Motor Oil Recycling: Barriers and Breakthroughs

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Written by Zachary Gray, B.Eng.Biosci., Chemical Engineering & Bioengineering

Motor oil changes are a sacrament in our car-obsessed modern life, while the mechanics working in the auto shops are their enforcers and evangelizers.  Every 5,000 to 8,000 kilometres, car owners begrudgingly schedule an oil change between busy work days and weekend errands.  

Primer of Motor Oil

During the 20-minute oil-change procedure, mechanics bleed the blackened, viscous motor oil from the bowels of the engine and replace it with pristine liquids from bright plastic packaging – eye-catching to some, but a far cry from the painted metal containers that furnish collector’s shelves.

Vintage Motor Oil Can, $31 (USD) on ebay

While the myriad of car oil brands available might suggest a wide variance in products, they differ only in the precise mixing of additives.  Motor lubricant is essentially 70-80% base oil with the remaining 20-30% consisting of supplements such as antioxidants, detergents, and viscosity enhancers, as well as rust inhibitors.

The quality of the motor oil degrades over time in a motor vehicle.  The build-up of debris blackens the oil, while the additive properties deteriorate over the driving cycle, dissipating heat and lubricating contact points between metal parts with less efficiency as time marches onward.  Water entrainment and oxidation of the base oil are also contributing factors.  

Changing one’s motor oil frequently, as the chorus drones on, ensures the longevity of the engine. One question remains as the mechanics dispense with the last of the used oil: what happens to it afterward?   Nothing much is often the answer. 

Motor Oil Re-refining

There are over 300 million registered vehicles in Canada and the United States alone, contributing to the nearly 2.5 billion gallons of motor oil disposed of annually throughout North America.  Of the almost 60% recovered, a mere 8% is recycled. The remainder feeds the 12 billion of gallons of lubricant reduced to toxic waste yearly.

Catastrophizing about the volumes quoted and their impact is not productive in and of itself.  Exploring ways to improve oil recycling figures is a better use of time.

In 2009, when the revered Scientific American explored whether motor oil could be recycled, the editors profiled Universal Lubricants (“UL”).  The Wichita-based company uses conventional refining techniques from upgrading crude oil when recovering the spent lubricant.  They essentially re-refine the used motor oil

UL processes over 45.4 million litres of used motor oil, or 28,600 barrels, per day.  In the re-refining process, used oil passes through a vacuum distillation unit which removes water from the base oil, accounting for 5-7% of the incoming volume. Next, contaminants are removed using an evaporation press.  In the final step, UL hydrotreats the decontaminated oil. 

Hydrotreating consists of applying high temperature and pressure (700 deg-F and 1,100 PSI) and enriching the carbon-backbone of the oil with hydrogen molecules in the presence of catalysts that aid in the chemical reactions. 

The final product resembles base oil, ready for lubricant merchants to add their additive concoctions and branding power.

Photo Credit: UL

Re-refining efforts, much like those by UL, accounts for only 10 percent of used oil management market.  The majority of used motor oil is either burned or dumped, depending on the jurisdiction and level of enforcement.  The emergence of re-refining technologies has done little in altering the outcome for spent motor oil — but why?

Barriers to Recycling

There are two main barriers to a broader adaptation of re-refining used motor oil.  The first is the capital expense in building and operating a facility on UL’s scale.  Investors should expect a final bill of tens of millions of dollars in replicating UL’s plant in Canada.  Recovering their investment is another issue: refineries derive their profits either from large volumes, amplifying small gains per unit of measurement, or upgrading cheaper base stocks.  With respect to the latter point, one could argue that the used motor oil would be a commodity instead of merely a waste product with broader market adaptation.  Such a classification diminishes the facility’s economic viability.

The second barrier to re-refining is the plant’s environmental impact.  A re-refiner has a similar environmental impact as an oil refinery.  To understand how difficult it is to get environmental approval for an oil refinery, one need to realize that the newest oil refinery in Canada is over 30 years old.

Canadian Innovation

Besides re-refining, there are innovative and arguably more feasible solutions for recycling motor oil in development.  The Ottawa-based MemPore Environmental Technologies Inc. (“MemPore”) is one such example, scaling their locally-minded, membrane-based process.

MemPore’s solution is this: the used motor oil is kept in 5,000-gallon settling tanks and periodically shipped to their regionally-based operation.  The central locations reduce the amount of pollution from transporting oil over longer distances and eases logistical challenges.  After removing contaminants during the pretreatment process, consisting of a filter, centrifuge, and flash evaporators, the oil is sent to the membrane unit.  Once polished to a quality consistent with a regular base oil, lubricant mixers take the final product and infuse it with their additives.

Cement kilns take the waste sludge separated by the membrane. The 15 metric tonnes, or 148 barrels, per day system operates at low temperatures and pressures, thus reducing its running costs and environmental impact.

