costs and benefits of australia phasing-down mercury final report · 5.3 dental practices ... 2...

FINAL REPORT MAY 2015

Costs and benefits of Australia phasing-down

mercury

Report prepared for Department of the Environment

Marsden Jacob Associates Financial & Economic Consultants ABN 66 663 324 657 ACN 072 233 204 Internet: http://www.marsdenjacob.com.au E-mail: [email protected] Melbourne office: Postal address: Level 3, 683 Burke Road, Camberwell Victoria 3124 AUSTRALIA Telephone: +61 3 9882 1600 Facsimile: +61 3 9882 1300 Perth office: Level 1, 220 St Georges Terrace, Perth Western Australia, 6000 AUSTRALIA Telephone: +61 8 9324 1785 Facsimile: +61 8 9322 7936 Sydney office: Phil Pickering Telephone: +61 434 884 220 Rod Carr Telephone: +61 418 765 393 Author: Alex Marsden, Elizabeth O’Brien, Peter Kinrade [email protected]

This report has been prepared in accordance with the scope of services described in the contract or agreement between Marsden Jacob Associates Pty Ltd ACN 072 233 204 (MJA) and the Client. Any findings, conclusions or recommendations only apply to the aforementioned circumstances and no greater reliance should be assumed or drawn by the Client. Furthermore, the report has been prepared solely for use by the Client and Marsden Jacob Associates accepts no responsibility for its use by other parties.

Copyright © Marsden Jacob Associates Pty Ltd 2015

mailto:[email protected]

Department of the Environment Costs and benefits of ratifying the Minamata Convention on Mercury

MARSDEN JACOB ASSOCIATES

TABLE OF CONTENTS

Page

Executive summary ................................................................................................................ i

1. Introduction .................................................................................................................. 1

1.1 Ratifying the Minamata Convention ............................................................................................. 1

1.2 Key obligations of the Convention ............................................................................................... 4

1.3 Project approach and scope ......................................................................................................... 5

2. Cost benefit analysis ...................................................................................................... 8

2.1 Cost benefit analysis overview ..................................................................................................... 8

2.2 Sensitivity analysis ..................................................................................................................... 10

2.3 Likely impact on consumers ....................................................................................................... 13

3. Regulatory burden analysis .......................................................................................... 15

3.1 Regulatory burden costs by industry ........................................................................................... 15

3.2 Regulatory burden summary and conclusions ............................................................................. 19

4. Government costs ....................................................................................................... 20

4.1 Impacted agencies .................................................................................................................... 20

4.2 Costs 21

4.3 Conclusion ................................................................................................................................ 26

5. Industry costs .............................................................................................................. 28

5.1 Industries with potential air emissions ........................................................................................ 30

5.2 Cane growers ............................................................................................................................. 37

5.3 Dental practices ......................................................................................................................... 41

5.4 Lighting sector ........................................................................................................................... 47

5.5 Waste and recycling sector .........................................................................................................56

5.6 Oil and gas production................................................................................................................56

6. Health and environmental outcomes ............................................................................ 60

6.1 Overview ................................................................................................................................... 60

6.2 Approach .................................................................................................................................. 60

6.3 Environmental benefits ............................................................................................................. 60

6.4 Health benefits of phasing-down mercury ................................................................................. 68

6.5 Workplace safety benefits .......................................................................................................... 76

Appendix A: Details of the scenarios considered ................................................................... 78

Appendix B: Risks and uncertainties .................................................................................... 81

Appendix C: Cost benefit and regulatory burden framework .................................................. 87

Appendix D: Industry consultation ....................................................................................... 91



LIST OF TABLES Page

Table 1: Scenarios 2A, 2B and 2C Average Annual Regulatory Costs to Business ................................................................ iii Table 2: Summary of costs and benefits ............................................................................................................................. 7 Table 3: Cost benefit analysis results for scenarios 2A, 2B and 2C (Note values are provided in millions) .............................. 9 Table 4: Sensitivity analysis showing the Net Present Value for each scenario .................................................................. 10 Table 5: Assumptions applied to key variables in most likely, best and worst case outcomes ............................................. 11 Table 6: Cost benefit analysis results for scenarios 2A, 2B and 2C (Note values are provided in millions) ........................... 12 Table 7: Government impacts by Article ........................................................................................................................... 25 Table 8: Summary of Government costs ........................................................................................................................... 26 Table 9: Industry impacts by Article .................................................................................................................................. 29 Table 10: Estimated air emissions of mercury and compounds 2013-14 ............................................................................. 33 Table 11: Estimated numbers of dentists and installations required .................................................................................. 46 Table 12: Mercury vapour street light stocks (in 2015) ....................................................................................................... 51 Table 13: Mercury vapour and equivalent non-mercury technology used in analysis .......................................................... 54 Table 14: Mercury Concentration in Sediment of Albany, WA ........................................................................................... 63 Table 15: Mercury Concentrations in Fish in Australia ....................................................................................................... 64 Table 16: Annual loss of IQ points in Australian population due to maternal mercury in hair .............................................. 71 Table 17: Spadaro and Rabl’s estimate of harm caused per kg of mercury released into the environment .......................... 72 Table 18: Australian estimate of harm caused per kg of mercury (benefit transfer) ............................................................ 72 Table 19: Total mass of mercury prevented from entering environment (kg/yr)................................................................. 75 Table 20: Total value of the mercury prevented from entering the environment ($ million) ............................................... 75 Table 21: Reduction in incidence of work incidents involving mercury ................................................................................77 Table 22: Cost estimation for power generation upgrades required to meet BAT/BEP guidance. ....................................... 83 Table 23: United States mercury limits under the Mercury and Air Toxics Standards ......................................................... 84 Table 24: Mercury emissions from newer coal-fired power stations in Australia ................................................................ 85 Table 25: Summary costs and benefits ............................................................................................................................. 88

LIST OF FIGURES Page

Figure 1: Net Benefits and Benefit Cost Ratio for each scenario ......................................................................................... iii Figure 2: Parties and Signatories to the Minamata Convention globally .............................................................................. 3 Figure 3: Likely Timeline for entry into force of the Minamata Convention .......................................................................... 4 Figure 4: Summary of the cost benefit analysis ($ millions) ................................................................................................. 8 Figure 5: Modelled phase out of mercury vapour lamps for RBM ....................................................................................... 18 Figure 6: Comparison of bud germination at 120 days for differing pesticide treatments ................................................... 39 Figure 7: Estimated phase-out of HPMV lamps under base case and phase-down scenarios .............................................. 53 Figure 8: Mercury emission hot spots – highlighting the spatial distribution of anthropogenic mercury emissions ............. 62 Figure 9: Priority pollutants for each region of the Great Barrier Reef ............................................................................... 66 Figure 10: Expected mercury emissions under the base case and scenarios 2A, 2B and 2C ................................................. 73


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Executive summary

Mercury is a persistent global pollutant. Exposure to mercury poses a serious risk to the

environment and human health worldwide. The World Health Organisation has suggested that

mercury may have no threshold below which some adverse effects do not occur.1

The Minamata Convention on Mercury (the Convention) is a multilateral environmental

agreement that addresses the adverse effects of mercury through practical actions to protect

human health and the environment from anthropogenic emissions and releases of mercury and

mercury compounds.

Australia signed the Convention and is now considering phasing-down mercury emissions and

ratifying the Convention to become a full Party to the Convention. Ratification of the

Convention would legally bind Australia to the Convention’s obligations.

A team lead by Marsden Jacob Associates was commissioned by the Commonwealth

Department of the Environment to undertake a cost benefit analysis of phasing-down mercury

emissions and ratification of the Convention. The analysis also assesses the predicted

regulatory burden from ratification. This report summarises our findings on the likely impacts

from Australia’s ratification of the Convention and other options to phase-down mercury in

Australia.

Approach

Two forms of economic analysis were undertaken in order to assess the impact from a national

phase-down of mercury in response to Australia’s ratification of the Convention:

a cost benefit analysis which considers the likely cost to government and industry as well

as benefits to the community (in terms of health and environmental benefits2) of each

scenario compared to a base case.

a regulatory burden measurement to estimate the costs borne by industry to comply with

amended regulations under the ratification scenarios.

To inform the analysis, Marsden Jacob reviewed previously published reports and undertook

consultation with industry stakeholders to ensure that impacts to industry were appropriately

and adequately captured. In addition, the Department facilitated liaisons with relevant

government agencies and Departments regarding to changes required to facilitate the ratification

of the Convention.

Scenarios

In order to identify the costs and benefits of a national phase-down of mercury, Marsden Jacob,

in conjunction with the Department, developed two primary scenarios that align to international

best practice:

1. Scenario 1 (base case): Under the base case scenario we consider what will occur if the

Convention is not ratified by Australia.

1 World Health Organization, Mercury in Healthcare – Policy paper, 2006

www.who.int/water_sanitation_health/medicalwaste/mercurypolpap230506.pdf

2 Note that while mercury is a global pollutant, the cost-benefit analysis only considers the impact of Australia’s

mercury emissions on the Australian population and environment.

http://www.who.int/water_sanitation_health/medicalwaste/mercurypolpap230506.pdf


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2. Scenario 2 (phase-down of mercury): In the alternative scenario we consider what will

occur if a national phase-down of mercury takes place such that Australia satisfies the

requirements to ratify the Convention. We also consider what will occur if Australia

goes beyond those requirements to address specific domestic activities that significantly

contribute to Australia’s mercury emissions and releases.

Under the phase-down scenario three sub-options were considered:

Scenario 2A: Australia undertakes the minimum actions required to meet the

Minamata Convention; and

Scenarios 2B and 2C: Australia undertakes further actions beyond the minimums

required by the Convention in specific areas – dental amalgam and mercury

containing pesticides.

Scenario 2B considers additional actions for the removal of waste amalgam

from dental practices (akin to an expansion of the now completed Victorian

Dentists For Cleaner Water program); and

Scenario 2C considers both the removal of waste amalgam from dental

practices and the early phase-out of mercury-containing pesticides whereby

manufacture ceases in 2017 rather than 2020 (under the minimum requirements

scenario).

Under both the base case and ratification scenario the Convention is assumed to be globally

ratified and come into effect by 2016. As the Convention restricts trade of mercury and mercury

related products, the ratification of the Convention by other countries would impact on Australia

domestically regardless of Australia’s decision to ratify. As mercury is a global pollutant the

commencement of the Convention globally would impact on mercury concentrations in

Australia which derive from changes in other country’s emission levels. However, for the

purposes of this analysis, we have only considered the impact of Australia’s mercury emissions

on the Australian population and environment.

A more detailed description of each of the scenarios has been provided in Appendix A.

Results of the cost benefit analysis

The results of the cost benefit analysis are summarised using two main metrics:

Net present value, which is the present value of benefits delivered by the policy less the

present value of costs incurred. It measures the expected benefit (or cost) to society of

implementing each scenario.

Benefit Cost Ratio, which is the ratio of the present value of benefits to present value of

costs.

For each of the scenarios (2A, 2B and 2C) a ‘most likely’ outcome has been identified and is the

focus of the analysis. In addition a ‘best case’ and ‘worst case’ outcome has been developed as

a sensitivity analysis.

The ‘most likely’ net present values for scenarios 2A, 2B and 2C are estimated to be

$145.4 million, $148.6 million and $207.0 million respectively3.

3 All values in the cost benefit are provided in 2015 Australian dollar values and are calculated in real terms. These

“Most likely” values are calculated using a 7% real discount rate.


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Scenario 2C has the greatest net present value under the ‘most likely’ case and is therefore

expected to deliver the greatest benefit to the community. However, Scenario 2A has the

highest Benefit Cost Ratio. These results are summarised in Figure 1.

Figure 1: Net Benefits and Benefit Cost Ratio for each scenario

Source: Marsden Jacob analysis

Results from the regulatory burden measurement

Regulatory burden measurement (RBM) was undertaken in line with guidance4 and focuses only

on private sector costs and those of Government Owned Corporations.

The RBM values are provided as a simple average of costs to industry over the first 10 year

period (2016 to 2025) using 2015 values. These costs include administrative compliance costs,

substantive compliance costs and delay costs.

Table 1: Scenarios 2A, 2B and 2C Average Annual Regulatory Costs to Business

Average annual regulatory costs (from business as usual)

Change in costs Scenario 2A

Minimum Requirements

Scenario 2B Ratification+ Amalgam

Separators

Scenario 2C Ratification+ Early

removal of Shirtan+ Amalgam Separators

Sugar Cane Growers

$0 $0 $8,400

Dental $0 $4,067,540 $4,067,540

Public Lighting $12,589,794 $12,589,794 $12,589,794

Total $12,589,794 $16,657,334 $16,665,734

Government activities impacted

Commonwealth, State and Territory Governments all have a role in Australia’s regulation of

mercury. The international trade in mercury and mercury-added products is primarily controlled

by the Commonwealth, while mercury emissions from point sources and the manufacture of

4 Department of Prime minister and Cabinet, Regulatory Burden Measurement Framework, Guidance Note

February 2015, www.dpmc.gov.au/office-best-practice-regulation/publication/regulatory-burden-measurement-

framework-guidance-note

http://www.dpmc.gov.au/office-best-practice-regulation/publication/regulatory-burden-measurement-framework-guidance-note



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mercury-added products are primarily regulated through licence arrangements implemented at a

State and Territory level basis.

The following Commonwealth agencies have been identified as needing to take action to ensure

Australia meets obligations under the Convention:

Department of the Environment;

Department of Health;

Australian Pesticides and Veterinary Medicines Authority;

Australian Customs and Border Protection Service;

Department of Industry and Science; and

Department of Defence.

Costs associated with amended regulations and changes to government activity related to the

control of mercury were considered in terms of setup costs and changes to ongoing costs. In

each case the costs are estimated to be minimal.

Industries impacted

Marsden Jacob’s analysis identified that industry impacts are driven by four Articles of the

Convention. The following table maps the impact from each of the four Articles to the key

industry impacts.

Table 2: Impact from each of the four Articles to the key industry impacts

Under the ‘most likely’ outcome minimum ratification scenario (2A) only cane growers and

street lighting customers would be impacted directly.

Environmental and health benefits

Environmental impacts from changes which reduce mercury emissions and releases to land or

water would likely benefit key environmental assets such as the Great Barrier Reef. However,

these benefits have not been valued in the analysis as concentrations of mercury in receiving

environments and levels of mercury at which adverse impacts on receiving environments are

observed is not well established in the literature. For these reasons, with the exception of

carbon savings from adoption of more energy efficient non-mercury street lights, environmental

benefits are only qualitatively discussed in the cost benefit analysis. Quantitative results of the

cost benefit analysis, presented earlier, should be viewed in this light.


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Human health impacts of mercury exposure, by contrast, have been well documented and

researched. Human exposure to methylmercury occurs primarily through ingestion of seafood

and freshwater fish.

Mercury exposure has been associated with a range of health effects including neurological

effects, effects on the kidneys and cardiovascular effects. The most studied outcomes of

mercury effects are cognitive development in children in particular loss of Intelligence Quotient

(IQ) and developmental effects.

To calculate the loss of IQ related to maternal hair mercury the following equation has been

applied:

Loss of IQ per child = Dose response relationship x maternal hair concentration

This is consistent with the approach used by a study conducted by United States Environmental

Protection Agency’s Regulatory Impact Analysis for the Final Mercury and Air Toxics

Standards in 20115.

Applying the approach used in previous studies the health costs of mercury emissions in

Australia have been estimated at $4,862/kg.

This ‘most likely’ outcome results in present value health benefits of $166.71 million under

scenario 2A across the 20 year timeframe of the analysis. These benefits are estimated to

increase to $214.26 million and $273.10 million respectively under scenarios 2B and 2C.

Additional health benefits have been identified where changes introduced to meet obligations

under the Convention would reduce or eliminate health and safety incidents. These have been

quantified at contributing present value benefits of $1.49 million under each ratification

scenario (2A, 2B, and 2C) for the ‘most likely’ case.

5 United States Environmental Protection Agency (2011) Regulatory Impact Analysis for the Final Mercury and

Air Toxics Standards, EPA-452/R-11-011 December 2011. Available at:

http://www.epa.gov/ttnecas1/regdata/RIAs/matsriafinal.pdf



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1. Introduction

Exposure to mercury poses a serious risk to the environment and human health worldwide. It can

cause a range of serious health impacts which can include cognitive impairment (mild mental

retardation), permanent damage to the central nervous system, kidney and heart disease, infertility, and

respiratory, digestive and immune problems. The World Health Organisation strongly advises that

pregnant women, infants, and children in particular avoid exposure to excess mercury.6 Mitigating and

resolving the problems caused by mercury can be costly, particularly in regard to remediation.

The most common sources of environmental and human exposure to mercury in Australia include;

certain species of fish, air emissions from coal-fired power stations and non-ferrous metal smelters,

mercury-containing pesticides, damaged fluorescent and low-energy lamps, leaking mercury-

containing thermometers and batteries, and amalgam dental fillings. At their end-of-life, many of these

products are sent to landfill or incinerated, resulting in further emissions and releases of mercury into

the environment. Mercury in the environment can also threaten the health of wildlife which can be

exposed to mercury through their food sources.

One of the key approaches to addressing the issue of mercury exposure is to prevent its emission and

release from anthropogenic (human-generated) sources.

The Minamata Convention on Mercury (the Convention) is a multilateral environmental agreement

that addresses the adverse effects of mercury through practical actions to protect human health and the

environment from anthropogenic emissions and releases of mercury and mercury compounds.

Australia signed the Convention on 10 October 2013 and is now considering ratifying the Convention

to become a full Party to it. Ratification of the Convention would legally bind Australia to the

Convention’s obligations.

Marsden Jacob Associates, with support from Toxikos, were commissioned by the Commonwealth

Department of the Environment (the Department) to undertake a cost benefit analysis of ratification of

the Convention including a regulatory burden measurement of private sector costs associated with

ratification.

The results from this analysis are presented in this report. Marsden Jacob understands that this analysis

will be used to support a Regulatory Impact Statement (RIS) which the Department is preparing. The

RIS will recommend whether Australia should ratify the Convention.

1.1 Ratifying the Minamata Convention

The Convention is a global treaty to protect human health and the environment from the adverse

effects of mercury.

The Convention requires ratified Parties to address mercury throughout its lifecycle, including its

production, its intentional use in products and processes, its unintentional release from industrial

activity, through to end-of-life aspects including water, contaminated sites and long-term storage.

The Convention was agreed at the fifth session of the Intergovernmental Negotiating Committee in

Geneva, Switzerland on 19 January 2013.

6 World Health Organisation (2013) ‘Factsheet No361: Mercury and Health’, last updated September 2013. Accessed 16

May 2015. Available at: http://www.who.int/mediacentre/factsheets/fs361/en/

http://www.who.int/mediacentre/factsheets/fs361/en/


2

Ratification of the Convention

Ratification of the Convention7 would elevate Australia to be a “Party to the Convention” and legally

bind Australia to the Convention’s obligations once the Convention enters into force.8

The ratification process involves sending a formal letter to the UN agreeing the Convention applies to

Australia (an instrument of ratification).

Achieving Party status will allow Australia to participate in important decision-making for the

Convention by its Conference of the Parties. Importantly, this includes negotiation of guidance on best

available techniques and best environmental practices (BAT/BEP) which will be agreed at

Conferences of the Parties and required to be followed by Parties.9

In order to participate as a Party to the Convention at the first Conference of the Parties, Australia would

optimally ratify the Convention around the time the Convention comes into force to allow planning for

the first Conference of the Parties and participation in important decision-making processes for the finer

technicalities of the Convention.

These technicalities include; the adoption of guidance on trade provisions and certification for

mercury trade, guidance for atmospheric emissions, financial and reporting arrangements, and the

election of members to the Implementation and Compliance Committee.

When will the Convention come into force?

The Convention will enter into force 90 days after 50 countries have ratified, with the first Conference

of the Parties to be held within 12 months of the treaty being enacted.

If Australia is among the first 50 countries to ratify, the Convention will become legally binding when

the Convention enters into force. Alternatively, if Australia is not among the first 50 countries to

ratify, the Convention will bind Australia 90 days after the instrument of ratification. Countries are

‘Parties to the Convention’ only when the Convention becomes binding on them.

There are currently 128 signatories to the Convention and 10 countries have already ratified and are

Parties to the Convention10 (Figure 2).

7 Australia is currently a signatory to the Convention. Being a signatory does not create any legally binding obligation but

does demonstrate the intent to examine the treaty domestically and consider ratifying it. If Australia ratifies, it will

automatically become a Party to the Convention once the Convention comes into force. At that time, Australia would be

legally bound by the obligations in the Convention unless specific exemptions had been sought.

8 the Convention will enter into force once the Convention comes into force (90 days after 50 countries have ratified)

9 As set out in detail in section 5.1, Article 8 paragraph 8 stipulates that the guidance on best available techniques and best

environmental practices will be adopted at the first meeting of the parties. Article 9 also includes provision for guidance

on best available techniques and best environmental practices – but the timing is not stipulated.

10 As at 12 April 2015 Djibouti, Gabon, Guinea, Guyana, Lesotho, Monaco, Nicaragua, Seychelles, United States of

America, and Uruguay are all Parties to the Convention having ratified the Convention subsequent to becoming

Signatories. For an up-to-date list of signatories, refer to:

http://www.MercuryConvention.org/Countries/tabid/3428/Default.aspx

http://www.mercuryconvention.org/Countries/tabid/3428/Default.aspx


3

Figure 2: Parties and Signatories to the Minamata Convention globally

Source: Minamata Convention website (based on information from March 2015)

The Department of the Environment advises that the European Union is likely to ratify in 2015 having

conducted a stakeholder consultation in 2014 which supported the preparation of a Minamata

ratification package early in 2015.11 Ratification of the Convention by the European Union would

result in 27 additional countries becoming Party to the Convention.

In addition, New Zealand has developed a National Interest Analysis to Parliament for the treaty

examination process which highlights “The advantages to New Zealand ratifying the Convention

outweigh the associated disadvantages.”12

South American countries are also actively considering ratification and the early implementation of

the Convention13. Similarly, Pacific Island countries are considering ratification and South East Asian

countries have also met to consider the implications.

Based on this information, the Department of the Environment expects that the Convention will be

ratified by the minimum 50 countries required to bring the Convention into force by late-2015

regardless of Australia’s decision. The exact timing of ratification by 50 countries is unknown – but it

is necessary to consider the likely timings to identify the timeframe before the first Conference of the

Parties. The following paragraphs set out a likely timeframe for the Convention entering into force

and the first Conference of the Parties.

If the Convention is ratified by the 50th country in late-2015 (e.g. October 2015), then it will enter into

force in early-2016 and the first Conference of the Parties would be held in either late-2016 or early

2017.

Figure 3 summarises this likely timeline and highlights that from the date the Convention comes into

force, the import and export of mercury will begin to be restricted, and manufacture and trade of

11 Refer to the European Commission website: http://ec.europa.eu/environment/chemicals/mercury/ratification_en.htm

12 New Zealand Government (2013) National Interest Analysis: Minamata Convention on Mercury, p. 1. Available at:

www.mfe.govt.nz/sites/default/files/national-interest-analysis-minamata-convention-mercury.pdf

13 Minamata Convention news article: South American sub-regional workshop in Brasilia, 2 to 4 September 2014,

http://www.mercuryConvention.org/News/SouthAmericansubregionalworkshopinBrasilia/tabid/4079/Default.aspx

http://ec.europa.eu/environment/chemicals/mercury/ratification_en.htm

http://www.mfe.govt.nz/sites/default/files/national-interest-analysis-minamata-convention-mercury.pdf

http://www.mercuryconvention.org/News/SouthAmericansubregionalworkshopinBrasilia/tabid/4079/Default.aspx


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specified mercury containing products will be restricted from 2020 onwards. This will occur

regardless of Australia’s decision to ratify the Convention, as other countries who become Parties to

the Convention will still be meeting its obligations. The key obligations under the Convention are

summarised in section 1.2.

Figure 3: Likely Timeline for entry into force of the Minamata Convention

1.2 Key obligations of the Convention

The Convention consists of 35 Articles and 5 Annexes detailing obligations which seek to “protect the

human health and the environment from anthropogenic emissions and releases of mercury and

mercury compounds”14.

The Convention sets out a number of ‘firm’ obligations – which impose specific requirements, as well

as a number actions which Parties to the Convention may endeavour to undertake (but which are not

specifically required).

The following briefly summarises the key obligations the Convention imposes on Parties:

Restrictions to mercury supply sources and trade (Article 3) such as ensuring no development

of new mercury mines, phasing out primary mercury production; and restricting the export and

import of mercury in the absence of written consent agreements between countries;

Phase-out of manufacture, import and export of specific mercury-added products (Article 4)

including batteries, switches and relays, various lighting products with mercury content exceeding

set limits and all mercury vapour lights, cosmetics with mercury content above a set limit,

pesticides, biocides and topical antiseptics, and various non-electrical measuring devices where no

mercury-free alternative is available (as listed in Annex A of the Convention).

Phase-out of specific manufacturing processes in which mercury or mercury compounds are

used (Article 5) such as various chemical productions and production in which mercury or

mercury compounds are used as a catalyst (as listed in Annex B of the Convention).

Develop initiatives to reduce artisanal and small-scale gold mining (Article 7) in which

mercury amalgamation is used to extract gold from ore.

Control or reduce air emissions of mercury and mercury compounds (Article 8) for source

categories listed in Annex D of the Convention (includes coal-fired generation, smelting and

14 United Nations Environment Programme (October 2013) Minamata Convention on Mercury: Text and Annexes, p. 6

A full copy of the Convention is available from the UNEP Minamata Convention on Mercury website:

http://www.mercuryConvention.org/Convention/tabid/3426/Default.aspx.

http://www.mercuryconvention.org/Convention/tabid/3426/Default.aspx


5

roasting processes for specific non-ferrous metals, waste incineration facilities and cement clinker

production facilities).

