Cover Story: Redefined recycling

Consumer, curb-side recycling in Ontario received a new twist in June with the passage of the Ontario Waste Diversion Act, otherwise known as Bill 90. Among other things, the Act will require industry to pay 50% of the costs to support curbside collection and sorting of materials used to package products. While the Bill is being lauded by the government, environmentalists, municipalities and a host of industry trade groups as a fair way of ensuring the financial viability of local blue box recycling programs across the province, questions remain about who exactly will pay, and how much.

In one sense, the answers to these questions are straightforward. The Act specifies that brand owners (Kraft, Coke, etc.) and first importers of record (Loblaws, for example) pay 50% of the recycling costs for the share of its packaging that end up in the blue box. Waste Diversion Ontario, a corporation with no share capital, will be responsible for convening an Industry Funding Organization to interpret the legislation and propose a formula for assessing and collecting these fees. The fees will go to the municipalities to help offset the costs of recycling. At press time, however, neither the WDO (see box, Essentials about Bill 90, p.18) nor a formula for calculating fees exists. The Minister of Environment is expected to appoint members to the WDO by the end of summer, and the goal is to have the program operational by 2003. In Quebec, a very similar piece of legislation, Bill 102, is expected to be passed into law this summer.

In the meantime, there is some anxiety that fees, regardless of how they are calculated, will inevitably be passed on to either the consumer, making products more expensive, to the supplier of packaging, or both. The total cost of recycling just the packaging-related contents of Ontario’s blue box programs is estimated at about $50 million, so industry is on the hook for about $25 million. This figure, however, does not include the cost to administer the program, an amount which is expected to be substantial.

“Some of these costs are likely to come back to packaging manufacturers like blowmolders,” says Larry Dworkin, Packaging Association of Canada. “If, as a brand owner, my recycling bill is $50,000, and you’re my supplier, I’m going to want you to swallow part of this cost.”

Dworkin says that while members of the Canadian packaging community have expressed a willingness to pay their fair share for recycling, there is a concern that the costs haven’t been properly analyzed.

“We’ve asked the government to do an economic impact analysis of the effects this Bill will have on the Canadian packaging industry and overall economy,” says Dworkin, noting that the request has not been heeded.

Damien Bassett, president and CEO of Corporations Supporting Recycling (CSR), downplays concerns over the costs of the program and speculation over its impact on industry.

“We have to be careful not to get ahead of ourselves,” says Bassett. “We have a piece of legislation, but we still have to have a regulation. Any discussions of formulas and levies at this point are highly premature.”

The CSR, which will have a total of three members on the WDO overseeing the program, consists of many of the brand owners of products whose packaging ultimately ends up in the blue box. Environmental responsibility aside, why are these companies putting their weight behind legislation that will ultimately raise their costs? In the words of one official close to the issue, “they see it as the lesser of two evils.” The other, worse, alternative, according to this official, would be a more stringent product stewardship program in which, for instance, Coke would be responsible for collecting, washing and re-using its own bottles

COST NOT ONLY WORRY

The view of many people in the plastics industry is that blue box recycling has helped not only the environment, but the image of plastics, and acceptance of plastic packaging by the public. In this sense, acknowledges Cathy Cirko, director general Environment and Plastics Industry Council, The Waste Diversion Act has general support among CPIA members and industry.

“Bill 90 enshrines a shared approach to paying for municipal recycling,” says Cirko, noting that the blue box program is only one part of the WDO’s mandate to implement reduce and reuse strategies for the full stream of waste by-products, such as tires and used oil. Yet, Cirko does perceive an ambiguity in the language of the legislation when it comes to cost.

“We support Bill 90, but it is silent on who exactly will pay for blue box recycling, and how this will be accomplished.”

The answers apparently won’t be forthcoming until WDO board members are appointed and carry out their mandate to draft a formula to calculate and collect fees from industry. Yet, even with the best of all possible formulas, some worry the Bill could have unforeseen consequences. One such concern is that the Bill could create economic imbalances in the market that begin to influence material choices of brand owners and packaging producers.

“Plastic is more expensive to recycle than aluminum,” notes Dworkin. “If my recycling levy is less to put my beverage into aluminum, I might have to consider switching from PET.”

If such a scenario plays itself out in any significant fashion, it would be a cruel irony, as plastic, in terms of total life cycle assessment studies, has proven to be at least as environmentally friendly as other materials.

Another concern is that the lack of similar legislation in the U.S. could make Canadian packaging companies less competitive in the export market.

