  the  period  under 
observation. This is mainly due to sample selection (see Chapter 3). In fact, all samples 
include  only  installations  that  were  already  operating  in  2006  and  are  still  operating 
today; therefore, all sampled plants survived the 2008 economic and financial crisis. It is 
reasonable to assume that these plants are more efficient and profitable than those that 
shut down between 2006 and 2015.  

Before  presenting  cumulative  regulatory  costs, 
methodological aspects detailed in Part A and B of this Study:  

it 

is  worth  reiterating  some 

  Regulatory  costs  generated  by  electricity,  gas,  energy  efficiency  and  climate 
legislation as well as key performance indicators, production costs and quantities 
of  output  were  collected  for  each  year  of  the  time  span  covered  by  the 
CCA. Therefore, in the analysis below, such costs and margins vary across years 
in  both  absolute  value  and  €/tonne  (by  reflecting  variations  in  the  production 
output of sampled plants). 

186  Production  costs  include all  costs,  both  OPEX,  CAPEX  and  other  expenses,  borne  by  the  plant 
and directly relating to the manufacturing process. 
187 EBITDA are a proxy of the plant’s current operating profitability. Positive EBITDA indicate that 
operating  revenues  are  higher  than  variable  costs,  i.e.  labour  costs,  energy  costs,  raw  material 
costs, etc. By contrast, negative EBITDA show that the plant is not able to fully cover such variable 
costs nor to cover yearly depreciation and amortisation of CAPEX as well as financial interest and 
income tax expenses. 
188  The  only  exception  is  represented  by  glass  tableware,  as  EBIT  of  sampled  plants  are  very 
different and no meaningful average can be presented. EBIT are a proxy of  the plant’s operating 
income. Positive EBIT indicate that operating revenues are high enough to cover all variable costs 
as  well  as  yearly  depreciation  and  amortisation  of  CAPEX.  By  contrast,  negative  EBIT  show  that 
the plant is not able to cover such costs nor to cover financial interest and national taxes. 

244 

 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Internal  Market 

for  construction  products,189 

  Regulatory  costs  generated  by  legislation  in  the  field  of  Internal  Market  for 
chemicals, 
the  Measuring 
Instruments  Directive,  waste  (including  packaging  waste),  general  workers’ 
health  and  safety  and  workplace  safety,  special  worker’s  health  and  safety  and 
consumers  and  health  were  quantified  for  a  ‘typical  year’.  In  fact,  such  cost 
data  are  less  sensitive  to  variations  in  production  output.  Therefore,  over  the 
period  under  observation,  such  cost  items  vary  only  in  terms  of  €/tonne, 
reflecting changes in production outputs of sampled plants. 

  With  regard  to  regulatory  costs  generated  by  environmental  legislation,  a 
cumulated approach was adopted as, in any given year, each plant incurs costs 
related  to  investments  made  in  the  same  year  as  well  as  costs  linked  to 
investments  made  in  previous  years.  As  the  Research  Team  did  not  collect 
investment  costs  incurred  before  2006,  a  realistic  cost  estimate  is  possible  only 
for  the  last  year  of  the  period  under  analysis,  i.e.  2015.  In  practice,  2015 
cumulated  compliance  costs  include:  i)  the  depreciation  for  investments  made 
that year as well as depreciation for all the investments made since 2006; ii) the 
operating  costs  linked  to  the  investments  between  2006  and  2015;  and  iii)  the 
financial  costs  incurred  for  the  financing  of  all  investments  made  since  2006. 
Therefore,  year  2015  was  selected  as  a  ‘typical  year’  and  in  the  analysis 
below  costs  generated  by  environmental  legislation  vary  across  years  only  in 
terms of €/tonne as a result of changes in quantities produced by sampled plants. 

  EU averages are weighted averages of regional averages and are computed 
by adopting as weights the regional turnover in the specific sector. This approach 
allows  capturing  the  uneven  distribution  of  production  across  the  EU.  Therefore, 
changes across years in the share of turnover produced in each region affect EU 
averages.  

  Regional averages are weighted averages of plant level regulatory costs, 
adopting as weights the yearly plant production in tonnes; hence, yearly changes 
in  production  output  of  sampled  plants  are  reflected  in  both  regional  and  EU 
averages.  

In what follows, data for packaging glass and flat glass are provided both at the 
EU  and  regional  level.  Conversely,  as  discussed  in  Chapter  3,  data  for  glass 
tableware are available only at the EU level.  

189  Regulatory  costs  generated  by  legislation in  the  field  of  Internal  Market  for  construction  were 
collected for two different ‘typical years’, i.e. before and after the entry into force of CPR. Data for 
a ‘typical year’ before the introduction of CPR capture cost impacts of CPD. 

245 

 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

13.1  Hollow glass: packaging glass 

13.1.1 EU 

The  EU  rules  in  the  scope  of  the  CCA  generated  regulatory  costs  for  the  EU  packaging 
glass subsector ranging from €8 to €14 per tonne of output (Figure 78). Substantive 
compliance  costs  and  indirect  costs  were  the  bulk  of  regulatory  costs  in  all  the  years 
under observation,  with  the  exception  of  2007 when  indirect  costs  triggered  by  climate 
legislation collapsed as a result of low prices  for EUAs. Over the entire period,  climate 
legislation and legislation  in the  field of electricity  were  the most burdensome 
areas  of  legislation,  each  generating  costs  of  €2.6/tonne.  Environmental 
legislation  and  waste  legislation  followed,  each  with  an  average  of  about  €2.4/tonne 
(Figure 79). 

In 2015, the cumulative regulatory costs were equal to €12.31/tonne, including 
€0.55/tonne  of  administrative  burdens,  €5.51/tonne  of  substantive  compliance  costs, 
€0.92/tonne  of  direct  charges  and  €5.33/tonne  of  indirect  costs  (mainly  generated  by 
energy  and  climate  legislation).  Rules  affecting  the  electricity  price  generated  28%  of 
total regulatory costs followed by environmental legislation (19%) and climate legislation 
(18%).  

Figure  78.  Packaging  glass:  Cumulative  cost  by  category  of  regulatory  costs 
(€/tonne, EU) 

16

14

12

10

8

6

4

2

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

AB

SCC DC

IC

Source: Authors’ own elaboration. 

246 

 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 79. Packaging glass: Cumulative cost by area of legislation (%, EU) 

100%

80%

60%

40%

20%

0%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Internal market chemicals Consumers and health

Electricity

Gas

Energy efficiency

Climate

Environment

Waste

Worker safety, general

Worker safety, special

Packaging

Source: Authors’ own elaboration. 

Cumulative  regulatory  costs  are  in  the  area  of  3.2%  to  4.7%  of  production  costs 
incurred  by  producers  of  packaging  glass  during  the  period  under  investigation  (Figure 
80).190 EBITDA of the subsector were stable at more than 70€/tonne; hence, regulatory 
costs represented on average 15% of this key performance indicator (Figure 81). 

Figure 80. Packaging glass: Cumulative cost versus production costs (€/tonne, 
EU) 

350

300

250

200

150

100

50

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Production costs 276,7 271,4 295,8 298,7 293,4 300,4 312,0 314,1 316,2 318,8

Regulatory costs 13,0

8,7

13,7

11,5

12,8

13,0

11,6

11,1

11,7

12,3

Note: Production costs are estimated on a sample of 19 plants in 2006, 20 between 2007 and 
2010 and 21 plants between 2011 and 2015. 
Source: Authors’ own elaboration. 

