Single Use Coffee Cup – The Recycling Challenge

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by Rebecca Zarmon, Sheridan College

Individual Parts are Recyclable

Polyethylene is one of the most prolific polymers in industry; it is used for plastic bags, food films, bottles, cutting boards, toys, insulation, and many other objects.  Disposable coffee cups are a prolific source of waste throughout Canada and North America.  These cups are typically constructed of paper with a Low-density polyethylene (LDPE) lining, and have lids made of high impact polystyrene (HIPS).

While paper, HIPS, and LDPE are individually considered recyclable, the three materials require different treatment to be recycled, and are not recyclable when they are mixed together, such as they are in a coffee cup.  Most disposal coffee cups end up in landfills and the LDPE ends up as microplastics that have become pervasive throughout most of our ecosystem.

Generation

Polyethylene is a polymer—a chain of repeating compounds—of ethene, ????????# = ????????#, from the catalytic cracking of crude oil.  Depending on the pressure used during the process, polyethylene can be categorised as low density or high density.  LDPE is made under high pressure and has many branching chains, resulting in a flexible plastic.  HIPS is made under low pressure and is very linear, with few branches and is more rigid.  Polyethylene is resistant to degradation from food and most water based mixtures, which makes it very popular for use in the food industry.

Disposable paper cups are generated by restaurant industry, fast food industry, coffee shops, supermarkets, and food trucks, to name a few.  It is also possible to buy a package of disposable coffee cups for personal use from retail stores.  Disposable coffee cups are seen everywhere, and it is not uncommon for a customer to purchase multiple disposable cups from the food industry in a single day.  It was estimated that 1.5 billion disposable coffee cups were used in Canada in 2010, with 1 million cups per day being sent to a landfill from the City of Toronto alone.

Material Handling and Recycling

Polyethylene can be sent to a recycling facility.  To recycle LDPE and retain high quality plastic, the used LDPE must be separated from other materials, including other plastics and HDPE.  The separated plastic must be cleaned and dried and formed back into pellets.

Separation of the LDPE is typically done manually, by humans.  In some businesses, such as the cosmetics company LUSH, washing is also done manually.  While these processes add to the cost of recycling plastics like LDPE, it is still often worth recycling, and many facilities dedicated to recycling plastics exist throughout the country.  An example of a company that recycles plastic is Nexcycle Canada Ltd., located in Brampton, Ontario.  Besides recycling glass, Nexcycle recycles LDPE, HDPE, and polypropylene (PP).  

Recycled HDPE from Nexcycle

Disposable cups are often marketed as recyclable or compostable, due to the materials individually being recyclable or compostable.  Paper is well known for being recyclable and compostable, but as with polyethylene, the paper must be separated from other materials cleaned to be recycled into new paper products.  This presents a problem for disposable paper cups, as they are lined with LDPE, which must be removed before either component can be recycled.  The process to separate the LDPE lining and the paper is very difficult and as a result, most coffee cups end up in landfill or being incinerated.

Environmental Impacts

Polymers, including polyethylene, require about 100 MJ of energy expenditure to produce 1 kg of product and release about 10,000,000 tonnes of carbon dioxide equivalents (CO2e) to the atmosphere annually.  Paper and cardboard require about 30 MJ of energy to produce 1 kg of product and release about 10,500,000 tonnes of CO2e to the atmosphere annually.

The production of a disposal coffee cup has an impact on greenhouse gas emissions.  Professor Michael F. Ashby at the University of Cambridge determined the production of an average disposable cup weighing about  18 grams can generate 28 grams of CO2 equivalents, effectively 1.5 times its mass.

There are potential human health impacts from the use of disposal coffee cups.  When cups are used under excessive heat, such as the near boiling temperatures of coffee and tea, the LDPE lining breaks down and enters the liquid, which is then ingested.

If coffee cups enter the organics recycling stream, problems result.  The paper in the cup degrades quickly.  However, the polyethylene coating on the cup does not degrade and coffee cups that enter the organic waste or recycle streams end up contaminating the process.  

When polyethylene ends up in a lake or ocean, the plastic begins to degrade into smaller pieces, but does not decompose.  Once the piece of plastic become less than 5 mm in size, they are categorised as microplastics. These microplastics are easily ingested by aquatic life, which are ingested by other animals eating the aquatic animals.  Because the microplastics do not decompose, they have managed to spread across the food chain, including humans.

Potential Solutions

The “Four R’s” of waste management is a hierarchal strategy to manage waste at all points of its life cycle.  The first of the four is to reduce the amount of waste at the point of generation.

Replacements for polyethylene and other plastics have been studied, such as using guar gum and citric acid as a food grade lining, but the replacement does not produce as effective of a lining and the currently low cost and high durability of polyethylene prevents from any alternatives from becoming more popular.  Some coffee shops have switched to cups labeled as biodegradable, but these cups still go to landfill as their lining is not biodegradable.