Mempore Used Oil Recycling System

Alastair Samson, MemPore’s CEO, eloquently summarizes the company’s position and value proposition:

“The MemPore System can, for the first time, recover and recycle this base oil with 71% reduction in pollution, from localized systems, using low energy, and at low capital and operating cost. This is an important contribution to the clean technology movement and the preservation of earth’s natural resources.”

MemPore’s community-centric and scalable solution, with the potential for handsome profit margins, offers a tangible solution to the endemic squandering of used motor oil.  They also provide the mechanics a new hymn during drivers’ reluctant excursion to the auto body shop.

Windsor-Essex Recycling Success Story

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The Essex-Windsor Solid Waste Authority (EWSWA) is one of the few municipalities in North America that has had minimal impact from the recycled material bans issued in Asia. The secret to its success is due to dealing exclusively with North American processors.

The EWSWA is the governmental agency charged with the responsibility of providing an integrated solid waste management system for the County of Essex and the City of Windsor in Ontario. Windsor is directly across the Detroit River from the City of Detroit. The City of Windsor and County of Essex has a combined population of 393,000.

The Authority generates revenue through the sale of recyclable materials. The more materials recycled – the more revenue there is to offset the waste management system costs.

In an interview with the CBC, Cathy Copot-Nepsy, the EWSWA manager of waste diversion, stated, “EWSWA has been working strategically for years to get established in the domestic market. [This] has allowed us to be one step ahead of all the other recycling plants who have been sending it overseas.”

In the CBC interview, Ms. Copot-Nepsy did admit the EWSWA was not entirely insulated from the Asian ban on recyclables. With more North American municipalities looking for local processors of recyclables, an over saturated domestic market has meant that EWSWA had to reduce the contaminants in the recyclables it sold to processors.

The residential recycling program in Essex Windsor is two stream – container materials and paper materials. Every recycling truck has two compartments (one for containers and one for paper). The materials are delivered to two different facilities (one building for containers and another building for paper).

EWSWA is expanding it public education program to reduce contamination of the recyclables that are received at the material recycling facilities (MRFs). It has also added an optical sorter at its fibre plant.

https://www.cbc.ca/news/canada/windsor/municipalities-recycling-windsor-step-1.5092863

Innovative company fueling greener steel from Wood Waste

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Ontario-based CHAR Technologies is developing cost-effective and efficient alternative fuels that help manufacturers drastically reduce greenhouse gas emissions (GHGs), all while adding value to otherwise wasted resources. Andrew White is CEO of CHAR Technologies Ltd., an innovative Toronto-based cleantech company specializing in biocarbon fuel development and provides custom equipment for industrial air and water treatment, environmental management services, site investigation and remediation and resource efficiency.

Mr. White began developing their first product, SulfaCHAR, while he was a grad student at the University of Toronto (U of T). SulfaCHAR is a patented form of activated biochar that removes hydrogen sulfide from renewable natural gas the same way a Brita® water filter removes contaminants from tap water, leaving behind a clean biogas that can be used for multiple energy applications.

The feedstock used in the production of SulfaCHAR is anaerobic digestate and/or compost.  Production of SulfaCHAR is achieved by pyrolysis under patented conditions that include specific hold times, temperatures, and conditions.  Currently, there is a SulfaCHAR production facility co-located at the Stormfisher Environmental biogas facility in London, Ontario.

CHAR Technologies’ next challenge is to develop a product it calls CleanFyre, a solid biofuel intended to replace traditional coal. On a fundamental level, CleanFyre is produced through pyrolysis, the same process that has been used to turn wood into charcoal since ancient times. “In pyrolysis, you have a bio-based material that you heat up in the absence of oxygen,” explains Devon Barry, Char Technologies’ Biocarbon Manager. “Since there is no oxygen, the organic material does not combust but instead the chemical compounds that make up the material decompose into combustible gases and charcoal.”

As we all know, burning coal proliferates GHGs, and unfortunately, a commercially viable solution that produces high enough energy levels to replace coal in many manufacturing processes, such as iron making, doesn’t exist yet. However, CHAR Technologies believes it can offer a solution to address the need for a high carbon, low ash coal replacement as an energy and reactant source.

The feedstock in the production of Cleanfyre is currently clean wood and waste wood. Other biomass materials are also being testing. The use of wood and biomass in the production the CleanFyre is considered carbon neutral as the source material is renewable.

ArcelorMittal Dofasco is Canada’s largest flat roll steel producer based in Hamilton, Ontario. In 2017, the steelmaker approached one of Ontario’s regional innovation centres, the Ontario Centres of Excellence (OCE), looking for a cost-effective alternative fuel for their blast furnaces that would reduce GHGs.

Andrew White, CEO, CHAR Technologies

“There was nothing that could generate the high levels of carbon and energy needed for steel production,” says White, who has now been meeting with ArcelorMittal Dofasco for 18 months. CHAR Technologies is piloting their CleanFyre energy fuel product through this Ontario-based collaboration, with an eye on opening up a market estimated at $340 million in Ontario alone.

