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.

B.C. Waste Organics Management Facility Fined $300,000 over Odour issues

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Harvest Fraser Richmond Organics Ltd. recently agreed in British Columbia Provincial Court to pay a $300,000 fine for violating the Metro Vancouver Regional District’s air quality bylaw on two dates in November 2016.
The two $150,000 fines are the biggest in Metro Vancouver history.

Source of Problem

Harvest Fraser Richmond Organics Ltd  entered the organic waste management business in Metro Vancouver in 2009, when it purchased Fraser Richmond Soil and Fibre, which had largely handled landscaping waste since 1993.

Harvest Fraser Richmond Organics Ltd. received a $5 million grant from the federal Clean Energy Fund to help bankroll its high solids anaerobic digestion facility. It got another $2 million from Metro Vancouver for improvements and $500,000 plus a $1 million loan from the provincial government in 2012.

When in full operation, the composting and anaerobic digestion facility turned region’s organic waste (i..c, curbside collected organic waste as well as leaf and yard waste) into clean, renewable electricity and high quality compost. Statistics for the facility were as follows: 

  • Over 200,000 metric tonnes of organic materials processed per year;
  • 6,500 mWh of clean, renewable electricity generated; and
  • Over 180,000 cubic yards of top quality soil products generated per year.

Odour became a major problem at the Harvest Fraser Richmond Organics Ltd. facility after the district banned food scraps from landfills in 2015. the company began accepting more organic waste and odours emanated from open air windrows.

Compost Windrows at the Harvest Fraser Richmond Organics Ltd facility, November, 2016.

In 2017 the City of Richmond stopped sending its organic waste to Harvest and chose to divert it to Delta-based Enviro-Smart Organic.

Why did the Facility Close Down?

The operation in Richmond that had consisted of both compositng and anaerobic digestion was shuttered in 2018. At the time the shut down of operations were announced, Stephen Bruyneel, a company spokesperson, stated it was due to regulatory uncertainty. Mr. Bruyneel told the Richmond News that Harvest Fraser Richmond Organics Ltd. was not willing to make multi-million dollar facility improvements amidst uncertainty surrounding its air quality permit, issued by Metro Vancouver.

In September 2016, Metro Vancouver issued a four-year permit to
Harvest Fraser Richmond Organics Ltd. on the condition it must take measures to mitigate odours and is bound by new enforcement guidelines.

One odour-mitigation measure in the permit was a new Covered Aerated Static Pile (CASP) Composting System that was to be in place by April, 2019. In the August closure announcement, the company stated it was not willing to install the CASP Composting System.

Another condition in the air permit that the company decided was untenable was the “odour measurement” system listed as a condition. The condition stated that Metro Vancouver employees would determine if odours from the impacting sensitive receptors. The company claimed it was method was unscientific.

Payment of the Fine

Harvest Fraser Richmond Organics Ltd. declared bankruptcy in 2018 and is now under creditor protection. At the time it declared bankruptcy, the company’s accounts payable totaled over $1.6 million. Creditors included a several environmental consulting firms an analytical laboratory.

Ray Robb, Metro Vancouver’s manager of air quality of enforcement, doubts the fine will be paid due the creditor protection the company is still in.

Mr. Robb said Metro Vancouver was to charge the company with dozens of counts of pollution, which carried fines of up to $1 million per day. The district had evidence of pollution from Sept. 1, 2016, to Nov. 16, 2016, as well as the two days noted in the settlement. However, it was decided to pursue charges for only two days in November as it was the day that environmental officers were in the field collecting evidence and coincided when there were many complaints from neighbours and meteorological conditions were stable.

The settlement stipulated that Metro Vancouver allow the company to change its name to 00891775 B.C. Ltd., which the provincial court system will register when posting the Feb. 22, 2019, court order.

New Composting Facility Planned on Vancouver Island

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As reported in the Campbell River Mirror, Comox Strathcona Waste Management (CSWM) is considering two properties as potential locations for an organics composting facility. The project picks up on work started by the City of Campbell River, British Columbia, which had applied for a grant that was unsuccessful back in 2015.

