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November 18, 2008 by Guy Crittenden

This blog entry contains a short essay on “Toward a Zero Waste Future: Review of Ontario’s Waste Diversion Act, 2002” the discussion paper released in November 2008 by Ontario Environment Minister John Gerretsen. The essay summarizes and responds to issues raised in the paper, and describes some solutions that advocates of the Zero Waste approach might recommend. This essay will be updated after suggestions are received.

Readers are invited to read this short essay and the suggestions at the end, then forward their own additional suggestions to the editor at:

gcrit@solidwastemag.com

The End of Garbage?

Commentary on “Toward a Zero Waste Future: Review of Ontario’s Waste Diversion Act, 2002”

By Guy Crittenden

In November 2008, Ontario Environment Minister John Gerretsen released a discussion paper, “Toward a Zero Waste Future: Review of Ontario’s Waste Diversion Act, 2002.” Release of the paper triggered a 90-day comment period ending on January 15, 2009. This brief essay summarizes and responds to issues raised in the paper, and describes some solutions that advocates of the Zero Waste approach might recommend.

Overview & Background

The ideas put forward in Toward a Zero Waste Future represent a significant change in direction in Ontario with respect to waste management and related policy issues. The document recognizes significant shortcomings in the current waste recycling and disposal system and offers to overcome these not simply by making minor modifications to the existing system but by overhauling it in major ways. The level of insight and the degree of change proposed in the paper will no doubt excite environmental advocates and waste minimization proponents, as well as generate concern from affected industries, including product and packaging producers (whose costs may rise and industry position may change) and waste management companies whose traditional role as carters and disposers of waste will require modification.

Simply put, the discussion paper proposes to move Extended Producer Responsibility (EPR) from a conceptual idea to a reality in the province; this will not only change how wastes are managed but also impact how goods are produced, packaged and distributed. The paper envisions an EPR economy in Ontario similar in many respects to those in place in certain European countries, most notably Germany.

If the ideas in the paper are implemented in the real world, Ontario will become a North American leader not only in waste minimization but also environmental stewardship, because much of the impacts will occur “upstream” during the production/manufacturing and distribution stage of products, not just the end-of-life management stage. Staff inside the environment ministry appear to have recognized that efficient waste diversion and disposal represent only a small fraction of the energy and environmental impact of products over their entire lifecycle, from natural resource extraction through manufacturing, distribution, sale and actual use of the product. Making industry responsible for its product and packaging wastes is a powerful way to cause change up and down the design and production ladder.

Moving Ontario toward becoming a European-style EPR economy will most certainly trigger a backlash, especially from the industries with a vested interest in the status quo. These include industries whose materials are managed via blue box recycling, but also industries whose materials never make it into that system and are sent directly for disposal. A province-wide EPR system would capture most if not all these materials, and assign management costs to producers that are currently borne by municipal ratepayers and only a few blue box “stewards.” If, as is described, industrial, commercial and institutional (IC&I) wastes are caught in the EPR net, owners of discards from this sector (which represents two-thirds of the waste stream) will no longer be able simply make use of the cheapest available landfill for disposal, and will instead have to reduce, reuse or recycle the materials.

The discussion paper was triggered by a stipulation of the 2002 Waste Diversion Act that the act be reviewed every five years. The minister is concurrently asking Waste Diversion Ontario (WDO) to review the existing Blue Box Program Plan (BBPP) and report back to the minister by March 20, 2009. WDO is the arms-length agency that meets with various “stewards” to arrange for program design and funding of waste diversion activities. Chief among these (so far) is Stewardship Ontario (SO) that represents the industries whose packaging is managed via the province’s curbside recycling program.

Currently, Stewardship Ontario’s members pay 50 per cent of the net cost of curbside recycling in the province, following a funding formula that attempts to assign costs proportionately among the different members (e.g., paper and paperboard packaging industry, beverage container producers, and so on). These stewards often argue fiercely between one another over the apportioning of costs (e.g., plastic versus paper) but have a common interest in paying only half, and not the full, net cost of recycling.