ArcelorMittal Dofasco has active plans towards an initial 20 tonne trial of CleanFyre in their blast furnaces, with the potential to scale-up once they confirm the fuel’s effectiveness. The major advantage of CHAR Technologies’ solution is ‘simplicity,’ says White. “There are no major modifications required for the iron making process; we’re striving towards a ‘drop-in’ solid biofuel.”

Ongoing research at the University of Toronto will be key to CleanFyre’s success. “We are working with researchers at the University of Toronto on some very innovative ways to drastically reduce the ash content, which will allow us to expand our feed stocks to low value ‘wastes’ that have valuable low GHG carbon that’s otherwise inaccessible.”

This article is an edited version from the one posted on the InvestOntario website.

Dressing the problem: Textile Waste in Canada

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By Zachary Gray, B.Eng. Biosci., Chemical & Bioengineering

Canadians dispense with their frayed, used clothing by the millions of tons each year.  Good Samaritans flood noble ventures, including the Salvation Army Thrift Stores and Goodwill Services, with their worn textiles, while some consumers exchange their threads for in-store vouchers with fast fashion lines, such as H&M, keeping their closets and racks well stocked.  The hope is that these used clothes will be recycled or given a second lease on life, inspiring joy in another person that only an excellent pair of second-hand jeans can.  The reality, however, is bleaker.  For convenience, many will deposit their clothes in the trash, while only a fraction of the donated items will find their way onto other people’s backs, while another minuscule sum replenishes the country’s supply of polishing cloths and carpet fibres.  Most of the time, the used garments are landfilled.  Therein lays the problem — and the opportunity — for recycling textiles in Canada.

The Current Situation

Textile recycling in Canada is in need of resuscitation: The country’s current trajectory is as environmentally damaging as it poorly understood.  For context, landfilling claims 85% of the wearable textiles and 99% of non-wearable ones, such as shoes and towels. The thoughtful donations and in-store voucher trade-ins, packaged in bulk and either sold in local thrift shops or abroad are usually of poor quality and are promptly thrown out.  African countries, such as Kenya, where an estimated 80% of the population wear second-hand clothing were once popular destinations for Canadian’s used clothing.  They are now imposing steep tariffs to curb the increasing amount of textile waste imported and thrown almost immediately into their landfills.  What is more, recycling used clothing has been a technically challenging and economically ruinous venture, at least up until this point in time.  In sum, either directly or not, the average Canadian tosses away some 37 kilograms of textiles per annum.

Textile Bans and Environmental Impacts

The cities of Markham, ON and Brandon, MB banned textiles from their respective garbage collections in an attempt to curb higher volumes of fabric from further occupying landfill space.  Vancouver, BC is weighing a similar decision.  

However, the problem continues to grow as consumption levels climb, and the consequences are farther reaching than landfill occupancy and degradation by-products.  Clothing production doubled worldwide between the years 2000 and 2014, while consumers purchase 60% more textile products and keep them for half the time.  For context, the average Canadian now buys 72 textiles items annually.  

As Canadians’ tastes for textiles increases, so too are the demands on its supply chain, placing further stress on sourcing raw materials as well as water and power consumption.  Textile fibres spun and manufactured from crops, such as cotton and hemp, and synthetics, including acrylics, nylons, and polyesters, each has its own carbon footprint.  For example, polyesters generate 9.52 kg-CO2 for every ton made, while conventionally farmed, non-organic, cotton and hemp produce 5.09 and 4.05, respectively.  

Image courtesy of Waste Reduction Week in Canada.

There are additional environmental costs in manufacturing synthetic fibres. For instance, processes making nylon products emit significant quantities of nitrous oxides, which are approximately 300 times worse in terms of their greenhouse gas potency.  The electricity demands placed on the power grid for processing the textile fibres are immense.  Spinning, knitting, and weaving are all energy-intensive steps, as are driving a facility’s air conditioning systems, pumps, and compressors.  Analysts estimate that the textile business consumes one trillion kilowatt hours annually worldwide.  

The water consumed, and often treated with dyes and other chemicals, in making textiles is commensurately high.  In illustrating the point, a single cotton shirt uses 2,700 litres of water while a pair of jeans uses 6,800.  A World Bank reported estimated that textile manufacturing accounts for 17-20% of the industrial water pollution globally.  

This tallying of textile’s environmental impacts does not include the considerable land requirements both for production, but more importantly, disposal, nor the industry’s complex socioeconomic, possibly exploitive, relationship with labour forces, many of whom are women in developing countries.  Given the high demands placed on energy production and commodities, as well as the vast sums overrunning landfills, Canadians’ relationship with textiles is unsustainable and needs readjustment.

Change is Happening

A paradigm shift leveraging multiple strategies can help Canadian reorient their increasing demands for textiles.  Encouraging changes in consumer habits and possibly embracing new recycling technologies are two options.

Canadians recycle approximately 15% of wearable and 1% of non-wearable textiles each year.  Polishing and cleaning cloths account for 20% of the amount recovered, while fibre insulations claim another 26%.  