The Comox Strathcona Waste Management (CSWM) service is a function of the Comox Valley Regional District, a community of 66,500 people located within an area of 1,725 square kilometres on Vancouver Island, British Columbia. The CSWM service manages over 100,000 tonnes of waste and recycled material annually and oversees a number of diversion and education programs for the CVRD and the Strathcona Regional District (SRD). 

CSWM uses three service providers for private curbside garbage and recycling pickup services:  Emterra Group, Progressive Waste Solutions, and SunCoast Waste Services.

The Comox Strathcona Solid Waste Management Plan targets a 70 per cent waste diversion rate for the Comox Strathcona Waste Management (CSWM) service area by 2022, and the greatest remaining opportunity to meet this target is the diversion of food waste from the waste stream.

CSWM has been partnering with the Village of Cumberland and the Town of Comox to pilot an organics collection program as part of the region’s commitment to reduce the amount of food in the waste stream.

CSWM Leaf and Yard Waste Composting Operations

CSWM adopted the organics composting project from the City of Campbell River and received an Infrastructure Canada grant in 2017 for a regional site. That year, Infrastructure Canada announced funding of $5.5 million for the facility, with the remaining $2.77 million of the then-$8.3 million project to be funded locally. A recent consultant’s report estimated the costs now would likely be just over $12 million because additional tonnage capacity proposed for the facility and increasing construction costs.

Part of the rationale for siting the operation in Campbell River is to take advantage of “back-haul” opportunities, by filling trucks from Campbell River with garbage for the landfill in the Comox Valley and bringing trucks back with organics from the Comox Valley for the Campbell River facility, once the landfill in Campbell River closes and garbage is taken to the regional site in the Comox Valley.

The area identified in the application in Infrastructure Canada for funding was at the Norm Wood Environmental Centre, which has been providing wastewater treatment for the city since 1996, as the location for the organics facility, one reason being to cut down on transport costs.

As reported by the Campbell River Mirror, CSWM senior solid waste manager Andrew McGifford discussed details of the planned organics composting facility board members during a recent CSWM meeting. The project will be tendered as a design-build-operate (DBO) facility.

The location of the proposed facility will be either the Norm Wood Environment Centre or an location identified as “Block J” adjacent to the Campbell River Waste Management Centre, the current landfill west of the city.

Comox Strathcona Waste Management

Besides finding a site of the proposed composting facility and making preparations for a Requests for Proposal of a DBO operation, the CSWM has also been in seriously considering the use of waste-to-energy as an option for management of waste in the future. In 2018, the CSWM board approved two directors and one senior staff person to tour a Sustane Technologies facility while in Nova Scotia. Sustane Technologies Inc. is a cleantech company has developed a processes to transform municipal solid waste into high value fuels and recyclable materials. 

Hamilton city council backtracks on plan to hear about alternative recycling options

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The City Council in Hamilton, Ontario recently decided not to pursue a tender for Expression of Interest for (EOI) alternative recycling options. A week earlier, Council had voted in favour of issuing an EOI.

The driver for the original motion was an unsolicited offer from AmaLaTerra Inc. that proposed a plan to transform the city’s plastic waste into green energy through a “steam reformation” processor. The President of AmaLaTerra Inc. is Mike Miscio. He is also a partner at the Bradam Energies, a company formed in 2012 that holds the patent on the steam reformation technology.

Mr. Miscio told city Councillors that any sort of waste can go inside its processor, including plastic and tires. Any emissions are “well below” provincial emissions standards, he said. The emissions are half “very, very green hydrogen,” he said, while the rest is “methane and carbons,” all of which can be used to produce electricity.

Bradam Energies acquired the assets and intellectual capital of technology of Elementa Group in April 2016 and has since been developing commercial project opportunities globally.

Elementa Group built and operated a pilot gasification facility in Sault Ste. Marie. The facility operated a successfully converted up to 3-tonnes per day of municipal solid waste to syngas from 2007 until 2011. The company had an agreement with the City to build a full-scale facility but was unable to raise the $50 million to build it.