190  The  EU  sectoral  turnover  per  tonne  of  output  ranged  between  €368  (in  2006)  and  €438  (in 
2015).  Cumulative  regulatory  costs  represented  between  2.3%  and  3.5%  of  the  turnover  per 
tonne of packaging glass. 

247 

 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Figure 81. Packaging glass: Cumulative cost versus EBITDA (€/tonne, EU) 

100

90

80

70

60

50

40

30

20

10

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBITDA

73,7

79,2

85,3

90,2

85,2

74,3

77,1

80,3

84,1

83,9

Regulatory costs 13,0

8,7

13,7

11,5

12,8

13,0

11,6

11,1

11,7

12,3

Note: EBITDA are estimated on a sample of 19 plants in 2006, 20 between 2007 and 2010 and 21 
plants between 2011 and 2015. 
Source: Authors’ own elaboration. 

The EBIT trend over the period 2006-15 follows closely the trend registered by EBITDA. 
On average, cumulative regulatory costs were 24% of EBIT; a peak was reached in 
2011, when regulatory costs represented 29.5% of EBIT due to a dramatic drop of this 
indicator. 

Figure 82. Packaging glass: Cumulative cost versus EBIT (€/tonne, EU) 

70

60

50

40

30

20

10

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBIT

43,9

50,0

48,8

59,6

54,3

44,0

47,0

49,3

54,2

52,0

Regulatory costs 13,0

8,7

13,7

11,5

12,8

13,0

11,6

11,1

11,7

12,3

Note: EBIT are estimated on a sample of 19 plants in 2006, 20 between 2007 and 2010 and 21 
plants between 2011 and 2015. 
Source: Authors’ own elaboration. 

248 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

13.1.2  Central-Eastern Europe 

The CEE region registered the highest regulatory costs; the most prominent share 
was represented by indirect costs (energy and climate legislation). Regulatory costs were 
on  average  €13.86/tonne  (Figure  83).  Overall,  rules  affecting  the  electricity  price  and 
climate  legislation  were  the  first  two  cost  components with  an  average  share  of  25.8% 
and  19.7%,  respectively,  followed  by  environmental  legislation  (15.4%)  and  rules 
affecting the gas price (14.8%; Figure 84).  

Figure  83.  Packaging  glass:  Cumulative  cost  by  category  of  regulatory  costs 
(€/tonne, Central-Eastern Europe) 

18

16

14

12

10

8

6

4

2

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

AB

SCC DC

IC

Source: Authors’ own elaboration. 

Figure 84. Packaging glass: Cumulative cost by area of legislation (%, Central-
Eastern Europe) 

100%

80%

60%

40%

20%

0%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Consumers and health

Electricity

Gas

Energy efficiency

Climate

Environment

Waste

Packaging

Worker safety, general Worker safety, special

Note: Costs for “Internal Market for chemicals” cannot be shown for this region due to 
confidentiality reasons. 
Source: Authors’ own elaboration. 

249 

 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Regulatory costs as a share of production costs and margins in Central Eastern 
Europe appeared to be higher than the EU average. In fact, whereas the share of 
regulatory  costs  out  of  total  production  costs  was  slightly  above  the  EU  average  (5% 
against 4% in the entire period), regulatory costs represented a notably larger share of 
EBITDA and EBIT than the EU average (21% versus 15% for EBITDA, and 34% versus 
24%  for  EBIT).  The  reason  for  such  difference  was  twofold:  i)  regulatory  costs  were 
€2/tonne higher in the region compared to the EU average; ii) production costs, EBITDA 
and EBIT were respectively about €40/tonne, €13/tonne and €7/tonne lower than the EU 
average. 

Figure 85. Packaging glass: Cumulative cost versus production costs (€/tonne, 
Central-Eastern Europe) 

350

300

250

200

150

100

50

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Production costs 236,5 230,4 270,1 257,0 269,3 245,8 258,6 268,9 301,5 258,9

Regulatory costs 13,6

8,7

15,3

13,1

14,9

15,5

14,0

14,7

14,4

14,2

Note: Production costs are estimated on a sample of five plants between 2006 and 2010 and six 
plants between 2011 and 2015. 
Source: Authors’ own elaboration. 

Figure 86. Packaging glass: Cumulative cost versus EBITDA (€/tonne, Central-
Eastern Europe) 

90

80

70

60

50

40

30

20

10

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBITDA

73,7

77,9

82,6

64,6

63,5

66,8

67,3

59,0

56,7

67,0

Regulatory costs 13,6

8,7

15,3

13,1

14,9

15,5

14,0

14,7

14,4

14,2

Note: EBITDA are estimated on a sample of five plants between 2006 and 2010 and six plants 
between 2011 and 2015. 

250 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Source: Authors’ own elaboration. 

Figure  87.  Packaging  glass:  Cumulative  cost  versus  EBIT  (€/tonne,  Central-
Eastern Europe) 

60

50

40

30

20

10

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBIT

50,0

51,0

53,0

38,2

39,7

43,3

44,6

35,2

33,7

45,5

Regulatory costs 13,6

8,7

15,3

13,1

14,9

15,5

14,0

14,7

14,4

14,2

Note: EBITDA are estimated on a sample of five plants between 2006 and 2010 and six plants 
between 2011 and 2015. 
Source: Authors’ own elaboration. 

13.1.3  Southern Europe 

Regulatory  costs  in  the  Southern  region  were  aligned  with  the  EU  average.  In 
2015,  total  regulatory  costs  were  equal  to  €13.32/tonne  and,  again,  indirect  costs 
represented  the  lion’s  share  with  €8.31/tonne,  mostly  driven  by  rules  affecting  the 
price  of  electricity.  In  fact,  in  this  region,  regulatory  costs  linked  to  electricity 
legislation  were  on  average  equal  to  35.4%  of  total  regulatory  costs,  reaching 
47.5%  in  2015.  Regulatory  costs  were  also  generated  by  climate  legislation, 
environmental  legislation  and  rules  affecting  the  price  of  gas,  representing  respectively 
17.7%, 15.5% and 11.1% of total regulatory costs over the entire period (Figure 89). 

Figure  88.  Packaging  glass:  Cumulative  cost  by  category  of  regulatory  costs 
(€/tonne, Southern Europe) 

14

12

10

8

6

4

2

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

AB

SCC DC

IC

Source: Authors’ own elaboration. 

251 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 89. Packaging glass: Cumulative cost by area of legislation (%, Southern 
Europe) 

100%

80%

60%

40%

20%

0%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Internal market chemicals

Consumers and health

Electricity

Gas

Energy efficiency

Climate

Environment

Waste

Worker safety, general

Worker safety, special

Packaging

Source: Authors’ own elaboration. 

The  average  share  of  total  regulatory  costs  out  of  production  costs  was  about 
4%  over  the  period  under  observation,  in  line  with  EU  level  figures  (Figure  90). 
However,  SE  registered  higher  value  for  both  EBITDA  and  EBIT  compared  to  the  other 
two  regions;  accordingly,  regulatory  costs  represented  a  smaller  share  of  margins 
registered  by  SE  producers  of  packaging  glass  vis-à-vis  producers  based  in  other 
regions. In 2015, regulatory costs were 12.2% of EBTIDA and 17.5% of EBIT. 

Figure 90. Packaging glass: Cumulative cost versus production costs (€/tonne, 
Southern Europe) 

350

300

250

200

150

100

50

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Production costs 277,4 284,0 298,7 311,4 293,1 305,2 318,3 316,8 308,6 318,2

Regulatory costs 11,0

8,0

12,5

10,7

12,2

13,3

13,2

12,0

12,4

13,3

Note: Production costs are estimated on a sample of eight plants. 
Source: Authors’ own elaboration. 