Innovative Companies

Canadian Textile Recycling Ltd. based in Burlington, Ontario is an example of a start-up business furthering the cause of textile recycling.  They are perfecting their WOOLTEX sorting system, adeptly refashioning used clothes into cleaning cloths and shipping reusable items abroad.  Theoretically, the majority of textiles are recyclable or reusable, but neither has been economical.  Together blended cotton, composed mostly of bleached cellulose, and polyester fibres are worth little, but invaluable separately.  Thermally separating complex fibre blends have been economically infeasible until recently.

Several new ventures are focusing on textile recycling.  The UK-based Worn Again Technologies secured investment of $8.8 million for scaling their textile decontamination and polyester extraction platform solution.  The start-up’s brain trust from the University of Cambridge believes there are enough textiles and plastic water bottles in circulation to supply various industries’ raw material needs.

Purified cotton waste garments are shredded and then extruded into a fibre for reuse in new clothing

The Seattle-based Evrnu is another ascending textile recycling start-up.  Their technology regenerates fibres at the molecular level suitable for new manufacturing. Evrnu recently secured venture capital financing from the Closed Loop Cycle Fund, a heavyweight in the clean-technology investment space, in recognition — and hope — for their company’s economic viability.
Levi Strauss & Co. sells the world’s blue jeans made from regenerated post-consumer cotton waste fibres from Evrnu.

Outside of clothing, Quebec’s Victor Innovatex’s Eco Intelligent Polyester (“EIP”) is a cradle-to-cradle furniture textile made from recycled plastics.  The company estimates that their EIP textile, generated using their antimony-free catalyst technology, reduces greenhouse gas emissions by 80% in comparison to using virgin polyesters while creating a sustainable product ecosystem.

Adjusting consumer behaviour throughout the cycle of buying, wearing, and disposing can have a significant impact.  Part of the problem is fast fashion brands making inexpensive, easily disposable garments that are difficult to repair and even harder to recycle due to their poor quality.  There is a correlation between the rise of fast fashion and the growth of the middle-class and their incomes, negating the argument that purchasing higher quality items is out of reach for most consumers.  Consumers’ dollars are pushing the market, not the other way around.  The British government recently announced that they are considering a tax on fast fashion items, with the hope of dampening consumer activity in that market segment.

Aside from choosing higher-quality clothing, selecting brands that purposefully reduce waste is additionally beneficial.  Picking designers with zero waste, such as the St. James brand from Queen’s, NY, also helps.  The Toronto-based twins Alex and Lindsay Lorusso have taken the concept of zero waste clothing a step further with Nudnik, their fashion line for children.  Nudnik makes fun and affordable apparel from other clothing manufacturers’ scraps and discarded fragments, essentially making the brand negative-waste. Nudnik and St. James’s concepts are forward-thinking and straightforward, yet they too shall eventually go.

Nudnik t-shirt made entirely from off-cut fabrics and end-of-roll threads 

While vast sums of donated clothing find their way to the landfill, many people throw their old clothes away instead of letting a charitable organization or recycling service evaluate them.  The fact remains that considerable volumes of trash-destined textiles are reusable.  The reasons are many, but one in particular is that donation bins in larger urban centres are sparse.  Vancouver’s Revify is addressing bin scarcity in their city by partnering with high-rise condominiums and eliminating the convenience factor of filing away old clothing in the trash.  Recycling can happen in other ways, too.  Community-wide clothing swaps and drives are also viable strategies in furthering one’s original purchases: someone else can enjoy them; this tactic applies to other textiles as well.

Textile waste is an issue we wear, sleep with, and have little concept of.  Canadians are less able to export the problem as it consumes land, resources, and money.  And while a magic bullet solution for textile recycling is a lovely idea, most technologies are in their infancy; people must rethink their relationship with clothes and fabric during the interim period of unwittingly purgatorial proportions — if only they knew.

About the Author

Zachary Gray graduated from McMaster University with a bachelor’s degree in Chemical Engineering & Bioengineering.  He has worked with several early-stage cleantech and agri-industrial companies since completing his studies, while remaining an active member of his community.  He is enthusiastic about topics that combine innovation, entrepreneurism, and social impact.

Recycled Content Standards for Plastic Products Coming?

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by Jonathan Cocker, Baker Mckenzie

The attention currently devoted to plastics waste in both the public and private sectors is breathtaking. A growing number of international brands have made recycled content commitments for their plastic packaging and related containers. The European Union’s Strategy for Plastics in a Circular Economy has begun implementing changes to the EU Packaging and Packaging Waste Directive and the UK Department of Agriculture, Environment and Rural Affairs (DAERA) has just released a well-developed plastics packaging taxation proposal that is currently under public consultation. The plans for plastic packaging are open and notorious.