The Bradam patented steam reformation process and facility design provide an environmentally responsible way to reform any organic waste into synthesis gas (“Syngas”) for production of electricity using turbines, pipeline grade renewable or synthetic natural gas, hydrogen, or the Syngas can be converted to biofuels (diesel & jet fuel) using Fischer Tropsch technology.

The patented process is a combustion-free chemical reduction process with no oxidation yielding a high quality BTU value Syngas, which is different than incineration and combustion processes.

The reversal on its decision was based partly on Hamilton Councillors re-thinking recycling in the City. Instead of end-of-pipe solutions, City Councillors thought upstream efforts as reduction should be the focus of the City.

The use of steam reformation to manage plastic recyclables would likely be off-side of the Ontario government’s 3Rs policy. In the Province, energy recovery from waste and recyclables is not considered recycling. In late 2016, Ontario proclaimed the Waste Free Ontario Act, comprising the Resource Recovery and Circular Economy Act and the Waste Diversion Transition Act. At the heart of the legislation is the idea that producers should be responsible for the end-of-life management of their products and packaging.

In the meantime, city staff will go ahead with the standard request for proposals from providers to handle Hamilton’s recyclables after the current contract expires in March 2020.

Hamilton mayor Fred Eisenberger proposed the city send a letter to the provincial government asking it to follow through with the Waste Free Ontario Act, which was established by the previous Liberal government and would compel manufacturers to use recyclable packaging. The mayor’s motion was passed by City Council.

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.

Cost of Composting in Montreal Skyrockets

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According to the Montreal Gazette, the City of Montreal’s City could have the most expensive waste composting operations in all of Canada.  Montreal’s 2019-2021 capital spending program shows that spending on the waste organics program is estimated to be $589 million.

In the summer, a whistleblower that alerted the media of the high cost of Montreal’s waste organics program called it the “most expensive composting plants in this universe.”

The latest figure is up by 70 per cent over last year’s estimate of $344 million, though no shovel has yet gone into the ground. The project is also now more than double the initial price tag of $237.5 million that was announced in 2013.

The key changes between the new 2019-2021 capital works program and the 2018-2020 program are as follows:

  • St-Laurent composting plant: cost goes from $65.3 million in previous program to $131.9 million in new program. Delayed from December 2020 to August 2021.
  • Montreal-East biomethanation plant: goes from $72.8 million to $126.4 million in new program. Delayed from December 2020 to August 2021.
  • R.D.P.–Pointe-aux-Trembles composting plant: goes from $46.9 million in previous program to $90.7 million in new program. Delayed from December 2020 to June 2024.
  • LaSalle biomethanation plant: goes from $89.1 million in previous program to $143 million in new program. Delayed from June 2024 to June 2025.
  • Montreal-East pre-treatment plant: goes from $22.2 million to $31.1 million in new program. Delayed from December 2021 to September 2024.

The cost increase is the result of high bids on contracts to design, build, operate and maintain the first three of the five centres, the city executive committee member responsible for the project, Jean-François Parenteau, said on Thursday.

The city received a single bid in two of the calls for tenders, and two bids in the third.  La compagnie de recyclage de papiers MD and SUEZ Canada Waste Services were each the sole bidder on, respectively, a composting plant in Rivière-des-Prairies—Pointe-aux-Trembles borough and a biomethanation plant in the suburb of Montreal-East.

La compagnie de recyclage de papiers MD is a Quebec based company that has been in operation since 1991.  In 2017, it won a contract to design, build, operate and ensure the maintenance of a new recyclable materials sorting centre in the Montreal borough of Lachine.

SUEZ is one of the largest water and waste companies in the world.  In Canada, it  operates and maintains the Edmonton Co-Composting Facility, Edmonton Materials Recovery Facility, and maintains the Edmonton Integrated Processing & Transfer Facility for the City of Edmonton. SUEZ also operates and maintains the Swan Hills Treatment Centre for the Province of Alberta.

The two companies were the only competitors for a composting centre in St-Laurent borough.

 

The growing trend of green finance: the Green Loan Principles

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By Sarah Dyke and Rebecca Urry, Dentons

In March 2018, the Loan Market Association (LMA) launched a new form of Green Loan Principles (the Principles), to support the loan markets in funding projects that contribute to environmental sustainability. This article explains the reasons behind the issuance of these Principles, and looks further into the growing trend of green asset finance in the current market.