252 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 91. Packaging glass: Cumulative cost versus EBITDA (€/tonne, Southern 
Europe) 

120

100

80

60

40

20

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBITDA

81,6

90,6

94,8 106,2 113,8 107,8 103,9 102,0 109,9 108,9

Regulatory costs 11,0

8,0

12,5

10,7

12,2

13,3

13,2

12,0

12,4

13,3

Note: EBITDA are estimated on a sample of eight plants. 
Source: Authors’ own elaboration. 

Figure  92.  Packaging  glass:  Cumulative  cost  versus  EBIT  (€/tonne,  Southern 
Europe) 

90

80

70

60

50

40

30

20

10

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBIT

53,7

63,9

67,0

71,2

79,4

74,5

73,7

70,6

79,3

76,0

Regulatory costs 11,0

8,0

12,5

10,7

12,2

13,3

13,2

12,0

12,4

13,3

Note: EBIT are estimated on a sample of eight plants. 
Source: Authors’ own elaboration. 

13.1.4  Northern-Western Europe 

In 2015, regulatory costs incurred by manufacturers of packaging glass based in 
NWE  were  equal  to  €11.35/tonne  (Figure  93).  The  main  difference  compared  with 
the  other  two  geographic  regions  was  the  more  limited  role  played  by  indirect  costs  in 
total  regulatory  costs.  This  was  mainly  because  in  NWE  rules  affecting  the  price  of 
electricity had a relatively lower impact. Electricity legislation, in fact, accounted on 

253 

 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

average for only 13.2% of total regulatory costs. By contrast, environmental legislation 
was  the  most  burdensome  area,  at  25.1%  of  total  costs,  i.e.  €2.84/tonne  on  average, 
followed  by  climate  legislation,  at  22.1%,  i.e.  €2.71/tonne  on  average.  Interestingly, 
legislation in the field of waste also played a prominent role in this region and accounted 
on  average  for  more  than  15%  of  regulatory  costs,  i.e.  €1.71/tonne  over  the  entire 
period under observation (Figure 94).  

Figure  93.  Packaging  glass:  Cumulative  cost  by  category  of  regulatory  costs 
(€/tonne, Northern-Western Europe) 

16

14

12

10

8

6

4

2

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

AB

SCC DC

IC

Source: Authors’ own elaboration. 

Figure  94.  Packaging  glass:  Cumulative  cost  by  area  of  legislation  (%, 
Northern-Western Europe) 

100%

80%

60%

40%

20%

0%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Consumers and health
Energy efficiency
Waste
Packaging

Electricity
Climate
Worker safety, general

Gas
Environment
Worker safety, special

Note: Costs for “Internal Market for chemicals” cannot be shown for this region due to 
confidentiality reasons. 
Source: Authors’ own elaboration. 

254 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

When  it  comes  to  key  performance  indicators,  regulatory  costs  represented  shares  of 
production costs and EBITDA that were comparable to those registered at the EU level; 
this was not the case for regulatory costs versus EBIT as this margin was well below the 
EU  average  for  NWE  producers.  Accordingly,  regulatory  costs  were  on  average  4%  of 
production costs, 16% of the EBITDA and 29% of the EBIT. 

Figure 95. Packaging glass: Cumulative cost versus production costs (€/tonne, 
Northern-Western Europe) 

350

300

250

200

150

100

50

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Production costs 286,0 276,1 300,5 300,6 298,8 309,1 320,5 322,4 323,4 332,8

Regulatory costs 13,8

8,9

13,9

11,5

12,5

12,3

10,2

9,8

10,6

11,3

Note: Production costs are estimated on a sample of six plants in 2006 and seven plants between 
2007 and 2015. 
Source: Authors’ own elaboration. 

255 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  96.  Packaging  glass:  Cumulative  cost  versus  EBITDA  (€/tonne, 
Northern-Western Europe) 

100

90

80

70

60

50

40

30

20

10

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBITDA

70,1

74,4

81,2

87,0

74,4

59,9

65,8

74,3

77,4

75,2

Regulatory costs 13,8

8,9

13,9

11,5

12,5

12,3

10,2

9,8

10,6

11,3

Note: EBITDA are estimated on a sample of six plants in 2006 and seven plants between 2007 and 
2015. 
Source: Authors’ own elaboration. 

Figure  97.  Packaging  glass:  Cumulative  cost  versus  EBIT  (€/tonne,  Northern-
Western Europe) 

70

60

50

40

30

20

10

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBIT

38,0

43,6

38,6

57,9

43,9

29,7

34,2

41,8

46,3

41,5

Regulatory costs 13,8

8,9

13,9

11,5

12,5

12,3

10,2

9,8

10,6

11,3

Note: EBIT are estimated on a sample of six plants in 2006 and seven plants between 2007 and 
2015. 
Source: Authors’ own elaboration. 

256 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

13.2  Hollow glass: Glass tableware 

The  EU  rules  in  the  scope  of  the  CCA  generated  regulatory  costs  for  the  EU  glass 
tableware subsector of between €20 and €34 per tonne of output (Figure 98). In the 
same  way  as  for  packaging  glass,  substantive  compliance  costs  and  indirect  costs 
represented  the  bulk  of  regulatory  costs  in  all  the  years  under  observation,  with  the 
exception  of  2007  when  indirect  costs  triggered  by  climate  legislation  collapsed  as  a 
result of low prices for EUAs. In 2015, the cumulative regulatory costs were equal 
to  €33.19/tonne,  including  €3.92/tonne  of  administrative  burdens,  €13.30/tonne  of 
substantive  compliance  costs,  €3.46/tonne  of  direct  charges  and  €12.51/tonne  of 
indirect  costs  (mainly  generated  by  energy  and  climate  legislation).  Over  the  period 
under  observation,  environmental  legislation  represented  the  most  burdensome  area 
with  regulatory  costs  of  €6.88/tonne,  followed  by  climate  legislation  (€5.54/tonne), 
legislation in the field of electricity (€4.67/tonne) and general workers’ health and safety 
and workplace safety (€4.09/tonne; Figure 99). Interestingly, climate legislation became 
the most burdensome area in 2015, accounting for 22% of regulatory costs. 

Figure  98.  Glass  tableware:  Cumulative  cost  by  category  of  regulatory  costs 
(€/tonne, EU) 

40

35

30

25

20

15

10

5

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

AB

SCC DC

IC

Source: Authors’ own elaboration. 

257 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 99. Glass tableware: Cumulative cost by area of legislation (%, EU) 

100%

80%

60%

40%

20%

0%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Consumers and health
Climate
Worker safety, general Worker safety, special
Measuring Instruments

Electricity
Environment

Gas
Waste
Packaging

Note: Costs for “Internal Market for chemicals” and “energy efficiency” cannot be shown due to 
confidentiality reasons. 
Source: Authors’ own elaboration. 

Cumulative  regulatory  costs  were  in  the  area  of  1.5%  to  2.4%  of  production  costs 
incurred  by  producers  of  glass  tableware  over  the  period  under  investigation  (Figure 
100); production costs per tonne of output were substantially higher than those incurred 
by  packaging  glass  manufacturers.191  EBITDA  in  the  tableware  subsector  recorded  a 
volatile trend (Figure 101). Therefore, while in most of the years covered by this Study 
regulatory  costs  were  in  the  region  of  15%  to  25%  of  this  key  performance 
indicator,  in  2009  and  2013  they  represented  more  than  50%  of  the  EBITDA. 
Interestingly,  in  2015  regulatory  costs  were  even  higher  than  EBITDA,  which 
registered  a  negative  value.  Apparently,  this  bad  performance  was  due  to  the  overall 
slowdown of EU demand for glass tableware (see Chapter 3 for trends in the value of the 
production  sold  by  EU  producers)  coupled  with  some  plant-level  problems,  e.g. 
interruption of the production to rebuild the furnace, shortage in inventories detected by 
the  introduction  of  new  stock-taking  technologies,  etc.).  Finally,  due  to  the  limited 
number of sampled plants and volatile trends, data for EBIT cannot be presented as no 
meaningful average can be computed.  