Less obvious has been the regulatory direction for plastic products. An increasing number of consumer goods companies are promoting products with some plastic (or even ocean plastic) waste content, though there are no common standards by which these claims can be measured. The EU has committed to some limited prohibitions on single use plastics (read: knives and forks) and has called for voluntary member commitments to grow markets for recycled plastics in its Strategy. The G7 Oceans Plastic Charter includes, an aspirational 2030 member goal of “working with industry towards increasing recycled content by at least 50% in plastic products where applicable”.

The dramatic reduction of overseas markets, including China’s National Sword, has, however, made urgent the need for local markets for recycled plastics. Something must be done.

Circular Economy and the Demand Side

In response, there is increasing support for broadening the role that all plastic products (of some chemistry) can play within a broader plastics circular economy strategy. Reloop’s June 2018 A Call for EU Action on Recycled Content Mandates, Eunomia’s UK Demand Recycled, October 2018 and A Vision for a Circular Economy for Plastics in Canada, Smart Prosperity Institute, February 2019 are just three recent advocates for recycled plastics content standards, creating the necessary market to ensure both supply chains and reverse supply chains are designed for the resupply of the necessary recycled content input.

Further, the materials caught by these recycled content obligations could be substantially broadened to capture the industrial, commercial and institutional sectors, as additional to consumer goods, to expand the market (and thereby potentially lower the price) for recycled plastics content.

The Commercial Case for Recycled Content Standards

Among the benefits of recycled content requirements would be the marriage of product content with its recycling, compelling producers to better understand the opportunities for the recycled plastics generated, and to foster further innovation to best streamline more efficient recycling methods to produce high-grade plastics at commercial scale.

The Smart Prosperity Institute also points out that this closed loop strategy will insulate producers from plastic market fluctuations:

Recycled content performance standards create a market for recycled materials that moves in step with the demand for plastic products regardless of input prices from other feedstocks. Such an approach will overcome the economic barrier posed by fluctuating virgin commodity prices even as demand for plastic products continues to grow.

There is also existing recycling infrastructure in North America and the EU which is at risk if new viable markets aren’t found for recycled plastics. Finally, the liabilities associated with the release of plastic waste to the environment would be lessened given the market incentives for recapture.

How Would It Work?

As has already been proven on a more limited scale in California, recycled content standards can function in a local (though large) market without international adoption. It would, however, benefit from expansion through multilateral initiatives such as the G7 Oceans Plastic Charter and the EU Strategy, creating a sufficient market to attract broad-scale overhaul of international supply chains for plastic products.

Alternatives to direct mandated standards include an input tax based upon the percentage of fossil-fuel derived plastics. This is the approach seemingly favoured for packaging by DAERA. There are also more complex models such as a “feebate” or a tradable credit regime, both of which may offer unique functionality benefits but are perhaps too involved for easy and confident adoption by participating countries. All models, however, point to recycled plastics content as a coming reality.

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It would be a mistake to review recycled content standards as either obscure or otherwise a 2030 obligation. As traditional recycling is going through a dramatic shift, plastic feedstock no longer has easy secondary markets in developing countries and there is a growing clamour for circular economy as a remedy to pervasive plastic waste, it is possible that the international push for these standards will be upon plastics product makers sooner than they might expect.

This article is republished at the permission of the author. It was first published on the Baker McKenzie Environmental Law Insights website.

About the author

Jonathan D. Cocker heads the Firm’s Environmental Practice Group in Canada and is an active member of firm Global Consumer Goods & Retail and Energy, Mining and Infrastructure groups. Mr. Cocker provides advice and representation to multinational companies on a variety of environment, health and safety matters, including product content, dangerous goods transportation, GHS, regulated wastes, consumer product and food safety, extended producer responsibilities and contaminated lands matters. He appears before both EHS tribunals and civil courts across Canada. Mr. Cocker is a frequent speaker and writer on EHS matters, an active participant on EHS issues in a number of national and international industry associations and the recent author of the first edition of The Environment and Climate Change Law Review (Canada chapter) and the upcoming Encyclopedia of Environmental Law (Chemicals chapter).

Global Waste-to-Energy Market Analysis and Forecast to 2027

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According to a recent research report prepared by Research and Markets Inc., the global waste-to-energy (WTE) market is poised for strong growth for the forecast period up to 2027.

The report, entitled “Global Waste to Energy Market Analysis & Trends – Industry Forecast to 2027”, states some of the prominent trends that the market is witnessing include demand in focus towards energy generation, rising government initiatives and stringent regulations, and increasing popularity of renewable energy resources.

The study presents detailed market analysis with inputs derived from industry professionals across the value chain. A special focus has been made on 23 countries such as U.S., Canada, Mexico, U.K., Germany, Spain, France, Italy, China, Brazil, Saudi Arabia, South Africa, etc. The market data is gathered from extensive primary interviews and secondary research. The market size is calculated based on the revenue generated through sales from all the given segments and sub segments in the research scope. The market sizing analysis includes both top-down and bottom-up approaches for data validation and accuracy measures.