Control or reduce releases of mercury and mercury compounds (Article 9) to land and water

from relevant point sources (not otherwise listed in the Convention) by undertaking appropriate

measures such as setting limit values, use of best available techniques and best environmental

practice and promoting alternative measures.

Ensure the environmentally sound interim storage of mercury (Article 10) in accordance with

relevant sections of the Basel Convention; and

Control and manage mercury wastes (Article 11) in accordance with the relevant sections of

the Basel Convention (to which Australia is already a Party).

The Convention also requires Parties to contribute financially towards activities undertaken for the

Convention’s administration; as well as fulfilling a number of reporting, monitoring and information

exchange requirements.

1.3 Project approach and scope

The purpose of this report is to present a clear, concise and comprehensive explanation of likely costs

and benefits from Australia’s decision to phase-down mercury, positioning the country to become a

ratified Party to the Minamata Convention.

1.3.1 Scenarios

In order to identify the costs and benefits of a national phase-down of mercury, Marsden Jacob, in

conjunction with the Department, developed two primary scenarios for ease of reference and align to

international best practice:

1. Scenario 1 (base case): Under the base case scenario we consider what will occur if the

Convention is not ratified by Australia.

2. Scenario 2 (phase-down of mercury): In the alternative scenario we consider what would

occur if a national phase-down of mercury took place such that Australia satisfies the

requirements to ratify the Convention. We also consider what would occur if Australia went

beyond those requirements to address specific domestic activities that significantly contribute

to Australia’s mercury emissions and releases.

Under the phase-down scenario three sub-options were considered:

Scenario 2A: Australia undertakes the minimum actions required to meet the Minamata

Convention; and

Scenarios 2B and 2C: Australia undertakes further actions to the minimums required by

the Convention in specific areas – dental amalgam and mercury containing pesticides.

Scenario 2B considers additional actions for the removal of waste amalgam from

dental practices (akin to an expansion of the now completed Victorian Dentists For

Cleaner Water program); and

Scenario 2C considers both the removal of waste amalgam from dental practices AND

the early phase-out of mercury-containing pesticides whereby manufacture ceases in

2017 rather than 2020 (under the minimum requirements scenario).


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Importantly there is sufficient evidence to suggest that the Convention will come into force regardless

of Australia’s participation in the Convention. As such, regardless of the scenario we assume the

Convention comes into force from early 2016.

Further details of the scenarios applied in the analysis are provided in Appendix A.

Cost benefit analysis

The cost benefit analysis seeks to determine the incremental impact of the ratification scenario

compared to the base case (non-ratification) scenario considering likely cost impacts on business,

government, and the wider community and benefits to human health and the environment.

To do this, costs and benefits were identified under each scenario and the net present value of the

alternative scenario was then assessed relative to the base case.

The analysis was undertaken over a 20 year period (2016 to 2035) as it has been determined that the

majority of costs will be up-front, while the benefits stream will continue to increase over time. Costs

and benefits beyond the 20 year period are uncertain and as such, we assume any material differences

between the base case and phase-down scenarios would be negligible beyond this point.

The cost benefit analysis result was tested through sensitivity analyses of alternative discount rates and

key cost and benefit variables.

Regulatory Burden Measurement

The regulatory burden of the phase-down scenario relative to the base case was quantified in a manner

consistent with Government guidance on Regulatory Burden Measurement (RBM)15.

The RBM focuses only on private sector costs and those of Government Owned Corporations.

Values in the RBM are provided as a simple average of costs to industry over the first 10 year period

and are disaggregated by cost types (administrative, substantive and delay costs).

A detailed description of the cost benefit analysis and regulatory burden frameworks applied in this

report are included in Appendix C.

Costs and benefits

Marsden Jacob classified costs and benefits under the groupings set out in Table 3.

It is important to note that while mercury is a global pollutant, the cost-benefit analysis only considers

the impact of Australia’s mercury emissions on the Australian population and environment.

To inform the development of this report, Marsden Jacob conducted brief interviews and

questionnaires with a range of industry stakeholders. Details of the contacts made through this process

are provided in an appendix to this report (Appendix D).

15 Department of Prime minister and Cabinet, Regulatory Burden Measurement Framework, Guidance Note February 2015,

www.dpmc.gov.au/office-best-practice-regulation/publication/regulatory-burden-measurement-framework-guidance-

note




7

Table 3: Summary of costs and benefits

Stakeholder Scenario 1 Base Case (non-ratification)

Ratification prior to mid-2016

Scenario 2A Minimum Requirement to ratify

Scenario 2B Interception / removal of amalgam waste from dental practices

Scenario 2C Early phase-out of mercury-containing pesticides (2017) and removal of waste amalgam from dental practices

Costs

Government As per current costs

Costs associated with meeting ratification:

Development of guidelines

Financial resources required and mechanisms

Regulation, compliance costs

Changes to ongoing regulation, compliance costs.

Similar to 2A Similar to 2A

Industry As per current costs but with potential for trade-related measures


Increased costs to implement Phase-out by 2020 of mercury-added products

Costs for new and existing point sources (e.g. gold production and coal fired power)

Changes to ongoing costs (and revenues) as a result of ratification.

Similar to 2A

Increased costs for installation and operation of mercury traps and separators

Similar to 2A

Increased costs for early phase out of mercury-containing pesticides.

Increased costs for installation and operation of mercury traps and separators.

Benefits/avoided costs

Health outcomes

Health outcomes consistent with current trends/ experience but with some improvement due to other Countries’ decision to ratify

Potential for improved health outcomes within Australia as a direct result of changes made by Australia.

Benefits from increased removal of mercury from Sewerage system

Benefits from early phase out of mercury-containing pesticides.

Benefits from increased removal of mercury from Sewerage system.

Environmental outcomes

Environmental outcomes consistent with current trends./ experience but with some improvement due to other Countries’ decision to ratify

Potential for improved environmental outcomes within Australia as a direct result of changes made by Australia.

Benefits from increased removal of mercury from Sewerage system

Benefits from early phase out of mercury-containing pesticides.

Benefits from increased removal of mercury from Sewerage system.


8

2. Cost benefit analysis

2.1 Cost benefit analysis overview

Results of the cost benefit analysis are summarised in Table 4 and Figure 4.

The results include two main metrics:

Net Present Value (NPV), which is the Present Value (PV) of benefits delivered by the policy less

the PV of costs incurred. It measures the expected benefit (or cost) to society of implementing

each scenario.

Benefit Cost Ratio (BCR), which is the ratio of the PV of benefits to PV of costs.

For each of the scenarios (2A, 2B and 2C) ‘most likely’ case NPV and BCR estimates are provided16

in Table 4 and in Figure 4. The NPV values for scenarios 2A, 2B and 2C are estimated to be

$145.4 million, $148.6 million and $207.0 million respectively 17. Option 2C has the greatest NPV

and is therefore expected to deliver the greatest benefit to the community. However, Option 2A has

the highest BCR.

This outcome reflects likely greater benefits for similar costs compared to Option 2A and Option 2B.

The key drivers of this outcome, in particular the early phase out of mercury-containing pesticides

under Option 2C - leading to substantial health and environmental benefits at relatively low cost - are

discussed further in section 6.

Figure 4: Summary of the cost benefit analysis ($ millions)

16 Note that best case and worst case figures are provided in Appendix A.

17 All values in the cost benefit are provided in 2015 Australian dollar values and are calculated in real terms. These “Most

likely” values are calculated using a 7% real discount rate.


9

Table 4: Cost benefit analysis results for scenarios 2A, 2B and 2C (Note values are provided in millions)

Minimum Requirements

Ratification+ Amalgam

Separators

Ratification+ Early phase out

of mercury-containing pesticides+ Amalgam

separators

Scenario 2A (Ratification) Scenario 2B Scenario 2C

Stakeholder

Costs $ (millions)

Government

Article 13 – Financial contributions

$1.3 $1.3 $1.3

Dept of the Environment $2.6 $2.6 $2.6

Other $0.0 $0.0 $0.0

Industry

Article 8- Air Emissions $0.0 $0.0 $0.0

Cane Growers $0.5 $0.5 $0.9

Dental $0.0 $44.3 $44.3

Public Lighting $52.6 $52.6 $52.6

Oil & Gas $0.0 $0.0 $0.0

Benefits/avoided costs $ (millions)

Health outcomes

Reduction in Mercury emissions and releases

$166.7 $214.3 $273.1

Reduced Health & Safety Costs

$1.5 $1.5 $1.5


Carbon Savings (public lighting)

$3.2 $3.2 $3.2

Energy Savings (public lighting)

$30.9 $30.9 $30.9

Environmental benefits Not Quantified Not Quantified Not Quantified

Totals

Total Cost $57.0 $101.2 $101.7

Total Benefit $202.3 $249.9 $308.7

Net Benefits $145.4 $148.6 $207.0

Benefit Cost Ratio 3.6 2.5 3.0


10

2.2 Sensitivity analysis

To test the outcomes of the cost benefit analysis, Marsden Jacob undertook two forms of sensitivity

analysis. Firstly the analysis considered the most likely outcome under alternative discount rates.

Secondly the analysis considered ‘most likely’, ‘best’ case and ‘worst’ case outcomes for each

scenario.

2.2.1 Discount Rate

Table 5 summarises the net present values estimated for the ‘most likely’ case under each of the

scenarios. It shows that scenario 2C provides the highest benefit under each discount rate.

Estimates in Table 5 also show that scenario 2B is marginally better than 2A under each discount rate.

Table 5: Sensitivity analysis showing the Net Present Value for each scenario

Net present value ($ millions)

Discount Rate Scenario 2A Scenario 2B Scenario 2C

3% 274.70 282.36 350.35

7% 145.37 148.62 207.02

10% 86.64 87.97 140.29


2.2.2 Best case and worst case analysis

Given the importance of certain key variables to outcomes of the analysis Marsden Jacob developed

‘most likely’, ‘best case’ and ‘worst case’ outcomes that reflect alternative assumptions about the

impacts of ratification on these key variables. The alternative assumptions applied to these variables

under each outcome are summarised in Table 6.

The ‘worst case’ assumptions applied to three key variables (power generation, gold smelters and

sugar cane) are discussed in more detail in Appendix B.


11

Table 6: Assumptions applied to key variables in most likely, best and worst case outcomes

Variable Most likely case Worst case Best case

Power generation

No new power facilities or no additional

requirements (no cost & no mercury

saved)

2 new power facilities with additional requirements

(additional cost and additional mercury

saved)

No new power facilities or no additional

requirements (no cost & no mercury

saved)

Gold smelters

No new facilities or no additional requirements (no cost & no mercury

saved)

2 new facilities with additional requirements

(additional cost and additional mercury

saved)

No new facilities or no additional requirements (no cost & no mercury

saved)

Sugar cane pesticide on germination rates

No impact on sugar cane germination

Annual impact on sugar cane germination

No impact on sugar cane germination

Public lighting – asset replacement

Average light replacement costs $400



Greenhouse gas savings from public lighting

Value of tonne of CO2e = $13.95



Health and safety benefits

30% reduction in workplace incidents



Health benefits of a reduction in mercury

Health damage per kg of Mercury = $4,862



For each of the scenarios (2A, 2B and 2C) ‘most likely’ case, ‘best case’ and ‘worst case’ net present

value and BCR estimates are provided in Table 7.

It can be seen that Scenario 2C has the highest NPV under both the ‘most likely’ case and ‘best case’

outcomes but Scenario 2A has the highest (smallest loss) NPV under the ‘worst case’ outcome and the

highest (or equal highest) BCR under all outcomes.


12


Table 7: Cost benefit analysis results for scenarios 2A, 2B and 2C (Note values are provided in millions)

Minimum Requirements Ratification+ Amalgam Separators

Ratification+ Early phase out of mercury-containing pesticides+

Amalgam separators

Scenario 2A (Ratification) Scenario 2B Scenario 2C

Stakeholder Element Most Likely Case

Best Case Worst Case

Most Likely Case

Best Case Worst Case Most Likely Case

Best Case Worst Case

Costs $ (millions) $ (millions) $ (millions)

Government


$1.3 $1.3 $1.3 $1.3 $1.3 $1.3 $1.3 $1.3 $1.3

Dept of the Environment $2.6 $2.6 $2.6 $2.6 $2.6 $2.6 $2.6 $2.6 $2.6

Other $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0 $0 $0

Industry

Article 8- Air Emissions $0.0 $0.0 $288.4* $0.0 $0.0 $288.4 $0.0 $0.0 $288.4

Cane Growers $0.5 $0.5 $26.0 $0.5 $0.5 $26.0 $0.9 $0.9 $35.5

Dental $0.0 $0.0 $0.0 $44.3 $44.3 $44.3 $44.3 $44.3 $44.3

Public Lighting $52.6 $26.3 $72.3 $52.6 $26.3 $72.3 $52.6 $26.3 $72.3

Oil & Gas $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0 $0 $0

Benefits/avoided costs $ (millions) $ (millions) $ (millions)

Health outcomes

Reduction in Mercury emissions and releases

$166.7 $206.5 $63.3 $214.3 $265.4 $81.2 $273.1 $338.3 $103.3

Reduced Health & Safety Costs

$1.5 $3.0 $0.5 $1.5 $3.0 $0.5 $1.5 $3.0 $0.5


Carbon Savings (public lighting)

$7.0 $14.2 $3.3 $7.0 $14.2 $3.3 $7.0 $14.2 $3.3

Energy Savings (public lighting)

$30.9 $30.9 $30.9 $30.9 $30.9 $30.9 $30.9 $30.9 $30.9

Environmental benefits Not Quantified Not Quantified Not Quantified

Totals

Total Cost $57.0 $30.7 $390.6 $101.2 $48.7 $434.9 $101.7 $75.4 $444.4

Total Benefit $206.1 $254.6 $98.0 $253.6 $296.4 $115.8 $312.4 $386.4 $138.0

Net Benefits $145.4 $216.7 -$293.7 $148.6 $231.3 -$320.1 $207.0 $303.8 -$307.5

Benefit Cost Ratio 3.6 8.1 0.2 2.5 5.8 0.3 3.0 5.0 0.3

*See Attachment B for an in-depth analysis of the risks and uncertainties associated with the BAT/BEP guidance for air emissions.


13


2.2.3 Cost benefit analysis drivers

It is important to note the differing costs of mercury reduction - even under a ‘worst case’ outcome -

relevant to the likely reduction in mercury output.

Ceasing the manufacture (and import and export) of mercury-containing pesticides under Article 4 is

expected to prevent approximately 5,280 kilograms of mercury entering the Australian environment

per annum after 2020 at an annual cost of $3,937,500 (under the ‘worst case’ outcome). This equates

to $746 per kilogram of mercury per annum.

In contrast improving mercury capture at coal fired power stations (under the ‘worst case’ outcome) is

expected to save around 14.5 kilograms of mercury per power station per annum at a cost of $224

million in capital and $2.40 million in operating costs. As new power stations are not expected to be

developed until late in the cost benefit period this equates to $3.26 million per kilogram of mercury

per annum.

2.3 Likely impact on consumers

In considering the costs of a phase-down in mercury it is useful to consider whether costs imposed on

business and government through requirements to reduce mercury usage and/or emissions are likely to

be passed on to consumers. The extent to which costs are able to be passed on and therefore the likely

impact to consumers will vary depending on the industry structure and the form of cost imposed.

To consider the impact on consumers it is necessary to first dissect the form of costs that arise for

business and government.

2.3.1 Forms of costs for business and government

The costs imposed on industry and government identified in the cost benefit analysis include some

costs which would directly impact a company’s “bottom line” and other costs which represent an

“opportunity cost”.

Bottom line costs

Additional requirements imposed through the phase-down in Mercury will impact on a company’s

total costs of operation under the following circumstances:

staff costs are increased by either requiring additional staff or paying existing staff more for either

longer hours or more responsibility; or

capital or operating costs increase as a result of additional compliance requirements.

Costs of this kind will impact on a company’s total costs of operation and may be passed on to

consumers.

Opportunity costs

Some costs such as the reallocation of staff and management time can be considered an opportunity

cost as staff and management costs may not increase (where staff and management are not paid by the

hour). This is particularly likely where the additional costs are not substantial. In this case the

imposition of a new requirement may prevent the staff from undertaking other roles - such as business

development. Alternatively the additional tasks may impact on staff and management’s personal time.


14


Costs of this kind do not impact directly on a company’s total costs of operation and so are not likely

to be passed on to consumers.

2.3.2 Ability of industry to pass on costs to consumers

Where a company’s total cost of operations are increased they may seek to pass on these additional

costs to consumers.18 However, the ability of a company to pass on higher costs to consumers will

vary from one product to another19 and is beyond the scope of this cost benefit analysis.

It is likely some costs will be passed on to consumers, however, this will not be uniform across the

industries considered in this analysis.

18 It is noted that industry did not indicate whether any individual costs would be passed on to consumers.

19 Factors influencing a company’s ability to pass on higher costs to consumers will include:

levels of buyer power and supplier power;

availability of substitutes;

threat of entry; and

existing levels of competition in the market for that product.


15


3. Regulatory burden analysis

Regulatory burden measurement (RBM) was undertaken in line with guidance20 and focuses only on

private sector costs and those of Government Owned Corporations.

The RBM values are provided as a simple average of costs to industry over the first 10 year period

(2016 to 2025) using 2015 values and have been disaggregated by cost types:

administrative compliance costs - costs that are primarily driven by the need to demonstrate

compliance with the Convention such as annual reporting.

substantive compliance costs –which are directly attributable to ratification and which fall

outside of the usual business costs these costs may include the capital costs of plant upgrades as

well as operational costs from process changes or additional staff training.

delay costs - include the time taken for the preparation of applications (referred to as application

delay) and the time taken for approval (referred to as approval delay). Estimating the cost savings

relating to removing delays requires a strong understanding of the realistically achievable

timeframes, the likely delays which could be avoided, and the value (potential cost) of any

avoidable delay.

The regulatory burden analysis aligns with the ’most likely’ outcome analysis of industry impacts and

so does not include costs that are only identified under the ‘best’ or ‘worst’ case outcomes.

3.1 Regulatory burden costs by industry

The regulatory burden costs for each of the industries impacted are discussed in turn below.

3.1.1 Industries with potential air emissions

For industries with potential air emissions the costs identified in the initial 10 year period are costs

associated with contributing to preparation of the national plan – however as it is not compulsory for

Australia to prepare a National plan, nor is it compulsory for industry to contribute to the plan these

costs are not considered regulatory burden.21 No other costs were identified through discussions with

industry and government as the Convention was determined to have negligible impact on existing

facilities, and no new facilities are expected to be developed in the initial 10 year period.

The average regulatory burden for industries with potential air emissions under each scenario (2A, 2B

and 2C) over the period from 2016 to 2025 is $0 per annum.

3.1.2 Sugarcane Growers

As detailed in the cost benefit analysis, the phase out of mercury-containing pesticides would impact

on a number of stakeholder groups – namely sugarcane growers (who use a mercury-containing

20 Department of Prime Minister and Cabinet (2015) Regulatory Burden Measurement Framework, Guidance Note

February 2015, www.dpmc.gov.au/office-best-practice-regulation/publication/regulatory-burden-measurement-

framework-guidance-note

21 According to the Convention, a Party with relevant sources shall take measures to control emissions and releases, and

may prepare a national plan setting out the measures to be taken to control emissions and releases, and its expected targets,

goals and outcomes. Any plan shall be submitted to the Conference of the Parties within four years of the date of entry

into force of the Convention for that Party.




16


pesticide), Crop Care (who distribute the mercury-containing pesticide), and Alpha Chemicals (who

manufacture the mercury-containing pesticide).

A range of potential costs were considered and discussed with the industry peak body.

A range of potential substantive compliance costs were considered – but no costs were identified

through discussions with industry stakeholders and government for Scenario 2A. Costs considered

included:

capital cost on changing machinery to add sprayers;

cost difference of alternative products; and

effectiveness of alternative products;

A potential offset benefit was identified, as the alternative product also provides protection against

other fungi and diseases. Industry advised that the removal of mercury-containing pesticides from the

market would impact on changes in emergence and budding in adverse conditions, however, published

research has found that alternative pesticides (that do not contain mercury) have a greater benefit to

emergence and budding in adverse conditions (see section 5.2).

The full discussion of the costs and benefits of each scenario is set out in section 5.2.

Scenario 2A and 2B

The regulatory burden for sugarcane growers under scenario 2A is $0 per annum.

The average regulatory burden for sugarcane growers under scenario 2A and 2B over the period from

2016 to 2025 is $0 per annum.

Scenario 2C

Under scenario 2C mercury-containing pesticides are phased out early (2017). This brings forward the

phase out period to the point where the alternative product (flutriafol) may still be a proprietary

product and so may cost more than the existing mercury-containing product. The increased costs

would only arise for one year and are estimated at $84,00022.

The average regulatory burden for sugarcane growers under scenario 2C over the period from 2016 to

2025 is $8,400 per annum.

3.1.3 Dental

In assessing the regulatory burden for dental industries Marsden Jacob considered the impact of

ratification on both manufacturers of amalgam and dental surgeries.

No regulatory burden impacts were identified through discussions with industry and government under

Scenario 2A on either manufacturers of amalgam or dental surgeries.

Marsden Jacob considered whether there would be additional administrative costs for mercury imports

– however, these appear unchanged from the base case. The full discussion of the costs and benefits

of each scenario is set out in section 5.3.

Scenario 2A

No regulatory burden costs were identified for dental industries under Scenario 2A.

22 Research indicates that Shirtan cost $27.50/ha and Sinker costs $29.00/ha across 56,000 hectares of cane planting


17


Scenario 2B

Scenario 2B would drive substantive compliance costs for dentists as 9,801 dentists would be required

to install and maintain amalgam separators at an installation cost of $900 and an annual waste

collection and recycling cost of $500.

Based on installations commencing in 2017 and being phased over a 4 year period the Regulatory

burden would be an average of $4,068,000 per annum over the first 10 years (2016 to 2025).

Scenario 2C

As per Scenario 2B, the Regulatory burden would be an average of $4,068,000 per annum over the

first 10 years (2016 to 2025).

3.1.4 Lighting

Lighting is impacted under Article 4, mercury-added products, and is considered in terms of domestic

and commercial lighting as well as public lighting. The full discussion of the costs and benefits of

each scenario is set out in section 3.1.4.

Domestic and commercial lighting

No regulatory burden costs were identified though discussions with industry stakeholders and

government for domestic and commercial lighting.

Public lighting

The ownership, responsibilities and governance structures surrounding street lighting assets are

complex and vary depending on the type of installation and maintenance arrangements. However, the

ownership can be largely separated in terms of the Australian Standards classifications for Category P

(residential streets and public open spaces) and Category V (main or major road) lighting.

Mercury vapour street lighting on minor, residential roads in Australia tends to be managed by

electricity distribution networks on behalf of local councils on the basis that the lamps are attached to

the electricity network power poles. In most circumstances, the maintenance of these lights by the

network businesses requires these assets to be ‘gifted’ to the distribution business.

Distribution businesses are only responsible for a very small proportion of main road lighting.

Government departments, such as main roads departments, who tend to be responsible for both the

management and the costs associated with main road lighting.

Under ratification of the Convention, Marsden Jacob analysis outlined in section 3.1.4 details that only

lower wattage street lighting on residential roads (50W, 80W, and 125W) will be phased out more

quickly than the current trends would predict. Higher wattage lighting on main roads (250W, 400W,

and 700W lamps) would be unaffected by ratification.

For the RBM the Department advised that a different assumption on phase out should be used

compared to the cost benefit analysis. For RBM that the phase out of mercury vapour lamps should be

modelled so that the numbers of lamps follow the base case up to the year 2020 and then step down

rapidly in one year (thereafter following the ratification scenario used in the cost benefit analysis).

This is depicted by the red line in Figure 5.


18


Figure 5: Modelled phase out of mercury vapour lamps for RBM

For street lighting Marsden Jacob modelled that ratification would bring forward capital replacement

programs, which can be classified as a substantive compliance cost. It should be noted that the “step

down” (following the based case to 2020, then stepping down to the ratification scenario from 2021

onwards) in mercury vapour lamps in 2020 makes no change to the RBM compared to the ratification

scenario used in the cost benefit analysis. This is because the total cost is the same and still occurs in

the period for RBM (10 years).

The average cost over the first 10 years of this compliance cost is $12.59 million. This cost is offset by

both energy savings and greenhouse gas savings. This saving is realised by the users (i.e. local

councils) who pay the energy costs and therefore is not an offset on the regulatory burden for

distribution businesses.

3.1.5 Waste and recycling

No regulatory burden costs were identified through discussions with industry and government for the

waste and recycling sector. The full discussion of the costs and benefits of each scenario is set out in

section 3.1.5.

3.1.6 Oil and Gas

No regulatory burden was identified for the oil and gas industry within the duration of the regulatory

burden assessment.


19


3.2 Regulatory burden summary and conclusions

Regulatory burden summary for each scenario are summarised in the tables provided

Scenarios 2A, 2B and 2C Average Annual Regulatory Costs to Business

Average annual regulatory costs (compared to business as usual)

Change in costs Scenario 2A Minimum Requirements

Scenario 2B Ratification+ Amalgam Separators

Scenario 2C Ratification+ Early removal of Shirtan+ Amalgam Separators

Coal-fired Generation

$0 $0 $0

Aluminium $0 $0 $0

Cement $0 $0 $0

Non Ferrous Metal Smelting (Gold, Lead, Zinc, Copper)

$0 $0 $0

Waste Incineration

$0 $0 $0

Sugar Cane Growers

$0 $0 $8,400

Oil and Gas $0 $0 $0

Dental $0 $4,067,540 $4,067,540

Public Lighting $12,589,794 $12,589,794 $12,589,794

Total $12,589,794 $16,657,334 $16,665,734


20


4. Government costs

Commonwealth, State and Territory Governments all have a role in Australia’s regulation of mercury.