The second “R” is to reuse products.  Disposable paper cups are intended for single use, but many coffee shops offer monetary incentives for bringing a reusable mug instead of purchasing a disposable cup.  In 2008, less than 2% of Starbucks customers used reusable cups.  Starbucks initiated a campaign to improve the reusable cup rate to 25% by 2015.  Reusable cups were offered for sale in store at low prices and discounts were given to those who used reusable cups, but the percentage of customers using reusable cups stayed below 2% by 2015.

It is possible that Starbucks’ strategy did not work because it is not the pricing that influences people to use or not use disposable cups, but the lack of knowledge of the impacts disposable cups have.  Many people are unaware that most disposable cups are not recyclable nor compostable.  

The City of Toronto displays on their waste management page that disposable coffee cups go into the landfill stream, but still some jurisdictions claim to accept coffee cups into green or blue bins. Coffee shops also frequently have bins displaying coffee cups under the recycling sign.

In the UK, a study was done where signs explaining the impact of coffee cups were displayed in coffee shops in varying locations.  In most locations, the percentage of customers using reusable cups went up, the highest increase going from 7.5% of customers using a reusable mug to 24.0% of customers using a reusable mug.

The third “R” is recycling.  As previously discussed, recycling is not an ideal situation, as current technology to separate LDPE from paper is too expensive.  A number of organizations in Ontario are working to reduce the amount of disposable cups that end up in landfill as well.

A project in the UK called CupCycling from James Cropper turns the paper from the cups into usable paper by soaking and softening the paper, skimming off the plastic film, filtering out the inpurities and reusing the material for other marketable products for other products and uses and sends the plastic to a plastic recycler.

The “R” at the bottom—hence the least effective at managing waste—is recovery.  Recovery refers to the incineration of the waste, with the product of the incineration being used to fuel another process, thereby reducing energy generation. Most polyethylene lined paper cups that aren’t in a landfill end up being incinerated.

Conclusion

Polyethylene is a highly durable plastic that is capable of maintaining stability even when in contact with water and food, which makes it a highly valuable material in the food industry. These same characteristics lead polyethylene to being very difficult to eliminate from the environment and it often ends up as microplastics in the ocean and in the digestive systems of animals throughout the food chain. Although polyethylene is recyclable, it is often used as a lining in disposable cups, rendering otherwise recyclable materials as landfill waste.  Alternatives to polyethylene are possible, but as of yet not stable or cheap enough for companies to make the switch.

Currently, the best option to reduce the amount of polyethylene in landfills and oceans is to educate customers on the impacts of disposable coffee cups and promote the use of reusable mugs.

Ontario: Electronics & Batteries Producer Responsibility Consultation Ends February 6th, 2019

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As part of the legal directive to transfer current government-overseen waste diversion obligations to a privately-run Individual Producer Responsibility regime (IPR), the Ontario Ministry of the Environment is currently holding consultations with stakeholders in the electronics/electrical equipment (EEE) and batteries industries regarding the coming circular economy regulation for EEE and batteries (and their packaging) and key decisions affecting industry are in the process of being made.

What’s the Mandate?

In understanding the anticipated reach of the EEE/Batteries Regulation, the Ministry is overtly promoting three goals:

  • Improved Environmental Outcomes, including reduction of toxics in landfill and related greenhouse gases;
  • Economic Growth, such as building more “infrastructure for reuse, refurbishment and recycling industries”; and
  • Consistency, Ease, Cost Efficiency and Reduced Burden, with an emphasis on shifting the costs of waste management to individual producers and consumers with the hope that more “competition, innovation and better product design” will result.

To help relieve municipalities of waste handling obligations, and to get itself out of the business of end-of-life product diversion (which it seems intent on doing), the Ministry is giving the EEE/Batteries Regulations a potentially broad and expansionist scope. As of July 1st, 2020, EEE and batteries “producers” will be compelled to resource recover the products (or equivalencies) they put into the Ontario market.

What Could Be Caught under the EEE/Batteries Regulation?

It seems likely that the product categories of one or both of these current diversion programs will be broaden under IPR to include the:

  • likely expansion from the existing 44 types of EEE to capture some or all of:
    • headphones;
    • routers;
    • large and small appliances; and
    • power tools and some categories of lighting.
  • near certain addition of rechargeable batteries;
  • maybe very limited types of EEE and/or batteries embedded in other products; and
  • remote prospect of obligating primary, convenience and/or transportation package used with EEE and/or batteries – given paper/packaging IPR has not yet been implemented in the province.

The addition of products not currently obligated under waste diversion will create immediate needs and opportunities for industries to find new resource recovery solutions to meet these needs.

Who’s Obligated under IPR?

Along with the group of currently obligated producers – namely resident brand owners and resident importers (and, for EEE, assemblers), the Ministry is considering adding one or more other parties which have a “commercial connection” to the products, such as non-resident:

  • importers;
  • wholesalers;
  • licencees;
  • retailers (including on-line out-of-province); and
  • distributors

Many of these companies would not necessarily replace any existing resident parties, but would, instead, be default-obligated for products with no resident “producers”.  The sanctions contemplated for non-compliance under the EEE/Batteries Regulation may well include a prohibition against the sale of products failing to meet their resource recovery targets.