Municipalities have complained that SO’s members have never paid anything like 50 per cent of the blue box costs; industry has required from the outset that municipal systems must operate efficiently (a not unreasonable requirement). Industry has withheld full funding from communities that it rates as “poor performers” and has set aside funds for municipal projects to demonstrate innovative or “best practices.” Some municipalities, meanwhile, complain that they are in fact operating efficiently and that funds are being withheld by industry acting in its own self interest. These complaints are not easy to prove one way or the other, but it’s a widely held perception among municipalities that industry is not paying its fair share, and among industry that municipalities operate inefficiently. This holds significance in terms of the minister’s discussion paper, because many municipalities (tired of criticism and lack of funds) are now fed up to the point of being willing to hand over management of product and packaging waste to industry, and some industries are so fed up with the perceived inefficiency of the municipalities that they’d consider managing their wastes themselves. (Consider the example of paper mills rejecting loads of “contaminated” fibre, especially from single-stream recycling programs, as anecdotal evidence suggests is being done.)

In addition to presiding over the funding of the blue box, the WDO has facilitated discussions among industry stakeholders to develop product stewardship programs for the wastes from a number of industries, namely: scrap tires, household hazardous wastes (HHW), and waste electronics and electronic equipment (WEEE). These material streams appear to have been given priority due to various factors such as the hazardous components they contain, the volume they take up in landfill, or simply the fact that stewardship programs already exist in other provinces or states that could easily be copied. In the vision outlined in the new discussion paper, it’s possible that almost every waste material could be managed in a product stewardship program of some kind, with industry funding 100 per cent of the cost, and managing the materials in various unique take-back programs or “manufacturer’s networks,” or simply contracting with municipalities to collect and process them.

Thus far, a program for scrap tires has not been achieved; the first program put forward by WDO ran afoul of the “nexus” test – meaning (to simplify) that the program’s fee structure was too similar to a “tax.” A new scrap tire management program is currently being discussed.

An HHW program was approved and is being rolled out. At first, municipalities were to collect the materials and industry would “share” the cost of processing and safely disposing of the materials. The minister later decided that industry will pay the full cost of the program.

A WEEE program has been approved that will see WEEE collected and recycled by designated transporters and processors. The program has two phases, collecting a list of approved waste electronics in Phase One, and an additional (more complete) list in Phase Two.

As an aside, the governance and board membership of the WDO has been criticized in the past as being overly subject to influence by regulated industry. However, the makeup of the WDO board has recently been changed to better balance the interests of industry, municipalities and the public (i.e., the minister can appoint some impartial representatives). Good governance of the WDO is seen as crucial, since a contest is unfolding across the continent between proponents of stronger and weaker forms of product stewardship and EPR.

Product Stewardship (PS): In a weak PS program, industry negotiates and agrees to a program that requires only minimal involvement on its part, and “business as usual” for its members. The industry forms a collective or “industry funding organization” (IFO) that assigns an advance recycling fee (ARF) to its products and approves a list of designated collection sites, haulers and processors for the materials. The ARF pays for end-of-life management costs of the product. Industry and elected officials may then claim to have “solved the problem,” which is defined simply in terms of keeping the waste materials out of landfill. In some cases, disposal of the materials at a cement kiln or waste incinerator is counted as “waste diversion.”

While this kind of entry-level PS may indeed keep waste materials out of landfill, critics say that it continues the separation (via the IFO) of manufacturers from downstream responsibility for their products. They have no incentive to redesign the products or packaging for “cradle to cradle” management and true sustainability. PS is the right answer to the wrong question, they say, i.e., “How can we divert more waste from landfill?” instead of the more meaningful “How would a truly sustainable economic system function?” Defenders of certain PS programs counter that full EPR for such things as used oil and tires is not appropriate, since there’s little opportunity for product redesign, unlike (say) computers and other electronic equipment.

Another criticism is that the IFO can act like an industry cartel – prohibited in other contexts – and engage in practices such as price fixing and the use of market clout to push competitors out of the market. This criticism has been leveled at certain used oil stewardship programs, for instance, in which IFOs populated by representatives of the petroleum industry were accused of designing systems that economically favor virgin oil producers and punish oil re-refiners, despite the fact that the latter are themselves models of product stewardship who (ironically) improve the overall eco-efficiency of the production cycle started by the virgin oil producers. Such unintended anti-market (and anti-environment) consequences must be carefully guarded against in policy and program development.