 

The Principles

The Principles were introduced to build on and develop the Green Bond Principles that were issued initially in the Autumn of 2017, and subsequently updated in June 2018, by the International Capital Markets Association to support the debt markets in providing investment for new and existing projects with environmental benefits. It is hoped that whilst the two codes develop alongside each other, it will promote consistency across the financial markets.

The LMA has stated that the aim of the Principles is to create a high-level framework of market standards and guidelines that provide a consistent methodology for use across the wholesale green loan market, whilst allowing the loan product to retain its flexibility, and preserve the integrity of the green loan market while it grows.

The LMA has framed the Principles around four main components:

  • use of proceeds;
  • process for project evaluation and selection;
  • management of proceeds; and
  • reporting.

The Principles also introduce the definition of “Green Loan” stating that it is any type of loan instrument made available exclusively to finance or refinance, in whole or in part, new and/or existing eligible green projects. Appendix 1 of the Principles contains a non-exhaustive list of categories setting out what constitutes green projects, and includes climate change adaptation, clean transportation and green buildings.

Environmental sustainability

Even before the Green Bond Principles and Principles were introduced, the concept of a “Green Loan” had become increasingly popular with stakeholders increasingly asking their companies to illustrate that they are socially aware. Whilst initially this lead to some companies treating sustainability simply as a reporting requirement tick box exercise in their corporate reports, others were eager to take the issue more seriously. Much of the recent drive to encourage green investment stems from the influence of national and international climate change and sustainability targets. Under the Paris Agreement, the signatories agreed to work to limit the rise in global temperature to well below 2 degrees Celsius. The UK government has subsequently set a target of seeing 15% of the UK’s energy generated from renewable sources by 2020, whilst the 2008 Climate Change Act commits the UK to reducing emissions by at least 80%, from 1990 levels, by 2050. In light of this legislation, many corporates have developed internal sustainability statements. They are keen to show that they are cutting their carbon emissions in order to enhance their organisation’s environmental credentials, as well as helping to meet their corporate social responsibility targets. For others, however, the most compelling reason to join the “green bandwagon” continues to be simply to save money as they look to become more efficient.

Types of green asset finance

With the interest of corporate borrowers growing in this sector, financial institutions have also identified green loans as a potential expanding market. BBVA, for instance, announced in February 2018 its pledge to use €100 billion by 2025 to fight climate change and drive sustainable development. In 2017, responsAbility Investments conducted a survey of green lending experts from around the developing world to provide an overview of the current state, and perceived potential, of the green lending market. The survey concluded that the main green lending opportunities are to be found in the manufacturing and agricultural sectors, with small to medium-sized businesses being the most attractive entry point for green lending.

Within this emergent sector, there are many different areas of renewable technology that may be utilised by companies wishing to improve their sustainability, and which can be financed under an asset finance structure. Some examples are:

Biomass boilers: Biomass boilers are used within the market to reduce both carbon emissions and annual fuel bills. They generate heat by burning different kinds of feedstock, such as wood chips or pellets from sustainable sources.

Light-emitting diodes (LED) lighting: LED lights help to reduce maintenance costs as they are up to 80% more energy-efficient than normal fluorescent or incandescent bulbs, and last up to six times longer.

Solar photovoltaics: Roof-mounted or standalone solar PVs capture the sun’s energy using photovoltaic cells which convert sunlight into electricity. Whilst becomingly increasingly popular in the residential market, more and more companies are looking to them as a way to save energy and reduce their costs.

Wind turbines: By harnessing the natural force of the wind, the installations blades are forced round, driving a turbine that generates electricity.

The future of green finance

Over the last few years, the requirements of the Paris Agreement and similar regulations have assisted in the adaption and evolution of the political, economic and social agendas of companies, and now such issues are becoming increasingly central to corporate business plans. By launching the Principles, the LMA has clearly shown that it at least thinks it is likely that we will see a growing popularity in the market for green loans. With this in mind it is currently working with the Loan Syndications and Trading Association to introduce similar principles to the North American market, as well as further develop them to accommodate a wider range of financings. It will be interesting to observe, as use of the Principles becomes more common, the extent to which they will drive the structuring of such financings in the future.