191 Over the period 2006-15, the EU sectoral turnover was quite volatile; on average, it was equal 
to  €2,061  per  tonne  of  output.  In  the  same  period,  cumulative  regulatory  costs  represented  on 
average 1.5% of the turnover per tonne of glass tableware. 

258 

 
 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Figure 100. Glass tableware: Cumulative cost versus production costs (€/tonne, 
EU) 

1.800

1.600

1.400

1.200

1.000

800

600

400

200

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Production costs 1.408,8 1.351,1 1.451,4 1.559,7 1.632,4 1.659,2 1.663,9 1.581,4 1.398,2 1.445,1

Regulatory costs

30,9

20,4

34,9

30,0

33,3

32,5

30,8

32,7

29,8

33,2

Note: Production costs are estimated on a sample of five plants. 
Source: Authors’ own elaboration. 

Figure 101. Glass tableware: Cumulative cost versus EBITDA (€/tonne, EU) 

250

200

150

100

50

0

-50

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBITDA

153,5 118,6 179,7 47,0 223,1 191,6 123,5 62,5 150,8 -3,1

Regulatory costs 30,9

20,4

34,9

30,0

33,3

32,5

30,8

32,7

29,8

33,2

Note: EBITDA are estimated on a sample of five plants. 
Source: Authors’ own elaboration. 

259 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

13.3  Flat glass 

13.3.1  EU 

The  EU  rules  covered  by  this  Study  generated  regulatory  costs  on  EU  flat  glass 
manufacturers of between €5.60 and €10.30 per tonne of output (Figure 102). While 
in  later  years  substantive  compliance  costs  and  indirect  costs  represented  the  bulk  of 
regulatory  costs,  between  2006  and  2012  sampled  producers  had  the  opportunity  to 
generate  revenues  by  selling  EUAs  on  the  carbon  market,  with  the  sole  exception  of 
2007 when low prices for EUAs influenced both substantive compliance costs and indirect 
costs  linked  to  climate  legislation.192  On  average,  legislation  affecting  the  price  of 
electricity  generated  the  highest  regulatory  costs  (€1.95/tonne),  followed  by 
environmental legislation (€1.90/tonne) and legislation in the field of gas (€1.53/tonne; 
Figure 103). 

In 2015, the cumulative regulatory costs were equal to €9.74/tonne, comprising 
€0.44/tonne  of  administrative  burdens,  €3.75/tonne  of  substantive  compliance  costs, 
€1.32/tonne  of  direct  charges  and  €4.22/tonne  of  indirect  costs  (mainly  generated  by 
energy and climate legislation). Rules affecting the electricity prices generated the 28% 
of total regulatory costs, followed by environmental legislation (20%), rules affecting the 
gas price (17%) and climate legislation (15%). 

Figure  102.  Flat  glass:  Cumulative  cost  per  category  of  regulatory  costs 
(€/tonne, EU) 

12

10

8

6

4

2

0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

AB

SCC DC

IC

Source: Authors’ own elaboration. 

192 Note that both revenues and costs generated by either selling or purchasing EUAs are based on 
a model presented in the Chapter detailing costs generated by climate legislation in Chapter 7 of 
this Study.  

260 

 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Figure 103. Flat glass: Cumulative cost per area of legislation (%, EU) 

100%

80%

60%

40%

20%

0%

-20%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Internal market chemicals Consumers and health

Electricity

Gas

Energy efficiency

Climate

Environment

Waste

Worker safety, general

Worker safety, special

CPR

Note: In 2009, 2010 and 2012 climate legislation might have led to potential net revenues 
generated by the opportunity to sell EUAs on the carbon market. 
Source: Authors’ own elaboration. 

Cumulative  regulatory  costs  represented  between  1.9%  and  3.5%  of  production 
costs  incurred  by  producers  of  flat  glass  in  the  time  span  covered  by  this  CCA  (Figure 
104).  Interestingly,  the  share  of  regulatory  costs  over  production  was  higher  in  most 
recent years (3% in 2013, 3.5% in 2014 and 3.4% in 2015). This was mainly due to the 
combined effect of: i) a reduction in production costs per tonne of output; ii) an increase 
in  regulatory  costs  generated  by  climate  legislation  as  well  as  rules  affecting  the 
electricity  price.  193  EBITDA  in  the  flat  glass  sector  were  rather  volatile  (Figure  105); 
accordingly, whereas regulatory costs represented only 4.9% of this key performance 
indicator  in  2007,  they  were  above  50%  of  EBITDA  in  2014  and  higher  than 
EBITDA in 2013, when the indicator was negative. In 2015, regulatory costs represented 
31.3%  of  EBITDA,  due  to  a  growing  trend  in  the  last  two  years.  EBIT  of  the  flat  glass 
sector  followed  the  same  volatile  trend  of  EBITDA  and  registered  negative  values  in 
2009, 2012 and 2013. With regard to 2015,  regulatory costs were equal to 78.2% 
of the EBIT (Figure 106). 

193  The  EU  sectoral  turnover  per  tonne  of  output  ranged  between  €339  (in  2014)  and  €473  (in 
2007).  Cumulative  regulatory  costs  represented  between  1.2%  and  3.0%  of  the  turnover  per 
tonne of flat glass. 

261 

 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Figure 104. Flat glass: Cumulative cost versus production costs (€/tonne, EU) 

400

350

300

250

200

150

100

50

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Production costs 307,6 305,9 330,2 318,8 308,7 328,3 337,7 319,8 290,9 285,1

Regulatory costs 7,0

5,7

6,6

5,6

6,2

8,0

7,8

9,6

10,3

9,7

Note: Production costs are estimated on a sample of nine plants in 2006, 12 plants between 2007 
and 2008, and 13 plants between 2009 and 2015. 
Source: Authors’ own elaboration. 

Figure 105. Flat glass: Cumulative cost versus EBITDA (€/tonne, EU) 

140

120

100

80

60

40

20

0

-20

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBITDA

44,2 116,3 69,7

13,9

44,3

51,8

21,5

-0,8

19,7

31,1

Regulatory costs 7,0

5,7

6,6

5,6

6,2

8,0

7,8

9,6

10,3

9,7

Note: EBITDA are estimated on a sample of nine plants in 2006, 12 plants between 2007 and 
2008, and 13 plants between 2009 and 2015. 
Source: Authors’ own elaboration. 

262 

 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 106. Flat glass: Cumulative cost vs. EBIT (€/tonne, EU) 

100

80

60

40

20

0

-20

-40

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBIT

19,5

83,7

46,4 -18,9 15,0

25,8 -10,5 -31,5

1,9

12,4

Regulatory costs 7,0

5,7

6,6

5,6

6,2

8,0

7,8

9,6

10,3

9,7

Note: EBIT are estimated on a sample of nine plants in 2006, 12 plants between 2007 and 2008, 
and 12 plants between 2009 and 2015. 
Source: Authors’ own elaboration. 