Environmentalists fear that jurisdictions across North America will approve various PS programs for all kinds of materials, allowing industry reps and elected officials to hold press conferences and declare the problem “solved” for each material even as the very same quantity and type of environmentally unfriendly products and packaging are manufactured in a status quo system. PS programs could in theory be put in place for every kind of material (e.g., plastic water bottles, shopping bags, aluminum beer cans, etc.) and allow those products and packaging to continue forever, with no one ever bothering to ask, “Should we really be using this material/package in the first place?”

Individual Producer Responsibility (IPR): Minister Gerretsen’s discussion paper suggests that he and his staff are well aware of the limitations of entry-level PS; they refer not only to EPR but also to Individual Producer Responsibility (IPR). This term was coined by policymakers who recognize the danger that stakeholders may design PS programs that look like EPR but are in fact just diversion schemes managed by collectives and ARFs. IPR promotes the idea that individual companies should be made to pay for (i.e., internalize the cost of) their products and packaging. Only when they cannot externalize the costs onto the environment or ratepayers (or consumers via a visible fee, which can then be falsely called a “tax”) will companies make decisions that are truly eco-efficient. The more that the specific costs of an industry’s wastes (and better yet, an individual company) can be assigned to that industry/company, the greater the incentive will be for the producer to choose the most eco-efficient or clean-production system, and packaging. Modern bar code and evolving RFID technologies may make it possible for companies in various industries to be precisely billed for the true end-of-life management costs of their products. In the meantime, waste composition studies can somewhat fairly apportion costs between different brand owners in certain industries (e.g., among electronics companies such as Sony, Sanyo, Toshiba, etc.). An eco fee may be applied to the sale of new products to pay for “orphan” or historical wastes in such sectors.

A good example of an industry for which asking a different question could yield more sustainable strategies is the soft drink industry. The industry currently uses a mix of plastic containers and metal cans (usually aluminum, to provide a subsidy to municipal recycling programs). After all the time and money spent promoting recycling, roughly half of these energy-intensive containers end up being sent for disposal. Those that are captured in municipal recycling programs are subject to wild market price fluctuations and pose various processing challenges. If the soft drink industry was made wholly responsible for the management of its containers and other packaging at end-of-life, including payment for the landfilling of those that are not recycled, it might contemplate different options, including the adoption of the very deposit-refund systems that its fought for years in so-called “bottle bill” states. It might even switch to refillable bottle collection and sterilization systems (as it did up until the 1970s) if they are the most eco-efficient. But it will only do this when it’s made directly responsible for these containers. Interestingly, the soft drink companies operate just such systems in Europe; in Germany, refillable PET bottles are as ubiquitous for beverages like Coca-Cola as single-use “recyclable” ones are in North America.

Discussion paper details

The WDA discussion paper discusses producer versus shared responsibility, the economic implications of individual producer responsibility versus collective producer action on waste diversion, the issue of stewardship costs manifesting themselves as “visible fees” applied over and above the price of products, and the impact of stewardship program design on competition in waste service markets.

In this context the discussion paper then proposes the following:

1. A clear framework built upon the foundation of EPR. The paper identifies key elements of this framework:

— The concept that, “…waste diversion programs should shift more financial responsibility onto producers”, while allowing, “…producers to discharge responsibility for their products and packaging in the way that best suits their needs, has the fairest impact on existing markets and meets the public’s demand for successful diversion activities that strive for zero waste and foster a green economy.”

— The concept of differentiating between producers’ products based on the environmental profile of those products (including waste and non-waste factors such as energy efficiency, toxics reduction, greenhouse gas emissions profile, etc.);

— A prohibition on “visible fees”;

— Application of stewardship fees to materials that are not currently recyclable;

— A more flexible approach to allowing producers to discharge their existing or future stewardship obligations through individually crafted approaches such as pre-existing schemes, or individual producer-run programs.

2. A greater focus on the first and second of the 3Rs: waste reduction and reuse.

3. Increasing reduction and diversion of waste from the industrial, commercial & institutional sectors. Alternatives proposed include revising existing 3Rs regulations, extending responsibility for IC&I wastes to producers or designating IC&I wastes on a material-by-material basis.