The article was first published on Denton’s website.

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About the Authors

Sarah Dyke is a partner in the Banking and Finance department of the firm’s London office specialising in asset finance. Sarah has broad domestic and cross-border asset finance experience and acts for UK and overseas financiers, banks, leasing companies, lessees, airlines, borrowers and high net worth individuals and family offices.

 

Rebecca Urry is a senior associate in the Asset Finance group in London. She has experience in asset finance with a focus on international shipping and aviation finance in the UK and Middle East. Rebecca joined the London office in 2007, where she completed her training and qualified as an English solicitor. She was seconded to Goldman Sachs, London from the spring of 2009 to the autumn of the same year, and to Société Générale, London from the autumn of 2009 to the spring of 2010. Rebecca has also previously worked in SNR Denton’s office in Dubai (2010 to 2012).

Innovations & Hurdles in Asphalt Recycling in Canada

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John McClelland with his ARRA Award

According to Donald Matthews of Pavement Recycling Systems, Inc. in California, asphalt has always been recyclable.  In fact, according to him, it is the #3 recycled product in the world after water.

Proof of the success of asphalt recycling in Canada can in found in Perth County, Ontario, about a 2-hour drive west of Toronto.  In the spring, the director of public works for Perth County, John McClelland, received Asphalt Recycling and Reclaiming Association’s (ARRA’s) annual Charles R. Valentine Award for Excellence in Cold Recycling.

The main reason for the recognition of Perth County by the ARRA was due to the County’s commitment to recycling of asphalt.  According to municipal estimates, since 1991 Perth County has saved approximately $25,000 per kilometre by choosing to rehabilitate its 440 km of roadway using recycled asphalt.

“Perth County has one of North America’s longest running in-place asphalt recycling programs and has been performing CIR (cold in-place recycling) on its roads successfully since 1991,” said Nicholas Cifelli, a technical services manager specializing in pavement products at The Miller Group, prior to presenting McClelland with his award. “Approximately 90% of the county’s road network has been remediated using CIR, averaging 15-20 km per year, and a total capital spend of $4 million.”

Innovations

There are a number of innovations in asphalt recycling that are currently used in North America including eco-friendly manufacturing and eco-friendly ingredients.

Cold-in-place (CIR) recycling of asphalt has been around in Canada for some time.  CIR is a pavement rehabilitation technique that reduces the life cycle cost of the pavement structure by reusing the existing asphalt pavement. This process generally uses 100% Reclaimed Asphalt Pavement (RAP) mixed with a new binder which may be either emulsion or foamed asphalt cement.

CIR may be considered wherever cracking, permanent deformation and/or loss of integrity in the existing bituminous pavement occur. Structurally sound and well-drained pavements are the most suitable candidates.

When the pavement is distorted, corrective operations may be required prior to the CIR process which include road profiling and/or the addition of corrective aggregate. The addition of a corrective aggregate may be required to modify the gradation or to improve the strength of the recycled material when rutting, shoving, and flushing exists.

CIR is considered the most effective process to mitigate reflective cracking in a cold climate and is widely utilized as a cost effective rehabilitation alternative to traditional reconstruction methods due to its comparatively low cost, higher life cycle and ease of construction.

 

Cold In-Place Recycling: City of Edmonton 137th Avenue – Standard General Inc.

The asphalt industry considers eco-friendly ingredients to include recycled material.  For example, Canadian Road Builders Inc. offers a mix called Vegecol that is made entirely from renewable, plant-based material and can be used on major roads as well as for walking and biking paths.   As an added benefit, there are no petrochemical ingredients to contaminate run off water.

Besides CIR, there is also hot-in-place recycling on asphalt that involves the recycling of the top layer of asphalt that includes scraping, mixing and then repaving in one continuous chain.  Basically, this process consists of four steps: (1) softening of the asphalt pavement surface with heat; (2) scarification and/or mechanical removal of the surface material; (3) mixing of the material with recycling agent, asphalt binder, or new mix; and (4) laydown and paving of the recycled mix on the pavement surface.