13.3.2  Central-Eastern Europe 

Regulatory costs borne by flat glass producers based in CEE were dominated by indirect 
costs.  Also,  the  role  played  by  overallocation  of  EUA  (and  ensuing  potential  revenues) 
was prominent; therefore, substantial compliance costs appeared to be limited in 2006, 
2009,  2010  and  2011  and  even  negative  in  2008.  Total  regulatory  costs  for  CEE 
producers  of  flat  glass  are  estimated  to  have  ranged  between  €8.60  and 
€13.30/tonne.  Environmental  rules  (39%  on  average)  and  rules  affecting  the 
price  of  electricity  (32%  on  average)  were  the  most  burdensome  areas  of 
legislation,  followed  by  rules  affecting  the  price  of  gas,  which  accounted  for  18%  of 
total regulatory costs over the period under observation (Figure 108). 

In  2015,  total  regulatory  costs  were  €12.91/tonne,  comprising  €0.18/tonne  of 
administrative  burdens,  €4.30/tonne  of  substantial  compliance  costs,  €1.39/tonne  of 
direct  charges  and  €7.04/tonne  of  indirect  costs  (Figure  107).  Rules  affecting  the 
price of electricity generated €4.64/tonne of regulatory cost in 2015, followed by 
environmental  legislation  (€3.62/tonne)  and  climate  legislation  and  rules  affecting  gas 
price (€1.82/tonne each).  

263 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  107.  Flat  glass:  Cumulative  cost  per  category  of  regulatory  costs 
(€/tonne, Central-Eastern Europe) 

16

14

12

10

8

6

4

2

0

-2

-4

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

AB

SCC DC

IC

Note: In 2008, substantive compliance costs are negative due to potential revenues generated by 
the opportunity to sell EUAs on the carbon market. 
Source: Authors’ own elaboration. 

Figure 108. Flat glass: Cumulative cost per area of legislation (%, Central-
Eastern Europe) 

100%

80%

60%

40%

20%

0%

-20%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Internal market chemicals Consumers and health

Electricity

Gas

Energy efficiency

Climate

Environment

Waste

Worker safety, general

Worker safety, special

CPR

Note: In 2006, 2009 and 2012 climate legislation might have led to potential net revenues 
generated by the opportunity to sell EUAs on the carbon market. 
Source: Authors’ own elaboration. 

Production costs  for flat  glass  producers  in  CEE were  on average  €45/tonne  lower than 
EU values, while total regulatory costs were on average €4/tonne higher than EU values. 

264 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Accordingly,  regulatory  costs  represented  a  larger  share  of  production  costs  (between 
3.1% and 5.7%; Figure 109).  

With regard to margins, EBITDA and EBIT followed the European trend even though the 
EBITDA  never  registered  negative  values  in  the  region.  After  peaking  in  2013  when 
regulatory  costs  represented  71.9%  of  the  EBITDA,  in  2015  the  share  dropped  to 
37.5%,  i.e.  slightly  above  the  EU  average  (Figure  110).  In  2015  regulatory  costs 
appeared  to  be  still  higher  than  EBIT,  which  is  not  the  case  for  the  EU  average 
(Figure 111). 

Figure 109. Flat glass: Cumulative cost versus production costs (€/tonne, 
Central-Eastern Europe) 

350

300

250

200

150

100

50

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Production costs 245,6 257,4 281,3 276,5 265,6 322,2 281,2 253,3 246,1 226,7

Regulatory costs 10,7

9,2

8,6

8,8

11,3

13,3

11,9

13,0

13,1

12,9

Note: Production costs are estimated on a sample of three plants in 2006 and four plants between 
2007 and 2015. 
Source: Authors’ own elaboration. 

Figure 110. Flat glass: Cumulative cost versus EBITDA (€/tonne, Central-
Eastern Europe) 

120

100

80

60

40

20

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBITDA

60,3

96,1

58,0

28,9

56,4

53,3

27,6

18,1

21,2

34,4

Regulatory costs 10,7

9,2

8,6

8,8

11,3

13,3

11,9

13,0

13,1

12,9

265 

 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Note: EBITDA are estimated on a sample of three plants in 2006 and four plants between 2007 
and 2015. 
Source: Authors’ own elaboration. 

Figure 111. Flat glass: Cumulative cost versus EBIT (€/tonne, Central-Eastern 
Europe) 

70

60

50

40

30

20

10

0

-10

-20

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBIT

34,1

64,6

15,3

-9,8

20,7

17,4

-9,2

-7,7

-2,1

9,9

Regulatory costs 10,7

9,2

8,6

8,8

11,3

13,3

11,9

13,0

13,1

12,9

Note: EBIT are estimated on a sample of three plants in 2006 and four plants between 2007 and 
2015. 
Source: Authors’ own elaboration. 

13.3.3  Southern Europe 

In  the  same  way  as  in  CEE,  in  SE  indirect  costs  were  the  main  component  of  total 
regulatory  costs.  On  average,  total  regulatory  costs  for  flat  glass  manufacturers 
based  in  SE  were  equal  to  €7.24/tonne,  ranging  between  €3.85  in  2008  and 
€9.57/tonne  in  2014.  In  2015,  regulatory  costs  were  equal  to  €9.55/tonne  and 
comprised €0.60/tonne of administrative burden, €3.27/tonne of substantive compliance 
costs, €1.59/tonne of direct charges and €4.10/tonne of indirect costs (Figure 112). 

In  the  same  year,  the  most  burdensome  areas  of  legislation  for  the  region  were  rules 
affecting  prices  of  both  electricity  and  gas,  which  generated  costs  equal  to 
€2.55/tonne (27% of total costs) and €2.10/tonne (22%), respectively (Figure 
113).  Environmental  legislation  was  the  third  most  burdensome  area,  generating  16% 
of total regulatory costs, i.e. €1.55/tonne. 

266 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  112.  Flat  glass:  Cumulative  cost  per  category  of  regulatory  costs 
(€/tonne, Southern Europe) 

12

10

8

6

4

2

0

-2

-4

2007

2008

2009

2010

2011

2012

2013

2014

2015

AB

SCC DC

IC

Note: In 2008, substantive compliance costs were negative due to potential revenues generated 
by the opportunity to sell EUAs on the carbon market. Data for 2006 cannot be shown for this 
region due to confidentiality reasons. 
Source: Authors’ own elaboration. 

Figure 113. Flat glass: Cumulative cost per area of legislation (%, Southern 
Europe) 

100%

80%

60%

40%

20%

0%

-20%

-40%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Electricity

Climate

Gas

Energy efficiency

Environment

Waste

Worker safety, general Worker safety, special

Note: In 2008 and 2009, climate legislation might have led to potential net revenues generated by 
the opportunity to sell EUAs on the carbon market. Data for 2006 cannot be shown for this region 
due to confidentiality reasons; costs for “Internal Market for chemicals” and “consumers and 
health” cannot be shown for this region due to confidentiality reasons. 
Source: Authors’ own elaboration. 

267 

 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

SE producers of flat glass reported higher production costs than their competitors 
in other European regions; hence, regulatory costs represented a more limited share 
of  total  production  costs  (between  1.1%  and  3.3%;  Figure  114).  Nonetheless,  higher 
production costs were also reflected by lower profitability in the region; in fact, 
both EBITDA and EBIT of SE producers were below the European average. Interestingly, 
this  region  was  the  only  one  in  which  the  EBITDA  were  negative  (or  close  to  zero) 
between  2012  and  2015.  In  this  respect,  2011  was  the  last  year  when  positive  values 
were registered and regulatory costs represented 26% of the EBITDA (Figure 115) and 
57% of the EBIT (Figure 116).  