4. Governance and administration of EPR programs — i.e., greater clarity around roles, responsibilities, and accountabilities, to ensure that all players are contributing to a common goal.

The Ministry has posted Toward a Zero Waste Future on the Environmental Bill of Rights registry at:

http://www.ebr.gov.on.ca/ERS-WEB-External/displaynoticecontent.do?noticeId=MTA0NjEy&statusId=MTU2Njg2&language=en

A copy of the discussion paper itself can be downloaded from inside that link. The discussion paper embeds some set questions in the body of its text, with a caution that the ministry offers these only as examples and welcomes any kind of comment or recommendation.

Solutions & Recommendations

It can be argued that companies, industry groups and their representatives generally behave in a rational, self-interested and somewhat predictable way in any given set of circumstances. Although corporate interests and those of the public are often aligned, it would be naive to expect an industry to harm its own profit potential to fulfill some abstract public or environmental good. History has shown that, given the opportunity, an industry will externalize its costs onto the environment or ratepayers if given the chance. With all due respect to the success and benefits of curbside recycling programs thus far, as an appropriate strategy for some materials, the blue box program represented from the very beginning a form of cost externalization by industry. The story is well documented that the soft drink industry, acting in concert with grocers, saw the blue box as a convenient way to get out of refillable beverage containers and rebrand their single-use containers as “recyclable” and therefore environmentally friendly.

The concept was embraced by environmentalists, elected officials and (of course) industry because it appeared to have all the elements of a winning policy. Anecdotal evidence suggests that municipalities initially had very high expectations of making money from the programs, especially when the soft drink industry switched from steel to valuable aluminum cans. In subsequent decades, the drawbacks of focusing on recycling (the third “R”) have manifested themselves in ways that no one can ignore. The “shared cost” and “basket of goods” system has cost ratepayers literally hundreds of millions of dollars in net costs, with no end in sight. When commodity prices have been high, the programs appeared to be at least self-financing (if not profitable). With today’s commodity markets collapsing, and municipalities once again stockpiling or even set to landfill bales of recycled materials, the downside is once again evident. It’s not that the blue box should be terminated; rather, curbside collection and recycling must be seen as but one tool in the solutions toolbox, and not as a “one size fits all” solution.

Gerretsen’s EPR discussion paper challenges the province to move to the next level (beyond the blue box) and may be thought of as a call for various industries to internalize costs that they’ve externalized onto the environment and ratepayers for a long time. Zero Waste advocates can expect resistance from those industries, and no end of arguments against EPR waged in the pages of newspapers and on the radio and television airways. But these protestations should not be taken at face value; many industry reps and lobbyists recognize that EPR and Zero Waste are almost inevitable and, being citizens and parents themselves, may be more open to change than would at first appear. Significant change creates winners and losers. The losers will no doubt quickly see themselves as such and adapt quickly to the new set of circumstances, if and when the initial “lobby wars” prove futile. (It’s worth noting that Coca-Cola captured major market share in Germany by switching to a refillable bottling system faster than its rivals, once it realized that the government was serious.)

In the end, the German and some other European governments realized that making companies directly responsible for the management of their products and packaging at end of life would cause them to innovate toward the most eco-efficient system. As Ontario shifts toward a Zero Waste or EPR economy, some ideas and solutions that will help it succeed include the following:

Make industry fully responsible: As the discussion paper suggests, make industry fully responsible for the end-of-life management of its products and packaging. Not all outcomes of doing this are predictable, and a certain “let the chips fall where they may” attitude will be necessary. (In other words, let the market sort it out. Offering protection for certain industries may turn out to be counter-productive.) The Ontario government might be wise to spend time carefully assessing European success stories (and failures) and include learnings from there into new legislation here.

Implement disposal bans: Although landfill and other bans may be unpopular with some waste and industry groups, the Zero Waste/EPR approach will not work if industry is made solely responsible for end-of-life management of its products and wastes, and simultaneously has the option to simply place it cheaply in a landfill or waste incinerator (as is currently the fate for a great deal of otherwise recyclable IC&I waste materials). Anything that can be reused or recycled should be banned from disposal. This might have to be phased in for certain materials.