The international trade in mercury and mercury-added products is primarily controlled by the

Commonwealth, while mercury emissions from point sources and the manufacture of mercury-added

products are primarily regulated through licence arrangements implemented at a State and Territory

level basis.

Marsden Jacob’s investigation has focused primarily on Commonwealth Government impacts. As is

discussed below, this is because we were advised a number of the requirements of the Convention are

already being met via national agreements.

4.1 Impacted agencies

Commonwealth

The following Commonwealth agencies have been identified as needing to take action to ensure

Australia meets obligations under the Convention:

Department of the Environment – the Department would be responsible for ratification and

ensuring that plans and guidelines are developed and meet requirements;

Department of Health – in relation to education and information for people working with mercury,

research and possible deregistration of products;

Australian Pesticides and Veterinary Medicines Authority – in relation to the registration of

pesticides;

Australian Customs and Border Protection Service – changes to monitoring, and possible

compliance and enforcement around trade in mercury and mercury-added products; and

Department of Industry and Science – ensuring that any contributions to mercury research are

shared or communicated consistent with the Convention expectations; and

Department of Defence– impacts of mercury restrictions on its activities given the Convention’s

exclusion of military related uses in a number of Articles.

State/Territory based agencies

Beyond the potential impact on state utilities, which is considered in the industry costs section23, no

cost impacts on State or Territory governments were identified.24

23 We note that local Governments and some State Government will be directly impacted in relation to street lighting and

coal fired power generation. As these impacts are related to government agents performing functions in a manner akin to

industry participants rather than acting in regulatory capacity these impacts are considered in the relevant subsections of

the Industry Costs section of this report.

24 This position was supported through informal discussions with one State.


21


4.2 Costs

There are several types of government costs which would occur under the phase-down scenarios

which would not arise in the base case scenario. These costs are categorised as “setup costs”25 and

“ongoing costs”:

Set up costs – the costs of transitioning to the new requirements in capital costs, staff time,

management time and consultant fees per annum during the changeover period.

These include: costs to negotiate ratification; and cost to ensure regulation and guidelines meet

obligations under the Convention which may involve either amending existing documents and/or

developing new regulations and guidelines. “One off” implementation costs that arise at or near

the start of the convention are also included in this classification of costs.

ongoing costs in staff time, management time and consultant fees per annum.

These include changes to compliance monitoring and regulatory regimes e.g. due to change

export/ import restrictions, or need to demonstrate compliance of national plans etc.

To quantify the cost impacts associated with ratification, Marsden Jacob was informed by discussion

undertaken between the Department and other government entities as well as information gathered as

part of those discussed.

In addition, Marsden Jacob undertook discussions with a number of government departments and

statutory bodies. The entities consulted in forming this report are listed in Appendix C.

Impacts for each of type of government costs (setup costs and ongoing costs) are outlined in turn with

reference to these discussions and research undertaken as part of the project.

The Department of the Environment indicates that an ongoing allocation of two full time employees

(equating to around $250,000 per annum) is expected to cover setup costs such as ratification, as well

as ongoing costs such as the administration and reporting of the Convention. The main components of

setup and ongoing costs are discussed in more detail below.

4.2.1 Setup costs

Setup costs will be incurred primarily by the Department of the Environment with some inputs

required from other government agencies.

Four main setup activities have been identified:

ratification of the Convention;

developing, in conjunction with Australian Customs and Border Protection Service, a general

notification process for mercury imports;

reporting on point sources; and,

deregistration costs for mercury-added products.

Each of these activities are described in turn.

Ratification of the Convention

Should Australia decide to ratify the Minamata Convention, the Department of the Environment will

be the agency responsible for meeting Australia’s obligations within the Convention.

25 Also known as “changeover costs”


22


Funds from the Department’s existing budget could be allocated towards:

attendance at the Conferences of the Parties; and,

arranging and agreeing any necessary consents with trading parties (as applicable).

General notification to the Secretariat

The Department indicates that under Article 3, it is proposed that Australia would develop a general

notification to set out any terms and conditions under which Australia provides its consent as an

importer of mercury.

Reporting on point sources

The National Pollutant Inventory, as Australia’s national pollutant release and transfer register,

satisfies the obligation within the Minamata Convention that requires Parties to collect and

disseminate information on annual quantities of mercury and mercury compounds that are emitted,

released and disposed of through human activities.

Development of guidance

If Australia ratifies the Convention, a key set up cost will be negotiation of guidance for best available

techniques and best environmental practices applicable under Article 8. This process will require

input from Australian State and Territory governments, industry, and the community, and negotiation

with other countries at the Intergovernmental Negotiating Committee and with Parties in advance of,

and at the first Conference of the Parties.

The Department of the Environment will coordinate consultation on the guidance and have indicated

that they will incorporate this within the planned Departmental budget.

Deregistration costs of mercury added products

Under Article 4 and Annex A of the Convention the manufacture, import and export of specific

mercury added products is phased-out. The domestic deregistration of listed products appears to be an

effective method to ensure that specified products are no longer manufactured or imported for sale in

Australia. Examples of products where deregistration could occur are mercury containing topical

antiseptics (registered by the Therapeutic Goods Administration) as well as pesticides and biocides

(registered by the Australian Pesticides and Veterinary Medicines Authority).26

As consultation on ending the use of the products has commenced, (as part of the consultation on the

Convention) it appears that the costs of product deregistration to government would be minimal.

Mercury containing topical antiseptics

By 2020, the manufacture, import and export of mercury topical antiseptics (mercurochrome 1% and

mercurochrome 2%) will be restricted in accordance with Part 1 of Annex A under the phase-down

scenarios.

Topical antiseptics, as with other therapeutic goods, must be entered in the Australian Register of

Therapeutic Goods (ARTG) before they can be lawfully supplied in or exported from Australia -

unless otherwise authorised by the Therapeutic Goods Administration (TGA).


23


The TGA provided correspondence to the effect that phase out of these products would have minimal

impact:

In Australia there are two topical antiseptics containing mercury that are registered on the

Australian Register of Therapeutic Goods (ARTG) (Mercurochrome 1% and Mercurochrome 2%).

To our knowledge these products are not being sold commercially in Australia. Therefore the

impact of a phase out will be minimal.27

Non-electronic measuring devices

By 2020, the manufacture, import and export of mercury containing non-electronic measuring devices

listed in Part 1 of Annex A would be restricted under the phase-down scenarios.

This list of non-electronic measuring devices includes mercury containing thermometers and

sphygmomanometers (blood pressure meters). Both medical thermometers and all blood pressure

meters are listed on the ARTG which is administered by the TGA on behalf of the Commonwealth

Department of Health.

Therapeutic goods must be entered in the ARTG before they can be lawfully supplied in or exported

from Australia (unless otherwise authorised by the TGA). Hence, removal of these items from the

ARTG by 2020 would ensure Australia is compliant with these obligations within the Convention.

The TGA has indicated that the proposed phase out of measuring devices listed in Part 1 of Annex A

would not impose any additional costs:

The Therapeutic Goods Administration has no objections to accepting the proposed phase out of

measuring devices listed in Part 1 of Annex A of the Minamata Convention. Thermometers and

sphygmomanometers containing mercury are being replaced by digital products reflective of

medical technological advances.28

Pesticides and biocides

The manufacture, import or export of pesticides and biocides are also listed under Part 1 of Annex A

of the Convention as being phased-out by 2020 under the phase-down scenarios. In Australia, the only

mercury-containing pesticide which would be impacted by this obligation of the Convention is

registered under the trading name of Shirtan®.

Before agricultural and veterinary chemicals, such as Shirtan, can be sold in Australia they must first

be registered with the Australian Pesticides and Veterinary Medicines Authority (APVMA). The

APVMA is a statutory body established in 1993 with responsibilities outlined in the Agricultural and

Veterinary Chemicals (Administration) Act 1992 and the Agricultural and Veterinary Chemicals Code

Act 1994. The APVMA resides within the Agriculture portfolio.

From an administrative perspective, deregistration of Shirtan® by the APVMA would involve minimal

costs to government.

4.2.2 Ongoing costs

Discussions with relevant government stakeholders have revealed the majority of ongoing

requirements stipulated in the Convention are minimal and impose negligible costs. In many instances,

27 Correspondence from the Department of Health on the impact of the Minamata Convention on mercury dated 5 March

2015.

28 Correspondence from the Department of Health on the impact of the Minamata Convention on mercury dated 5 March

2015.


24


this is due to Australia’s existing standards – such as reporting of mercury emissions and transfers in

the National Pollutant Inventory.

Outside of the Department of the Environment, the only potential ongoing cost imposed on

government identified was on Australian Customs and Border Protection Service (ACBPS).

Customs and Border Protection

The ACBPS manages the security and integrity of Australia’s borders.

Should Australia ratify the Convention, trade in prohibited and restricted mercury and mercury added-

products would be monitored and controlled by the ACBPS.

In forming lists of prohibited and restricted imports, the ACBPS refers directly to relevant government

department managed lists and international Conventions as applicable29.

Antibiotics – permits issues by the Minister for Health and requests to import processed by the

Therapeutic Goods Administration. Refers to traditional antibiotics such as penicillin,

tetracyclines and other substances including the sulpha drugs, nitrofurazones, dapsone and

rifampicin. Anti-viral medicaments are not antibiotics.

Hazardous waste – permits issued by the Minister for the Environment and requests to import

processed by the Hazardous Waste Section of the Department of the Environment. Refers to waste

defined by the Basel Convention, of which mercury is included.

Incandescent lamps - permits issues by the Minister for Industry and requests to import processed

by the Energy Efficiency Branch of the Department of Industry. Refers to the general lighting

service that have attributes as specified in Australian Standard AS 4934.2-2011 Incandescent

lamps and general lighting services Part 2: Minimum Energy Performance Standards (MEPS)

requirements.

Pesticides and other hazardous chemicals - requests to import or export pesticides listed on the

Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals

and Pesticides in International Trade (the Rotterdam Convention) and the Stockholm Convention

on Persistent Organic Pollutants (the Stockholm Convention) are administered by the Department

of Agriculture30. Requests to import or export industrial chemicals listed on the Rotterdam or

Stockholm Conventions are administered by the National Industrial Chemicals Notification and

Assessment Scheme under the Industrial Chemicals (Notification and Assessment) Regulations

1990, along with the Customs import and export regulations in some instances.

Therapeutic drugs and substances - permits issued by the Minister for Health and requests to

import processed by the Therapeutic Goods Administration. Drugs and substances including

abortifacients, aphrodisiacs and others controlled for health reasons. This also includes laetrile and

thalidomide.

It was noted that the ACBPS currently monitor imports for a broad range of other hazardous chemicals

such as Asbestos Containing Materials, chemicals banned under the Stockholm Convention and ozone

depleting substances under the Montreal Protocol on Substances that Deplete the Ozone Layer, and

synthetic greenhouse gases under the Kyoto Protocol. Within this framework it was proposed that the

ratification of the Minamata Convention would impose negligible additional costs.

29 Refer to Customs website for details: http://www.customs.gov.au/site/page4369.asp

30 under the Agricultural and Veterinary Chemicals (Administration) Regulations 1995 and the Australian Customs and

Border Protection Service under the Customs (Prohibited Exports) Regulations 1958 and Customs (Prohibited Imports)

Regulations 1956

http://www.customs.gov.au/site/page4369.asp


25


Department of Defence

The Department of Defence indicated that they are currently auditing their use of mercury-added

products. The Department of Defence indicated that they plan to minimise, and if possible eliminate,

their reliance on mercury added products. However, the Department of Defence propose to use the

exclusion available under Annex A of the Convention:

The following products are excluded from this Annex:

(a) Products essential for civil protection and military uses;

Using this exclusion, the phase-down scenarios does not impose any additional costs over the base

case.

4.2.3 Compliance with specific Articles

In addition to discussions with relevant Departments, Marsden Jacob reviewed the requirements of the

Convention to ensure all elements were captured.

The following table summarises the Articles identified as requiring government action and the actions

involved under the ratify scenario.

Table 8: Government impacts by Article

Article Description Impact Bases for estimate


Each Party to the Convention is required to provide, within it capabilities, resources in respect of national activities that are intended to implement the Convention.

$120,000 per annum

Based on Australia’s contribution of to the Stockholm and Basel Conventions, which each uses percentage based funding mechanisms.31

Article 14 – Capacity Building

Parties shall cooperate and provide, within their respective capabilities, timely and appropriate capacity building and technical assistance to developing country Parties.

$0

Existing funding to the Asian-Pacific region managed by Department of Foreign Affairs and Trade are expected to be able to be allocated towards initiatives which would meet the requirements of this Article.

Article 17 – Information Exchange

Each Party shall facilitate the exchange of information in relation to mercury and mercury compounds as specified under the Article either directly or through the Secretariat, or in cooperation with other relevant organisations.

Each Party shall designate a national focal point for the exchange of information under the Convention, including with regard to the consent of importing Parties under Article 3.

Minimal

(included in Department of

the Environment

estimates)

Information exchange covers scientific, technical, economic and legal, and health and safety information, however the Article is non-specific as to any direct action required from Party’s.

Australia’s national focal point for exchange of information will rest with the Department of the Environment. Any costs associated with information exchange under this would be absorbed within Department costs outlined above.

31 Estimate considered that the US has already ratified the Minamata Convention and is not a Party to either the Stockholm

or Basel Conventions. The inclusion of the US as Party is likely to reduce the overall contribution required from other

Parties (including Australia), as such the estimated costs for the Minamata Convention are considered conservative.


26


Article 18 – Public information

Each Party shall promote and facilitate provision to the public of available information on health and environment effects; alternatives to mercury; topics included in paragraph1 Article 17 – information exchange; result of research, development and monitoring; and activities undertaken to meet obligations under the Convention.

Education, training and public awareness related to the effects of exposure to mercury and mercury compounds on human health and the environment.

Minimal additional

requirements

(absorbed with existing budgets

of the Departments

and government

agencies)

Reporting on activities undertaken to meet obligation under the Convention has been included in the Department’s estimate

Article 19 – Research, development & monitoring

$0

Existing funding to the Asian-Pacific region managed by Department of Foreign Affairs and Trade are expected to be able to be allocated towards initiatives which would meet the requirements of this Article.

Article 21 – Reporting

Reporting to the Conference of the Parties, through the Secretariat, on measure taken to implement the provision of the Convention.

Includes reporting information outlined in Articles 3,5,7,8 and 9.

Minimal

(included in Department of

the Environment

estimates)

The timing and format of reporting will be decided at the first meeting of the Parties. However, based on the Basel Convention requirements, costs based on a three year reporting cycle have been estimated by the Department.

Article 22 – Monitoring data

Effectiveness evaluation $0

Appears will be undertaken as part of the Conference of the Parties process relying on data provided under other articles (eg. Article 21).

4.3 Conclusion

In relation to each of these Articles, the Department has suggested that some minor costs may be

incurred; however, resources will be limited to the existing two full time employees and would

therefore be managed within the current budget. The government costs are listed in Table 9.

Table 9: Summary of Government costs

Activity Estimated annual cost NPV of estimated cost

(7% over 20 years)

Article 13 – Financial contributions $120,000 $1,270,000

Department of the Environment budget

$250,000 $2,650,000

Other government departments $0 $0

Total $370,000 $3,920,000


27



28


5. Industry costs

A review of submissions to the Department’s consultation process undertaken in 2014 identified the

following industries as likely to be impacted by Australia ratifying the Convention:

1. Industries with potential air emissions

a. Coal fired power generation and industrial boilers;

b. Non-ferrous metals smelting and roasting (lead, zinc, copper and industrial gold);

c. Waste incineration;

d. Cement;

2. Cane growers;

3. Dental practices;

4. Lighting sector;

5. Waste and recycling sector; and

6. Oil and gas production;

Marsden Jacob’s analysis has identified that industry impacts are driven by four Articles of the

Convention.

Table 10 maps the impact from each of the four Articles to the key industry impacts.


29


Table 10: Industry impacts by Article

Key Industries

Article Dental Cane Growers Coal-fired Generation

including in Aluminium Production

Non-Ferrous Mining

Cement Other

Ke

y A

rtic

les

4

Mercury added products

Amalgam Mercury-containing pesticides

Street Lighting

8

Emissions

New plant Existing plant



Waste Incineration & Coal fired boilers New plant Existing plant

11

Wastes

Amalgam - sink waste interceptors

Fly ash

Recycling

3

Supply sources and trade

Phase-down of amalgam 2 of 9 measures in Part 2 Annex A


30


5.1 Industries with potential air emissions

Article 8 of the Convention sets out requirements for controlling, and where feasible reducing

emissions of mercury and mercury compounds to the atmosphere from a number of specified point

source categories. Point source categories are set out in Annex D of the Convention. These include:

Coal-fired power plants;

Coal-fired industrial boilers;

Smelting and roasting processes used in the production of non-non-ferrous metals (lead, zinc,

copper and industrial gold);

Waste incineration facilities; and

Cement clinker production facilities.

Importantly, each Party to the Convention may establish criteria to identify the sources (e.g. individual

facilities) covered within a source category listed in Annex D. The criteria for identifying point

sources within a category is flexible so long as those criteria for any category includes at least 75 per

cent of the emissions from that category (Article 8 Paragraph 2(b)).

Note, while aluminium production is not specifically mentioned in Annex D, many aluminium

refineries and smelters include coal-fired power generation - which is included – and hence this

section of the report would also be relevant to this sector.

5.1.1 New sources and existing sources

The structure of Article 8 differentiates between existing sources of emissions (emissions from

existing plants and facilities) and new emissions (emissions from either existing plant which has

undergone ‘substantial modification’32 or new plant and facilities).

New sources are also defined with reference to the date of entry of force of the Convention. New

sources are sources for which the construction or substantial modification of which is commenced at

least one year after the date of entry into force of the Convention. 33 Existing sources are defined as

any sources which are not defined as a new source. 34

Using the timetable set out in section 1.1, we assume that new sources are those where construction

commences after early 2017. This assumption is based on the Convention entering into force in early

2016 – consistent with the remainder of the report.

The obligations required for existing and new sources differ. These are considered in turn.

Existing sources

For existing sources each Party to the Convention is required to select one or more of five possible

measures for implementation within 10 years of the Convention coming into force. The five measures

are:

32 ‘Substantial modification’ means modification that results in a significant increase in emissions, excluding any change in

emissions resulting from by-product recovery (as applicable). Each Party to the Convention must (individually, in relation

to its own matters) decide whether a modification is substantial or not. See Article 8, paragraph 2(d) of the Conventions.

33 Article 8, Paragraph 4

34 Article 8, Paragraph 5.


31


(a) A quantified goal for controlling and, where feasible, reducing emissions from relevant

sources;

(b) Emission limit values for controlling and, where feasible, reducing emissions from

relevant sources;

(c) The use of best available techniques and best environmental practices to control emissions

from relevant sources;

(d) A multi-pollutant control strategy that would deliver co-benefits for control of mercury

emissions;

(e) Alternative measures to reduce emissions from relevant sources.

In discussions with industry and the Department, Marsden Jacob considers the least costly option to

enable Australia’s compliance with the Convention is the introduction of (b) Emission limit values for

controlling and, where feasible, reducing emissions from relevant sources.

It is also noted that the selection of measures under the Convention should “take into account its

national circumstances, and the economic and technical feasibility and affordability of the

measures.”35 Marsden Jacob’s interpretation is that the Convention does not seek to impose mercury

emission reduction measures to the extent that prevent individual plants or being viable. Similarly,

recognition of national circumstances may be interpreted in Australia’s context in a number of

different ways – including requirement for economies of scale, isolation factors and lack of alternative

treatment or production methods (such as might be available in interconnected or larger European and

American economies).

New sources

Article 8, Paragraph 4 of the Convention specifies the

For its new sources, each Party shall require the use of best available techniques and

best environmental practices to control and, where feasible, reduce emissions, as soon as

practicable but no later than five years after the date of entry into force of the Convention

for that Party. A Party may use emission limit values that are consistent with the

application of best available techniques.

The guidance on best available techniques (BAT) and best environmental practices (BEP) is currently

being developed by a technical working group. The guidance will be discussed at the next

Intergovernmental Negotiating Committee (around the start of 2016) and then negotiated and agreed at

the first Conference of the Parties (expected to occur in late 2016 or early 2017).

Due to the current status of the guidance (draft and confidential) and the unknown outcomes of the

multi-staged process prior to implementation it is not possible to predict the requirements (and

resulting costs and benefits) of the guidance.

The remainder of this section sets out and discusses the ‘most likely’ outcome that would arise.

Potential risks raised by the unknown nature of the BAT and BEP guidance is discussed more fully in

Appendix B.

35 Minamata Convention on Mercury, Article 8, paragraph 5, p.20


32


5.1.2 Non-ferrous metals

For the purpose of the Convention ‘non-ferrous metals’ refers to lead, zinc, copper and industrial gold.

Smelting and roasting processes associated with the production of these metals.

In Australia, the roasting of gold is the largest point source of mercury emissions into the atmosphere.

The Gidji gold smelting facility North of Kalgoorlie releases approximately three tonnes of mercury

per annum36 however, current upgrades to the smelter facility will reduce this amount within the next

four years irrespective of the Convention. Additional benefits will arise from the current planned

upgrades as the facilities will be able to meet their existing State-based environmental conditions.37

Base case

Under the base case we assume current operations would continue in line with existing planned

upgrades. We also considered the likelihood of new or substantially modified facilities.

Based on consultation, no new facilities are expected for lead, zinc and copper in the next 20 years.

New industrial gold facilities are possible within the study period with up to two facilities being

considered feasible. However discussions with industry suggest that if one or more new gold smelters

were developed, the suggested timing for these would be around 15 years from now (around 2025).

Ratification

Potential new industrial gold facilities could face additional capital and operating costs if Australia

ratifies the Convention and technology requirements under guidelines are more expensive than

technology which would be employed otherwise. However, there is a large uncertainty on longer term

need for new facilities and no new gold facilities are expected in within the immediate 10 years. Given

the uncertainty over whether a new facility will be needed, the current legislative requirements that

would be imposed on a new facility as well as the requirements that would be imposed under the

convention, the additional costs were considered to be negligible under the ‘most likely’ outcome.

Indicative costs (and mercury capture) are discussed under the ‘worst case’ outcome in Appendix B.

Conclusion

Based on discussions with industry and government Marsden Jacob concluded that ratification could

impose small set up costs on industry in providing voluntary contributions to a (likely) national plan,

but is unlikely to impose costs on existing facilities. While ratification could impose costs on any new

facilities constructed, as new facilities are only considered probable for industrial gold and these are

not likely within the immediate 10 year period and are uncertain beyond this period costs associated

with non-ferrous metal obligations do not feature under the ‘most likely’ outcome of Marsden Jacob’s

cost benefit analysis.38

5.1.3 Coal-fired power generation

There are 37 coal fired power stations in Australia that are used to generate electricity. Through the

incineration process to produce electricity whereby coal is burned, trace amounts of mercury

embedded in the coal are released.

36 National Pollutant Inventory, 2012/2013 www.npi.gov.au

37 http://superpit.com.au/Environment/AirQuality/SulphurDioxideManagement/tabid/128/Default.aspx

38 Costs imposed on industry are modelled under the ‘worst case’ outcome in Appendix B.

http://www.npi.gov.au/npidata/action/load/emission-by-facility-result/criteria/substance/55/destination/ALL/source-type/ALL/substance-name/Mercury%2B%2526%2Bcompounds/subthreshold-data/Yes/year/2013

http://superpit.com.au/Environment/AirQuality/SulphurDioxideManagement/tabid/128/Default.aspx


33


Australian coal is relatively low in mercury content (in comparison to countries such as the United

States of America) and the mercury content varies from one resource to another. Estimated air

emissions for some of Australia’s coal power stations are provided in Table 11. It is noted that the four

largest emitters are Victorian based which is attributed to the lower calorific value of Victorian brown

coal and a higher mercury content in these coal resources.

Table 11: Estimated air emissions of mercury and compounds 2013-14

Plant Location Estimated Air Emissions of Mercury (Kg)

GDF SUEZ Hazelwood Morwell-VIC 450

Loy Yang B Power Station Traralgon-VIC 437

EnergyAustralia Yallourn Yallourn North-VIC 360

AGL Loy Yang Traralgon-VIC 188

Northern Power Station Port Augusta-SA 148

Callide Power Plant Biloela-QLD 127

Stanwell Power Station Gracemere-QLD 107

Callide Power Station (A & B) Biloela-QLD 103

Gladstone Power Station Gladstone-QLD 92

Muja Power Station Collie-WA 72

Eraring Power Station Eraring-NSW 59

Tarong Power Station Nanango-QLD 49

Collie Power Station Collie-WA 49

Bayswater Power Station Muswellbrook-NSW 41

Source: National Pollutant Inventory, 2013/2014 mercury and compounds

Base case

The Electricity Supply Association of Australia (ESAA) notes:

“Forecasts of electricity demand indicate that there is no need for additional generation

capacity, of any fuel source, for at least a decade. Falling demand for electricity has

resulted in a significant oversupply of generation capacity.” 39

The ESAA noted that eight power stations were built in the previous 20 year period and that “it is

impossible to accurately forecast demand beyond 2025 or foresee the type of generation technology

required.” 40

The ESAA’s advice is consist with information contained in the Australian Energy Regulator’s annual

State of the Energy Market Report. The 2014 report outlined that “muted demand and climate change

39 Electricity Supply Association of Australia submission to Marsden Jacob and the Department of the Environment in

response to questions posed (unpublished), March 2015

40 Electricity Supply Association of Australia submission to Marsden Jacob and the Department of the Environment in

response to questions posed (unpublished), March 2015


34


policies contributed to over 2,000 MW of coal plant being shut down or periodically taken offline in

2012–13” and highlighted that “For the first time in the NEM’s history, no new capacity would be

required in any NEM region to maintain supply–demand adequacy for the next 10 years.”41

During the course of the project AGL Energy Limited, announced a new policy to “decarbonisation of

electricity generation”. 42 Importantly, the policy states that AGL will not build, finance or acquire

new conventional coal-fired power stations in Australia43 and that AGL will not extend the operating

life of any of its existing coal-fired power stations.