Figure 114. Flat glass: Cumulative cost versus production costs (€/tonne, 
Southern Europe) 

500

450

400

350

300

250

200

150

100

50

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Production costs 430,4 366,9 357,5 363,2 364,4 388,0 332,9 347,0 309,9 291,2

Regulatory costs 7,5

5,4

3,9

5,6

6,8

7,2

8,3

8,7

9,6

9,6

Note: Data for 2006 cannot be shown for this region due to confidentiality reasons. 
Production costs are estimated on a sample of three plants between 2007 and 2008, and of four 
plants between 2009 and 2015. 
Source: Authors’ own elaboration. 

268 

 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 115. Flat glass: Cumulative cost versus EBITDA (€/tonne, Southern 
Europe) 

120

100

80

60

40

20

0

-20

-40

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBITDA

-32,8 110,8 45,7

-5,6

22,9

27,4

-2,5

-3,6

-6,9

Regulatory costs 7,5

5,4

3,9

5,6

6,8

7,2

8,3

8,7

9,6

0,4

9,6

Note: Data for 2006 cannot be shown for this region due to confidentiality reasons; EBITDA are 
estimated on a sample of three plants between 2007 and 2008, and of four plants between 2009 
and 2015. 
Source: Authors’ own elaboration. 

Figure 116. Flat glass: Cumulative cost versus EBIT (€/tonne, Southern Europe) 

100

80

60

40

20

0

-20

-40

-60

2007

2008

2009

2010

2011

2012

2013

2014

2015

EBIT

84,5

20,8

-37,4

Regulatory costs

5,4

3,9

5,6

3,2

6,8

12,7

-33,5 -46,9 -22,9

-8,8

7,2

8,3

8,7

9,6

9,6

Note: Data for 2006 cannot be shown for this region due to confidentiality reasons; EBIT are 
estimated on a sample of three plants between 2007 and 2015. 
Source: Authors’ own elaboration. 

269 

 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

13.3.4  Northern-Western Europe 

Overallocation  of  EUAs  played  a  minor  role  in  NWE;  hence,  while  indirect  costs  greatly 
contributed  to  total  regulatory  costs,  substantive  compliance  costs  overtook  indirect 
costs in the period 2013-15. Overall, regulatory costs in NEW lay between €4.62 in 
2010  and  €9.33/tonne  in  2014  (Figure  117).  In  2015,  administrative  burdens  were 
equal to €0.44/tonne, substantive compliance costs equal to €3.75/tonne, direct charges 
equal  to  €1.15/tonne  and  indirect  costs  equal  to  €2.93/tonne,  thus  leading  to  overall 
regulatory costs in the region of  €8.27/tonne. In the same year, the most burdensome 
areas  of  legislation  in  descending  orders  were:  i)  rules  affecting  the  price  of 
electricity  (23%  of  total  regulatory  costs,  i.e.  €1.94/tonne);  ii)  climate  legislation 
(16%, i.e. €1.32/tonne); iii) legislation in the field of general workers’ health and 
safety and workplace safety (16%, i.e. €1.31/tonne); iv) rules affecting the price of 
gas and climate legislation (16%, €1.30/tonne); and v) environmental legislation (15%, 
i.e. €1.26/tonne; Figure 118). 

Figure  117.  Flat  glass:  Cumulative  cost  per  category  of  regulatory  costs 
(€/tonne, Northern-Western Europe) 

10

8

6

4

2

0

-2

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

AB

SCC DC

IC

Source: Authors’ own elaboration. 

270 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure 118. Flat glass: Cumulative cost per area of legislation (%, Northern-
Western Europe) 

100%

80%

60%

40%

20%

0%

-20%

-40%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Consumers and health

Electricity

Gas

Energy efficiency

Climate

Environment

Waste

CPR

Worker safety, general Worker safety, special

Note: In 2009, 2010 and 2012, climate legislation might have led to potential net revenues 
generated by the opportunity to sell EUAs on the carbon market; costs for “Internal Market 
chemicals” cannot be shown for this region due to confidentiality reasons. 
Source: Authors’ own elaboration. 

Production  costs  registered  in  NEW  were  close  to  the  EU  average.  In  this  region,  total 
regulatory  costs  represented  between  1.6%  and  3.1%  of  total  production 
costs,  including  2.7%  in  2015  (Figure  119).  Interestingly,  the  region  was  the  best 
performing when it came to EBITDA and EBIT. Accordingly, in 2015 regulatory costs 
amounted to 18.1% of EBITDA (Figure 120) and 33.2% of EBIT (Figure 121). 

Figure  119.  Flat  glass:  Cumulative  cost  versus  production  costs  (€/tonne, 
Northern-Western Europe) 

400

350

300

250

200

150

100

50

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Production costs 271,6 292,1 330,6 310,2 297,8 303,4 364,4 335,2 302,4 310,1

Regulatory costs 5,2

4,9

7,1

4,9

4,6

6,4

5,7

8,6

9,3

8,3

Note: Production costs are estimated on a sample of four plants in 2006, and of five plants 
between 2007 and 2015. 
Source: Authors’ own elaboration. 

271 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  120.  Flat  glass:  Cumulative  cost  versus  EBITDA  (€/tonne,  Northern-
Western Europe) 

140

120

100

80

60

40

20

0

-20

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBITDA

76,6 124,1 80,7

18,5

49,7

62,4

29,9

-7,7

32,9

45,7

Regulatory costs 5,2

4,9

7,1

4,9

4,6

6,4

5,7

8,6

9,3

8,3

Note: EBITDA are estimated on a sample of four plants in 2006, and of five plants between 2007 
and 2015. 
Source: Authors’ own elaboration. 

Figure  121.  Flat  glass:  Cumulative  cost  versus  EBIT  (€/tonne,  Northern-
Western Europe) 

100

80

60

40

20

0

-20

-40

-60

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

EBIT

48,0

88,5

61,9 -13,4 18,2

34,7

-0,5 -34,0 16,9

24,9

Regulatory costs 5,2

4,9

7,1

4,9

4,6

6,4

5,7

8,6

9,3

8,3

Note: EBITDA are estimated on a sample of four plants in 2006, and of five plants between 2007 
and 2015. 
Source: Authors’ own elaboration. 

272 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

14  Relevance ‘heat maps’ 

Table 82 provides a relevance ‘heat map’ of EU legislation discussed in Part B of this 
Study.  More  specifically,  areas  of  legislation  generating  more  than  20%  of  the 
overall  regulatory  costs  are  marked  as  highly  relevant;  medium  relevance  is 
attributed to areas generating between 5% and 20% of regulatory costs borne by glass 
manufacturers;  other  areas  are  classified  as  either  slightly  relevant  (below  5%)  or  not 
relevant (no regulatory costs were detected). 

Table  82.  Relevance  heat  map  of  the  EU  legislation  affecting  the  EU  glass 
industry: regulatory costs generated by specific areas of legislation as a share 
of total regulatory costs (2015) 

Legislation 

Flat glass 

Packaging 
glass 

Glass 
tableware 

Internal Market for 
construction products  

0.2% 

Internal Market chemicals  

0.2% 

0.1% 

* 

Internal 
Market 

Energy 

Environmental 

Measuring Instrument 
Directive 

Electricity 

Gas 

Energy Efficiency 

Climate 

Industrial emissions 

Waste 
Packaging & packaging 
waste 

Consumers & health 

Worker safety 

Worker safety, general 

Worker safety, special 

28.2% 

16.8% 

0.3% 

15.1% 

19.5% 

6.4% 

1% 

11% 

1.3% 

27.9% 

9.3% 

0.3% 

18.2% 

19% 

10.1% 

2% 

2.6% 

9% 

1.4% 

6.9% 

16.9% 

12.1% 

* 

21.6% 

20.3% 

6.4% 

1.1% 

0.7% 

12.1% 

2% 

Note: Red for high relevance, orange for medium relevance, light blue for low relevance, white for 
no relevance; the relevance assessment is based on regulatory costs measured in this CCA; 
*shares for “Internal Market for chemicals” and “energy efficiency” cannot be shown due to 
confidentiality reasons. 
Source: Authors’ own elaboration. 