Will it be Like the Tire Regulation?

More than a year ago, stakeholders in the EEE and batteries space were already paying close attention to the Ministry’s implementation of the Tire Regulation, North America’s first comprehensive circular economy law.  Given the breadth of obligations, including the producer’s private obligation to run a reverse supply chain, it’s anticipated that affected companies may respond similarly – coalescing around a limited number of producer responsibility organizations based upon commercial, industry, and market commonalities, to run end-of-life product networks that meet the unique needs of the separate producer groups.

Industry also learned through the Tire Regulation process that critical commercial outcomes can be based upon the content of the regulatory requirements and that full advantage should be taken of the windows of opportunity offered to engage the Ministry on key facets of the coming law.  One such window for EEE and batteries stakeholders is closing on February 6th, 2019.


This has been republished with the permission of Baker MacKenzie. It was first published on the Baker Mackenzie website.

About the Author

Jonathan D. Cocker heads the Baker McKenzie’s Environmental Practice Group in Canada and is an active member of its Global Consumer Goods & Retail and Energy, Mining & Infrastructure groups. He participated in founding one of North America’s first circular economy producer responsibility organizations. Jonathan 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 most recently the author of the first edition of The Environment and Climate Change Law Review (Canada chapter) and the upcoming Encyclopedia of Environmental Law (Chemicals chapter).

One Person’s trash is the New Government’s Treasure: Ontario stays the course on waste management in the “Made-in-Ontario Environment Plan”

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by Erin D. FarrellJessica E.M. Boily and 
Liane Langstaff, Associate Lawyers, Gowlings WLG

On November 29, 2018, Ontario’s new Progressive Conservative government released “Preserving and Protecting our Environment for Future Generations: A Made-in-Ontario Environment Plan” (the Plan).

The Plan comes on the heels of Ontario’s announcement to scrap the cap and trade program in Ontario, previously discussed in our October 9, 2018 article, “Ontario’s Cap and Trade Program Ends and Federal Backstop Looms: Implications for Ontario Businesses”. In addition to addressing climate change, without the cap and trade regime, as set out in our companion article, the Plan sets out the government’s other priorities with respect to the environment. Among other priorities, the Plan touches on four aspects of waste management:

  1. Food and organic waste and landfills
  2. Excess soil
  3. Producer responsibility
  4. Clean-tech

In summary, the policies and priorities in the Plan don’t differ drastically from the previous government’s waste management policies. It is clear that the government recognizes the work done to date to consult with stakeholders on waste management challenges and hopes to build on that work. It is also clear that, on waste, the government is hoping to find pragmatic, balanced solutions that aim to improve both the environment and economy.

1.ORGANIC WASTE AND LANDFILLS

The Plan notes that individual Ontarians divert almost 50% of their own household waste to either the blue or green bin, but that when Industrial, Commercial and Institutional (IC&I) waste is considered, Ontario’s waste diversion rate has been stalled at below 30% for the past 15 years. By way of comparison, San Francisco has a waste diversion rate of 80% and New York diverts about 21%. Contributing to the gap in Ontario is the fact that over 60% of Ontario’s food and organic waste is still sent to landfills. There it breaks down to create methane, a greenhouse gas that contributes to climate change.

In May 2018, after consultation with stakeholders, the previous government released Ontario’s Food and Organic Waste Framework, (the Framework) which included an Action Plan and Policy Statement setting out the priorities for addressing food and organic waste in Ontario. The Framework focused on 4 priorities:

  1. Reducing food and organic waste
  2. Recovering resources from food and organic waste (particularly in multi-unit residential and the IC&I sector)
  3. Supporting resource recovery infrastructure
  4. Promoting recovered resources with a focus both on beneficial uses and promoting sustainable markets for end-use products

While the previous government’s Framework identified short, medium and long-term priorities for a number of overarching goals, it also contemplated future consultation on a number of specific legal changes including amending the 3Rs Regulations (O. Reg.103/94, 104/94, and 102/94) under the Environmental Protection Act to include food and organic waste, banning food and organic waste from landfills, modernizing approval processes and requirements to support resource recovery infrastructure, and reviewing regulatory approaches to compost quality standards and agricultural soil health.

The Plan similarly hopes to close the gap and ban all food and organic waste from landfills. This is proposed to be done by expanding green bin collection systems and educating the public about organic waste diversion. As part of its focus on reducing food waste, the Plan notes that safe food donation will continue to be supported through the Ontario Community Food Program Donation Tax Creditand the Ontario Donation of Food Actwhich provide tax credits to encourage partnerships between farms and food banks.