Despite these changes in trends, some new coal fired generation projects may be proposed within the

latter part of the cost benefit analysis timeframe. Australian Energy Market Operator lists proposed

generation projects that are ‘advanced’ or publicly announced. At July 2014 it listed around

20,000 MW of proposed capacity across the NEM, 10.6 per cent of which related to coal generation

projects.44

Given the information provided Marsden Jacob agreed with industry to use a range of zero to two coal

fired power stations being built around the year 2030.

Ratification

Under the most likely outcome it was considered that no additional costs would be incurred and no

change in mercury emissions would occur. This outcome would arise either if no new facilities are

constructed, or if the BAT and BEP guidance does not impose additional requirements beyond

business as usual levels.

5.1.4 Aluminium

While Aluminium production is not specifically listed under Article 845 a number of aluminium

refineries and smelters include coal-fired power generation and/or coal-fired industrial boilers.

In aluminium production mercury is released from two principal sources:

the combustion of coal (at alumina refineries); and

emissions from the alumina refining process.

Only mercury emissions released through the combustion of coal are currently captured by the

wording under Article 8.

In discussions with aluminium industry it was noted that Appendix D could be expanded in the future

to include emissions from the alumina refining processes. While this may be the case, such an

41 Australian Energy Regulator (2014) State of the Energy Market Report, p. 34.

42 AGL Energy Limited (2015), AGL policy to provide pathway to decarbonisation of electricity generation, media release

dated 17 April 2015, accessed 30 April 2015. Available at: www.agl.com.au/about-agl/media-centre/article-

list/2015/april/agl-policy-to-provide-pathway-to-decarbonisation-of-electricity-generation and

AGL Energy Limited (2015) AGL Greenhouse Gas Policy, 17 April 2015, accessed 30 April 2015. Available at:

http://www.agl.com.au/~/media/AGL/About%20AGL/Documents/Media%20Center/Corporate%20Governance%20Pol

icies%20Charter/1704015_GHG_Policy_Final.pdf

43 Without Carbon Capture and Storage

44 Australian Energy Regulator (2014) State of the Energy Market Report, p. 32 and Figure 1.13 on p. 35.

45 See Appendix D of the Convention which lists lead, zinc, copper and industrial gold as the non-ferrous metals which are

covered by the Convention.

http://www.agl.com.au/about-agl/media-centre/article-list/2015/april/agl-policy-to-provide-pathway-to-decarbonisation-of-electricity-generation

http://www.agl.com.au/about-agl/media-centre/article-list/2015/april/agl-policy-to-provide-pathway-to-decarbonisation-of-electricity-generation

http://www.agl.com.au/~/media/AGL/About%20AGL/Documents/Media%20Center/Corporate%20Governance%20Policies%20Charter/1704015_GHG_Policy_Final.pdf

http://www.agl.com.au/~/media/AGL/About%20AGL/Documents/Media%20Center/Corporate%20Governance%20Policies%20Charter/1704015_GHG_Policy_Final.pdf


35


assumption is beyond the scope of Marsden Jacob’s cost benefit analysis and so is not considered

further.

Given that aluminium industry’s interest in Article 8 is based on coal-fired generation the same figures

were applied to the aluminium as for was for the coal fired generation sector.

5.1.5 Cement

Mercury is introduced into the clinker burning process via both, raw materials and fuels. The mercury

content of these inputs varies, with raw materials (such as limestone and clay or their natural mix, lime

marl, and sand) containing lower mercury content per kilogram than fuel used in the cement industry

(such as coal, or other fuels).46 The burning process releases the trace mercury content of these inputs

as emissions.

The Cement Industry Federation indicated that there are three companies with five integrated cement

and clinker facilities in Australia. Industry also commented that mercury emissions from Australian

cement facilities compare well to emissions from international facilities.

National Pollution Inventory data suggests that integrated cement plant mercury emissions in 2012-13

equated to 0.013 grams per tonne of clinker. This is an order of magnitude less than the European

Union legislated limit47 which is equivalent to around 0.11 to 0.13 grams per tonne of clinker.

Base case

The cement industry indicates that it is highly unlikely that any new facilities would be developed in

the next 20 years. It was also noted that no new facilities were constructed during the previous

20 years (between 1995 and 2015). However, all operating integrated cement plants underwent

significant technology upgrades to reduce emissions over this time period.

Ratification

Of the five current facilities only one plant (in Queensland) is not covered by an existing emission

limit value through state approvals, however, the current licence is for this plant is still likely to meet

the obligations of Article 8 due to the range of measures within the Convention that can be applied to

existing plant.

Conclusion

Through consultation industry confirmed that no ongoing costs are expected for existing facilities and

no new facilities are expected to be constructed during the next 20 years.

As such, no impact has been estimated for the cement industry as a result of ratification for the cost

benefit analysis.

46 European Cement Research Academy (2013) Technical Report: Guidance Document on BAT-BEP for Mercury in the

Cement Industry - Initial Outline (TR-ECRA 0049a/2013/M), 31 May 2013, Table 3 and Table 4 on p. 9. Available at:

http://www.unep.org/chemicalsandwaste/Portals/9/CSI_Hg-Report_final_10_06_13.pdf

47 European Regulation states a maximum 0.050 mg/Nm 3 (~0.11 to 0.13 g/t-clinker). See Alan Kreisberg (2013)

Rationale, objectives and priority areas of the Cement Industry Partnership on Mercury, PowerPoint presentation to the

UNEP Cement Industry Partnership Geneva Meeting on 18 June 18 2013. Available at:

http://www.unep.org/chemicalsandwaste/Mercury/GlobalMercuryPartnership/MercuryreleasesfromtheCementIndustry/

Meetings/tabid/106280/Default.aspx

http://www.unep.org/chemicalsandwaste/Portals/9/CSI_Hg-Report_final_10_06_13.pdf

http://www.unep.org/chemicalsandwaste/Mercury/GlobalMercuryPartnership/MercuryreleasesfromtheCementIndustry/Meetings/tabid/106280/Default.aspx

http://www.unep.org/chemicalsandwaste/Mercury/GlobalMercuryPartnership/MercuryreleasesfromtheCementIndustry/Meetings/tabid/106280/Default.aspx


36


5.1.6 Waste incineration

“Incineration is a combustion process that uses rapid oxidation, excess air and high temperatures to

produce conditions whereby hazardous and toxic waste products are thermally broken down and

destroyed.”48 Where waste contains mercury or traces of mercury, the incineration process releases

mercury emissions.

Australia has not traditionally used waste incineration as a method for solid waste disposal. However,

there have been four recent approvals for waste incineration facilities in Western Australia – and one

further facility is currently under assessment, also in Western Australia.

Three of the facilities are waste to energy projects based on gasification. Only one facility is based on

full incineration of the waste.

Base case

Four waste incineration facilities have gained approval in Western Australia, but at this stage none of

the facilities have commenced construction. It is unknown how many facilities additional new

facilities will be planned throughout Australia in the period to 2035.

Ratification

Under the Convention new facilities are defined broadly as “the construction or substantial

moderation of which is commenced at least one year after the date of entry into force of the

Convention.” Depending on the timing of construction, some or all of the four facilities with existing

approvals could be classified as either existing facilities or new facilities.

The West Australian Environment Protection Authority49 has prepared informal advice under section

16(e) of the Environmental Protection Act (Western Australia) 1986 on best practice for waste

incineration.50

From the Authority’s advice it appears that Western Australia already adopts best practice techniques

in granting approvals. This view was confirmed in discussions with staff from the Office of

Environment Protection Authority. Further, these discussions suggested that similar advice and

sources of information on best practice have been used by the Authority in approving the plants as

would inform the BAT and BEP guidance. For this reason, it is likely that the Western Australian

plants are likely to already align with international BAT and BEP guidance.

Conclusion

The four waste incineration facilities which have gained approval in Western Australia, but for which

construction is yet to commence are likely incorporate best practice techniques akin to the likely BAT

and BEP guidance to be developed under the Convention. It is unknown how many other new waste

incineration facilities are likely to arise in other parts of Australia.

48 Unilabs Environmental (1999) Characterisation and Estimation of Dioxin and Furan Emissions from Waste Incineration

Facilities, report prepared for Environment Australia, June 1999, p. 34.

49 Western Australia being the only State that is known to have currently approved waste incineration facilities.

50 Environmental and health performance of waste to energy technologies, 4 April 2013

www.epa.wa.gov.au/Policies_guidelines/strategicadvice/Pages/default.aspx?cat=Strategic%20Advice&url=Policies_gui

delines/strategicadvice

http://www.epa.wa.gov.au/Policies_guidelines/strategicadvice/Pages/default.aspx?cat=Strategic%20Advice&url=Policies_guidelines/strategicadvice

http://www.epa.wa.gov.au/Policies_guidelines/strategicadvice/Pages/default.aspx?cat=Strategic%20Advice&url=Policies_guidelines/strategicadvice


37


As legislative requirements for solid waste incineration have not been set for other jurisdictions, the

West Australian requirements are likely to be used as a starting point for other states. For this reason

Marsden Jacob concluded that ratification would not impose any additional costs on new facilities..

5.2 Cane growers

Mercury is used in some pesticides and biocides. However, in Australia only one product registered

with the Australian Pesticides and Veterinary Medicines Authority (APVMA) is listed as containing

mercury. Shirtan® is a mercury-containing pesticide that is widely used by sugarcane growers for the

control of pineapple disease (caused by the fungus Ceratocyctis paradoxa).

Growers that use Shirtan® apply the chemical to sugarcane setts prior to planting (approximately every

four to six years). While there are alternative products available (discussed below) the mercury-

containing pesticide has substantial market penetration with around 80% of new plantings being

treated (equating to an average of 44,000 litres per year over the period 2011 to 2014).

The active ingredient of Shirtan is 120 grams of mercury, present as methoxyethylmercuric chloride

(referred to as MEMC) per litre.51

Sugarcane planting

Sugarcane is a semi-perennial crop and individual fields are only replanted every four to six

years. Sugarcane is planted by using cuttings (referred to as “setts”).

Sugarcane is cut annually and in the intervening years- between replanting, the root stock and

base of the plant are left in place.

Cane farmers indicate that planting is the most expensive part of the cropping cycle and disease

management is a key element of planting.

Relevant Articles of the Convention

Article 4 (mercury-added products) restricts the manufacture, import or export of mercury-added

products after a specified phase-out date. Pesticides, biocides and topical antiseptics have a

compulsory phase-out date of 2020.

Article 4 also requires Parties to collect and maintain information on mercury-added products and their

alternatives and make this information publically available.

Article 4 does not specifically require the APVMA to remove mercury-containing pesticides from its

list of registered products – however, as discussed in section 4.2, it is recognised that this would

provide a mechanism to ensure the product ceases to be produced and used.

Alternative products

Alternative non-mercury pesticides are available on the market. A range of propiconazole based

pesticides are available under differing trade names and are registered for control of both pineapple

sett rot and smut.

Sinker® is a relatively new flutriafol-based pesticide that is currently a proprietary formulation used

for the control of sugarcane smut and pineapple disease – however, alternative flutriafol-based

51 Crop care Australia, Material Safety Data Sheet Shirtan Liquid Fungicide, 2011


38


pesticides are likely to become available in approximately 3 years.52 Once competitors using

flutriafol-based pesticides are able to enter the market, costs are expected to drop and be more

competitive with the current mercury-containing pesticide.

Previous analysis indicated that propiconazole-based fungicides cost approximately half that of the

mercury-containing pesticide53 (which costs $27)54 and these relative costs were confirmed in

discussions with the industry.

Some industry participants suggest that the popularity of the mercury-containing pesticide is due a

belief that the chemical stimulates rapid germination of sugarcane relative to alternative products –

particularly in adverse conditions (such as cold weather). Crop Care reportedly spoke with researchers

who estimated that each year around 10% to 20% of the sugarcane crop planted is at risk due to poor

conditions and that it is under these conditions that they believe the mercury-containing pesticide is

advantageous. Crop Care estimated that the risk to crops might be realised 30% of the time (if the

mercury-containing pesticide weren’t used) – equating to 3,150 hectares. Where crops are damaged

the most likely response is to replant the crop at a cost of $1,000 to $1,500 per hectare. This

information would value the loss of Shirtan at $3,937,500 per annum. There is no published scientific

information available that supports this belief. Given the uncertain nature of this value it was not

included under the most likely case assessment.

The belief that the mercury-containing pesticide improves germination rates was reported in an

(unsighted) journal article from 197055, this has since been disproven by more recent studies that

found:

“results from the current study indicated that MEMC [the mercury-containing pesticide]

did not provide higher or faster germination compared to the two triazole fungicides or

the uninoculated control. The reason for the discrepancy between the current and the

previous study is not clear.” 56

Selected results from an experiment of this more recent research analysis are displayed in Figure 6.

The mercury-containing pesticide is listed as MEMC (referring to the active ingredient) and has a

germination rate of only 14% in comparison to 23% for the flutriafol-based product. In the text

accompanying the graph it is observed that:

“conditions were cold and wet after a late winter planting.”

These planting conditions appear to align with the description of “adverse conditions” that industry

stakeholders are primarily concerned about. It follows that more recent research has found that

existing mercury-free alternative products have a greater beneficial impact on sugarcane germination

than the mercury-containing pesticide, even when used in adverse conditions.

52 Once the data used for registration with APVMA becomes publicly available – Information provided by Crop care

53 Dent Siobhan, Switala John and O’Sullivan Mark, Modelling the role of an assumed “eco-efficient” production system:

Queensland’s sugar cane industry, presentation at Outlook 2003.

54 Information provided by cropcare

55 Steindl DRL (1970) The control of pineapple disease and the stimulation of germination in cane setts in Queensland.

Sugarcane Pathol Newsl 5:53–54

56 Bhuiyan S. A. Croft B. J. & Tucker G. R. Efficacy of the fungicide flutriafol for the control of pineapple sett rot of

sugarcane in Australia, Australasian Plant Pathol. (2014) 43:413–419 DOI 10.1007/s13313-014-0282-y


39


Figure 6: Comparison of bud germination at 120 days for differing pesticide treatments

Source: Crop care media release 23 May 2013, Crop Care launches Sinker fungicide in sugarcane

Alpha Chemicals (who manufacture the mercury-containing pesticide) believe that the popularity of

the mercury-containing pesticide was because organic-based pesticides can become less effective over

time if not managed properly, as fungi can develop a tolerance to the product. It is important to note

however, that pesticide resistance management plans are standard practice (and can include integrated

disease management programs) in order to ensure that the products are used appropriately and manage

resistance without sacrificing disease control.

Base case

Under the base case, it appears that the mercury-containing pesticide would continue to be used at its

current level into the foreseeable future.

It was noted that if Australia does not ratify the Convention, then importing mercury for the

production of the mercury-containing pesticide would only be possible from other countries which

have not ratified57. Alpha Chemicals indicated that this was not a concern as a source of mercury

(from a waste stream) had been identified within Australia.

Ratification

Under the phase-down scenarios, the manufacture of the mercury-containing pesticide would have to

cease by 2020. While one of the alternative products is cheaper (and the other product is the same

price) – this cost differential represents a transfer between parties and does not impact on economic

costs for Australia as a whole – as both products are manufactured in Australia.

57 Under Article 3 Paragraph 6b parties to the Convention are prohibited from exporting Mercury to non-parties for a

prohibited use and the manufacture of Shirtan is a prohibited use under Article 4 and Annex A.


40


The Canegrowers association indicated that there are negligible costs in changing from one pesticide

to another. From discussions with the distributor of the mercury-containing pesticide, it appears likely

that under a phase-down scenarios, their agents may need to spend more time with cane growers

educating them on the need to change and alternative products.

The impact of ratification on mercury released

The average amount of Shirtan (the mercury-containing pesticide) used in recent years is 44,000 litres

per annum. This equates to 5,280 kg of elemental mercury being released into the Australian

environment each year.

Evidence of “significantly increased” mercury residues in soils throughout sugarcane growing

regions has not been detected by Sugar Research Australia.58 The Department of the Environment

noted that the form of mercury in this pesticide does not readily transport through the soil profile,

rather it is more likely to attach to soil particles and flow overland, becoming agricultural runoff.

Mercury in water bodies is primarily associated with dissolved organic matter and suspended

particulate matter such as clay particles. These particulates eventually settle into sediment layers.

Great Barrier Reef sediment cores have identified mercury concentrations of up to 100µg kg-1, an

order of magnitude higher than background concentrations. These concentrations were attributed to

the contemporary application of mercury-based pesticides on sugarcane farms.59

5.2.1 Scenario 2C

Scenario 2C considers the impact if the manufacture and use of mercury-containing pesticides were

phased out early (in 2017) rather than in 2020 as stipulated in the Annex A of the Convention.

From discussions with the Canegrowers association Marsden Jacob understands that the costs to cane

growers would not alter significantly if the mercury-containing pesticide were removed from

production and use earlier than 2020.

However, it is expected that an early phase out would impose additional costs on Crop Care and the

distributors of other alternative products through increased resourcing of advisors and sales staff to

assist farmers in the change to alternative products . While these costs are not readily estimated

across a competitive market in Marsden Jacob’s experience it is reasonable to double the estimated

resources required to achieve a transition to alternative products in under half the time.

It is noted that if mercury-containing pesticides were phased-out in 2017, then it appears likely that the

non-mercury product Sinker (which may be the preferred alternative product) will still be priced at a

higher cost than the current mercury-containing pesticide Shirtan. This does not appear in the cost

benefit analysis as it is a transfer between stakeholders – but does impose a regulatory burden on

canegrowers60. In addition, bringing forwards the date for the phase-out of mercury-containing

pesticides would reduce the ability for Alpha Chemicals (who manufacture Shirtan) to restructure its

business.

58 Canegrowers Association submission to the Department of the Environment’s Public Consultation Paper on the possible

ratification of the Minamata Convention, dated 30 June 2014.

59 GBRMPA, Water Quality Guidelines for the Great Barrier Reef Marine Park: Revised Edition 2010, p. 74.

60 Due to the differing focus of the cost benefit analysis and the regulatory burden measurement this cost appears as a

regulatory burden – but not as a


41


5.3 Dental practices

It is important to note that the Convention does not prohibit the manufacture, import, export or use of

amalgam fillings. Instead Parties are required to undertake measures to phase-down the use of

amalgam.

Dental amalgam containing mercury is a material used for dental fillings – both in Australia and

globally. The usage of dental amalgam in Australia is declining and currently comprises roughly 25%

of the new fillings in Australia61.

The majority of dental filling now make use of alternative products such as resin composite and glass-

ionomer. The industry reports that the declining use of dental amalgam is largely due to increasing

consumer preference for tooth-coloured alternatives62. This trend appears to be continuing despite the

alternatives being higher cost (roughly 50% to 100% more expensive) and potentially having shorter

useful life.63

Under the Convention, Article 4 requires Parties to undertake measures to phase-down the use of

dental amalgam. Specifically, Parties are required to undertake two or more of the measures listed in

the Convention to phase-down the use of dental amalgam.64 Australia is already compliant with this

obligation.

Articles 3 and 11 which deal with mercury trade and management of mercury waste respectively are

also of relevance to the dental industry. Mercury is (or could be) imported under Article 3 for the

purpose of dental amalgam manufacture, however trade in mercury for this purpose is not restricted.

Waste dental amalgam can be captured by installing separation devices at dental surgeries –

preventing the waste amalgam entering waste water systems.

Although, installation of separators is not strictly required under the Convention, Marsden Jacob has

conducted analysis on the likely costs and benefits of facilitating installation of these devices in

surgeries across Australia as part of sub-option 2B under the phase-down scenario.

In assessing the costs and benefits of ratifying it is necessary to consider the impact of the Convention

(under both ratification and base case scenarios) on the:

61 According to separate submissions by the Australian Dental Industry Association and Australian Dental Association to

the Department of the Environment’s Minamata Convention On Mercury Ratification Consultation and discussions with

dental industry experts

62 Department of Health (2014) Submission to Department of the Environment: Ratification of the Minamata Conventions

Consultation, 17 July 2014, p. 2

63 Based on discussions with dental industry experts

64 Listed measures in Annex A part II which apply under Article 4, paragraph 3 include:

(i) setting national objectives aiming at dental caries prevention and health promotion, thereby minimizing the need for dental restoration;

(ii) Setting national objectives aiming at minimizing its use;

(iii) Promoting the use of cost-effective and clinically effective mercury-free alternatives for dental restoration;

(iv) Promoting research and development of quality mercury-free materials for dental restoration;

(v) Encouraging representative professional organizations and dental schools to educate and train dental professionals and students on the use of mercury-free dental restoration alternatives and on promoting best management practices;

(vi) Discouraging insurance policies and programmes that favour dental amalgam use over mercury-free dental restoration;

(vii) Encouraging insurance policies and programmes that favour the use of quality alternatives to dental amalgam for dental restoration;

(viii) Restricting the use of dental amalgam to its encapsulated form;

(ix) Promoting the use of best environmental practices in dental facilities to reduce releases of mercury and mercury

compounds to water and land.


42


manufacture, import and export of dental amalgam; and

use of amalgam for dental fillings in Australia.

In addition Scenario 2 B requires consideration of the costs and benefits of installing amalgam

separators in all dental clinics.

5.3.1 Base case

Under the base case where Australia does not ratify the Convention, any changes in costs after

ratification compared to the current costs will be driven by changes in Australia’s ability to:

import mercury for continued manufacture of dental amalgam; and

import and export amalgam.

These points are considered in turn below.

Australia’s ability to import mercury

Australia’s ability to import mercury for continued manufacture of dental amalgam depends largely on

decisions by other countries in relation to the future of mercury. The Convention does not restrict trade

in mercury for dental amalgam (subject to consents being agreed between Parties); however other

restrictions will result in the mining of “new” mercury becoming less common over time as the

Convention restricts the development of new mercury mines. As such, the supply of mercury

internationally could reasonably reduce as a consequence of the Convention coming into force.

Marsden Jacob does not expect that Convention will impact the supply of mercury to Australia for

dental amalgam in the immediate future (10 to 15 years).

For the purpose of the cost benefit analysis, changes which depend on other countries actions are

assumed to be the same, regardless of Australia’s decision to ratify. As such there is no difference as

these changes would occur in both the base and ratification cases and as such the impacts net off.

According to the Dental Industry Association “There is only one Australian producer of dental

amalgam, SDI Limited, which requires approximately twenty tons of mercury per year to support its

manufacturing processes.” 65 In addition, Kerr Australia was identified as importing and exporting

amalgam fillings.

The Dental Industry Association also commented that “Around 98% of the mercury needed by SDI

Limited for production of dental amalgam is imported. Australia has a domestic mercury recycling

operator, Ecocycle Australia, which processes approximately 350 kilograms of mercury annually

which is on-sold to SDI.” 66

The Convention will have competing and opposite impacts on recycling of mercury which will vary

depending on whether Australia ratifies or not. Some sources of mercury (such as streetlights and

lamps) will reduce over time as international manufacturers are likely to move to alternative products.

In contrast, sources of waste mercury from captured smelters, refineries and oil and gas production

appears to have increased in recent years. Under the base case it remains unclear whether recycling

could generate sufficient mercury to meet supply for dental amalgam in the absence of mercury

imports.

65 Australian Dental Industry Association (2014) Submission on the Minamata Convention On Mercury Ratification, 30

June 2014, p. 7

66 Australian Dental Industry Association (2014) Submission on the Minamata Convention On Mercury Ratification, 30

June 2014, p. 7


43


Import and export amalgam

In addition to supplying the Australian market, SDI Limited manufactures dental products for export –

including mercury based amalgam.

It is noted that should the supply of mercury to Australia become limited (discussed above), then the

ability for Australian manufacture of amalgam would be limited and as such the ability to continue

exporting to other countries becomes mute

The future demand for amalgam in Australia, and the future overseas demand under the base case are

each discussed in turn.

Future demand for mercury based dental amalgam in Australia

A number of factors discussed above suggest that continued use of amalgam after 2020 may reduce

regardless of Australia’s decision to ratify.

Firstly, the use of mercury based amalgam appears to be reducing over time as a result of individual

preference for “white filling” substitutes. The Department of Health submitted to the Department’s

consultation on ratification of the Minamata Convention that:

“Amalgam use has been declining rapidly in Australia in the last few years due to a response to

the demand for "white fillings". The impact that a phase-down would have on the dental

restorative materials industry does not appear to be great. There are only two active suppliers

of amalgam in Australia and use is declining. 67

Secondly, ratification of the Convention by larger international markets may influence decisions by

the suppliers of mercury based amalgam to Australia (e.g. SDI Limited and Kerr Australia).

Future export of mercury based dental amalgam

Dental amalgam capsules are exported from Australia, so permission to import would need to be given

by the country receiving the imports. On the basis the Convention stipulates the phasing down of

dental amalgam, this appears likely to happen unless the country chooses to ban amalgam fillings. To

date a small number of countries – such as Sweden, Norway and Denmark have chosen to ban

amalgam fillings. However, this decision would be considered independent of the Minamata

Convention.

5.3.2 Ratification

Under the phase-down scenarios, where Australia does ratify the Convention and adheres to the

Convention requirements, impacts to the dental industry would be driven by:

any measures Australia chooses to undertake with regards to facilitating the phase-down of

amalgam consistent with Article 4; and

impacts on mercury for imports and mercury products for exports.

As noted above the introduction of the Convention will potentially have some impacts on international

trade in mercury and mercury added products – but following discussions with stakeholders it was

concluded that the impacts will be the same whether Australia ratifies or not. For this reason it does

not impact on the Cost Benefit Analysis and is not considered further.