Table 83 provides another relevance ‘heat map’ of EU legislation in the scope of the 
CCA.  More  specifically,  areas  of  legislation  generating  more  than  1%  of  the 
overall  production  costs  are  marked  as  highly  relevant;  medium  relevance  is 
attributed to areas generating between 0.5% and 1% of regulatory costs borne by glass 
manufacturers; other areas are classified as either slightly relevant (below 0.5%) or not 
relevant (no regulatory costs were detected). 

273 

 
 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table  83.  Relevance  heat  map  of  the  EU  legislation  affecting  the  EU  glass 
industry: regulatory costs generated by specific areas of legislation as a share 
of total production costs (2015) 

Legislation 

Flat glass 

Packaging 
glass 

Glass 
tableware 

Internal Market for 
construction products  

0.01% 

Internal Market chemicals  

0.01% 

0% 

* 

Internal 
Market 

Energy 

Environmental 

Measuring Instrument 
Directive 

Electricity 

Gas 

Energy efficiency 

Climate 

Industrial emissions 

Waste 
Packaging & Packaging 
Waste 

Consumers & health 

Worker safety 

Worker safety, general 

Worker safety, special 

0.96% 

0.57% 

0.01% 

0.52% 

0.67% 

0.22% 

0.03% 

0.37% 

0.04% 

1.08% 

0.36% 

0.01% 

0.52% 

0.73% 

0.39% 

0.08% 

0.03% 

0.35% 

0.05% 

0.16% 

0.39% 

0.28% 

* 

0.70% 

0.47% 

0.15% 

0.03% 

0.10% 

0.28% 

0.05% 

Note: Red for high relevance, orange for medium relevance, light blue for low relevance, white for 
no relevance; the relevance assessment is based on regulatory costs and production costs 
measured in this CCA; *shares for “Internal Market for chemicals” and “energy efficiency” cannot 
be shown due to confidentiality reasons. 
Source: Authors’ own elaboration. 

274 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Annex  I  –  Sectoral  analysis  of  glass  sectors  not  covered  by  the 
CCA 

Introduction 

This  Annex  provides  sectoral  statistics  for  the  “manufacture  and  processing  of  other 
glass, including technical glassware” sector, which corresponds to the NACE rev.2 class 
23.19.  As  mentioned  in  Box  5  in  Chapter  3.2  above,  while  this  sector was  listed  in  the 
Technical  Specifications  for  this  Study,  in  agreement  with  the  Commission  it  was  not 
covered  by  the  CCA  for  two  main  reasons:  i)  difficulties  of  collecting  plant  level  data, 
which  have  been  envisaged  upfront  by  the  relevant  EU  sectoral  associations;  and  ii) 
difficulties  of  identifying  representative  plants  and  aggregating  data,  due  to  the  high 
level  of  heterogeneity  in  terms  of  products,  production  processes  and  technologies. 
Against this background, it is worth remarking that in 2015 the three sectors covered by 
the  CCA  (flat  glass,  packaging  glass  and  glass  tableware)  accounted  for  some  80%  of 
the  total  value  of  production  sold  by  the  EU  glass  sectors  listed  in  the  Technical 
Specifications for this Study (Figure 122). 

Figure 122. Share of the value of production sold by the EU glass sectors listed 
in the Technical Specifications (2015) 

Other glass 
21% 

Flat glass 
16% 

Glass 
tableware 
11% 

Packaging 
glass 
52% 

Source: Authors’ own elaboration on PRODCOM. 

Other glass, including technical glassware 

The long list of specific products encompassed by the NACE rev.2 class 23.19 illustrates 
the broad spectrum of companies and products falling under this sector.194 This 
diversity  is  also  reflected  in  the  variety  of  production  processes,  required  raw 
materials  (and  their  shares)  and  company  sizes.  Generally  speaking,  the  same  raw 
materials  are  used  as  for  flat  and  hollow  glass,  but  their  composition  might  differ  for 

194 This class includes manufacture of: laboratory, hygienic or pharmaceutical glassware; clock or 
watch glasses, optical glass and optical elements not optically worked; glassware used in imitation 
jewellery; glass insulators and glass insulating fittings; glass envelopes for lamps; glass figurines; 
glass paving blocks; glass in rods or tubes. 

275 

 
 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

less  automated  and  more 
each  product.  Furthermore,  processes  are  often 
specialised  (which  requires  more  manpower).195  Many  manufacturers  are  SMEs. 
Nevertheless,  large  companies,  e.g.  Schott,  Swarovski,  tend  to  have  large  market 
shares, e.g. Swarovski in the jewellery segment.196 

The  value  of  the  product  usually  comes  from  its  individualised  and  customised 
design.  Therefore,  price  competition  is  of  less  importance  to  the  sector  (this  does  not 
mean,  of  course,  that  companies  do  not  aim  to  reduce  their  costs).  Hence,  companies 
have more possibilities of passing on the costs to downstream clients as long as the 
interaction between the marketing/sales activities and the design activities function well. 
Given  the  heterogeneity  of  the  products,  the  sector  also  demands  high-skilled  labour 
forces in its design and manufacturing processes. Typical clients of this sector are  B2B 
such as construction companies, laboratories or hospitals, but also shops or, to a minor 
extent,  end-consumers  (B2C),  especially  in  those  segments  such  as  jewellery  where 
some large companies have their own distribution network.197 

Sectoral statistics 

As Figure 123 shows, the sector “other glass (including technical glassware)” contracted 
significantly beginning in 2008, as the numbers of enterprises and employees constantly 
decreased.  The  value  of  production  sold  remained  relatively  constant,  in  the  range  of 
€3.5-€4  billion,  registering  an  upward  trend  between  2012  and  2015  (Figure  124); 
nonetheless, 2015 values were still below pre-crisis levels. 

Figure  123.  Number  of  employees  (right  axis,  absolute  value)  and  enterprises 
(left  axis,  index  number  2006=100)  in  manufacture  and  processing  of  other 
glass including technical glassware 

120

100

80

60

40

20

0

70.000

60.000

50.000

40.000

30.000

20.000

10.000

0

2006 2007 2008 2009 2010 2011 2012 2013 2014

N. of employees

N. of enterprises

Source: Authors’ own elaboration on Eurostat Structural Business Statistics. 

195 Ecorys (2008), “Competitiveness of the Glass Sector”. 
196  For  further  details  see:  www.luxurydaily.com/swarovski-benchmarks-2020-strategy-with-247-
global-accessibility/. 
197 Ecorys (2008), “Competitiveness of the Glass Sector”. 

276 

 
 
 
 
 
 
 
                                          
Cumulative Cost Assessment of the EU Glass Industry 

Figure  124.  Value  of  production  sold  by  EU  producers  of  other  glass  including 
technical glassware (€ millions) 

4.500

4.000

3.500

3.000

2.500

2.000

1.500

1.000

500

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Authors’ own elaboration on PRODCOM. 

As regards extra-EU trade in other glass (including technical glassware), the EU was a 
net  exporter,  as  shown  in  Figure  125.  However,  in  2015,  the  positive  trade  balance 
narrowed  to  €270  million  from  €566  million  registered  in  2014.  The  first  two 
international  trade  partners for the  EU  in  this  sector are  the  US and  China,  which  rank 
first  and  second  as  both  destination  markets  and  exporters  to  the  EU  (Table  84). 
Together, these two countries make up to 42% and 68.2% of total extra-EU exports and 
imports, respectively. 