The primary purpose of hot in-place recycling is to correct surface distresses not caused by structural inadequacy, such as raveling, cracks, ruts and holes, and shoves and bumps. It may be performed as a single-pass operation or a multiple-pass operation.

The City of Hamilton used hot-in-place asphalt recycling on a portion of the Red Valley Parkway in the summer.  In an interview with the Hamilton Spectator, Gord McGuire, Hamilton’s new director of engineering services, stated that repaving the Red Valley Parkway would cost around $6.75 million.  Using hot-in-place recycling would safe time and money.

Hurdles to Implementation of Innovations

With the potential savings in time and money (and possibility of an award) through asphalt recycling, it may be surprising that asphalt recycling is not commonplace across Canada.  However, a recent report issued by TARBA, an association of road builders that promote the betterment of the road building industry in the City of Toronto and other municipalities, there are some municipalities not recycling asphalt.

The TARBA report, entitled Leaders and Laggards, provides information compiled by independent research that examines the aggregate recycling policies and practices of a sample of large municipalities. The study also ranked the municipalities based on whether they are “Leaders” or “Laggards” in supporting aggregate recycling. The results follow.

The TARBA report concludes that Ontario’s largest municipalities have a long way to go before they can fully realize the benefits of increased use of recycled aggregate materials. The report notes that the current policies and practices across Ontario municipalities vary. Based on the survey data provided by the municipalities, some municipalities emerge as “Leaders” and others as “Laggards” in this area. The report states that even in the municipalities identified as “Leaders” there is room for continued growth.

There is much that municipalities can learn from one another in this respect, sharing best practices and working together to increase the use of recycled aggregate materials in order to realize more of the associated benefits for their communities.

The report holds the Government of Ontario as an good example of a public tendering agency that accepts and encourages aggregates recycling. About 20% of the aggregates used in Ministry of Transportation (MTO) projects – whether for granular base and fills or new hot mix asphalt – are recycled asphalt and concrete materials.

Finally, the report concludes that increasing the use of recycled aggregate materials in road infrastructure projects represents an opportunity to reduce their impact on the environment, decrease costs, and find efficiencies.

 

What to do when a new government revokes your environmental approval

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by Stanley Berger, Fogler Rubinoff LLP

Background

In Eagleridge International Ltd. v. Newfoundland and Labrador (Environment and Conservation) 2018 NLSC 180, following a change of government, the new Minister of Environment and Conservation withdrew approval for the construction of a gravel road intended to facilitate mineral exploration on lands for which mining licences were held and ordered that the project be subject to a full environmental assessment (EA). The licence holder, and project proponent, Eagleridge had already delivered an Environmental Preview Report as required by the previous government, and during the period awaiting approval had incurred approximately $400,000 in expenses including the cost of meeting the conditions for approval. The conditions included an Environmental Effects and Monitoring Plan and a Rare Lichen survey. A group of interested citizens appealed the previous government’s decision to release the project from a full EA. That appeal was filed with the Minister outside the limitation period, the Minister did not issue a decision on the appeal within the prescribed period and there was no express statutory authority to place the appeal “on hold” during this time. Over a year after the appeal had been filed, the Appellants wrote the new Minister requesting a decision on the Appeal. During that time frame, Eaglebridge continued to expend money on the project. The new government advised Eagleridge that the appeal would be revived. Eagleridge filed written submissions respecting the revived appeal process, but the decision to release the project from a full EA was nevertheless overturned by the new government without addressing the objections raised by Eagleridge. The rationale provided by the Minister focussed on the effects of the project on the biophysical and socio-economic environments of the project area, significant public concerns and the recommendations of the Environmental Assessment Committee which had issued the guidelines for the original Environmental Preview Report.