Though the Plan aims to eliminate organic waste being set to landfills, the government recognizes that despite best efforts at diversion, there will be a need for new landfills in the future. In addition the Plan references “enhanced” consultation with municipalities and communities regarding landfill siting in addition to the already rigorous environmental assessment and approval process currently in place.

2. EXCESS SOIL

It has been estimated that Ontario’s construction activities generate close to 26 million cubic metres of excess construction soil every year, and that $2 billion is spent annually to manage excess soil. Historically, there has been a lack of clear legal requirements around the management of excess soil generated from construction and environmental remediation activities. Decisions about how and when to classify excess soil as “clean” enough to exclude it from the definition of waste had to be made on a case-by-case basis without reference to a clear legal framework. Stakeholders in the industry have been looking for clarity and guidance on this issue.

In April 2018, the previous government released an Excess Soil Management Regulation for consultation. The Regulation built on stakeholder comments provided to a previous regulatory proposal and the Excess Soil Management Policy Framework released in December 2016.

The Plan briefly touches on excess soil management but does not state whether the Excess Soil Management Regulation will be passed. Rather, the Plan reflects the general commitment to include making “clear rules and standards around how extra soil from construction projects is managed, relocated and reused”. In addition, the Plan speaks to consideration of local options (which reduce greenhouse gas emissions from trucking) and the re-use of soil rather than landfilling. It remains to be seen whether the proposed Regulation will be passed in its entirety.

Last, the Plan comments on enforcement, noting the government will “take strong enforcement action” to ensure waste, including hazardous waste in soil, is properly stored, transported, recycled, recovered or disposed of.

3. PRODUCER RESPONSIBILITY

In 2016, the Resource Recovery and Circular Economy Act, 2016 began Ontario’s progression towards “full producer responsibility”, i.e. making producers financially responsible for recovering resources and reducing waste associated with their products and packaging. Prior “extended producer responsibility” programs only required designated producers to pay a portion of these costs, and were criticized for decoupling waste creation and waste processing as the producers do not control or participate in the recycling process for their products. Used tires were the first material to be transitioned to the full producer responsibility system. Additional materials, including blue box waste, municipal hazardous or special waste, and waste electrical and electronic equipment, were to follow.

The Plan states that the government will “move Ontario’s existing waste diversion programs to the producer responsibility model”. It is unclear whether the new government will make substantive changes to the existing producer responsibility programs in Ontario, which had already begun to phase-in manufacturer responsibility product and packaging waste. However, the focus on certain products such as compostable packaging in the Plan indicates what sectors may become a priority to this government.

4. FUNDING FOR CLEAN TECH AND WASTE MANAGEMENT INNOVATIONS

The Plan calls on the private sector to use its capital, capability and know-how to transform clean-tech markets, including the technologies involved in waste management. A variety of funding streams were previously available to support clean tech. For example, the 2016 budget contained a $55 million commitment to support the clean tech industry. Furthermore, in recognition that 6% of Ontario’s total GHG emissions came from the waste sector, some of the proceeds of Ontario’s previous cap and trade program were to be used for waste management innovations and the cap and trade program intended to accept offset credits for landfill gas capture projects that resulted in GHG emissions reductions. The previous Climate Change Action Plan also established a pilot programto use methane obtained from agricultural materials and food wastes for transportation purposes.

It is not clear from the Plan whether these types of funding sources will be continued. What the Plan does do is to specifically reference investment in waste management technologies such as chemical recycling and thermal treatment to ensure that valuable waste-based resources do not end up in landfills. Ontario is also seeking in increase new projects or technologies to deal with difficult to recycle materials.

Furthermore, the Government will still support clean tech through a new funding pool called the Ontario Carbon Trust. In total the program will devote $400 million over four years. $350 million would be used to create an emission reduction fund to support GHG reduction emissions. The remaining $50 million would be used to fund a “Reverse Auction”, allowing bidders to send the Government proposals for emissions reduction projects and compete for contracts based on the bidder who can reduce emissions for the lowest cost. Thus, waste management innovations that have a corresponding benefit of reducing GHG emissions may receive some of this funding.

Green Bonds, government bonds meant to fund projects with environmental or climate benefits, may also be on the horizon. The Government states that it will work with the Ontario Financing Authority to issue Green Bonds to allow Ontario to raise funds for “green” projects by the end of the fiscal year.

Ontario also notes that a planned emissions performance standard for large emitters may include compliance flexibility mechanisms, such as offset credits. Given the prior government’s acceptance of landfill gas capture projects for offsets, it is conceivable that similar projects could qualify for offsets under the new emissions performance standard and spur innovation in this field. For more details on Ontario’s emissions performance standard, see our companion article on the climate change implications of the Plan.

CONCLUSIONS

Most of the waste management goals set out in the Plan build upon previous plans or programs. The Plan aims to:

  • Improve and update environmental approvals to support sustainable end markets for waste and new waste processing infrastructure
  • Incentivize new technologies, such as thermal treatment, to recover valuable resources in waste
  • Reduce the amount of waste going to landfill
  • Expand green bin and organic waste collection systems in cities and the IC&I sector to prevent any food waste from entering landfills
  • Promote redevelopment of brownfields.