Require recycled content: As a correlative of disposal bans, it should be required that recycled materials be incorporated wherever possible in new products and packaging. This will drive markets for the materials banned from disposal, which should not sit in stockpiles.

Ban problem materials: By now the kinds of materials that are easy versus difficult (or even impossible) to sort and recycle at recycling plants are well known. Certain plastics and other materials that cannot be recycled must be banned from the marketplace, including plastics (for example) that are not recyclable but look identical to plastics that are recyclable. Again, making industry responsible to pay for the end-of-life management of its products and packaging should, on its own, provide an incentive for the selection of environmentally-friendlier materials.

Use economic instruments: It’s important to support environmentally preferred behavior with positive price signals. For instance, in order to encourage the use of reusable shopping bags, “recyclable” ones should only be provided by merchants to customers who ask for them with the charge of a refundable deposit (e.g., set at a meaningful level of, say, 25 cents per bag). That way, customers can still enjoy the convenience of whatever bag they prefer, but have an economic incentive to use reusable bags or at least return bags for recycling; if they do not, at least “the polluter pays.” Non-refunded deposits can be used to support recycling and waste diversion systems. This concept could be extended to a wide variety of products and materials (e.g., non-rechargeable batteries, oil filters, various containers, etc.).

Set meaningful targets and timetables: It’s reasonable to demand of various industries that their packaging achieve certain diversion rates by a certain time. When Alberta’s milk industry recently failed to achieve prescribed diversion targets in a voluntary program, the government placed milk beverage containers on deposit. The soft drink industry, for instance, could be required to attain an 80 per cent or greater recovery rate for its containers within a set number of years. It should be charged for all containers that are sent for disposal. This will almost certainly cause the industry to adopt a deposit-refund system. Such a system could be prescribed. The industry could be required to sell its products in refillable containers in a system similar to that of Germany.

Implement green procurement policies: The government should lead by example and adopt meaningful Zero Waste practices throughout its own operations. A good example is the program recently implemented by the Town of Markham – a waste diversion leader.

Issue a clear policy statement: The government should issue a broad policy statement in support of EPR and Zero Waste. This could be a re-written draft of its recent discussion paper, after comments have been received. Zero Waste principles should be incorporated into all waste and environmental legislation wherever possible. The government needs to outline its vision for where the EPR economy is headed so that various economic actors can determine their appropriate roles and responsibilities in the new system. For instance, the government could state that its long-term goal is to see local municipalities primarily managing source-separated organics via collection and composting programs, and to see them only handling other materials under contractual arrangements with industry. As much as possible, the policy statement should harmonize Ontario’s EPR goals with so-called “framework legislation” being adopted in certain other jurisdictions (e.g., British Columbia, California) to promote EPR and Zero Waste as a continent-wide movement.

Regulate materials by application: Ontario should establish a formal policy task force to link with British Columbia and emulate the approach taken there, which regulates waste diversion by application rather than simply by material. For example, BC is establishing a product stewardship program for used detergent containers. This has the advantage that the government can work with one industry group led by a small number of companies whose packaging constitutes the vast majority of waste materials in that sector. The packages generally use the same kind of plastic resin. In this instance, having the detergent companies design and implement a product stewardship program for their containers makes more sense than, say, implementing product stewardship broadly for a particular kind of plastic. Ontario and BC (and other provinces such as Nova Scotia and Quebec) could cooperate in rolling out a series of programs to deal with various materials/applications, and this would benefit brand owners who sell their products nationally. It’s difficult to imagine “laggard” provinces not following suit once such programs are established. Another example of an industry sector whose discards need to be managed more sustainably and whose way of delivering products to customers must change is the fast food industry, including chains like Time Hortons and McDonalds, and also the in-store food counters of supermarkets. The City of Toronto has recently demanded change from this sector, which begs the question: Wouldn’t a province-wide system be better than a balkanized local one, now that municipal governments have raised the issue?