67 Department of Health (2014) Submission to Department of the Environment: Ratification of the Minamata Conventions

Consultation, 17 July 2014, p. 2


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Options to meet Article 4 measures

Under Article 4, paragraph 3 of the Convention, Parties are required to undertake specific measures

for the mercury-added products. For dental amalgam these are:

Measures to be taken by a Party to phase-down the use of dental amalgam shall take into account

the Party’s domestic circumstances and relevant international guidance and shall include two or

more of the measures from the following list:

(i) setting national objectives aiming at dental caries prevention and health promotion,

thereby minimizing the need for dental restoration;

(ii) Setting national objectives aiming at minimizing its use;

(iii) Promoting the use of cost-effective and clinically effective mercury-free alternatives for

dental restoration;

(iv) Promoting research and development of quality mercury-free materials for dental

restoration;

(v) Encouraging representative professional organizations and dental schools to educate

and train dental professionals and students on the use of mercury-free dental restoration

alternatives and on promoting best management practices;

(vi) Discouraging insurance policies and programmes that favour dental amalgam use over

mercury-free dental restoration;

(vii) Encouraging insurance policies and programmes that favour the use of quality

alternatives to dental amalgam for dental restoration;

(viii) Restricting the use of dental amalgam to its encapsulated form;

(ix) Promoting the use of best environmental practices in dental facilities to reduce releases

of mercury and mercury compounds to water and land.

From discussions with the Department and stakeholders Australia appears to be compliant with at least

two of these measures. In particular:

Australia is updating its oral health plan68 to cover 2015 to 2024 (aligning with measure i);

professional organizations and dental schools already educate and train dental professionals and

students on the use of mercury-free dental restoration (aligning with measure v); and

in Australia no insurance policies and programmes favour dental amalgam use over mercury-free

dental restoration (aligning with measure vi).

Given that Australia is already compliant with the requirement to meet two or more measures, no

additional costs or benefits are expected to arise as a result of ratification.

5.3.3 Scenario 2B – Ratification with dental amalgam separators encouraged by government

The primary source of mercury waste from dental amalgam is through the removal of old fillings.

Some mercury residue also enters the waste water streams when new mercury fillings are installed.

68 The National Advisory Committee on Oral Health is drafting the new 2014-2023 national oral health plan for the COAG

Health Council’s endorsement http://oralhealthplan.com.au/

http://oralhealthplan.com.au/


45


To reduce mercury releases to the environment the Australian Dental Association (Victorian Branch),

the Victorian water industry and the Victoria Environmental Protection Authority ran the ‘Dentists for

Cleaner Water Program’ between 2008 and 2011. The program facilitated the installation of dental

amalgam traps and separators in private sector dental practices across the state.

As part of the cost benefit analysis the Department of the Environment sought analysis of a further

scenario (2B) Ratification with dental amalgam separators encouraged by government.

Marsden Jacob developed this scenario based on an evaluation of the Dentists for Cleaner Water

program, interviews and other data sources. Marsden Jacob has conducted a brief investigation into the

cost and benefits of facilitating a similar program or extension to the initiative across Australia.

The Dentists for Cleaner Water Project (DCWP) was a voluntary amalgam separate installation and

case rebate program that ran for three years between July 2008 and June 2011. The DCWP rebate

program resulted in the installation of a total of 725 amalgam separators being installed serving about

1,454 dental chairs across Victoria for a total government investment of $1 million.69

An evaluation of the program estimated that the amalgam wasted collected by CMA over the three and

a half years of collections data, gives an annual average mercury collection rate of about 324 kg/yr

(based on drained net weight calculations and an assumed 30% moisture factor).70 Divided across the

725 amalgam separators (and assuming one amalgam separator per dental practice), this equates to

0.45 kg/yr of mercury being collected per separator.

Amalgam separators

Amalgam separators complying with International Standard ISO 11143:2008 are capable of 95%

amalgam removal, and can greatly reduce mercury loads to sewers from individual dental surgeries.

The standard addresses the characteristics of three types of dental amalgam separators, these being:

Centrifugal System: These systems use centrifugal force to draw out amalgam particles from

the wastewater.

Sedimentation System: These systems reduce the speed of wastewater flow, which allows

amalgam particles to settle out of the wastewater.

Filter System: Depending on the type of filter used, these separators remove not only coarser

amalgam particles but also some finer and colloidal amalgam particles.

In Australia there are several suppliers of amalgam separators which are predominately supplied by

Cattani Australia, Ecocycle Australia, Durr Dental, Ritter Dental (formerly Gritter Dental) and

Sirona Dental Systems.

Costs

Currently Victoria is the only state with a large number of amalgam separators. Based on Australian

Bureau of Statistics business data and assuming that 90% of dentists would undertake some work that

may release mercury the breakdown of installations required is set out in Table 12 and gives a total of

11,862 dental surgeries.

69 DCWP Evaluation Report, p. v

70 DCWP, p. vii


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Table 12: Estimated numbers of dentists and installations required

State Numbers of

dentists Number of installations

required

New South Wales 4,224 3,802

Victoria 2,915 1,749

Queensland 2,291 2,062

South Australia 820 738

Western Australia 1,176 1,058

Tasmania 150 135

Northern Territory 59 53

Australian Capital Territory 224 202

Currently Unknown 3 3

TOTAL 11,862 9,801

Source: ABS data – counts of business entry and exit - Operating at end of financial year 2013

A broad range of installation costs and annual servicing fees were reported. For the Cost Benefit

Analysis the prices quoted by CMA ecocycle ($900 installation and $500 annual servicing) were used.

Mercury Removed

The evaluation of Dentists for Cleaner Water reported alternative estimates of the mercury recovered.

To ensure a realistic estimate Marsden Jacob used the Victorian forecast estimate of 95kg of mercury

from 725 surgeries giving a recovery rate of 0.13 kg per surgery per year.7172

If expanded across 90% of the 11,862 surgeries across Australia this would result in the recovery of

1,284 kilograms per annum.73

Discussions with a large water utility74 indicated that mercury in the sewer system was largely

captured in biosolids – which depending on the utility and contaminant levels – may be used as a form

of soil improver for agricultural areas. Marsden Jacob considered whether the improved value of

biosolids should be included in the cost benefit analysis – however, the water utility advised that other

contaminants (particularly copper) are a more important limiting factor on the use of the biosolids and

that Mercury levels are found to be at or below ambient levels of mercury in the soil. For this reason

the benefit assessment focussed only on the reduced quantity of mercury released to the environment.

71 URS, Evaluation of Dentists for Cleaner Water, 2013 See Table 5-4.

72 Analysis of data provided in the Australian Dental Industry Association submission to the 2014 Minamata consultation

reveals a higher estimate of 0.214 kg per unit per annum (314 kg of Hg across 664 Units over 2.2 years)

73 For the purpose of the cost benefit analysis it was assumed that these interception units would be installed over a four

year period.

74 West Australian Water Corporation


47


5.4 Lighting sector

A number of lights used at either a domestic or commercial level include some quantity of mercury.

Mercury-containing lamps include small compact fluorescent lamps (CFLs) used mostly in homes,

linear fluorescent lamps (LFLs) or linear fluorescent tubes commonly used in offices, and high

intensity discharge lamps such as high pressure mercury vapour lamps (HPMVs) used for street

lighting and sports grounds.

Article 4 of the Convention restricts the manufacture, import or export of mercury-added CFLs and

LFLs with mercury quantities above specified limits and all HPMVs by 2020. In the absence of

Australia seeking an exemption, under a phase-down scenarios, the manufacture, import and export of

these products would be prohibited after 2020.

Alternative non-mercury products are widely available. These include traditional incandescent lamps

(which are relatively less energy efficient) and light-emitting diode (LED) lights. High pressure

sodium vapour lights and other energy efficient alternatives are also available as an alternative to

HPMV lamps.

5.4.1 CFLs and LFLs

Large amounts of mercury (up to 40 mg per lamp) was previously a characteristic of CFLs and LFLs.

Developments in manufacturing technologies have significantly reduced the mercury content in

fluorescent lamps, with most lamps being manufactured globally containing less than 10 to 5 mg per

lamp75. In addition, the Australian Standard (AS/NSZ 4782 series), which applies to fluorescent

lamps, is voluntary but typically requires ‘best practice’ technology. The following are relevant to

Australia’s ratification the Convention:

CFLs (used mostly in homes) are required by an Australian Standard to have a maximum of 5 mg

of mercury per bulb; and

LFLs (used in most commercial and public buildings) are required by an Australian Standard to

contain less than 15 mg of mercury per tube76.

Industry stakeholders advise that CFLs and LFLs available in Australia already conform to maximum

mercury content requirements outlined in Annex A of the Convention. For this reason ratification is

not expected to have any impact on CFLs and LFLs.

75 Hu, Yuanan; Cheng, Hefa (2012) Mercury risk from fluorescent lamps in China: Current status and future perspective,

Environment International, 2012, Vol.44, pp.141-150 [Peer Reviewed Journal]

Aman, MM; Jasmon, GB; Mokhlis, H; Bakar, AHA (2013) Analysis of the performance of domestic lighting lamps,

Energy Policy, 2013, Vol.52, pp. 482-500 [Peer Reviewed Journal]

76 Refer to Australian Standards AS/NSZ 4782 series; http://www.environment.gov.au/protection/national-waste-

policy/mercury-containing-lamps ; and

http://www.austlii.edu.au/au/legis/cth/num_reg_es/ciar20087n256o2008622.html#_Toc216078647

http://www.environment.gov.au/protection/national-waste-policy/mercury-containing-lamps

http://www.environment.gov.au/protection/national-waste-policy/mercury-containing-lamps

http://www.austlii.edu.au/au/legis/cth/num_reg_es/ciar20087n256o2008622.html#_Toc216078647


48


5.4.2 Mercury vapour streetlights (HPMVs)

In 2010, there were roughly 2.28 million streetlights nationally in Australia. Of these, approximately

1.39 million (or 61 per cent) were HPMV lamps77. By 2015, Marsden Jacob estimates the number of

HPMV lamps remaining in service had fallen to just under 1 million78.

HPMV streetlights are predominately owned and maintained by distribution companies, local councils

and other government organisations and statutory bodies in Australia.

A number of factors are currently in play which mean that the current phase-out of these mercury

vapour lights is already underway, expected to continue and may potentially accelerate regardless of

Australia’s decision to ratify the Minamata Convention. These include:

Changes to the relative costs of alternative (low or no-mercury) products such as LED and high

pressure sodium vapour lights have changed the economics of streetlight investments with regards

to balancing capital installation costs, maintenance costs and energy costs. Alternative LED and

high pressure sodium vapour lights offer a lower energy usage (for the same light output); and

generally have a lower cost maintenance schedule compared to mercury vapour alternatives.

Improvements and introduction of these technologies underpins the growing trend in street light

customers moving away from mercury vapour options.

Discussions with industry experts and previous analysis cited by Marsden Jacob have highlighted

that the business case for non-mercury lights currently provides a pay back of less than 10 years

(estimated to be 5-6 years in Victoria). Experts have suggested that by the end of 2017, the

Victorian mercury vapour stock will have been reduced by 90 per cent due to local councils

choosing to retire old mercury vapour lamps. Similarly, discussions with Energex pointed to these

cost savings as the driver for change as far back as 1990 from HPMV to sodium vapour lights.79

Changes to Australian Standard’s 1158 Series for Category V installations (main or major roads)

in 2010 which required that mercury vapour technology is not used in new Category V

installations and further proposed changes to the energy efficiency design requirements for these

installations which will effectively preclude use of mercury vapour lamps for Category V

installations on energy efficiency grounds.

Although Australian Standard’s for Category V and Category P (residential streets and public

open spaces) are voluntary, these are widely accepted and adhered to by industry.

Changes to Category V installations impacts higher wattage lights ( 250W, 400W, 700W and

some 125W mercury vapour lamps) but would not impact lower wattage mercury vapours used

residential streets . Traffic and roads authorities and transport departments tend to be responsible

for the installation and upkeep of these light types as the article roads are considered State

infrastructure. Number of mercury vapour installation for these users is already declining.

Marsden Jacob estimates that these lights represent only 8 per cent of the total number of mercury

vapour lights installed in Australia. The relatively small current numbers and the changes to the

Standards are considered likely to influence the phase-out of these lights in the absence of

ratification. As such, we assume 250W, 400W, and 700W mercury vapour lamps are not impacted

77 Source: Commonwealth of Australia (2011) ‘Draft Strategy paper: Street Light Strategy’, prepared by Ironbark

Sustainability on behalf of the Equipment Energy Efficiency Program, a join initiative of Australian, State and Territory

and New Zealand Governments, July 2011. Available at: http://www.energyrating.gov.au/wp-

content/uploads/Energy_Rating_Documents/Library/Lighting/Street_Lighting/Draft-streetlight-Strategy.pdf

78 Based on Marsden Jacob analysis of regulatory proposal submissions by distribution businesses to the Australian Energy

Regulator, discussions with industry stakeholders, and Marsden Jacob estimates.

79 According to discussions with street lighting industry experts, business cases for replacement of mercury vapour street

lights in Western Australia and Victoria; and discussions with Energex.

http://www.energyrating.gov.au/wp-content/uploads/Energy_Rating_Documents/Library/Lighting/Street_Lighting/Draft-streetlight-Strategy.pdf

http://www.energyrating.gov.au/wp-content/uploads/Energy_Rating_Documents/Library/Lighting/Street_Lighting/Draft-streetlight-Strategy.pdf


49


by the ratification decision. (Note: numbers of these lights have been included in the analysis to

provide a complete picture, however the modelling phases the number of these lights down to zero

under both the base case and the phase-down scenarios at the same rate – hence the net influence

on the CBA is zero).

Under both the base case and the phase-down scenarios this phase out of mercury vapour streetlights

for both minor and main roads is expected to continue. Main road lights (250W, 400W, and 700W

lamps) are expected to be phased out at the same rate regardless of ratification, however, as outlined

below, the replacement of minor, residential lights (50W, 80W and 125W lamps) by non-mercury

alternatives is likely to be accelerated if Australia ratifies.

Future supply of mercury vapour streetlights

Although a number of light types and fixtures are constructed from imported parts in Australia, there

is no manufacture of mercury vapour globes in Australia. As such, Australia is dependent on imports

for the supply of the mercury vapour globes for use in street light fixtures.

Mercury vapour globes used in Australian street lights are generally subject to a 3 to 4 year

replacement cycle to ensure the brightness of lamps meet with Australian lighting standards. As such,

the future availability of globes requires consideration under both the base case (non-ratification) and

phase-down scenarios.

Ratification and continued supply by exporting countries

Ratification of the Convention by countries which currently manufacture and export this technology

will impact Australia’s ability import this technology after 2020.

Discussions with street lighting suppliers in Australia indicated that the majority of mercury vapour

lamps are now manufactured in India and China. While it is unknown whether India intends to ratify,

Marsden Jacob were advised that China is considering ratification of the Convention. Should China

choose to ratify the Convention, the supply of mercury vapour lamps to Australia may be restricted

after 2020.

Changes in the global lighting market

Even if an exporting country chooses not to ratify the Convention, the global nature of the lighting

market may cause individual manufacturers to suspend production of mercury vapour lights.

These changes are likely to be driven by demand side changes. Of note, mercury vapour streetlights

are being phased-out in the US and EU markets:

The US has already ratified the Convention and has had domestic policies to phase out mercury

vapour lamps since 1 January 200880.

Recent changes to Energy Related Products (ErP) legislation have banned mercury vapour lamps

effective from April 2015. International street lighting provider, Sylvania, commented: “All EU-

28 countries as well as Switzerland, Turkey and Norway are banning the sale of these lamps so

specifies, contractors and end-users are legally obliged to change their lamps.”81

80 United States of America (2013) United States of America: Notification Under Article 4, Paragraph 2, p.3. Available at:

http://www.mercuryconvention.org/Portals/11/documents/submissions/USA%20declaration_Art%204%20para%202.pd

f

81 Havells Sylvania (2014) ‘Sylvania Relimina is the Answer to Merucry Replacement’, press release dated 1 April 2014.

Accessed 12 April 2015. Available at: http://www.havells-sylvania.com/en_DK/press-centre/sylvania-relumina-is-the-

answer-to-mercury-replacement

http://www.mercuryconvention.org/Portals/11/documents/submissions/USA%20declaration_Art%204%20para%202.pdf

http://www.mercuryconvention.org/Portals/11/documents/submissions/USA%20declaration_Art%204%20para%202.pdf

http://www.havells-sylvania.com/en_DK/press-centre/sylvania-relumina-is-the-answer-to-mercury-replacement

http://www.havells-sylvania.com/en_DK/press-centre/sylvania-relumina-is-the-answer-to-mercury-replacement


50


Based on this information, as well as domestic economic and changing regulatory environments

impacting streetlights, Marsden Jacob has assumed that mercury vapour street lighting on residential

roads (50W, 80W, and 125W lamps) will be:

phased out by 2030 (at the latest) under the base case (non-ratification) scenario, but that

phase out will be accelerated under the phase-down scenarios such that remaining mercury vapour

streetlight numbers are negligible after 2023.

The lagged phased out time of 2023 (compared to restriction taking effect in 2020) for residential

street lights is due to:

Street light owners replacing lamps at the end 3-4 year maintenance cycles; and

Allowance for a small amount of stockpiling of lamps, such that bulk replacement of lamps and

associated lamp fixtures (which generally have a 10 to 20 year life span) can be optimised where

retrofit of non-mercury vapour globes is not possible.

Disposal of mercury vapour lights

The safe disposal of mercury vapours lights is indirectly covered by the Convention through the

reference in Article 11 to the Basel Convention.

CFLs and LFLs available within Australia would not be captured under the Minamata Convention due

to the low quantities of mercury present in these types of lights in Australia.

The Basel Convention does however recommend the separation of waste containing mercury from

other wastes, when feasible, and recovery of the mercury from these sources. Further, technical

guidelines for mercury under the Basel Convention require consideration of a number of items for

design of collection programmes applicable to CFLs and LFLs – of which FluoroCycle is one example

of an Australian program already targeting these lamps82.

FluoroCycle also covers mercury vapour lamps used for streetlights. This voluntary industry-led

product stewardship program seeks to increase the national recycling rate of wastes mercury-

containing lamps to help reduce the amount of mercury being sent to landfill. Companies that are

signatories to the scheme make a commitment to recycle all their waste mercury-containing lamps.

FluoroCycle has 230 signatories including commercial users, building and facilities managers,

government departments, recyclers and others involved in the recycling and re-use process.

Currently, Ausgrid, SA Power Networks, CitiPower/Powercor, Endeavour Energy and Essential

Energy are all signatories to the scheme and have committed to recycle all their waste street lighting.

Mercury streetlights active in these distribution networks are estimated to account for approximately

25 per cent of all Australian streetlights.

From discussions with FluoroCycle, Marsden Jacob understands a number of other Australian

distribution businesses, responsible for the maintenance of street lights (and therefore the disposal of

waste mercury vapour lamps) are also considering becoming signatories to the scheme and may

already recycle streetlight waste. However, a significant proportion of Australia’s street lights continue

to be disposed to land fill.

82 Basel Convention, Technical guidelines for the environmental sound management of wastes consisting of elemental

mercury and wastes containing or contaminated with mercury, available at:

http://www.basel.int/Implementation/MercuryWastes/TechnicalGuidelines/tabid/2380/Default.aspx

http://www.basel.int/Implementation/MercuryWastes/TechnicalGuidelines/tabid/2380/Default.aspx


51


Each mercury vapour lamp can contain up to 200 milligrams of mercury - more than ten times the

amount found in a fluorescent light in a typical office building. 83 As FluoroCycle states:

“It is the accumulation of mercury in landfill across Australia that is a cause for concern

across the wider environment. .... Mercury in landfill converts to the toxic methylmercury and

spreads through the wider environment through air, water and soil.”84

The following table outlines the number of mercury vapour street lights estimated to be currently in

service throughout Australia by wattage. It shows that the vast proportion of HPMV lights are 80W

(65 per cent). These lights are predominately installed in NSW and Victoria which are estimated to

have 187,000 and 151,000 of these lights installed respectively; the second highest number of lights

(by wattage) is 50W and these light types are predominately installed in Queensland.

Table 13: Mercury vapour street light stocks (in 2015)

Type of light Number of HPMV

street lights Proportion Treatment in CBA

50W MV 258,414 25% Assumed phase out by 2030 under base case

and 2023* under ratification.

80W MV 666,087 65%

125W MV 19,734 2%

250W MV 48,735 5%

Phase out not impacted by ratification.

400W MV 18,800 2%

Other 13,810 1%

Total 1,393,080 100%

Source: Marsden Jacob analysis of AER regulatory proposals, estimates provided by distribution businesses, and Marsden Jacob estimates

*2023 phase-out date includes a lagged response to restrictions taking effect in 2020 to account for optimised replacement cycles and stockpiling of globes to manage this optimisation.

As the Basel Convention (and consequently the Minamata Convention) does not provide for any

specific measures to be undertaken in relation to disposal of waste mercury-containing lamps, our

analysis has not included the quantification avoided mercury waste to landfill.

However, data contained in this section may be informative for other programs and initiatives with

similar goals to the Minamata Convention.

5.4.3 Base case

Under the base case, where Australia does not ratify the Convention:

The phase-out of mercury vapour streetlights will continue.

83 Hon Amanda Rishworth MP (2013) ‘Industry recognised for fluror-light recycling’ media release dated 14 June 2013.

Refer to: http://www.fluorocycle.org.au/pdf/media/Media%20Release%20-

%20Industry%20recognised%20for%20fluoro-light%20recycling%20-%2014%20June%202013.pdf

84 FluroCycle webpage (undated) ‘Why should we recycle our waste lighting?’ Accessed 14 April 2015. Refer to:

http://www.fluorocycle.org.au/why-recycle.php

http://www.fluorocycle.org.au/pdf/media/Media%20Release%20-%20Industry%20recognised%20for%20fluoro-light%20recycling%20-%2014%20June%202013.pdf

http://www.fluorocycle.org.au/pdf/media/Media%20Release%20-%20Industry%20recognised%20for%20fluoro-light%20recycling%20-%2014%20June%202013.pdf

http://www.fluorocycle.org.au/why-recycle.php


52


The globe supply of mercury vapour lamps for import to Australia will be reduced after 2020 and

these products will not be available post-203085.

5.4.4 Ratification

Under the phase-down scenarios, Australia will be required to restrict the import of HPMV lamps after

2020. The effect of this restriction would be to bring forward the current phase-out of mercury vapour

street lights on residential streets which account for the majority of street lighting in Australia.86

We estimate that the number of active HPMV lamps in Australia after 2023 will be negligible. High

wattage mercury vapour lights on main roads (350W, 400W, and 700W lamps) would be phased out

by 2020 under both the base case and the phase-down scenarios as a result of changed Australian

Standards for Category V roads and consistent with current trends.

Current phase out of residential street lights (50W, 80W and 125W lamps) will be phased out by 2030

under the base case – consistent with current trends and economics. Phase out will be accelerated

under the phase-down scenarios as industry responds to forthcoming 2020 restrictions by proactively

replacing lamps. The lagged phased out time of 2023 (compared to restriction taking effect in 2020)

results from optimisation of maintenance and replacement cycles and stockpiling of globes to cater for

this.

Figure 8 shows the phase out of HPMV lamps under the base case and phase-down scenarios for

Australia. Note that Marsden Jacob’s analysis assumes that lamps with wattage levels above 250 watts

would be phased out by 2020 regardless of the scenario due to expected updates to Australian

Standards for main roads.

As such, the difference between the base case and phase-down scenarios is limited to varied phase-out

rates for 50W, 80W and 125W lamps across Australia.

85 The latest phase-out date should exporting countries seek the maximum two five year exemption periods for phase-out of

HPMV lamps.

86 Victoria is the exception where Councils have been proactive to replacing this technology with more energy efficient

alternatives, such that industry experts estimate that 90% of the Victoria HPMV stock will have already been replaced by

2020.


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Figure 7: Estimated phase-out of HPMV lamps under base case and phase-down scenarios

Source: Ironbark Sustainability (2011), Marsden Jacob analysis of AER regulatory proposals and Marsden Jacob estimates

Note: The ‘kink’ in the phase out curves at 2020 results from the phase-out of higher wattage lamps occurring under both the base case and phase-down scenario by 2020. Under the cost benefit analysis the phase out of these lamps nets to zero, however these lamps have been included in graphs and analysis for completeness purposes.

Assuming that disposal of street lamps by energy distribution businesses aligns with current waste

disposal regulations and is not captured by the Convention, no substantial benefits would result from

the reduction in mercury due to the early replacement of these lights.

However, early replacement under the phase-down scenarios would bring forward:

capital investment (replacing the lights earlier);

energy efficiency benefits (and cost savings); and

greenhouse gas savings.

Marsden Jacob understands from industry experts that the hardware for alternative technologies is

comparability priced (allowing for differing maintenance schedules) to mercury vapour equivalents

over the life of the technology but are more energy efficient.

For the purpose of our analysis, we have estimated energy efficiency and greenhouse gas emission

savings based on the following substitutions: 87

87 Marsden Jacob notes that multiple light technologies may replace mercury vapour lamps. This analysis has been

completed for indicative purposes only and does not constitute recommended replacement options.


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Table 14: Mercury vapour and equivalent non-mercury technology used in analysis

Mercury vapour lamp Alternative non-mercury substitute

Energy saving (%) Lamp type AEMO Wattage

(W)* Lamp type AEMO Wattage

(W)*

50W MV 64.3 CFL 32W 36.6 43.1%

80W MV 95.1 CFL 42W 60.3 36.6%

125W MV 141.4 70W MH 82.6 41.6%

250W MV 270.7 150W Std HPS 172.1 36.4%

400W MV 430.2 250W Std HPS 273.0 36.5%

700W MV 737.8 400W Std HPS 440.0 40.4%

Source: Marsden Jacob analysis and AEMO Unmetered load tables CFL= Compact Florescent Lamp; MH = Metal Halide; Std HPS = Standard High Pressure Sodium *Average for NEM jurisdictions

Bringing forward capital investment

Under the phase-down scenarios the capital investment of replacing the lights will be brought forward

by up to 7 years. Marsden Jacob’s analysis assumes the following nominal average costs per street

light for installation and capital costs associated with switching from mercury vapour to alternative

light technologies:

Best case outcome: $200 per lamp. The ‘best case’ outcome assumes that most lamps can be

readily changed over without substantial changes to the surrounding light fixture such as lamp

casing, brackets or pole fixtures.