The implementation of the Plan will require detailed regulatory proposals, programs and policies. Once those details are made available, it will be possible to determine whether the Plan achieves its goals of fostering innovation while still protecting the environment.

The Ministry will accept comments and feedback on the Plan until January 28, 2019.


NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.

This article has been re-published with the permission of  Gowlings WLG.  It was first published on the Gowlings WLG we


About the Authors

Erin Farrell is an associate lawyer in Gowling WLG’s Toronto office, practising in the firm’s advocacy department. Her practice focuses on a variety of commercial litigation matters, including class actions, product and professional liability, environmental law and municipal liability.  
Erin represents professionals in both civil and administrative matters, and has defended a number of Canadian and foreign clients in the pharmaceutical, medical device and manufacturing sectors in litigation. She also has extensive experience in the banking sector, advising clients on a range of litigation matters, including a variety of motions and injunctions.

Jessica Boily is an associate in Gowling WLG’s Toronto office, practising in Environmental Law.   Jessica works with clients to navigate and resolve complex disputes, including advocating for clients in appeals of environmental orders and civil litigation involving contaminated sites. She guides clients through regulatory inspections and investigations, including defending clients charged with federal, provincial and municipal environmental and regulatory offences.

Liane Langstaff is an associate lawyer in Gowling WLG’s Toronto office, practising in the areas of environmental law, indigenous law and land use planning law. Liane has a diverse practice, serving corporate, municipal and indigenous clients. She is a passionate advocate and provides comprehensive legal advice on a range of environmental issue

Toronto Company developing technology to turn waste to bioplastics

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Genecis Bioindustries, a cleantech start-up based in Toronto, is in the process of commercializing an anaerobic digestion technology that converts food waste to Polyhydroxyalkanoates (PHAs).

PHAs are a unique types of plastics as they are bio-based (produced via microorganisms vs. petroleum based) and are also biodegradable.  PHAs (and bioplastics in general) are considered by some professionals in the waste-to-product sector as very attractive materials for three primary reasons: they can be created from renewable sources, they can also biodegrade, and they are biocompatible (not harmful to living tissue).

PHA bioplastic pellets

Research and development on manufacturing bioplastics from waste using microorganisms has been ongoing around the world for the past decade.  Some researchers have focused on specific organic waste such as banana peels or potato peelings  to produce bioplastics.

The promise of using waste to make bioplastics is considered good news by some environmental activists and other industry players since it could potentially replace the use of agricultural products (i.e., corn) in the production of bioplastics.

Genecis Technology

The production of PHAs from food waste is accomplished via anaerobic digestion. First, the company treats food waste with heat, acid and mechanical grinding. Next, anaerobic bacteria break the waste into fatty acids in an anaerobic bioreactor. The fatty acids are then introduced to another bacteria culture that converts the feedstock into PHA. Genecis then collects the PHA and coverts that into bioplastic pellets.

The patented and propriety expertise of Genecis lies in the company’s ability to modify the mechanical properties and biocompatibility of PHA polymers by adjusting bacteria composition in the bioreactor, and the blending of the food waste feedstock.  This allows the company to make a wider range of PHA polymers creating a wider range of applications of the product.

Some applications in which PHAs plastics include packaging for foods, beverages, consumer products; medical applications; and agricultural foils and films.  PHAs can also be moulded into 3D printing filament.

Compared to traditional waste processing technology, like traditional anaerobic digestors, Genecis claims that its technology can generate 7 times greater revenue output, per unit tonne of waste processed, within 1/3 of the time. As the company continues to develop its synthetic biology platform, the shared profit margins further increases with each new generation of bacteria.

Partnerships

To date, Genecis has scaled up to a pilot production line, secured a 2 year partnership with Sodexo.  Sodexo is a provider of integrated food, facilities management and other services. Sodexo’s National Corporate Social Responsibility Manager – Meaghan Beck stated “Our partnership with Genecis Bioindustries Inc. inspires me that creative solutions do exist to solve our world’s food waste and landfill issues. (….) I couldn’t be more proud of Sodexo working with the Genecis team.”

Sodexo recently announced a North American Single Use Plastics Reduction Plan that will eliminate single use plastic bags and stirrers by 2019, polystyrene foam items such as cups, lids and food containers by 2025, and shift straws to a “by request” item that will still be available to customers who need them while moving toward more sustainable materials.

Besides Sodexo, Genecis has 14 other partnerships, which include waste processing companies and manufactured bioplastics buyers. Many of these partners are also locally based firms.

About Genecis

Luna Lu, Genecis Bioindustries Founder

Genecis Bioindustries was founded by Luna Yu, a graduate student from University of Toronto, and currently has a team of 12 engineers and scientists as well as members with business experience.  The company started on the campus at University of Toronto in 2016.