Establish a Duales-type authority in the province: At the recent fall conference of the Association of Municipal Recycling Coordinators (AMRC, now known as the Municipal Waste Association, MWA) in Niagara-on-the-Lake, consultant Usman Valiante outlined a scheme in which Stewardship Ontario would be tasked with responsibility for the materials managed in the blue box. He described SO as becoming the Duales-type manager of industry wastes in the province (i.e., similar to the German entity). Something like this makes sense, given the “bench strength” within SO in understanding waste and recycling issues. SO would no doubt have to be reorganized a bit and various safeguards would have to be put in place to make sure that anti-competitive “combines”-type activities do not occur or become institutionalized.

Hold a Zero Waste Summit: The province should hold a summit at which reps from key organizations would have an opportunity to present their ideas for how the new system could be made to work. The agenda would have to reflect presentations and discussion about “how it can be done” and not “why it cannot be done.” Reps from BC and other jurisdictions with “product stewardship councils” could share information about what’s happening in their jurisdictions, including the writing of “framework legislation” for EPR/Zero Waste. Presentations from Europe could explain how EPR and Zero Waste systems work there, and how various challenges have been overcome.

Implement a provincial communications strategy: At some point the new system will have to be described to the public, which will have to recognize that some “convenience” products and packaging items may be sacrificed along the way as it truly embraces sustainability. Province-wide TV, radio and print campaigns could explain Zero Waste and how the province is now moving beyond the blue box to the next level.

Provide assistance to displaced facilities and personnel: There will be some displacement of people and facilities as Ontario moves toward full EPR. The government needs to resist the temptation to “pick winners” in new technologies, or otherwise interfere as the market sorts itself out. Nevertheless, since full EPR and Zero Waste will initially be disruptive and the government is instigating change for a greater public good, it’s reasonable for the government to provide some kind of transitional support to certain facilities and workers in the environment industry. This could include retraining and transition programs, and financial support to municipalities that may, for instance, have to close, shutter or re-tool recycling plants that no longer have a place in the new system. Funding for this could come directly or indirectly from such things as the environment levy collected from the sale of all non-refillable alcohol beverage containers in the province, which amounts to tens of millions of dollars annually. The transition help could also be extended to people displaced by changes in the production of certain products and packaging.

Reuse wine and liquor bottles: Now that The Beer Store is collecting LCBO wine and liquor bottles under deposit, the opportunity exists to separate a portion of these not merely for recycling as broken glass cullet, but for sanitization and reuse as wine bottles made available at a low price to domestic Ontario wine producers. Large amounts of intact wine bottles, for instance, are being returned (in standard shapes and sizes) by restaurants in cardboard cartons. If these are reused instead of recycled, they should be entitled to money from the 10 cent environment levy currently imposed on all non-refillable alcohol beverage containers sold in the province. Working in partnership with wine entrepreneurs, a beneficial program could be set up with the government to preserve the embodied energy in intact wine bottles, and lower container costs for local producers.

Revisit waste to energy policy: The discussion paper puts the ministry in a conflicted position in respect to policy statements that recognized waste as a renewable energy resource. In other words, the government – anxious to find new “calories” for the provincial energy grid (as it closes coal-fired generating plants) – was quick to embrace the idea that burning waste for energy (in modern waste-to-energy [WTE] plants) is a clean and “green” activity. This idea is not embraced uniformly by Zero Waste proponents for a number of reasons. They argue against the idea that such plants are truly non-polluting, but that even if a safe and non-polluting WTE plant can be built, burning of wastes supports “business as usual” for the consumer society, i.e., we can keep consuming materials and make the discards somehow “go away.” Indeed, WTE plants compete for the very same BTU-dense materials made from byproducts of non-renewable petroleum (e.g., plastic containers) that Zero Waste proponents would prefer not be used in the first place (at least, not at the high volumes we see today). The environment ministry must clarify its commitment to the waste management hierarchy and treat disposal (burying and burning) as a “last resort.” In the case of WTE, perhaps only niche applications should be allowed (e.g., autoclave for medical wastes) until society has moved much further toward reduction and reuse, and overall sustainable practices.


Guy Crittenden

Guy Crittenden

Guy Crittenden was formerly Editor of this magazine and is currently a freelance writer specializing in environmental and producer responsibility themes. He lives in Collingwood, Ontario, Canada and can be contacted directly at gcrit @ rogers DOT com
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