Market Research Report

A similar market study prepared by Market Research, entitled Global Waste To Energy Market Analysis, Drivers, Restraints, Opportunities, Threats, Trends, Applications, And Growth Forecast To 2027, predicts growth in the WTE market.

The Market Research report states that increasing adoption of renewable energy resources globally is a key factor driving growth of the global waste to energy market. In addition, government policies on waste deposable & treatment techniques, low price of fossil fuel, and development in thermal technologies such as incineration, gasification, and pyrolysis that lowers the carbon emissions are other factors expected to boost growth of the global waste to energy market over the forecast period.

The Market Research report cautions that the high cost associated with waste to energy generation is a key factor restraining growth of the global waste to energy market. Additionally, lack of awareness regarding waste to energy benefits, and emission of flue gases in thermal waste to energy technology that causes health issues are other factors expected to hamper growth of the global waste to energy market over the forecast period.

The Market Research report predicts that the rising demand of low cost technologies for treating local waste is also expected to generate potential opportunity for key players in the global waste to energy market over the forecast period.

Provincial Environmental Obligations Prevail Over Federal Bankruptcy Laws – Supreme Court of Canada

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by Paul Manning, Manning Environmental Law

Recently, the Supreme Court of Canada released its decision in the case of Orphan Well Association, et al. v. Grant Thornton Limited, et al.Orphan Well Association, et al. v. Grant Thornton Limited, et al. 

The decision writes another chapter in the long running saga of whether a company’s environmental regulatory obligations survive bankruptcy and, in particular, whether the company’s trustee in bankruptcy can disclaim an asset so as to avoid environmental liability. (See our blog post The Non-Polluter Pays: Creditor Roulette and Director Liability)

The Supreme Court has now decided in Orphan Well that, after going bankrupt, an oil and gas company must  fulfill provincial environmental obligations before paying its creditors.

Background

Redwater was an Alberta oil and gas company, which owned over a hundred wells, pipelines, and facilities when it went bankrupt in 2015.

Alberta has provincial laws requiring oil and gas companies to obtain a licence to operate. As part of the licence, companies have to “abandon” wells, pipelines, and facilities when they are done. This means permanently taking these structures down. They also have to “reclaim” the land by cleaning it up. Companies cannot transfer licences without permission from the Alberta Energy Regulator (AER), which they won’t receive if they haven’t met their responsibilities.

Most of Redwater’s wells were dry when it went bankrupt. Dismantling the sites and restoring the land would have cost millions of dollars more than they were worth. To avoid paying those costs, the the trustee in Orphan Well decided to disclaim (i.e. not to take responsibility for) the redundant wells and sites under the BIA. The trustee wanted to sell the productive sites to pay Redwater’s creditors.

The AER said that this wasn’t allowed under the BIA or provincial law and ordered the trustee to dismantle the disowned sites. The trustee argued that even if the AER was correct, the provincial abandonment orders were only provable claims under the BIA. In this case, this meant the money would first go to pay Redwater’s creditors.

The Supreme  Court’s Decision

There were two main legal issues before the Supreme Court. The first was whether the BIA allowed the trustee disclaim the sites it didn’t want take responsibility for. The second was whether the provincial orders to remove structures from the land were provable claims under the BIA. If they were, that would mean the payment order set up in the BIA applied. Only money left, if any, after those payments were made, could be used to pay for taking the sites down.

The trial judge had ruled that the trustee was allowed to disclaim the disowned sites and the abandonment costs were only provable claims in the bankruptcy. The majority of judges at the Alberta Court of Appeal hearing had agreed.

The majority of judges at the Supreme Court disagreed. It ruled that the trustee could not disclaim  the disowned sites. It said the BIA was meant to protect trustees from having to pay for a bankrupt estate’s environmental claims with their own money. It did not mean Redwater’s estate could avoid its environmental obligations.

The majority also said the abandonment costs were not “provable claims”. These costs weren’t debts requiring payments; they were duties to the public and nearby landowners. This put the abandonment costs outside the BIA’s payment order scheme and as such, the majority ruled, there was no conflict between the federal and provincial laws.

(The minority of judges at the Supreme Court disagreed, arguing that there was a genuine conflict between the federal and provincial laws and the BIA being the federal law should prevail over the provincial regulations. Where a valid provincial law conflicts with a valid federal law, the federal law will normally prevail under the constitutional law “doctrine of paramountcy.”)

As the trustee had already sold or given up all of Redwater’s assets, the money from the sales was held “in trust” by the court during the lawsuit. This money must now be used to abandon and reclaim the land before anything is paid to any of Redwater’s creditors.

Click here for the full decision of the Supreme Court of Canada in Orphan Well

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Manning Environmental Law is a Canadian law firm based in Toronto, Ontario. Our practice is focused on environmental law, energy law and aboriginal law. 

Paul Manning is a certified specialist in environmental law. He has been named as one of the World’s Leading Environmental Lawyers and one of the World’s Leading Climate Change Lawyers by Who’s Who Legal. This article is only as a general guide and is not legal advice.