Ms. Yu first realized the potential of food waste after completing her studies at University of Toronto in Environmental Science.  “What appealed the most to me was the ability to integrate advancements in artificial intelligence, big data, automation, and genetic engineering together to build the platform for the next generation of industrial chemical manufacturing,” told the Varsity, the University of Toronto Student newspaper.

The company’s main value proposition is to make chemicals [or] materials currently too expensive [or] difficult to produce traditionally more economical.

Next steps

The company is leveraging advancements in artificial intelligence, bioinformatics, and genetic engineering to take their development to the next level. They recently partnered with a waste company, and aims to jointly scale up to an Industrial Demonstration Plant by the end of 2019.

Genecis is working to license its production technology to companies in the waste management sector, providing them a profitable solution to dispose of organic waste.

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).

Cutting the Waste: How to save money while improving our solid waste systems

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by David McRobert, Environmental Lawyer and Advisor

Canada’s Ecofiscal Commission (EFC) recently released a report on cutting municipal solid waste (MSW) by promoting incentives and market-based policies. Accordingly, municipalities should implement “pay-as-you-throw” (PAYT) programs for residents and higher “tipping fees” for business. As well, provinces should implement “extended producer responsibility” (EPR) programs.

Are user pay instruments such as PAYT programs and related policy tools the magic bullet that can solve our municipal solid waste problems and reduce the MSW quantities flowing to landfills and energy from waste (EFW) sites? Regrettably, if we have learned anything in the past twenty-five years with respect to MSW in Canada there probably are no easy answers on reduction, reuse and recycling (3Rs) of solid waste.  To my mind, there are just difficult choices that will require combinations of government, municipal, community and corporate mechanisms and policies such as improved enforcement by regulators, user pay, increased producer responsibility, greater corporate social responsibility, improved public education, technological changes and packaging material and equipment innovations.

For example, increased tipping fees seem like a logical policy tool to target and reduce wastes produced by industrial, commercial and institutional (IC&I) generators. However, in the post-US-Canada Free Trade Agreement era (FTA, 1988) and then under the North America Free Trade Agreement (NAFTA, 1993) municipal solid wastes, recyclables and some hazardous wastes have flowed much more freely between national, provincial, state and municipal boundaries on the North American continent.

In 1988, I was part of an advisory group that strongly recommended the City Toronto implement significant increases in tipping fees, from $17/tonne to $150/tonne in 1990 – to support 3Rs. At the time, the US border was closed to Canadian municipal solid waste (MSW) unless it was incinerated in the USA. At the time, Halton Region had run out of landfill space (and would struggle for more than 16 years to site a new landfill as OMOE regulators kept changing the goalposts).  Consequently Halton Region was shipping its MSW waste to Hooker Chemical in Niagara Falls, New York where it was incinerated for – surprise, surprise — $150 a tonne. So this seemed like the right number.

No doubt $150 a tonne seemed like a bonanza to some haulers in Canada and the US and landfill operators in nearby states. The multinational garbage companies lobbied to get the US border restrictions lifted and in 1991 Ontario’s MSW, especially its IC&I wastes, began to flow to the US for as low as $30/tonne. To facilitate the new collection-transfer-shipping system, makeshift transfer stations also were established in empty industrial buildings and on farmer’s fields in the Greater Toronto Area (GTA).  In short, we created an enforcement mess for Ontario Ministry of Environment (OMOE).

Between 1991 and the late 2000s, hundreds of thousands of tonnes of Ontario’s MSW flowed into landfills in Michigan, mainly ones that were scheduled to be closed because of strict rules implemented after 1991 (and phased) in by US EPA on landfill standards under Title D. By the mid 2000s the US and Ontario media began to track this ongoing and intriguing export issue. Historically Canada mainly had shipped raw materials such as wood, paper products, minerals, aggregates and other resources to the USA. This was something different. Inevitably, there were a couple of incidents graphically reported in the media when giant transport trucks from the GTA were involved in serious accidents, dumping their smelly and messy loads on highways and roads in Michigan. As expected, a strong No Ontario Garbage in My Backyard (NOGIMBY) emerged out of dust and the fumes. This made for great TV and was early fodder for social media banter and colourful photo exchanges.

Governor Jennifer Granholme and other state legislators, then campaigning for re-election in the State of Michigan in the 2006 US midterms, fought back claiming that the GTA’s MSW was full of soft drink containers and used smoke and CO2 alarms (with small amounts of radioactive wastes) and that its import should be banned because these materials supposedly were banned from Michigan’s landfills. Upon taking office in early 2007, the Michigan Legislature managed to stop the flow of Ontario’s MSW into the state’s landfills. This forced Toronto to purchase the Greenlane landfill near London, Ontario in the late 2000s for its MSW. However, Industrial, Commercial, and Institutional (IC&I) waste is still trucked from Ontario to Michigan landfills. In sum, tipping fees proved a challenging tool to use. Cooperation between provincial, state and federal regulators in the US and Canada undoubtedly will be required to make this instrument work well.