Figure  125.  Extra-EU-28  trade  and  total  production  in  manufacture  and 
processing of other glass including technical glassware (€ billions) 

4,5

4

3,5

3

2,5

2

1,5

1

0,5

0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Import Extra EU

Export Extra EU

Total production

Note: The NACE category “Manufacture of other glass including technical glassware” (C2319 NACE 
Rev.2) corresponds to HS 7001, 7002, 7011, 7014, 7015, 7017, 7018, and 7020.  
Source: Authors’ own elaboration on COMEXT (2016). 

277 

 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Table  84.  Top  10  trading  partners  for  manufacture  and  processing  of  other 
glass  including  technical  glassware  in  2015  (%  of  overall  export/import 
values) 

Top 10 Destination  
Markets  

Top 10 Exporters  
to the EU  

United States 
China 
Switzerland 
Japan 
Norway 
Russia 
United Arab Emirates 
Hong Kong 
South Korea 
India 

24.4% 
18.1% 
6.2% 
4.3% 
4.1% 
3.7% 
3.7% 
3.4% 
3.3% 
3.0% 

China 
United States 
Japan 
Liechtenstein 
Switzerland 
India 
Malaysia 
Turkey 
Serbia 
Hong Kong 

47.4% 
21.2% 
8.1% 
5.1% 
4.3% 
3.7% 
1.7% 
1.3% 
1.2% 
0.7% 

Note: The NACE category “Manufacture of other glass including technical glassware” (C2319 NACE 
Rev.2) corresponds to HS 7001, 7002, 7011, 7014, 7015, 7017, 7018, and 7020. 
Source: Authors’ own elaboration on COMEXT (2016). 

278 

 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Annex II – International Comparison 

Introduction 

This  Annex  compares  production  costs,  energy  costs  and  margins  registered  by 
European  glass  manufacturers  in  2015  vis-à-vis  those  registered  in  the  same  year  by 
manufactured  based  in  neighbouring  countries.  More  specifically,  the  international 
comparison  was  performed  for  both  producers  of  packaging  glass  and  producers  of  flat 
glass.  While  the  methodology  applied  to  collect  data  and  estimate  all  the  indicators  is 
detailed in  Box 3, Table 85 and Table 86 report the number of plant-level observations 
on which each estimate relies.  

Table  85.  Packaging  Glass:  number  of  observations  used  to  estimate  key 
performance indicators and energy costs in 2015 

PRODUCTION 
COSTS 

EBITDA 

EBIT 

ELECTRICITY 
COSTS 

GAS 
COSTS 

EU 

CEE 

SE 

NWE 
NEIGHBOURING 
COUNTRIES 

21 

6 

8 

7 

5 

21 

21 

6 

8 

7 

6 

6 

8 

7 

6 

21 

6 

8 

7 

6 

21 

6 

8 

7 

6 

Source: Authors’ own elaboration. 

Table 86. Flat Glass: number of observations used to estimate key performance 
indicators and energy costs in 2015  

PRODUCTION COSTS  EBITDA 

EBIT 

ELECTRICITY COSTS  GAS COSTS 

EU 

CEE 

SE 

NWE 

RUSSIA 

13 

4 

4 

5 

3 

13 

12 

4 

4 

5 

3 

4 

3 

5 

3 

15 

5 

5 

5 

3 

Source: Authors’ own elaboration. 

15 

5 

5 

5 

3 

Packaging Glass 

Figure 126 compares per-tonne production costs and margins registered in 2015 by EU 
packaging  glass  manufacturers  vis-à-vis  those  registered  in  the  same  year  by 
manufacturers  based  in  a  mix  of  neighbouring  countries  including  Algeria,  Ukraine, 
Russia,  Switzerland  and  Turkey.  Production  costs  as  well  as  EBITDA  and  EBIT 
experienced  by  plants  based  in  neighbouring  countries  were  considerably  lower  than 
those  borne  by  EU  producers  (190€/tonne  versus  319€/tonne  for  production  costs, 
37€/tonne versus 84€/tonne for EBITDA and 14€/tonne versus 52€/tonne for EBIT). In 
fact,  also  the  2015  per-tonne  turnover  registered  by  neighbouring  plants  was  much 
lower than the average EU turnover (€246 vs €438).  

279 

 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Figure  126.  Packaging  Glass:  International  Comparison  –  Key  performance 
indicators (€/tonne, 2015) 

350

300

250

200

150

100

50

0

PRODUCTION COSTS

EBITDA

EBIT

EU

CEE

SE

NWE

NEIGHBOURING COUNTRIES

Note: Production costs for the neighbour region are estimated on a sample of five plants, while 
both EBITDA and EBIT rely on the entire sample of six plants. 

Source: Authors’ own elaboration. 

As regards energy costs (Figure 127), per-tonne gas and electricity costs in neighbouring 
countries  were  on  average  comparable  to  those  incurred  by  EU  plants  in  2015. 
Nonetheless,  it  is  worth  stressing  that  the  variance  for  energy  costs  borne  by  the  six 
plants  producing  packaging  glass  in  the  neighbouring  region  is  quite  high  as  they  are 
located in countries characterised by important differences in the local energy market. 

Figure  127.  Packaging  Glass:  International  Comparison  –  Energy  costs 
(€/tonne, 2015) 

80

70

60

50

40

30

20

10

0

ELECTRICITY COST

GAS COST

EU

CEE

SE

NWE

NEIGHBOURING COUNTRIES

Source: Authors’ own elaboration. 

280 

 
 
 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Flat Glass 

Per-tonne  production  costs  registered  in  2015  by  flat  glass  producers  located  in  Russia 
were  considerably  lower  than  EU  average  values  (145€/tonne  versus  285€/tonne).  By 
contrast, the average EBITDA and EBIT for Russia were higher than EU average values 
(42€/tonne  versus  31€/tonne  for  EBITDA  and  22€/tonne  versus  12€/tonne  for  EBIT; 
Figure 128). This is consistent with the evidence that flat glass travels long distances (as 
shown in Chapter 12.3, Figure 77) and location based cost advantages play a prominent 
role in this sector. 

Figure 128. Flat Glass: International Comparison – Key performance indicators 
(€/tonne, 2015) 

350

300

250

200

150

100

50

0

-50

PRODUCTION COSTS

EBITDA

EBIT

EU

CEE

SE

NWE

RUSSIA

Source: Authors’ own elaboration. 

As  flat  glass  plants  covered  by  the  international  comparison  are  all  based  in  Russia, 
differences  in  energy  costs  when  compared  with  costs  borne  by  EU  plants  were  rather 
pronounced  (Figure  129).  Whereas  average  electricity  costs 
in  Russia  were 
approximately half of the European ones in 2015 (7.6€/tonne versus 14.8€/tonne), the 
average  gas  costs  were  even  lower,  approximately  one-fourth  of  those  incurred  by  EU 
plants (14.0€/tonne versus 54.7€/tonne). 

Figure  129.  Flat  Glass:  International  Comparison  –  Energy  costs  (€/tonne, 
2015)  

80

70

60

50

40

30

20

10

0

ELECTRICITY COST

GAS COST

EU

CEE

SE

NWE

RUSSIA

281 

 
 
 
 
 
 
 
 
Cumulative Cost Assessment of the EU Glass Industry 

Source: Authors’ own elaboration. 

282 

 
 
 
 
 
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