Worst case outcome: $500 per lamp. This scenario captures the full cost of installing a non-

mercury vapour lamp according to current distribution network service providers price lists.

Most likely outcome: $400 per lamp. The most likely outcome represents that most replacement of

mercury vapour lamps would likely cost street light customers the standard full rate replacement

cost, however there may be instances where retrofit of lamps only (with minimal changes to

surrounding fixtures) would be possible.

Marsden Jacob notes that the actual cost of capital replacement of street lights would vary

significantly from these estimates. This is because globe technology changes do not often occur in

isolation. Rather upgrades to street light fixtures may coincide with undergrounding of power line

projects, upgrades to existing power poles or independently of distribution network infrastructure

decisions. For this reason, the estimates provided in this report should not be taken to represent the

cost to any individual street light customer.

Under the most likely scenario, using a nominal average value of $400 per street light and a discount

rate of 7 per cent, bringing forward capital investment increases the cost by a present value of $34.23

million. This falls to $17.11 million (net present value) under the ‘best case’ outcome and increases to

$47.06 million (net present value) under the ‘worst case’ outcome.

Energy consumption savings

Assuming streetlights across Australian are active for an average of 11 hours per day (average number

of ‘dark hours’), and that the cost of supply for electricity to streetlights remains consistent with

current tariff rates:

479,223 MW of electricity would be saved between 2016 and 2030; and these


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energy savings are valued at $30. 86 million (net present value).

Greenhouse gas emissions

Marsden Jacob’s analysis on the value of emission reductions resultant from the early replacement of

mercury vapour street lights with more efficient non-mercury alternatives could result in a greenhouse

gas savings of approximately 382,000 tonnes (tCo2-e)88.

While value of emissions in Australian policy contexts is no longer certain, using a value of

$13.95/tCO2-e gives a present value of $3.25 million. This represents Marsden Jacob’s most likely

outcome.

A ‘high price’ and ‘low price’ outcome for greenhouse case emissions (aligning to ‘best case’ and

‘worst case’ scenarios) was also developed. These assume the carbon emissions are valued at:

$30/ tCO2-e (best case outcome) which values benefits due to carbon savings at $6.98 million (net

present value);

$9.50/ tCO2-e (worst case outcome) which values carbon savings at $2.21 million (net present

value).89

5.4.5 Conclusion

Regardless of Australia’s decision to ratify, the phase out of mercury vapour lamps is currently

underway and this is expected to continue.

Under both the base case and phase-down scenarios mercury vapour lamps on main roads are expected

to be phased out by 2020. This is due to changes to the Australian Standard impacting Category V

roads (main or major roads) and current phase out trends which mean these light currently only

account for 8 per cent of mercury vapour lights in Australia. The current phase out rates and small

number of these lamps mean that the decision to ratify the Minamata Convention would have, at best,

a trivial impact on costs and benefits, hence these are assumed to be the same under the two scenarios.

For minor road street lights, we assume the current phase-out continues but is accelerated under the

phase-down scenarios. Marsden Jacob estimates there are just under 950,000 50W, 80W, and 125W

lamps currently installed in residential streets and public open spaces across Australia and that these

represent 92 per cent of the mercury vapour street lighting stock.

Under the base case, these lamps are expected to be phased out by 2030 at the latest due the

changing economics of alternative substitutes, and other countries’ decisions to ratify the

Convention which would restrict Australia’s ability to import lamps.

Under the phase-down scenarios, the phase-out of these lamps will be accelerated as street light

customers proactively replace lamps in anticipation of the 2020 restriction date. The number of

remaining lamps would be insignificant beyond 2023. The lagged phase-out date accounts for the

optimisation of replacement with existing maintenance cycles and a small amount of stockpiling

of globes to cater for this optimisation.

88 Marsden Jacob’s analysis made use of standard greenhouse gas emission conversion rates averaged for Australia and the

kW energy consumption values predicted in our analysis.

89 Values of CO2e were based on ‘low price’ scenario: use $9.50/t CO2-e to reflect a value of carbon represented by

international carbon units and the RET Review modelling. ‘Central price’ is based on the average Emissions Reduction

Fund 1st auction price paid of $13.95/t CO2-e. ‘High price’ scenario uses $30/t CO2-e based on the central price series

from modelling done by Treasury for the Climate Change Authority’s Targets and Progress Review and the medium term

traded carbon price.

https://retreview.dpmc.gov.au/sites/default/files/files/ACIL_Report.pdf

http://www.environment.gov.au/minister/hunt/2015/mr20150423a.html

http://www.climatechangeauthority.gov.au/reviews/targets-and-progress-review-3


56


Assuming maintenance cycles are broadly similar across the alternative non-mercury lamps installed90,

the accelerated phase-out will deliver a net cost of $18.47 million.

Should Australia ratify, local councils and main roads authorities will have to initiate early

replacement of an estimated 440,600 HPMV lamps sooner than they would otherwise have done

Bringing forward the replacement of these lamps by between 1 and 7 years entails a cost to bring

forward capital expenditure valued at $52.58 million, however this cost is be partly offset by energy

savings of $30.87 million and carbon emissions reductions valued at $3.25 million.

5.5 Waste and recycling sector

Article 11 “Mercury wastes” requires Parties to the Convention to take a number of measures with

regards to mercury waste management and recycling.

Under paragraph 3(a) of Article 11, Parties are required to take appropriate measures so that mercury

waste is managed in a sound manner, taking into account guidelines developed under the Basel

Convention (to which Australia is already a Party).

Australia’s compliance with the Basel Convention means that any incremental impacts arising from

Australia’s ratification of the Minamata Convention are likely to be minimal.

From discussions with various stakeholders it appears likely that the Convention will drive an increase

in some mercury containing wastes – such as the additional flue gases that will be required to be

captured in fabric filters while decreasing mercury emissions.

Importantly the costs for disposal of mercury wastes – are captured under the costs for each of the

source areas and so are not considered again here.

5.6 Oil and gas production

5.6.1 Obligations under the Convention

While oil and gas production is not specifically mentioned in the Convention, it is potentially impacted

by Article 9 – Releases which focuses on land and water releases of mercury for “significant

anthropogenic point sources”.

If Australia were to ratify, the key impacts arising under Article 9 are:

Australia may develop a national plan (within 4 years) outlining control measures that will be

implemented;

controls would need to be introduced on significant anthropogenic point sources (Note: no

timeframe is specified) and the simplest control measure would be the implementation of release

limit values91 - importantly this covers both new and existing sources; and

90 Marsden Jacob notes that there is some evidence to suggest that maintenance cycles are less frequent for alternative lamp

technologies, however the failure rates particularly towards the end of the lights life as less well tested by the current

market.

91 Other potential measures (specified under Article 9 Paragraph 5) are

(b) The use of best available techniques and best environmental practices to control releases from relevant sources;

(c) A multi-pollutant control strategy that would deliver co-benefits for control of mercury releases;

(d) Alternative measures to reduce releases from relevant sources.


57


Australia would also need to identify the relevant point source categories (within 3 years) and

maintain an inventory of releases from relevant sources (within 5 years).

While Article 9 includes provisions for adopting guidance on Best Available Techniques and Best

Environmental Practice these are not yet developed and the timing is uncertain – so they are not

included in the Cost Benefit Analysis.92 Article 9 also does not stipulate that new sources must

comply with Best Available Techniques and Best Environmental Practice guidance.

Following discussions with the Department of the Environment it was assumed that existing sources

would need to be managed within 10 years.

5.6.2 Mercury in petroleum and gas reserves

Mercury levels vary from one reserve to another.

Some examples of quoted measures of mercury are:

200-250 parts per billion of mercury for a particular reserve in Bass Strait93; and

Measurements taken from a Browse exploration well indicate that reservoir fluids may contain

mercury, with concentrations expected to range between 38 and 83 μg/Sm3 [microgram of

mercury per standard cubic meter] in the gas stream and between 35 and 41 μg/Sm3 in the

condensate stream.94

Current legislative arrangements (Commonwealth legislation)

In Commonwealth waters95 and state waters where the State has conferred functions and powers on

NOPSEMA96, mercury is managed through Environmental Plans required under the Offshore

Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009.

The legislation is objective based and so does not include specific release limit values. However,

regulation 10A specifies the Criteria for acceptance of environment plan.

Individual Environmental Plans may set release limit values for that project – which (following

discussions with the Department of the Environment) would appear to fall within the definition of

Article 9 Paragraph 5.

The legislation sets a requirement that all risks are managed to be “As Low As Reasonably

Practicable” (ALARP).

92 Its also worth noting that if Australia ratifies then the Government would get to have input on the Best Available

Techniques and Best Environmental Practice guidance.

93 http://www.exxonmobil.com.au/Australia-English/PA/Files/publications_mercury.pdf

94 (Browse FLNG Development Draft Environmental Impact Statement EP BC 2013/7079, November 2014 Page 55)

http://www.woodside.com.au/Our-Business/Browse/Pages/Draft-Environmental-Impact-Statement.aspx

95 between 3 to 200 nautical miles from the coast

96

http://www.industry.gov.au/resource/UpstreamPetroleum/OffshorePetroleumExplorationinAustralia/Documents/A

ustralianPetroleumNews.pdf

http://www.exxonmobil.com.au/Australia-English/PA/Files/publications_mercury.pdf

http://www.woodside.com.au/Our-Business/Browse/Pages/Draft-Environmental-Impact-Statement.aspx

http://www.industry.gov.au/resource/UpstreamPetroleum/OffshorePetroleumExplorationinAustralia/Documents/AustralianPetroleumNews.pdf

http://www.industry.gov.au/resource/UpstreamPetroleum/OffshorePetroleumExplorationinAustralia/Documents/AustralianPetroleumNews.pdf


58


5.6.3 Potential points of mercury releases in oil and gas production

Five potential releases of mercury were identified in conversations with industry and NOPSEMA (drill

cuttings, produced water, mercury in the petroleum and gas streams, air emissions of mercury and

disposal of mercury). These are summarised in turn below.

Drill cuttings

Drilling mud sometimes includes barite, which is added for its high specific gravity.97 Barite can

include low levels of mercury and while there is no quality specification for barite it appears that

mercury levels of less than 1 part per million98.

Produced Water

Formation water (water released from the geological formations) and condensed water (collected from

the gaseous phase of the petroleum and natural gas) are collectively referred to as produced water.

Depending on the site (and the levels of mercury) - produced water can be treated and mercury

removed – prior to disposal.

However, as mercury tends to be hydrophobic and, it tends to gravitate into the hydrocarbon reservoir

itself, so the levels in produced formation water tend to be very low (e.g. order of magnitude lower

than ANZECC release guidelines, even for bioaccumulation).

Mercury in the petroleum and gas streams

Mercury tends to bind to the gas phase of the natural gas and is removed before and/or during the

LNG process trains.

Depending on the mercury content of the local geology, some plants use specific mercury removal

units which capture the mercury onto an adsorbent material that is replaced periodically and disposed

of as hazardous waste.

Air emissions of mercury

Air emissions of mercury from petroleum and gas facilities are not covered by the Convention as there

is a specific list of industries covered by air emissions.

Disposal of mercury

Wastes containing mercury are already covered by the Basel Convention, and the Minamata

Convention does not impose additional requirements on wastes.

5.6.4 Conclusions

Existing facilities

For existing facilities, controls would need to be introduced on significant anthropogenic point

sources and the simplest control measure would be the implementation of release limit values. As

97 Barite (BaSO4) is a mineral consisting of barium sulfate.


59


noted above – while the timing is unclear it is assumed that this would need to occur within ten years

of the Convention being introduced.

From discussions with industry it appears that most offshore facilities already have release limit values

as part of their environmental plan – or commit to adherence to published levels such ANZECC Water

Quality Guidelines.

New facilities

Article 9 also does not stipulate that new sources must comply guidance higher standard than existing

sources.

It is noted that the legislation for covering petroleum activities in Commonwealth waters sets a

requirement that all risks are managed to be “As Low As Reasonably Practicable” (ALARP) and some

proponents appear to state that they have risks which are reduced to ALARP where they are using Best

Available Technology.99

Accordingly it appears that the current legislative requirements (for at least off shore oil and gas) are

likely to meet any future requirements (even though these are beyond the scope of the cost benefit

analysis).

99 See Browse FLNG Development Draft Environmental Impact Statement EP BC 2013/7079, November 2014 Page 55


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6. Health and environmental outcomes

6.1 Overview

Exposure to mercury poses a serious risk to the environment and human health worldwide. The World

Health Organisation has suggested that mercury may have no threshold below which some adverse

effects do not occur. It can cause a range of serious health impacts which can include cognitive

impairment (mild mental retardation), permanent damage to the central nervous system, kidney and

heart disease, infertility, and respiratory, digestive and immune problems. The World Health

Organisation strongly advises that pregnant women, infants, and children in particular avoid exposure

to excess mercury.100 Mitigating and resolving the problems caused by mercury can be costly,

particularly in regard to remediation.

The most significant benefits that would arise from Australia’s ratification of the Minamata

Convention would be improved environmental and health outcomes.

Identifying the benefits and linking these to action undertaken in Australia is complicated by the

ability for mercury emissions to move globally through atmospheric and ocean processes.

In considering health and environmental benefits arising from ratification the following simplifying

assumptions were used:

mercury that is likely to be disposed of through hazardous waste or recycling processes is unlikely

to enter the environment;

all mercury emissions were considered equally toxic irrespective of medium (air, land or water)

and the form of mercury (elemental mercury and mercury compounds); and

the analysis focuses only on Australian emissions impacted by the Convention and the resulting

benefit to the Australian population and environment.

6.2 Approach

In assessing the benefits Marsden Jacob considered the benefits arising from:

improved environmental conditions;

improved health across the Australian population; and

reduced incidence of workplace accidents involving mercury exposure.

These benefits are considered in turn below. However, due to the lack of firm data the improved

environmental conditions are only considered qualitatively.

6.3 Environmental benefits

Mercury is found naturally in small quantities throughout the environment in both the atmosphere and

in aquatic and terrestrial ecosystems. However human-generated release of mercury into the

environment can result in concentrations of mercury which are harmful to the environment.

100 WHO 2013, ‘Mercury and Health’, Factsheet No361, http://www.who.int/mediacentre/factsheets/fs361/en/.

http://www.who.int/mediacentre/factsheets/fs361/en/


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In particular, mercury released into the air may settle into water bodies and affect water quality. Once

mercury settles in water bodies, it is transferred to methylmercury (bioavailable mercury) through

microbial activity.

Methylmercury may then accumulate in fish at levels that may harm the fish and the other animals that

eat them. Birds and mammals that eat fish are more exposed to methylmercury than other animals in

water ecosystems. Similarly, humans are impacted predominately from the consumption of fish

containing high concentrations of methylmercury.

By extension, predators that eat fish-eating animals are also at risk due to increased mercury emissions

in the environment.

The US Environmental Protection Agency states the effects of methylmercury exposure on wildlife as

including mortality (death), reduced fertility, slower growth and development and abnormal behaviour

that affects survival, depending on the level of exposure. In addition, research indicates that the

endocrine system of fish, which plays an important role in fish development and reproduction, may be

altered by the levels of methylmercury found in the environment.101

Tracing the impact of mercury emissions in the environment is challenging for a number of reasons:

Firstly, mercury accumulation in water bodies depends on mercury emitted from local, regional,

national, and international sources.

Secondly, the amount of methylmercury in fish in different waterbodies is a function of a number

of factors beyond the amount of mercury deposited from the atmosphere, including local non-air

releases of mercury, naturally occurring mercury in soils, the physical, biological, and chemical

properties of different waterbodies and the age, size and types of food the fish eats. As a result,

fish from lakes with similar local sources of methylmercury can have significantly different

methylmercury concentrations and the releases may have variable detrimental effects depending

on the ability for the system to absorb the excess quantities.

In Australia, there is a paucity of data for environmental levels of mercury which prevents a

quantitative analysis of the likely benefits arising from ratification of the Convention.

This section provides a summary of information collated for Australia which is relevant to the

environmental impacts from mercury emissions in Australia, however the information does not

contribute directly to the cost benefit analysis.

101 United States Environmental Protection Authority website, Environmental Effects: Fate and Transport and Ecological

Effects of Mercury, accessed 13 April 2015. Available at: http://www.epa.gov/mercury/eco.htm

http://www.epa.gov/mercury/eco.htm


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6.3.1 Spatial distribution of mercury emissions and concentrations

A 2009 report by the CSIRO provides an overview of both mercury emissions and mercury levels

across Australia102. Key findings from this work are displayed graphically in Figure 8. Hotspots can

be identified around known point sources of mercury emissions such as Kalgoorlie in Western

Australia and the Latrobe Valley in Victoria.

Figure 8: Mercury emission hot spots – highlighting the spatial distribution of anthropogenic mercury emissions

Source: National Pollutant Inventory, Unpublished 2015

6.3.2 Environmental levels of mercury in Australia

There is limited information about ambient mercury levels in Australia with many studies focussing on

potential pollution sources. A recent study conducted in Albany, Western Australia by Goetze and

Mackey has analysed mercury levels in sediments103. The data is shown in Table 15. Only one

102 Cope, M. E., Hibberd, M. F., Lee, S., Malfroy, H. R., McGregor, J. R., Meyer, C. P., Morrison, A. L., Nelson, P. F. (2009).

The Transportation and Fate of Mercury in Australia: Atmospheric Transport Modelling and Dispersion. Appendix 1 to

Report RFT 100/0607 to Department of Environment, Water, Heritage & the Arts, The Centre for Australian Weather

and Climate Research, 60 pp

103 Goetze R & Mackey P. (2011) Selenium and mercury concentrations in the sediments and pilchards (Sardinops sagax)

of King George Sound and the broader Albany waters, Albany Port Authority, 2011


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sample exceeded the high trigger level in the ANZECC guidelines for mercury in sediments. The high

and low trigger levels are 1 mg/kg and 0.15 mg/kg respectively.

Table 15: Mercury Concentration in Sediment of Albany, WA

Sample location Date of sample

Sediment concentration

mg/kg Dry Weight

Total Bioavailable

King George Sound April 2011 <0.2 <0.2

King River mouth April 2011 0.7 <0.2

Kalgan River mouth April 2011 0.58 <0.2

Princess Royal Harbour April 2011 0.23 <0.2

Wellstead Estuary April 2011 3.6* <0.2

Shannon River April 2011 <0.2 <0.2

Note: *Exceeds the ANZECC Guideline high trigger value 1 mg/kg

Goetze and Mackey, 2011

A second study conducted in Port Curtis in Queensland104 found mean concentrations of mercury of

0.01 mg/kg in sediments with the maximum value of 0.055 mg/kg.

A further study conducted in Port Curtis, found mean mercury levels in sediments of 0.02 mg/kg with

the 95th percentile level of 0.2 mg/kg. The 95th percentile concentration exceeded the low trigger

level in the ANZECC guidelines.105

6.3.3 Mercury levels in fish

A number of studies have investigated the levels of mercury in fish in Australia. The following table

summarises the publicly available data (Table 2). As shown in Table 2 a number of fish species have

been found to have mercury exceeding the Food Standard Australia and New Guidelines for mercury

in fish.106

104 Jones MA, Stauber J, Apte S, Simpson S, Vicente-Beckett V, Johnson R, Duivenvoorden L (2011) A risk assessment

approach to contaminants in Port Curtis, Queensland, Australia Mar Pollut Bull. 2005;51(1-4):448-58. Epub 2004

November 2011

105 Port Curtis Integrated Monitoring Program (2012) Port Curtis Ecosystem Health Report 2008-2010. Available at

www.pcimp.com.au

106 Food Standards Australia New Zealand (2004) Mercury in fish – Background to the mercury in fish advisory statement,

March 2004. Available at: http://www.foodstandards.gov.au/publications/Pages/Mercury-in-fish---background-to-the-

mercury-in-fish-advisory-statement.aspx

http://www.pcimp.com.au/

http://www.foodstandards.gov.au/publications/Pages/Mercury-in-fish---background-to-the-mercury-in-fish-advisory-statement.aspx

http://www.foodstandards.gov.au/publications/Pages/Mercury-in-fish---background-to-the-mercury-in-fish-advisory-statement.aspx


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Table 16: Mercury Concentrations in Fish in Australia

Sample location Date of sample

Fish species Concentration

µg/g wet weight

Gippsland Lakes

Source (Fabris, G., Theodoropoulos, T., Sheehan, A. and Abbott, B.(1999))

Lake Wellington 1997 Black Bream - Acanthopagrus butcheri 0.35

Blonde Bay 1997 Black Bream - Acanthopagrus butcheri 0.17

Spoon Bay 1997 Black Bream - Acanthopagrus butcheri 0.24

Masons Bay 1997 Black Bream - Acanthopagrus butcheri 0.22

Lake Victoria 1997 Black Bream - Acanthopagrus butcheri 0.24

Point King 1997 Black Bream - Acanthopagrus butcheri 0.18

Tambo 1997 Black Bream - Acanthopagrus butcheri 0.22

Swan Bay 1997 Black Bream - Acanthopagrus butcheri 0.2

Flanagan Island 1997 Black Bream - Acanthopagrus butcheri 0.18

Jones Bay 1997 Black Bream - Acanthopagrus butcheri 0.16

Mean 1997 Gippsland Lakes

1997 Black Bream - Acanthopagrus butcheri 0.22

0.18107

Mean 1978-79 Gippsland Lakes

1978-79 Black Bream - Acanthopagrus butcheri 0.111

Source - Food Standards Australia New Zealand (2005)

Wildcaught (Australia) 2003/04 Abalone 0.0005

Eel 0.211

Lobster 0.048

Mackerel 0.072

Prawn 0.040

Scallop 0.005

Pink Snapper 0.190

Coral Trout 0.126

Tuna 0.343

Whiting 0.023

Aquaculture (Australia) 2003/04 Barramundi 0.022

Marron 0.040

Red Claw 0.010

Yabby 0.060

Eel 0.055

Kingfish (Yellowtail) 0.040


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Source - Food Standards Australia New Zealand (2011)

Unknown Unknown Prawns 0.014108

Fish portions, frozen 0.0402

Fish fillets battered 0.122

Tuna, canned in brine 0.0292

Prawns 0.012109

Fish portions, frozen 0.0193

Fish fillets battered 0.0153

Tuna, canned in brine 0.0084 3

Source - NSW Health Department (2001)

NSW 1997-98 Shark 0.48110

2.3111

Swordfish 0.984

1.655

Marlin 0.574

0.955

Fin fish (generally) 0.154

Source - Goetze R. and Mackey P. (2011)

Albany 2011 Pilchard (Sardinops sagax) 0.0424

Bremer Bay 2011 Pilchard (Sardinops sagax) 0.0524

Esperance 2011 Pilchard (Sardinops sagax) 0.0584

Notes:

1. Exceeds ANZFA standard= 0.5 µg/g

2. Exceeds Standard A 12 1mg/kg (NSW Health Department (2001))

3. Exceeds FSANZ 2004 (upper) = 1.0mg/kg

4. Exceeds FSANZ, 2004 (lower) = 0.5mg/kg

5. Exceeds FSANZ 2004 (crustacean/mollusc)= 0.5mg/kg

6.3.4 Great Barrier Reef

Given the high environmental values of the Great Barrier Reef and the presence of industries with

potential mercury emissions (sugarcane, aluminium at Gladstone, and coal-fired generation), we

specifically considered whether mercury levels could be attributed to environmental damage.


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Water quality issues and objectives

The 2013 Reef Water Quality Protection Plan identified the key pollutants in the region as:

“Sediment, nutrients and pesticides leaving agricultural land and draining into the reef

lagoon remain the largest contributors to elevated pollutant levels.” 112

A breakdown of the key pollutants for each region of the Great Barrier Reef is set out in Figure 9. The

matrix shows that pesticides pose a very high risk in the Burdekin and Mackay Whitsunday Regions.

Figure 9: Priority pollutants for each region of the Great Barrier Reef

Great Barrier Reef sediment cores have identified mercury concentrations of up to 100µg kg-1, an

order of magnitude higher than background concentrations. These concentrations were attributed to

the contemporary application of mercury-based pesticides on sugarcane farms.113

According to recent research, coral reefs are under threat from land-based pollutants, with the

vulnerability of the early life stages of coral being a particular concern. This research found that the

pesticide with the active ingredient of methoxyethylmeruric chloride (the mercury-containing pesticide

used on sugarcane in Australia) is extremely toxic to corals at barely detectable concentrations,

affecting coral fertilisation and metamorphosis, and causing coral bleaching and host tissue death.114

Mass spawning on the Great Barrier Reef generally occurs during November and December each year,

often coinciding with the first rains of the wet season in tropical North Queensland potentially

increasing the risk of contamination from agricultural runoff. The use of methoxyethylmeruric

chloride is banned in many countries due to its adverse effects on the environment.115

6.3.5 Valuing impacts on ecosystem services

Marsden Jacob did consider whether environmental benefits of ratification could be assessed using a

valuation methodology such as ecosystem services. In particular “provisioning services” (valuing

services provided by the environment such as food and fresh water) appear to be directly affected by

mercury and can potentially be valued.

112 Reef Water Quality Protection Plan 2013 www.reefplan.qld.gov.au/resources/assets/reef-plan-2013.pdf accessed 7 April

2015, Page 5,

113 GBRMPA, Water Quality Guidelines for the Great Barrier Reef Marine Park: Revised Edition 2010, p. 74

114 Negri, A et al. 2007, ‘Insecticides and a fungicide affect multiple coral life stages’, Marine Ecology Progress Series,

vol.330, pp.127-137.