In 1993 I drafted a discussion paper on PAYT programs for the OMOE. Our research at the OMOE showed that PAYT programs can encourage scofflaws to “throw without paying” (TWP) in farmer’s fields and forests requiring municipal staff to become garbage detectives.

In 1994, I prepared a summary of my OMOE discussion paper and related research for a seminar on user pay I conducted for several environmental non-government organizations (ENGOs). I also used the 1994 paper for teaching Environmental and Administrative Law (as well as Waste Management Law and Policy) at Osgoode Hall Law School, the University of Toronto and York University between 1990 and 2009. My 1994 brief can be found below.  Although the discussion paper is over 20 decades old, it is uncanny how most of the issues raised back then are still current today.

Discussion Paper: User Fees for Waste Management – Issues and Options (1994)

 


A. Introduction

In the United States and Canada, most industrial, commercial and institutional (IC&I) waste generators are charged for waste services on the basis of the quantities of waste that they produce. In contrast, the vast majority of householders are not charged user fees. Instead, residential waste management services are financed through property taxes, provincial grants and subsidies, and revenues generated from the sale of secondary materials. Therefore the user of the service often does not directly pay for the service.

B. The Trend Towards User Fees

In the past five years, many Ontario municipalities have considered charging users for waste management services. Between late 1988 and early 1993 approximately 10 different municipalities asked the provincial government for clarification of these powers in the Ontario Municipal Act.(see Note 1) Most municipalities that have examined or implemented user fees are small and ethnically uniform; larger municipalities that have considered user fees include Peterborough and Ottawa.

In 1993 the Ontario government passed Bill 7 amending several parts of the Municipal Act to give municipalities the authority to implement user pay systems for financing waste management if they choose to do so. It is likely that in the coming years Ontarians will see introduced an increasing number of municipal user pay systems.

  1. The Supposed Benefits of User Fees

According to proponents, the main advantage of user fees is that generators are provided with a direct financial incentive to reduce their waste. In other words, the less garbage a household or IC&I user generates, the less it would pay for disposal.  Another advantage is that householders become keenly aware of the major sources of residential waste, and adjust their purchasing habits accordingly.

There also can be significant cost savings to municipalities. In many communities with a generator pay system in place, it has been found that residents pay less for the collection and disposal of solid waste after the systems are implemented.

  1. Experience in Ontario and U.S.

In the United States, a variety of user fee systems for household waste disposal services have been established in many jurisdictions. In most systems, the charges are administered on a per can or a per bag basis. However, in some cases, the generator can prearrange a certain specified level of service on a weekly or monthly basis.

In June 1990, Carlisle Borough, Pennsylvania (estimated 1990 population of 20,000) simultaneously implemented a per-bag waste collection fee and a borough-wide recycling program. Householders purchase 30-gallon garbage bags costing $2.10 each. Borough officials estimated that they recovered more than 30% of previously disposed recyclables during the first 40 weeks of the user-fee program’s operation, saving the Borough $83,504 in avoided disposal costs.(see note 2)

The Borough of Perkasie in Pennsylvania implemented a volume-based bag program in January 1988 for its 6,000 residents. Residents buy bags capable of holding 40 pounds for $1.75 and smaller, 20 pound capacity bags for $1.00. The program has assisted the Borough in achieving a significant diversion rate; between 1988 and 1992, the quantity of waste being recycled increased by 49% (by weight). Similarly, the quantity of waste being disposed at landfill declined by 51% (by weight).

In 1991, Gananoque, Ontario faced an increase in disposal costs of approximately $160,000 per year. In response, the Town started a mandatory tag system in July 1991 for an estimated 2,200 households. Tags cost $1.00, and only tagged bags are collected.

The Town had established a backyard composting program in 1990 and a recycling depot in March 1991. The depot takes in steel, glass, paper, aluminum, PET (polyethylene terephthalate), and old newsprint (ONP). A free tag is given out for every two bushels of recyclables delivered to the recycling depot.

Householder participation in recycling and source-reduction activities increased after implementation of the user fee system in July 1991. By March 1992, the Town had distributed 15,000 free bag tags through the recycling depot and recycling tonnages increased 175% compared with July 1991 (i.e., from 8 to 22 tonnes of recyclables/month). By April 1992, approximately 900 composting units had been distributed to 40% of the Town’s households. The user-fee program also resulted in a decrease of 45% in the amount of solid waste requiring disposal, and an estimated cost savings to the municipality of $216,000 in 1992.(see note 3)

Experience in Canada and the United States suggests that the more 3Rs options householders have to reduce their disposal costs, the more effective user fee systems will be in reducing waste.

C. Discussion

From an administrative viewpoint, funds raised by generator pay charges could be retained by municipalities or regions and then could be used to support development of local infrastructure.