Global Companies form an Alliance to End Plastic Waste

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Nearly 30 major global companies have joined together to form an Alliance to End Plastic Waste (AEPW) and have committed over $1.0 billion to develop, deploy and bring to scale solutions to reduce and manage such waste, and to promote post-use solutions. The companies, which span the entire plastics value chain, expect to invest $1.5 billion over the next five years.

The alliance is being chaired by David Taylor, president and CEO of Procter & Gamble (multi-national consumer goods corporation). The Vice President of the AEPW is Bob Patel, CEO of LyondellBasell (one of the largest plastics, chemicals and refining companies in the world).

In addition to Procter & Gamble, AEPW has drawn other big guns from across the value chain. Other founding companies – from throughout North and South America, Europe, Asia, Southeast Asia, Africa, and the Middle East – include BASF, Berry Global, Braskem, Chevron Phillips Chemical Company LLC, Clariant, Covestro, Dow, DSM, ExxonMobil, Formosa Plastics Corporation USA, Henkel, Mitsubishi Chemical Holdings, Mitsui Chemicals, NOVA Chemicals, OxyChem, PolyOne, Reliance Industries, SABIC, Sasol, SUEZ, Shell, SCG Chemicals, Sumitomo Chemical, Total, Veolia, and Versalis (Eni).

The Alliance is a not-for-profit organization that includes companies that make, use, sell, process, collect, and recycle plastics. This includes chemical and plastic manufacturers, consumer goods companies, retailers, converters, and waste management companies, also known as the plastics value chain. The Alliance has been working with the World Business Council for Sustainable Development as a founding strategic partner. The Alliance today also announced an initial set of projects and collaborations that reflect a range of solutions to help end plastic waste:

With participation from chemical and plastic manufacturers, consumer goods companies, retailers, converters, and waste management companies, the alliance membership has representation across the entire plastics value chain. The alliance has also been working with the World Business Council for Sustainable Development as a founding strategic partner

In the months ahead, the Alliance will make additional investments and drive progress in four key areas:

  • Infrastructure development to collect and manage waste and increase recycling;
  • Innovation to advance and scale new technologies that make recycling and recovering plastics easier and create value from all post-use plastics;
  • Education and engagement of governments, businesses, and communities to mobilize action; and,
  • Clean up of concentrated areas of plastic waste already in the environment, particularly the major conduits of waste, like rivers, that carry land-based plastic waste to the sea.

The Alliance also announced an initial set of projects and collaborations that reflect a range of solutions to help end plastic waste. Initial projects and collaborations include:

  • Partnering with cities to design integrated waste management systems in large urban areas where infrastructure is lacking, especially those along the rivers that transport large amounts of plastic waste from land to the ocean.
  • Funding The Incubator Network by Circulate Capital to develop and promote technologies, business models and entrepreneurs that prevent ocean plastic waste and improve waste management and recycling, with the intention of creating a pipeline of projects for investment; the initial focus area will be Southeast Asia.
  • Developing an open source, science-based global information project to support waste management projects globally with reliable data collection, metrics, standards, and methodologies to help governments, companies, and investors accelerate actions to stop plastic waste from entering the environment.
  • Creating a capacity building collaboration with intergovernmental organizations such as the United Nations to conduct joint workshops and trainings for government officials and community leaders to help identify and pursue the most effective solutions.
  • Supporting Renew Oceansto aid localized investment and engagement. The program is designed to capture plastic waste before it reaches the ocean from the ten major rivers shown to carry the vast majority of land-based waste to the ocean. The initial work will support the Renew Ganga project, which has also received support from the National Geographic Society.

The alliance will focus on collaboration and coordinated efforts across the value chain, working on projects focused on near-term progress as well as those that require major investments with longer timelines. “Addressing plastic waste in the environment and developing a circular economy of plastics requires the participation of everyone across the entire value chain and the long term commitment of businesses, governments, and communities. No one country, company or community can solve this on their own,” says Veolia CEO Antoine Frérot, a vice chairman of the Alliance to End Plastic Waste.

Research from the Ocean Conservancy shows that nearly 80 percent of plastic waste in the ocean begins as litter on land, the vast majority of which travels to the sea by rivers. In fact one study estimates that over 90 percent of river borne plastic in the ocean comes from 10 major rivers around the world – eight in Asia, and two in Africa. Sixty percent of plastic waste in the ocean can be sourced to five countries in Southeast Asia.

For more information, please visit www.endplasticwaste.org

Northern Canada Waste Management Update

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The City of Iqaluit, Nunavut recently began consultations on a $35 million waste plan.  Currently, a new landfill and recycling facility is planned.  Iqaluit is the capital city of the Canadian territory of Nunavut. It sits on vast Baffin Island in Frobisher Bay.

The new waste management plan the city first announced this past July, after the federal government confirmed it will put $26.6 million into the project, amounting to 75 per cent of its $35-million cost.  The remaining 25 per cent of the money will come from the city, through the block funding it receives from the Government of Nunavut.