115 Bhuiyan, S.A; Croft, B.J & Tucker, G.R 2014, ‘Efficacy of the fungicide flutriafol for the control of pineapple sett rot of

sugarcane in Australia’, Australasian Plant Pathology, vol. 43, p. 418.

http://www.reefplan.qld.gov.au/resources/assets/reef-plan-2013.pdf%20accessed%207%20April%202015

http://www.reefplan.qld.gov.au/resources/assets/reef-plan-2013.pdf%20accessed%207%20April%202015


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Review of previous studies

Marsden Jacob undertook a literature review to identify previous studies that have estimated the value

of ecosystem impacts from mercury emissions or the benefit that would arise from reduced ecosystem

impacts if mercury were phased down.

A limited number of values relating to environmental damage or ecosystem services were identified.

The United Nations Environment Programme reported that in 2008 the global

environmental external costs due to human activity included … USD 22 billion due to

mercury emissions.116

It appears that this valuation117 includes both the health effect on humans and the impact on the

environment and therefore should not be considered separately from health benefits (discussed in

section 6.4 of this report).

The development of the Minamata Convention has prompted a number of studies on Mercury

contamination at both an international level118 and a jurisdiction level119. It is instructive to note that

none of these reports value the ecosystem damage attributable to mercury or the benefits that would

arise from a phase-down of Mercury.

The literature review did identify some studies that valued the costs of fishing advisory notices on

recreational and commercial fishing (as a result of high mercury levels)120.

Estimating values for Australia

As fish and other seafood are a key source of food and are a segment of the ecosystem where mercury

is known to bio-magnify (increase through the food chain) the potential for valuation was considered.

However, valuation was not pursued further for two reasons. Firstly, there is a lack of literature on

agreed methodologies for valuing environmental damage arising from mercury emissions. Secondly

there is a lack of data linking mercury emissions in Australia to resultant levels of mercury in fish or

resultant impacts on key environmental assets such as the Great Barrier Reef.

Finally the potential impact on Australia’s fisheries was considered. However, Australia currently has

limited guidance on the consumption of seafood, which is reviewed as required121. Importantly

Australia doesn’t have a history of closing fisheries due to mercury contamination. As such the likely

benefit of reduced mercury in fish would be relatively small with the most likely impacts arising from

pregnant women and infants no longer being warned on potential health effects.

In conclusion, it appears likely that reduced mercury emissions and releases to land or water would

result in environmental benefits including to key environmental assets such as the Great Barrier Reef.

However, these benefits are not readily valued and so are noted qualitatively in the cost benefit

analysis.

116 United Nations Environment Program, Costs of Inaction on the Sound Management of Chemicals, 2013

117 While this global value ($22 Billion) is reported, the supporting calculation was not identified.

118 For example: UNEP, Global Mercury Assessment, 2013 - Sources, Emissions, Releases and Environmental Transport

119 See ICF International (2014) Study on EU Implementation of the Minamata Convention on Mercury Draft Final Report

(revised), 30 June 2014

120 Jakus P, McGuinness M, and Krupnick A (2002) The Benefits and Costs of Fish Consumption Advisories for Mercury,

October 2002 http://ageconsearch.umn.edu/bitstream/10853/1/dp020055.pdf

http://ageconsearch.umn.edu/bitstream/10853/1/dp020055.pdf


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6.4 Health benefits of phasing-down mercury

6.4.1 Health effects of mercury

Human exposure to methylmercury occurs primarily through ingestion of seafood and freshwater fish.

Mercury exposure has been associated with a range of health effects including neurological effects,

effects on the kidneys and cardiovascular effects.122

Although other health outcomes have been associated with exposure to mercury, loss of IQ123 is the

most robust and is believed to have the most reliable dose response relationships. As the critical effect

of mercury is considered to be developmental, brain toxicity methyl mercury intake by pregnant

women is of primary concern.124

The following sections detail available research on mercury exposures and loss of IQ. The subsequent

section then summarises our treatment of these effect in the cost benefit analysis.

Evidence of effects on cognitive development

The most studied outcomes of mercury effects are cognitive development in children in particular loss

of IQ and developmental effects. The effects of mercury on the developing brain are similar to those

observed for lead exposure in terms of loss of IQ, impacts on motor activities and attention disorders

the most commonly observed outcomes associated with biomarkers of mercury exposure such as

blood and hair mercury. As such loss of IQ is commonly used as the basis of health risk assessments

for mercury and associated cost benefit analyses.

Three longitudinal developmental studies were conducted in the Seychelles Islands, the Faroe Islands,

and New Zealand.

The subjects of the Seychelles longitudinal prospective study were 779 mother-infant pairs from a

fish-eating population125 . Infants were followed from birth to 5.5 years of age, and assessed at various

ages on a number of standardized neuropsychological endpoints. The independent variable was

maternal-hair mercury levels.

The Faroe Islands study was a longitudinal study of about 900 mother-infant pairs.126 The main

independent variable was cord-blood mercury; maternal-hair mercury was also measured. At 7 years

of age, children were tested on a variety of tasks designed to assess function in specific behavioural

domains.

The New Zealand study was a prospective study in which 38 children of mothers with hair mercury

levels during pregnancy greater than 6 ppm were matched with children whose mothers had lower hair

122 Agency Toxic Substances and Disease Registry, ATSDR (1999), Toxicological Profile for Mercury. Available at

http://www.atsdr.cdc.gov/toxprofiles/tp46.pdf

USEPA (2011), Regulatory Impact Analysis for the Final Mercury and Air Toxics Standards, EPA-452/R-11-011

December 2011. Available at http://www.epa.gov/ttnecas1/regdata/RIAs/matsriafinal.pdf

123 Intelligence Quotient

124 Shimshack JP, Ward MB (2010) Mercury advisories and household health tradeoffs. J Health Econ, 29:674–685

125 Refer to: Myers et al., 1995a-c, 1997; Davidson et al., 1995, 1998

126 Grandjean P, Weihe P, White RF, Debes F, Araki S, Yokoyama K, Murata K, Sørensen N, Dahl R, Jørgensen PJ: (1997)

Cognitive deficit in 7-year-old children with prenatal exposure to methylmercury. Neurotoxicol Teratol 19:417–428

http://www.atsdr.cdc.gov/toxprofiles/tp46.pdf



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mercury levels.127. At 6 years of age, a total of 237 children were assessed on a number of

neuropsychological endpoints similar to those used in the Seychelles study.

Health effects in previous cost benefit analysis

Several cost-benefit analyses have been conducted internationally to inform decisions in relation to

actions to reduce mercury levels:

United States Environmental Protection Agency (USEPA) (2011) Regulatory Impact Analysis for

the Final Mercury and Air Toxics Standards, EPA-452/R-11-011 December 2011128 (the USEPA

Study);

Trasande L, et. al. (2006), Applying cost analyses to drive policy that protects children: mercury

as a case study. Ann N Y Acad Sci., 1076:911-23 (the Transande Study);

Bellanger M., et al (2013), Economic benefits of methylmercury exposure control in Europe:

Monetary value of neurotoxicity prevention, Environmental Health 2013, 12:3; and

Pichery, C., Bellanger, M, et. al (2012), Economic evaluation of health consequences of prenatal

methylmercury exposure in France, Environmental Health 2012, 11:53.

In all these analyses the health outcome used as the basis of the health risk assessment is loss of IQ in

children.

All the health risk assessments have used dose-response relationships that relate loss of IQ in children

with maternal blood or hair mercury levels or cord blood mercury levels, however the dose response

relationship varies between the studies

The dose response relationship used by the USEPA study (2011) has been derived using data from

Faroe Islands, Seychelle Islands and New Zealand cohort studies. The resulting response relationship

is a loss of 0.18 IQ points/ppm maternal hair mercury per child.

What this means is that for each child there is a loss of IQ points associated with a 1ppm increase in

mercury levels in their mother’s hair. It is assumed that no adverse effects are observed at maternal

blood levels below 3.5 µg/L.

The Trasande study (2006) derived dose response relationships from only the Faroe Islands and

Seychelle Island studies and consequently obtained dose response relationships higher than those

derived by the USEPA. The dose-response relationship used in the Trasande study suggests a loss of

0.465 IQ points/ppm maternal hair mercury and 0.093 IQ points/ppb of mercury in cord blood. These

values are higher than those used by the USEPA study (2011).

For the purpose of this CBA both sets of dose response relationships have been used. The USEPA

study (2011) estimates have been used as the core analysis with the Trasande (2006) values used in a

sensitivity analysis to give a higher bound of the potential impact.

127 Kjellstrom, T; Kennedy, P; Wallis, S; et al. (1986) Physical and mental development of children with prenatal exposure

to mercury from fish. Stage 1: Preliminary test at age 4. Natl Swed Environ Protec Bd, Rpt 3080 (Solna, Sweden); and

Kjellstrom, T; Kennedy, P; Wallis, S; et al. (1989) Physical and mental development of children with prenatal exposure

to mercury from fish. Stage 2: Interviews and psychological tests at age 6. Natl Swed Environ Prot Bd, Rpt 3642 (Solna,

Sweden)

128 Available at http://www.epa.gov/ttnecas1/regdata/RIAs/matsriafinal.pdf



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Mercury levels in the Australian population

The only available Australian data on maternal blood mercury levels is from studies conducted in

Perth and the south-west of Western Australia.129

This study found that mean maternal blood mercury levels were 0.83 µg/L with the highest value of

5.8 µg/L.

The USEPA has determined that the conversion of maternal blood mercury to maternal hair mercury is

at a ratio of 1:250. Converting the maternal blood mercury levels in the Western Australian cohort to

maternal hair mercury results in concentrations of 0.21ppm (mean) and 1.5ppm (max).

The Western Australian study found that 5% of women in the cohort had blood mercury levels above

the no effects level of 3.5 µg/L. The source of mercury in blood was attributed to consumption of fish

and seafood. These findings are consistent with other studies conducted overseas. The conclusion

that all methyl mercury exposure is due to fish and seafood consumption is also consistent with the

findings of the most recent Australian Total Diet Survey (ATDS).130

Assuming that the Western Australian results are applicable to the Australian population, the loss of

IQ and associated economic costs associated with mercury in Australia can be estimated.

From Table 2 the mercury levels in fish from various locations in Australia are similar. The ATDS

concludes that exposure to methyl mercury in Australia is due almost entirely to the eating of fish and

shellfish, it appears that the extrapolation of the Western Australian blood and hair mercury levels to

the whole Australian population is a reasonable assumption.

According the ABS 2011 Census data, in Australia there are 7,581,899 women of child bearing age

(15-44 years). The current fertility rate is 1.93/1000 live births per year131. In 2013 this translated to

14,633 births.

Assuming that 5% of women of child bearing age, as found in the Western Australian study, have

blood mercury levels above the no effects level of 3.5 µg/L, this translates to 732 children born in

2013 in Australia that may be affected by exposure to mercury.

Calculation of IQ losses in Australia

To calculate the loss of IQ related to maternal hair mercury the following equation has been applied:

Loss of IQ per child = Dose response relationship x maternal hair concentration

This is consistent with the approach used by the USEPA study.

Using this approach and applying the birth rates for Australia in 2013, the loss of IQ has been

calculated for four scenarios based on the USEPA study dose relationship, and the Transande Study

dose relationships for each of the mean and maximum hair mercury levels estimated from the Western

Australian study:

1. USEPA dose response relationship (loss of 0.18 IQ points/ppm maternal hair mercury per

child) and mean hair mercury levels (0.21ppm);

2. USEPA dose response relationship and maximum hair mercury levels (1.5ppm);

129 Hinwood, AL., Callan, A.C., Ramalingam, M., Boyce, M., Heyworth, J., McCafferty, P and Odland, J.O., (2013)

Cadmium, lead and mercury exposure in non-smoking pregnant women. Environmental Research, October 2013, 126.

118-124.

130 Food Standards Australia New Zealand (2013) Mercury in Fish – Advice on Fish Consumption. FSANZ. Canberra.

131 ABS, 2013


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3. Trasande dose response relationship (a loss of 0.465 IQ points/ppm maternal hair mercury)

and mean hair mercury levels (0.21ppm); and

4. Trasande dose response relationship and maximum hair mercury levels (1.5ppm).

Assuming a linear dose relationship above maternal blood mercury levels of 3.5 µg/L, the results of

the risk calculations for the estimated number of affected children in 2013 in Australia are shown in

Table 17 for each these scenarios.

Essentially, the table outlines the current expected loss of IQ points for Australia given the current

mercury levels in the population.

Table 17: Annual loss of IQ points in Australian population due to maternal mercury in hair

Scenario Loss of IQ points

1. USEPA dose response relationship and mean hair mercury levels

36

2. USEPA dose response relationship and maximum hair mercury levels

191

3. Trasande dose response relationship and mean hair mercury levels

92

4. Trasande dose response relationship and maximum hair mercury levels

494

Source: Toxikos analysis

6.4.2 Valuation of loss of IQ

Valuation of the loss of IQ in children has been valued as part of previous analysis of the impacts of

mercury and other heavy metals.

A previous review of literature undertaken by Spadaro and Rabl in 2008 identified five estimates

ranging from US2005$4,500 to US2005$22,300 per IQ point and concluded that US2005$18,000 per IQ

point was a suitable value (values in US$2005). 132Converting this to Australian dollars and escalating

this value by CPI to obtain a 2016 value gives a total of AU2016$30,030 per IQ point lost. This value is

for the United States and so cannot be applied to Australia without further consideration.

However, the range of values are worthy of further consideration. The values in the studies reviewed

by Spadaro and Rabl when converted to Australian dollars and 2016 values range from $11,290 per IQ

point (28% of the value used by Spadaro and Rabl) to $37,204 per IQ point (124% of the value used

by Spadaro and Rabl).

132 Spadaro JV, Rabl A: Global health impacts and costs due to mercury emissions. Risk Analysis 2008, 28(3):603–613, p.

609 cites the following estimates:

Lutter (2000) indicates US$4,500 per IQ point;

Grosse et al. (2002) estimate US$14,500 per IQ point;

Muir and Zegarac (2001) estimate US$15,000 per IQ point;

Rice and Hammitt (2005) indicate US$16,500 per IQ point; and

Trasande et al. (2005) indicate US$22,300 per IQ point.


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6.4.3 Estimation of the value of the harm caused by mercury

Based on the value per IQ point lost and developing a Dose – Response formula, Spadaro and Rabl

provided a 2008 estimate of the value of the harm caused by mercury of $4,380 US$ per kilogram of

mercury released to the environment in the United States and a global estimate of $1,500 US$/kg –

assuming a threshold above which mercury levels have an impact on the child’s IQ. 133

Table 18: Spadaro and Rabl’s estimate of harm caused per kg of mercury released into the environment

United States

Global Average

US$/kg (2008)

With threshold $4,380 $1,500

Without threshold $9,993 $3,400

Source: Spadaro JV, Rabl A (2008): Global health impacts and costs due to mercury emissions. Risk Analysis, Vol.28, No. 3, 2008

Spadaro and Rabl also propose a formula for identifying the likely cost in other countries (referred to

as benefit transfer).

The United States costs based on the IQ decrement is adjusted to other countries using the Gross

Domestic Product (GDP) per capita expressed as Purchasing Power Parity (PPP) as a weighting factor.

Where Ci is a damage cost in a specific country and CUSA is the damage cost in the United States.

Ci = CUSA

(GDPppp / capita)i

(GDPppp / capita)USA

Using this formula the value of mercury costs as it would apply in Australia is AU2016$4,862/kg as set

out in Table 19.

Table 19: Australian estimate of harm caused per kg of mercury (benefit transfer)

Harm /kg mercury

USD$ (2008) AUD$ (2016)

With threshold $2,028 $4,862

Without threshold $4,598 $11,093


Using the variation on estimates for IQ loss outlined in section 6.4.2 (28% to 124%) a low and high

estimate of the harm caused per kilogram of mercury emitted was calculated for use in a sensitivity

analysis. This produced a low value of $1,828 and a high value of $6,024.

133 Spadaro JV, Rabl A: Global health impacts and costs due to mercury emissions. Risk Analysis 2008, 28(3):603–613.

www.arirabl.com/publications/spadarorabl-hg08-fig.pdf

http://www.arirabl.com/publications/spadarorabl-hg08-fig.pdf


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6.4.4 Conclusion

Human exposure to mercury occurs primarily through ingestion of seafood and freshwater fish

containing methylmercury. Although anthropogenic emissions of mercury tend not to be bioavailable,

all forms of mercury can be transformed to methylmercury through aquatic processes.

Although mercury exposure has been associated with a range of health effects including neurological

effects, effects on the kidneys and cardiovascular effects, the loss of IQ on the population resultant

from developmental brain toxicity methyl mercury intake by pregnant women is of primary concern as

there is a direct impact on the developing foetus in utero.

Previous studies have developed a benefit transfer methodology which when applied to Australia

estimates the likely impact of mercury emissions at $4,862 per kilogram of mercury.

6.4.5 Quantifying the reduction in the amount of mercury emitted

Base case

Under the base case scenario it is expected that mercury emissions would remain steady in the short

term and would continue to increase in the future as mercury emitting sources are expanded and the

construction of new sources is undertaken.

Ratification

Under the phase-down scenarios it is expected that there would be a step change in mercury emissions

in the short term, while mercury emissions are likely to remain stable in the long term as new sources

in the future would be subject to stringent controls. The expected mercury emissions are shown in

Figure 10. It can be seen that the base case remains steady until 2030 when it has been identified that

new sources could be developed.

Figure 10: Expected mercury emissions under the base case and scenarios 2A, 2B and 2C

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Esti

mat

ed

Me

rcu

ry E

mis

sio

ns

Year

Basecase

2A

2B

2C


74


The total mass of mercury prevented from entering the environment is set out in Table 20 and the

value of these savings is set out in Table 21.

For each of the scenarios (2A, 2B and 2C) a low and high estimate is provided based on the range of

possible new facilities under article 8.


75


Table 20: Total mass of mercury prevented from entering environment (kg/yr)

Year number 1 2 3 4 5 6-14 15 16 17 18 19 20

Year 2016 2017 2018 2019 2020 2021-2029

2030 2031 2032 2033 2034 2035

2A 0 0 0 0 0 5,280 5,280 5,280 5,280 5,280 5,280 5,280

2B 0 0 321 642 963 6,564 6,564 6,564 6,564 6,564 6,564 6,564

2C 0 0 5,601 5,922 6,243 6,564 6,564 6,564 6,564 6,564 6,564 6,564

Table 21: Total value of the mercury prevented from entering the environment ($ million)

Year number

1 2 3 4 5 6-14 15 16 17 18 19 20 Present Value

2016 2017 2018 2019 2020 2021-2029

2030 2031 2032 2033 2034 2035

2A $0.00 $0.00 $0.00 $0.00 $0.00 $25.67 $25.67 $25.67 $25.67 $25.67 $25.67 $25.67 $166.71

2B $0.00 $0.00 $1.56 $3.12 $4.68 $31.92 $31.92 $31.92 $31.92 $31.92 $31.92 $31.92 $214.26

2C $0.00 $0.00 $27.23 $28.79 $30.36 $31.92 $31.92 $31.92 $31.92 $31.92 $31.92 $31.92 $273.11


76

6.5 Workplace safety benefits

A final potential benefit of ratification is a reduction in acute mercury exposure – such as through a

workplace accident.

Ratification of the Convention appears likely to reduce the exposure of some workers to mercury –

such as ceasing the use of mercury-containing pesticide by canegrowers and reduced use of mercury

vapour lamps. In contrast, there is potentially a small increase in the number of workers employed in

mercury disposal and mercury recycling.

Workers compensation data

In considering the cost of mercury and mercury compounds in workplace injuries and illness Marsden

Jacob sought data workers compensation data from the National Data Set for Compensation-Based

Statistics. The National Data Set contains accepted workers’ compensation claims, which are derived

from state, territory and Commonwealth workers’ compensation authorities.

Within the National Data Set incidents relating to mercury and mercury compounds can be identified

as all incidents are classified using the Type of Occurrence Classification System (TOOCS). TOOCS

uses four classifications to describe the type of injury or disease sustained by the worker and the way

in which it was inflicted:

Nature of Injury/Disease;

Bodily Location of Injury/Disease;

Mechanism of Injury/Disease; and

Agency.

The agency (also referred to as the breakdown agency) identifies the object, substance or circumstance

that was principally involved in, or most closely associated with, the point at which things started to

go wrong and which ultimately led to the most serious injury or disease.

There is a category within agency for mercury and mercury compounds – which allows ready

identification of these incidents.

Due to the low number of incidents, Safe Work Australia were not able to provide134 an annual

breakdown of incidents of compensation paid.

However, over the period 2000-01 to 2011-12, the total number of accepted claims was 59 and the

total compensation paid was $687,167. Over the 11 year period this equates to an average of 5.3

claims per year and average value of compensation paid as $57,264.

Estimating the total value of workplace injuries and illnesses

Reliable data on the total cost of workplace injuries and illnesses for Australia is not available for each

year, or by category. However, reasonable estimates can be derived by comparing the annual value of

WorkCover payments with the total estimated cost of injury and illness reported by Safe Work

Australia in The cost of work-related injury and illness for Australian employers, workers, and the

community, 2008–09.

134 Due to confidentiality concerns.


77

The cost of work-related injury and disease to workers, their employers and the community for the

2008–09 financial year data is estimated to be $60.6 billion. This can be compared to the estimated

workers compensation premiums paid by employers ($6.5 billion in the 2008–09 financial year).135

This indicates that across all injuries on average the total cost of injury and illness is 10 times the

compensation paid.

Using this multiplier the average total value of workplace injuries and illnesses relating to mercury

and mercury compounds is $573,000.136

Estimating the impact ratifying the Convention on workplace injuries involving mercury

Given the opaque nature of the workers compensation data it is not possible to reliably determine the

impact that ratifying the Convention would have on reducing workplace injuries and illnesses.

However, it appears likely that under the base case there will be some reduction in workplace

incidents as imported mercury products are phased out.

It also appears reasonable that Australia choosing to ratify the Convention would reduce these

incidents further – but the extent of this is not easily determined. For this reason Marsden Jacob

modelled a 10% reduction, a 30% reduction and 60% reduction in workplace incidents attributable to

ratifying the Convention. These scenarios and the resulting benefit are set out in Table 22.

The timing of the reduction of exposure will vary from one industry to another as the various articles

take effect and as industry prepares for the implementation of each Article. For simplicity it was

assumed that the benefit would commence in 2019.

Table 22: Reduction in incidence of work incidents involving mercury

Scenario % reduction in incidents Annual Benefit

(commencing 2019)

Present Value (2019-2035)

7% discount rate

Low 10% $62,470 $497,865

Medium 30% $187,409 $1,493,595

High 60% $374,818 $2,987,189

135 Safework Australia, The cost of work-related injury and illness for Australian employers, workers, and the community,

2008–09. Page 28

136 This figure assumes that all compensation data is given in 2015 values.


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Appendix A: Details of the scenarios considered

Scenario 1: Base case

Under the base case Australia chooses not to phase-down mercury and does not ratify the Minamata

Convention. While Australia is a signatory to the Convention this does not create any legal obligations

if Australia does not ratify.

For clarity we assume the base case has the following characteristics:

no significant change in industry numbers would occur as a direct response to Australia not

ratifying – that is, non-ratification will not lead to the development of new industries

manufacturing mercury based products or otherwise mercury processing facilities re-locating to

Australia.

existing plants would not change from their current processes or practices as a direct result of a

non-ratification decision. (It is noted that some plants may already have plans to reduce mercury

usage or emissions and these are captured in the Industry costs section (section5) in both the base

case and phase-down scenarios).

For many industries the base case would represent minimal change from the current circumstances.

However, the Convention coming into force and decisions by some key trading patterns in relation to

ratification, would impact Australia’s ability to import mercury and mercury-added products in the

future. The base case forms that basis for the identification of business as usual costs – which are used

in the assessment of regulatory burden.

Under both the base case and the phase-down scenarios, some other government policies may impact

on Mercury emissions. For example, a National Clean Air Agreement is currently being consulted on

which could potentially impact on mercury emissions137. However, given the current status of this

policy (consultation on a discussion paper) the impacts of this agreement have not been included in

this cost benefit analysis.

Scenario 2: Phase-down of mercury

Under this scenario, Australia will actively identify a number of measures to phase-down mercury, and

as such, will be in a position to ratify the Minamata Convention. Marsden Jacob assumes that

ratification will broadly align with the following timetable:

the Convention is ratified by the 50th country in late-2015 (eg. October 2015);

the Convention will enter into force in early-2016 and

the first Conference of the Parties would be held in either late-2016 or early 2017.

Marsden Jacob assumes that Australia would ratify the Convention ahead of the first Conference of

the Parties. As the timing is uncertain, this scenario conservatively suggests ratification occurs prior

to mid-2016. This timing would also allow preparation ahead of the first Conference of the Parties.

Once Australia becomes a Party to the Convention and the Convention comes into force, Australia will

be legally bound by the obligations in the Convention.

137 www.environment.gov.au/protection/air-quality/national-clean-air-agreement

http://www.environment.gov.au/protection/air-quality/national-clean-air-agreement


79

Timing for meeting obligations is detailed in each of the Articles of the Convention. Some obligations

apply immediately following the date of entry into force of the Convention by a Party, while others are

required within a set period of this date.

Further, in certain circumstances, exemptions may be permitted which would extend (but not

eliminate) specified phase-out timeframes (e.g. trade in mercury where certified written contest is

demonstrated).

The following assumptions have been used to inform the phase-down scenarios for the purpose of this

cost benefit analysis:

Imports of mercury to Australia are restricted from 2016-onwards to permitted uses. Trade consent

agreed for the purposes of mercury use in the manufacture of mercury-containing pesticides from

2016 to 2020 only. No exemptions sought.

All products listed in Annex A are phased-out in accordance with initial dates (by 2020). This

includes mercury vapour streetlights which would no longer be able to be imported after 2020; and

production of mercury-containing pesticides – which would be banned after 2020. No exemptions

sought.