The area of the mineral access road in Newfoundland, as originally proposed by Eagleridge International in the registration for environmental assessment with the province in September 2013

Decision

The reconsideration of the appeal as a device to reverse the previous Minister’s decision to release the project from a full EA was a breach of natural justice as Eagleridge was denied any opportunity to state its case and the decision to revive the appeal was without reasons or rationale. The reconsideration of the appeal was without statutory authority and was quashed. Had the judgment stopped there it would have been a matter-of-fact administrative law opinion. However, the Newfoundland Supreme Court went further and assumed that the power existed in the Provincial Government to still call for a full EA. Notwithstanding that assumed power, the Court held that Eagleridge had recourse to the administrative law doctrine of public law estoppel. It cited the Supreme Court of Canada description of the doctrine in
Immeubles Jacques Robitaille inc. c. Québec (Ville), 2014 SCC 34 (S.C.C.):

The reconsideration of the appeal as a device to reverse the previous Minister’s decision to release the project from a full EA was a breach of natural justice as Eagleridge was denied any opportunity to state its case and the decision to revive the appeal was without reasons or rationale. The reconsideration of the appeal was without statutory authority and was quashed. Had the judgment stopped there it would have been a matter-of-fact administrative law opinion. However, the Newfoundland Supreme Court went further and assumed that the power existed in the Provincial Government to still call for a full EA. Notwithstanding that assumed power, the Court held that Eagleridge had recourse to the administrative law doctrine of public law estoppel. It cited the Supreme Court of Canada description of the doctrine in
Immeubles Jacques Robitaille inc. c. Québec (Ville), 2014 SCC 34 (S.C.C.):

“19. In the public law context, promissory estoppel requires proof of a clear and unambiguous promise made to a citizen by a public authority in order to induce the citizen to perform certain acts. In addition, the citizen must have relied on the promise and acted on it by changing his or her conduct (), 2001 SCC 41, [2001] 2 S.C.R. 281 (S.C.Centre hospitalier Mont-Sinaï c. Québec (Ministre de la Santé & des Services sociauxC.), at paras. 45-46 (“Mount Sinai“), quoting Maracle v. Travelers Indemnity Co. of Canada, [1991] 2 S.C.R. 50 (S.C.C.); J.-P. Villaggi, L’Administration publique québècoise et le processus décisionnel: Des pouvoirs au contrôle administratif et judiciaire (2005), at p. 329).

  1. However, the doctrine of estoppel must yield in the public law context to an overriding public interest and may not be invoked to prevent the application of an express legislative provision (Mount Sinai, at para. 47; St. Ann’s Island Shooting & Fishing Club Ltd. v. R., [1950] S.C.R. 211 (S.C.C.), at p. 220).”

The government argued that the overall public interest in the environment weighed against the application of promissory estoppel. Government officials initially recommended to Cabinet that the project was not in the public interest because the development would take place in proximity to a protected wilderness area and a wildlife park and could have significant implications for a nearby salmon river. The Court rejected this argument on the basis that Cabinet had considered the recommendation and decided to nevertheless release the project from a full EA.

“It goes without saying that environmental considerations are important in assessing the public interest. But defining the public interest is the role of elected officials not the Court.” (par. 115)

What was the Remedy?

Eagleridge was entitled to proceed in accordance with the release from the full EA granted by the Minister before the change in government.

“If the government determines by a lawful means that the release should be reversed, or at least altered, then Eagleridge, under the doctrine of public interest estoppel, is entitled to claim its reasonable costs associated with its actions in pursuance of the release.” (at par.117)

This article was first published in the Fogler Rubinoff LLP website.

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About the Author

Mr. Berger has practiced regulatory law for 37 years. He represents nuclear operators and suppliers , waste management operators, renewable energy operators, receivers -in -bankruptcy, municipalities and First Nations. He has been certified as a specialist in environmental law by the Law Society of Ontario since 2006.

He was an Assistant Crown Attorney in Toronto for 8 years , Senior counsel and Deputy Director for Legal Services /Prosecutions at the Ministry of the Environment for 9 years and Assistant General Counsel at Ontario Power Generation Inc for 14 years.

He is the author of a quarterly loose-leaf service published by Thomson Reuters entitled the Prosecution and Defence of Environmental Offences and the editor of an annual review of environmental law.

-Mr. Berger was the President of the International Nuclear Law Association (2008-2009) and the founder, and President of the Canadian Nuclear Law Organization .