“Even if the Bill adds a fraction of a penny to the cost of producing a bottle, that could be my profit,” Dworkin argues. “In order to compete with the big guys in the U.S., Canadian companies must run with very tight margins.”

The Canadian Manufacturers and Exporters association has expressed its concern that not all stakeholders will be represented on the WDO.

“The Bill as it now reads does not mandate the Board to include one industrial manufacturer,” says Joanne McGovern, senior director, Ontario policy, CME. “Nor does it include anyone from the waste hauling industry or end users of recycled materials, even though all of these will have a stake in a program as wide ranging as this one.”

McGovern says that Bill permits changing the Board’s make-up, but the government as yet has given no indication it intends to do this. She says the CME also objects to the government essentially granting taxing power and unlimited control to a non-elected Board of Directors.

“It is the responsibility of the elected government to collect a new tax,” she says.

WHAT ME WORRY

Surprisingly, aside from industry people actively involved with trade organizations, there seems to be little general awareness of either Ontario’s Bill 90 or Quebec’s Bill 102 among packaging manufacturers, despite the potential economic implications of the legislation. In an informal polling of a half dozen top managers at medium to large plastic packaging manufacturers, five knew nothing of the legislation, while one had heard something about Bill 90, but assumed it wouldn’t directly affect his business. The president of one packaging company reported that he had always opposed the blue box program because he believed it was simply a way for the large beverage companies to off-load the bottle washing costs and stick the province with the tab for picking up and recycling its plastic (mostly) bottles.

“Non-returnable PET containers have brought about a major increase in package usage, expecially in water bottles,” he says. “If bottles had to be returned to be washed and recycled, industry would drop back five to 10 years.”

Bill 90, EPIC’s Cathy Cirko points out, is actually the end result of 15 years of discussion between government and industry about who pays for blue box recycling. She believes the Bill’s potential negative economic consequences, such as the creation of artificial pressures on packaging material selection, can be avoided by devising the right form
ula to assess the fees.

“Industry will have representation on the WDO and will try to ensure there’s a level playing field (among materials) in the formula,” says Cirko.

There are a number of different possible methods to calculate the levies under discussion, but at the time of writing, no indication which would be used.

“Whether it’s going to be weight-based, or weight-based plus, or based on the true cost of recycling a material, we just don’t know,” says Dworkin.

Dworkin argues that the formula will likely have to take into account both the amount (weight or volume) plus the true cost of recycling in some manner in order to be considered fair.

“If it’s just based on weight alone, glass is behind the eight ball, because it’s the heaviest,” he notes.

“It will be interesting to see if they can develop a formula that is neutral to all concerns and materials.”

Bassett of Corporations Supporting Recycling stresses the need for balance in the pending formula for assessing the levies. “Our stance is to work with our members in achieving a fair formula. All issues, sales, weight, etc., will have to be addressed.”

Dworkin says some of the onus for keeping recycling costs down must fall on the shoulders of the municipalities. “Not all municipal blue box programs are equally efficient. Toronto in particular is one of the most inefficient. This is one of the issues that should be addressed by the WDO board once it’s up and running.”

In the meantime it’s wait and see until the WDO is operational and ready to carry out its mandate. It’s probably safe to assume, however, that the Ministry of Environment would gladly listen to anyone who had a clue about how to make this work and keep everyone happy at the same time.

ESSENTIALS ABOUT BILL 90

The Bill is essentially the outcome of 15 years of discussion between the province of Ontario, municipalities, recyclers and industry over how to fund curbside recycling, popularly known as the Blue Box program. The Bill, which was passed into law in June, will:

, Require generators of packaging materials, specifically brand owners (Coke, Kraft, etc.) and first importers of record (retailers), to pay for up to 50% of the net costs of municipal recycling.

, Establish a non-share capital corporation, Waste Diversion Ontario (WDO), to develop, implement and operate waste diversion programs for designated wastes.

, Create a WDO board of directors composed of:

Four members appointed by the Association of Municipalities of Ontario

One member appointed by Brewers of Ontario

One member appointed jointly by the Canadian Manufacturers of Chemical Specialties Association and the Canadian Paint and Coatings Association

One member appointed by the Canadian Newspaper Association

Three members appointed by Corporations Supporting Recycling

One member appointed by the Liquor Control Board of Ontario

One member appointed by the Retail Council of Canada

, Charge the WDO to convene an Industry Funding Organization, which in turn will be responsible for coming up with a formula for calculating the levy on individual companies, as well as a system for collecting and dispersing the money.

TYPICAL RECOVERY RATE FOR MUNICIPAL RECYCLING PROGRAMS IN ONTARIO*