Sub options under the phase-down of mercury scenario

Under the ratify scenario three sub-options were considered:

Scenario 2A - Australia undertakes the minimum actions required to meet the Minamata

Convention; and

Australia undertakes further actions to those required by the Convention in two specific areas:

Scenario 2B - Interception and removal of waste amalgam from dental practices (an expansion

of the Victorian Dentists For Cleaner Water program); and

Scenario 2C early phase-out of mercury-containing pesticides – manufacture to cease in 2017

rather than 2020 and removal of waste amalgam from dental practices.

Considerations in developing the cost benefit analysis

In developing and considering the scenarios Marsden Jacob identified some key considerations.

Impact of the Convention on the current arrangements

In assessing the base case (non-ratification) it is important to note that the scenario will differ from the

current situation in a number of ways due to the impact of the Convention entering into force. In

particular it is expected that the base case would vary from the current situation in terms of:

Trade in mercury will reduce over time from 2016-onwards; and

Availability of mercury-added products for import would be reduced after 2020. Of the products

listed in Annex A, Australia only manufactures dental amalgam. The availability of other mercury

added products138 to the Australia market therefore depends on decisions by trading partners to

exempt certain products or otherwise not ratify.

138 Such as certain batteries, switches and relays; various lighting products with mercury content exceeding set limits; all

mercury vapour lights; cosmetics with mercury content above a set limit; pesticides, biocides and topical antiseptics; and

various non-electrical measuring devices where no mercury-free alternative is available.


80

Given that a number of significant markets have either ratified (US) or intend to ratify (EU and

China), trading partners who manufacture these products adapt their products to match the

requirements of customers from countries that have ratified.

Uncertainty in predicting future impacts

The exact outcome of ratifying the Convention cannot be determined at this point due to the

difficulties of predicting future industry scenarios.

By way of example, to accurately estimate the costs and benefits of Article 8 of the Convention on one

industry (such as coal-fired power generation) it is necessary to know:

the number, timing and scale of the construction of (or upgrade of) coal-fired power generation up

to 2035;

the current legislative requirements (e.g. state Environmental Protection approvals) that are in

place for facilities that don’t operate in all jurisdictions and the resultant costs and emission levels;

the content and effect of the guidance on best available techniques and best environmental practice

supporting Article 8 and the resultant costs and emission levels; and

the competitive interaction between coal-fired power generation and alternative generation

sources.

To overcome this inherent difficulty, Marsden Jacob envisaged a likely outcome of the Convention for

each industry, based on detailed discussions with industry experts as well as government officials.


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Appendix B: Risks and uncertainties

The exact outcome of ratifying the Convention cannot be determined at this point with certainty due to

the difficulties of predicting future industry scenarios.

By way of example, to accurately estimate the costs and benefits of Article 8 of the Convention on one

industry (such as coal-fired power generation) it is necessary to know:

the number, timing and scale of the construction of (or upgrade of) coal-fired power generation up

to 2035;

the current legislative requirements (eg. state Environmental Protection approvals) that are in

place for facilities that don’t operate in all jurisdictions and the resultant costs and emission levels;

the content and effect of the guidance on best available techniques and best environmental practice

supporting Article 8 and the resultant costs and emission levels; and

the competitive interaction between coal-fired power generation and alternative generation

sources.

To overcome this inherent difficulty, Marsden Jacob envisaged a likely outcome of the Convention for

each industry, based on detailed discussions with industry experts as well as government officials.

Two key areas are discussed in detail below that drive changes to both the costs and benefits under the

‘worst case’ outcome compared to the most likely outcome.

The points relate to the nature and content of Best Available Techniques and Best Environmental

Practice (BAT and BEP) guidance under Article 8 and whether the current pesticide used during sugar

cane planting has an impact on germination rates. These points are discussed in turn below.

6.5.1 BAT and BEP guidance under Article 8

Article 8, Paragraph 4 of the Convention specifies the

For its new sources, each Party shall require the use of best available techniques and

best environmental practices to control and, where feasible, reduce emissions, as soon as

practicable but no later than five years after the date of entry into force of the Convention

for that Party. A Party may use emission limit values that are consistent with the

application of best available techniques.

The guidance on BAT and BEP is currently being developed by a technical working group. The

guidance will then be discussed at the Intergovernmental Negotiating Committee (around the start of

2016) and then will be negotiated and agreed at the first Conference of the Parties (expected to occur

in late 2016 or early 2017).

If Australia becomes a ratified Party to the Convention, the BAT/BEP guidance could not be adopted

without Australia’s acceptance.

Due to the current status of the guidance (draft and confidential) and multiple steps prior to

implementation, it is not possible to predict the requirements (and resulting costs and benefits) of the

guidance.139

139 Note: a potential transitional issue for new facilities as well as substantial modifications of existing plants under Article

8 the Convention was also identified. This issue is likely to affect facilities that have already been granted approval but

will not have started construction until after early 2017.


82

For this reason Marsden Jacob considered two alternative outcomes and consulted on these outcomes

with industry and the Department:

“Low bar” guidance: aims to bring all countries up to an OECD level and would not impose any

costs (or result in any mercury reductions) compared to a “business as usual” situation in

Australia; and

“High bar” guidance: takes a literal interpretation of “best available techniques” and identifies

leading edge technology and approaches from around the world and indicates that these forms of

technologies and approaches should be used.

It should be noted that estimating the costs of guidance on BAT and BEP requires a prediction of the

number of new facilities (or substantially modified facilities) that will be constructed in the next 20

years, as well as a simplifying assumption that state based environmental approvals do not alter over

this period.140

As discussed in detail in section 5.1, new facilities (or substantial modification of existing facilities) is

considered quite unlikely for base metal smelting and cement clinker. In addition it appears likely that

current approvals for waste incineration are set at a BAT and BEP level. For this reason, the

uncertainty only relates to possible new facilities for gold smelting and coal fired power generation.

Gold smelting

For gold smelting only two current facilitates were identified – both operating in Western Australia. It

is considered unlikely that any new gold smelting facilities would be constructed in the next 10 years

(prior to 2025). Beyond that timeframe it was considered possible that zero, one or two facilities

could be constructed – with the year 2030 used in the model.

Under the ‘most likely’ outcome it was determined that either no facilities are constructed or the BAT

and BEP guidance does not require any additional constraints beyond Business As Usual costs. This

would result in no change in mercury emissions (ie. no mercury saved) and no additional costs.

Under the ‘worst case’ outcome – it is assumed that two new facilities are constructed in 2030 and

based on consultation with industry indicative costs (based on upgrades to the existing facilities) were

estimated at $40 million capital investment per facility.

The quantity of mercury captured due to BAT and BEP guidance will depend on the nature of the gold

processed and the business as usual level of environmental legislation. For this reason 100 kilograms

of mercury per facility per year was used as an indicative figure only.

It should be noted that these numbers ($40 million capital investment and 100 kg of mercury) are

estimated only without knowing the content of the guidance on best available technology and best

environmental practices or the Business as Usual costs from the environmental legislative

requirements that currently would be applied.

18 It should be noted that if the BAT/BEP guidance is strict then this will impose additional costs on new facilities, but not

on existing facilities. This does create an incentive to continue to operate existing facilities for longer, rather than to

invest in new facilities. This incentive would potentially delay the construction of new facilities and so could increase

the level of mercury emissions (over the base case) in the short to medium term. Industry did not identify this perverse

incentive during consultation and (as noted below) there not expected to be new facilities in some industries and there is

substantial uncertainty in the likely number of new facilities in other industries. For this reason this potential for a perverse

incentive is noted, but is not considered quantitatively.


83

Coal fired power generation

For coal fired power generation, it is considered unlikely that any facilities would be constructed in the

next 10 years (prior to 2025). Beyond that timeframe it was considered possible that zero, one or two

facilities could be constructed – with the year 2030 used in the model.

Discussions with Australia’s representative to the Minamata Convention Technical Expert Working

Group – developing the guidance on best available techniques and best environmental practices -

noted that an existing document the Process Optimisation Guide141 provide a useful guide to the likely

form and content of the guidance for power generation.

Based on the Process Optimisation Guide, Table 23 collates possible upgrades required and estimates

the costs. It should be noted that these are only estimates made knowing the content of the best

available techniques guidance or the Business as Usual costs from the environmental legislative

requirements that will exist in the future.

Table 23: Cost estimation for power generation upgrades required to meet BAT/BEP guidance.

Capital costs Operating

costs Units Year

Escalated and converted values

Capital costs

$AUD 2016

Operating costs

$AUD 2016

Fabric Filter $60,000,000 AUD 2007 $54,775,410 $0

Activated Carbon Injection $1,296,000 $600,000 USD 2006 $1,509,882 $699,020

Activated Carbon Disposal $1,430,000 USD 2006 $0 $1,665,997

Flue-gas desulfurization $86,400,000 USD 2008 $95,194,969 $0

Selective catalytic reduction

$66,100,000 USD 2008 $72,828,559 $0

Total $214,196,000 $2,060,000 $224,751,880 $2,398,246

Note: The costs provided from the Process Optimisation Guide are for a 360 MW plant

Industry also identified additional monitoring as a potential cost item – but the Department of the

Environment suggested that it appeared unlikely that additional monitoring would be required under

the BAT/BEP guidance compared to the business as usual costs.

In reality, adding $224 million to the cost of a coal fired power station may make it uncompetitive and

an alternative form or generation may be built instead (eg. a Combined Cycle Gas Turbine). In this

case, the cost impact on the Australian community would only be the cost difference between coal

fired generation and the next best source. However, estimating the competitive nature of electricity

generation is out of scope for this cost benefit – so the total estimated cost is used – recognising that

this may be a conservative estimate (ie. high estimate of the cost).

The modelled capital cost increase ($224 million) represents around a 15% increase in capital cost for

a non-critical 360 megawatt coal fired power station. Importantly these costs appear in the “worst

case” cost benefit analysis for the phase-down scenarios but not under the most likely case for each

scenario.

141 UNEP, Process Optimization Guidance for Reducing Mercury Emissions from Coal Combustion in Power Plants,

November 2010


84

These costs are excluded from the most likely outcome – and are included in the ‘worst case’ –

because for these costs to be realised at this scale all of the following factors would need to occur:

new facilities would need to be constructed (or existing facilities would need to be substantially

modified);

guidance on best available technology and best environmental practice aligns with the “high bar”

description;

State level environmental requirements (representing the “business as usual” cost) are not

tightened over the intervening period for mercury or other flue gases which would have a co-

benefit on mercury emissions (such as nitrogen oxides and sulphur dioxide)142;

costs of technology do not decrease over the intervening period; and

coal fired power remains the best energy source despite the increase in cost.

Potential impact of ratification on mercury emitted by coal fired generation

Due to the industry’s advice that they anticipate to be in compliance with the requirement to have

emission limit values, ratification would have no impact on the mercury emitted from existing coal-

fired power generation.

For new and substantially modified coal-fired power generation the benefits will depend on both the

strictness of the best available techniques guidance and the number of new (or substantially modified)

plants built.

Under a “low bar” scenario there would be no impact on mercury emitted.

Under the “high bar” scenario there would be an impact on mercury emitted – and this can be

estimated as set out below.

Under a high bar scenario it is assumed that mercury emissions are set at world leading standards. The

United States Mercury and Air Toxics Standards are seen as a reasonable proxy for world leading

standards – although it is recognised that world leading standards may be more stringent. The mercury

limits for the United States Mercury and Air Toxics Standards are set out inTable 24.

Table 24: United States mercury limits under the Mercury and Air Toxics Standards

Coal type lb/ GWh kg/ GWh

New- Not Low Rank Virgin Coal

0.0002 0.00009

New- Low Rank Virgin Coal 0.04 0.018

Source: http://www.met.net/1mats.aspx

Note: Unit designed for low rank virgin coal subcategory means any coal-fired EGU that is designed to burn and that is burning non agglomerating virgin coal having a calorific value (moist, mineral matter-free basis) of less than 19,305 kJ/kg (www.law.cornell.edu/cfr/text/40/63.10042) In comparison NSW thermal coal has a calorific value of around 26,000 kJ/kg.

142 It is noted that this assumption is a requirement for determining Business As Usual costs.

http://www.met.net/1mats.aspx

http://www.law.cornell.edu/cfr/text/40/63.10042


85

Under the United States standard low rank coal has a calorific value of less than 19,305 kJ/kg143.

Using this definition it appears that Australian coals (other than Victorian brown coal) would be

defined as not low rank coal144

These standards can be compared to the mercury emissions published in the National Pollutant

Inventory for relatively newly constructed coal-fired power stations145 – which are set out in Table 25.

Table 25: Mercury emissions from newer coal-fired power stations in Australia

Facility name 2011/12 Mercury Air

Emissions (kg) 2011/12

GWh

Mercury Air Emissions

g/GWh

Stanwell Power Station [Gracemere-QLD] 40.0 7,333 5.45

Tarong North PS [Nanango-QLD] 20.0 2,752 7.27

Kogan Creek Power Station [Brigalow-QLD] 14.1 4,697 3.00

Redbank Power [Warkworth-NSW] 0.37 1,036 0.36

Millmerran Power [Millmerran-QLD] 0.16 5,907 0.03

Source: Energy outputs in GWh for 2011/2012 from Australian Energy Market Operator NEM-wide historical information report 2012

Mercury emissions for 2011/12 from the National Pollution Inventory

If these power stations were to meet the US Mercury and Air Toxics Standards for Not Low Rank

Virgin Coal then the mercury emissions for each power station would reduce to less than one kilogram

per annum. Across the five power stations this would result in an average reduction of mercury by

14.5 kilograms per annum.

In addition to reductions in mercury emitted, the introduction of high bar best available techniques

guidance would have co-benefits in reduced emissions of sulfur dioxide (SO2)and nitrogen oxides

(NO, N2O and NO2).

6.5.2 Cane growers

Some industry participants suggest that the popularity of the current mercury-containing pesticide

(Shirtan) is due to a belief that the chemical stimulates rapid germination of sugarcane relative to

alternative products – particularly in adverse conditions (such as cold weather). Crop Care reportedly

spoke with researchers who estimated that each year around 10% to 20% of the sugarcane crop planted

is at risk due to poor conditions and that it is under these conditions that they believe the mercury-

containing pesticide is advantageous. Crop Care estimated that the risk to crops might be realised

30% of the time (if the mercury-containing pesticide weren’t used) – equating to 3,150 hectares.

Where crops are damaged the most likely response is to replant the crop at a cost of $1,000 to $1,500

per hectare. This information would value the loss of Shirtan at $3,937,500 per annum. However,

143 www.law.cornell.edu/cfr/text/40/63.10042

144 www.coalmarketinginfo.com/coal-basics/

145 Energy Supply Association of Australia identified 8 power stations built in the period from 1995 to 2015. Of these two

were omitted as they lie outside the National Electricity Market (located in WA) and one was omitted due to difficulty in

identifying the corresponding NPI data.

http://www.npi.gov.au/npidata/action/load/emission-by-individual-facility-result/criteria/state/NSW/year/2012/jurisdiction-facility/151

http://www.law.cornell.edu/cfr/text/40/63.10042

http://www.coalmarketinginfo.com/coal-basics/


86

there is no published scientific information available that supports this belief and it appears to

contradict published data (see Figure 6 on page 39). Given the uncertain nature of this value it was not

included under the most likely case assessment – and is only included in the ‘worst case’ outcome.


87

Appendix C: Cost benefit and regulatory burden framework

For this engagement, Marsden Jacob undertook a Cost Benefit Analysis and a Regulatory Burden

Measurement consistent with Australian Government policy.

The Cost Benefit Analysis considers the expected cost impacts on, and benefits to, business,

government, and the wider community that would arise from ratifying or not ratifying the Convention,

as well as identifying and assessing the costs and benefits to human health and the environment. The

final Cost Benefit Analysis identifies the Net Present Value over 20 years, distribution of costs and

benefits and includes a number of sensitivity analysis.

The Regulatory Burden Measurement (RBM) focuses on quantifying the regulatory burden for

industry (and Government Owned Corporations as applicable) only. The RBM consists of a simple

average annual cost over a 10 year period.

The framework and process to be used in undertaking the Cost Benefit Analysis and Regulatory

Burden Measurement are briefly outlined in this section.

Cost Benefit Analysis

The Cost Benefit Analysis has been undertaken in line with guidance published in July 2014 by the

Department of Prime Minister and Cabinet.146

The Cost Benefit Analysis seeks to determine the incremental impact of the ratify scenario compared

to the base case (non-ratification) scenario. To do this, Marsden Jacob identified the range of impacts

accruing to categories of stakeholders and then compare net present value of the two scenarios.

146 Department of Prime minister and Cabinet, Cost Benefit Analysis, Guidance Note July 2014, www.dpmc.gov.au/office-

best-practice-regulation/publication/cost-benefit-analysis-guidance-note

http://www.dpmc.gov.au/office-best-practice-regulation/publication/cost-benefit-analysis-guidance-note

http://www.dpmc.gov.au/office-best-practice-regulation/publication/cost-benefit-analysis-guidance-note


88

Stakeholder groups

Marsden Jacob classified costs and benefits under the groupings set out in Table 26.

Table 26: Summary costs and benefits

Stakeholder Base Case (non-ratification) Ratification prior to 2016

Costs

Government As per current costs


Development of guidelines

Financial resources required and mechanisms

Regulation, compliance costs

Changes to ongoing regulation, compliance costs.

Industry As per current costs but with potential for trade-related measures


Increased costs to implement Phase-out by 2020 of mercury-added products

Costs for new and existing point sources (e.g. gold production and coal fired power)

Changes to ongoing costs (and revenues) as a result of ratification.

Benefits/avoided costs

Health outcomes

Health outcomes consistent with current trends/ experience but with some improvement due to other Countries’ decision to ratify

Potential for improved health outcomes within Australia as a direct result of changes made by Australia.


Environmental outcomes consistent with current trends./ experience but with some improvement due to other Countries’ decision to ratify

Potential for improved environmental outcomes within Australia as a direct result of changes made by Australia.

Cost types

When considering cost impacts for both business and government Marsden Jacob sought to identify

“set up” or “changeover costs” separately from ongoing costs. For clarity we propose to use the

following definitions:

changeover costs – the costs of transitioning to the new requirements in capital costs, staff time,

management time and consultant fees per annum during the changeover period; and

ongoing costs in staff time, management time and consultant fees per annum.

Changeover costs are likely to appear as an increase in costs occurred in Year 1 but may also appear

later in the study period as certain aspect of the Convention come into forced after a period of time.

The costs attributable to ratification are those changeover costs which would not have occurred in the

absence of ratification or otherwise have been brought forward in time as a result of ratification.

Ongoing costs will appear as the annual cost of compliance from Year 2 onwards (under the

Convention). In order to inform understanding of ongoing costs attributable to the Convention

Marsden Jacob will seek information from industry and Government as to:


89

current costs – the cost of compliance with the current regulations given as an average costs in

terms of staff time, management time and consultant fees per annum; and

future costs (absent the Convention) – if the Convention is not ratified are current costs a good

estimate of future costs? (Note: these may be the same as the current costs, or future projections

based on current costs).

Based on the above definitions Marsden Jacob established the costs for the first year and subsequent

years of the study as follows:

First year cost impact = changeover costs + ongoing costs – current costs

Ongoing cost impact = ongoing costs – future costs (absent the Convention)

Approach to estimating the cost of staff time

The staff time costs identified in this assessment tended to be portions of an employee or one to two

employees at the most. For this reason, in estimating the cost of staff time the approach used was to

focus on the “marginal cost” of staff time.

Using this approach Marsden Jacob considered the Staff salary and on-costs as well as overheads that

are directly linked to an individual staff member (eg. telephone, computer and cars). This approach

ignores broader corporate overheads such as building costs and corporate functions such as Human

Resources and finance on the basis that these costs would not be impacted by the change in a portion

of an employee or individual employees.

As the Convention impacts a broad range of industries and government agencies the likely costs will

vary from one industry to another. Unless an industry indicated otherwise an assumed cost of

$100,000 per Full Time Employee was used. The only variations to this value were for the

Department of the Environment where it was assumed that 2 Full Time Equivalents was $250,000.

Benefit types

Where applicable, benefits are categorised using the same terminologies that applied for costs (i.e.

changeover benefits and ongoing benefits). However, benefits are more likely to appear as ‘avoided

costs’ in the phase-down scenario or ‘avoided losses’. Health and environmental benefits in particular,

lend themselves to this type of classification.

Discount rates

The costs and benefits from ratification will be presented as a net present value of the 20 year study

period.

Consistent with OBPR requirements and guidance, Marsden Jacob applied a number of discount rates

which reflect the time value of money and the opportunity cost for investment (in the case of business

costs).

An annual real discount rate of 7 per cent will be used as the standard discount rate. In addition,

Marsden Jacob will perform sensitivity analysis based on real discount rates of 3 per cent and 10 per

cent.


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Sensitivity analysis

A number of the inputs into modelling are uncertain, as such we will perform a number of sensitivity

analyses for by identifying an ‘optimistic’ and ‘pessimistic’ estimate of each input. In addition, if

there are 1 or 2 variables that dominate the cost benefit outcome, we will consider a sensitivity

analysis of these individual inputs.

Regulatory Burden Measurement

Regulatory burden measurement (RBM) has been be undertaken in line with guidance147 and focuses

only on private sector costs and those of Government Owned Corporations.

The RBM values are provided as a simple average of costs to industry over the first 10 year period and

will be disaggregated by cost types:

administrative compliance costs - costs that are primarily driven by the need to demonstrate

compliance with the Convention such as annual reporting.

substantive compliance costs –which are directly attributable to ratification and which fall

outside of the usual business costs these costs may include the capital costs of plant upgrades as

well as operational costs from process changes or additional staff training.

delay costs - include the time taken for the preparation of applications (referred to as application

delay) and the time taken for approval (referred to as approval delay). Estimating the cost savings

relating to removing delays requires a strong understanding of the realistically achievable

timeframes, the likely delays which could be avoided, and the value (potential cost) of any

avoidable delay.

Regulatory burden measurement focuses on the costs that are imposed on industry – that would not

otherwise be incurred. Costs from actions that industry would undertake anyway or are requirements

of existing legislation are considered “Business as usual” costs and are excluded.

147 Department of Prime minister and Cabinet, Regulatory Burden Measurement Framework, Guidance Note February 2015,

www.dpmc.gov.au/office-best-practice-regulation/publication/regulatory-burden-measurement-framework-guidance-

note




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Appendix D: Industry consultation

Public consultation by the Department of the Environment

The Department undertook a public consultation process in 2014 which sought comment on each of

the key Articles of the Convention. 148

A Consultation Paper149 was published in March 2014 and submissions were invited by 30 June 2014.

The Consultation Paper highlighted the obligations of the Convention which would require action if

Australia became a Party by ratifying the Convention. Comments were sought from all interested

stakeholders on the impacts on Australia of meeting obligations of the Convention.

Following a review of the submissions received in responses to the Consultation Paper and research

previously undertaken by the Department, a number of areas have been identified as potentially

requiring change from industry. Impacted industries include:

1. Industries with potential air emissions

a. Coal fired power generation and industrial boilers;

b. Non-ferrous metals smelting and roasting (lead, zinc, copper and industrial gold);

c. Waste incineration;

d. Cement;

2. Cane Growers;

3. Dental;

4. Lighting;

5. Waste and recycling sector; and

6. Oil and gas production;

The Department has previously identified that there are 14 Articles of the Convention which will

require Australia’s action if Australia becomes Party to the Convention.

Follow up consultation for this project

Marsden Jacob surveyed and had a number of discussions with industry stakeholders in order to

inform the development of the industry impact analysis.

148 Refer to the Department’s website: http://www.environment.gov.au/protection/chemicals-management/mercury

149 www.environment.gov.au/system/files/pages/6f253b28-f22f-4002-92fe-6f9824d531b6/files/minamata-convention-

invitation-comment.pdf

http://www.environment.gov.au/protection/chemicals-management/mercury

http://www.environment.gov.au/system/files/pages/6f253b28-f22f-4002-92fe-6f9824d531b6/files/minamata-convention-invitation-comment.pdf

http://www.environment.gov.au/system/files/pages/6f253b28-f22f-4002-92fe-6f9824d531b6/files/minamata-convention-invitation-comment.pdf


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Table 27: Details of the organisations consulted and the topics discussed

Organisation Consulted Topic

Minerals Council Mining – esp. Article 8 & Non Ferrous metals & coal mining

Cement Industry Federation Cement Industry esp. Article 8

Energy Supply Association esp. Article 8

Aluminium Council esp. Article 8

Cane Growers Discussed Shirtan and alternatives

Crop Care Discussed Shirtan and alternatives

Alpha Chemicals Discussed Shirtan and other products

NOPSEMA Mercury in petroleum and gas

APPEA Mercury in petroleum and gas

WA Dept of Mines and Petroleum

Mercury in petroleum and gas

WA Department of Health Data on mercury in people

WA Dept of Environmental Regulation

Data on mercury in environment

Safe Work Australia Data on workers compensation claims relating to mercury

WA Water Corporation Discussed mercury in sewerage and WWTP sludge

Ecocycle Discussed mercury sources and recycling

SDI Limited Discussed impact of reduced mercury imports on dental amalgam and use of recycled amalgam

Australian Dental Association (ADA)

Discussed use of mercury in dental amalgam and mercury separator costs

Australian Dental Industry Association (ADIA)

Discussed use of mercury in dental amalgam and mercury separator costs

Ironbark Sustainability Discussed quantum of mercury vapour streetlights in Australia and the status of current replacement programs

Department of State Development

Discussed updates to energy efficiency standards for lighting

Energex Discussed mercury vapour streetlight, replacement programs and lamp distributors

Gerald Lighting Discussed sales of mercury vapour streetlights and demand going forward

Qld Department of Environment and Heritage Protection


Qld Department of Science, Information Technology, Innovation and the Arts


CSIRO Discussed data on mercury in environment