The $35 million will pay for a new landfill proposed to be located about 8.5 kilometres northwest of Iqaluit, the closure and cleanup of the existing landfill and a waste transfer station.

The existing municipal landfill in Iqaluit was built in 1995 as a stop-gap, to be used for just five years. Until now, the city has not been able to build a new facility because of the cost, said Amy Elgersma, the city’s acting chief administrative officer, in an interview with the media on July 20th at the landfill.

The landfill foreman, Jeff McMunn, says they see over 50 truck-loads of garbage a day, from individual drop-offs and from street collection.

At the existing landfill, waste is capped with dirt, rock and gravel. If it’s not covered quickly enough, the wind can blow items away or animals can eat it. The proposed new landfill will be a bale-fill design, which involves compacting the trash into bales that are then wrapped in plastic and stacked in neat rows.

Iqaluit’s Existing Landfill (PHOTO BY COURTNEY EDGAR)

The current plan is for the to use the waste transfer station to recycle metal and tires, and to sort electronics, furniture and household items that could be offered back to residents for re-use.  The city also says only waste that cannot be re-used or recycled will be sent to the landfill site.  The city estimates that recycling at the transfer station will result in a 44 per cent reduction in waste destined for disposal at the landfill.

The recycles generated from the waste transfer station will be sent in shipping containers to southern Canadian locations for further processing.

The Nunavut Planning Commission and the Nunavut Impact Review Board must still look at the city’s plans, through an application the city was expected to make to regulators this month.  The city hopes the construction of the transfer station and landfill will start in 2019.

 

 

Development of an Alternative Glass Market: Bio-Soil from Recycled Glass

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The Regional Municipality of Niagara, Ontario recently reported on a research and development project that explored alternative uses for recycled glass.  The project was partially funded from the Ontario Continuous Improvement Fund, which is a partnership between the Association of Municipalities of Ontario (AMO), the City of TorontoStewardship Ontario (SO) and the Resource Productivity and Recovery Authority (formerly Waste Diversion Ontario – WDO).

In Ontario and throughout much of Canada, the marketplace for municipal grade mixed broken glass is relatively thin and, at the same time, quality specifications from end markets are becoming tighter, requiring added attention by Material Recovery Facility (MRF) operators.

Testing a Potential New End Market for Recovered Glass

Niagara Region is seeking to create a secondary market for recycled glass in the event its current market (sandblast) slows down. The project the municipality is currently working on is an innovative approach to development of an economically-effective way to replace up to 85% of the sand component of engineered bio-soil with processed recycled glass.

A perceived benefit to using recycled glass in bio-soil for the Region is that its granular sizing can be controlled and be easily reproduced at the Region’s glass processing facility.

The project features three main tasks to determine the suitability and feasibility of utilizing recycled glass as an ingredient in bio-soil.  The tasks are as follows:

  • Task 1 – Laboratory Testing of Bio-soil Quality;
  • Task 2 – Field Plot Testing of Bio-soil Quality; and
  • Task 3 – Economic Feasibility Analysis

Task 1 Progress to Date

Task 1 has three goals:

  1. Identify desired product specifications and characteristics to be in line with soil media currently used;
  2. Examine the physical, chemical, microbiological and leaching characteristics of the recycled glass; and
  3. Undertake greenhouse trials to test the effectiveness of the proposed media specifications and determine which of the mixes should be taken to larger field trails in Task 2.

So far under Task 1, the Region has experienced mixed success with laboratory germination tests. The first test revealed 80% germination and positive plant growth. However, the second growth test results were not as favourable, with only 20% growth. The discrepancy between the two is that different media mixes were used. Further testing is currently underway to confirm growth viability.

First Test with Positive Growth

Second Test with Less Than Positive Growth

The goal for Task 2, is to demonstrate the effectiveness of the proposed media through field plot studies. The results from the greenhouse studies undertaken in Task 1 will be fully evaluated by the project team and field plots will be designed. This evaluation will identify what media mixes showed the potential characteristics desired and which one should be brought forward for the field plot studies. The field plots will be located at a site that is suitable to meet the ongoing needs of the research over the length of the project.

Assessing Economic Feasibility in Task 3

Task 3 will build on the results of Tasks 1 and 2 to complete an economic feasibility assessment for including recycled glass in bio-soil.

A first step for Task 3 is a high-level assessment (tonnages, costs, revenues) of the current recycled market in Ontario. This plus Niagara data would be used as the baseline from for comparison. The efforts would then include an examination of all the costs for production of bio-soil utilizing recycled glass. A secondary goal is the evaluation of the market costs for comparable sand products and the value ranges for which recycled glass could be purchased.

Project Next Steps

Once Niagara Region has identified and developed the correct mixture for optimal germination and growth, staff will proceed to Task 2 and carry out some field trials. Please stay tuned for a follow up blog highlighting the results of the project.