The charge can be administered on a per can or a per bag basis, or the generator can pre-arrange/pre-select a certain specified level of service on a weekly or monthly basis. Obviously, the more options householders have to reduce their costs, the more effective the system will be in reducing waste. Householders will need access to composting and recycling, and they should also have the opportunity to choose a reduced level of service.

Some supporters of user pay for garbage argue that eventually it would be logical to require generators to pay nominal charges for recycling and centralized composting services to ensure that source reduction is maximized.

User fees for garbage usually are supported for the following reasons:

1) user pay seems to be consistent with the argument that polluters (including companies and consumers) should be made responsible for externalities when possible;

2) user pay does not seem to conflict with any of the policies and major programs of the Ontario Environment Ministry such as support for the Blue Box program. Moreover, it was seen as supportive of the home composting program;

3) in theory, user pay would encourage shifts towards the 3Rs by individuals and corporate entities;

4) user pay systems would be simple and cost-effective to administrate, and ideally could be integrated with existing federal, provincial and municipal financial, regulatory and institutional structures;

5) revenues generated could be retained by municipal governments to support the overall waste management system;

6) user pay does not raise all of the messy inter-jurisdictional, trade, political power, etc. issues related to most other (and in my opinion) better economic instruments (such as removal of subsidies to virgin material extraction); and

7) user pay seems to be consistent with the goal of disentanglement of municipal/provincial financing and responsibilities and off-loading of provincial programs onto municipalities.

Here are some of the other major policy issues that should be considered in discussing user pay options.

  1. Equity Issues

The most frequently raised issue with respect to generator pay or Pay as You Throw (PAYT) charges is equity. For example, it is argued that large families may be less able to cope with the additional cost of a generator pay system. Undoubtedly there is some truth to this argument; however, the proponents argue that inequities that would arise could be addressed through appropriate rebates to large or low-income families.

The permissive powers in the amendments to Ontario’s Municipal Act contained in Bill 7 [as it then was] will allow municipalities to exempt or reduce the fees charged to these types of households. In other words, at the Ontario Environment Ministry knew this was going to be a big political issues and designed the law to accommodate municipalities.

  1. Potential for Littering and Illegal Dumping

Municipalities often raise the concern that user pay schemes will result in illegal dumping. There is considerable evidence that PAYT programs can encourage scofflaws to “throw without paying” (TWP) in farmer’s fields and forests requiring municipal staff to become garbage detectives.

Proponents argue the issue that arises is a traditional deterrence argument: should the fact that a few individuals will break the law stop us from putting good laws into place?

In some municipalities, user fees and PAYT charges have increased illegal dumping of waste in commercial dumpsters and littering, particularly in the first year after introduction of user fees. Usually, these problems are addressed through public education, by imposing stiff fines against those caught dumping and by the locking of unattended dumpsters. However enforcement is difficult.

Successful public education campaigns against illegal dumping and littering have been launched in many jurisdictions in both the U.S. and Canada. To discourage illegal dumping in Perkasie, Pennsylvania, officials there publish the names of illegal dumpers in the local newspaper.

Advocates of user pay systems argue that public education could help control illegal dumping. However, in some jurisdictions with pay-by-the-bag systems, illegally dumping problems have not been entirely resolved. For example, in Nanaimo, BC user pay has increased the incidence of illegal dumping in the ocean and in wooded areas near the town.

  1. Dealing with Apartment Buildings

Another problem with implementing user pay is dealing with residents in apartment buildings. At present, garbage collection services for most apartment buildings are part of the cost of doing business for landlords and the cost is passed on to tenants. Thus, most apartment dwellers are, in effect, serviced by private hauling companies and these companies would be very happy to charge a user fee.

Conceivably, apartment dwellers could be required to participate. However, there is the technical problem of how and when a fee would collected (ie. each time they put waste down the garbage chute in their building?).

In large cities where single family dwellings and apartment buildings are scattered in residential districts one could imagine that administering user pay might create a nightmare for officials. There might be an enormous temptation for landlords to try to arrange user pay to gouge tenants and off-load the cost of garbage disposal onto tenants. In addition, there would be an equally great temptation for apartment dwellers to try to avoid the charges altogether. And this might lead to illegal dumping.

  1. Occupational Health and Safety Issues

Pay-by-the-bag user charges are opposed by the Canadian Union of Public Employees (CUPE), which represents between 1,500-2,000 municipal waste management workers in Ontario, because the charges tend to encourage people to increase the density of their garbage by compacting it (ie. to fit more into a bag or can). This could lead to an increase in occupational injuries (i.e. back problems) for CUPE workers. It is unclear if CUPE would support user charges if they are based on weight.

  1. User Pay Focuses on Consumers Instead of Producers of Packaging

Another argument that is made against user pay systems is that there is no direct pressure on the manufacturers of certain products to change their packaging. Many individuals feel trapped by a lack of choice with respect to packaging; they want to purchase a certain good or service but they cannot buy the product inn a reusable container at supermarkets.

In theory, user pay could result in the indirect pressure of consumers on manufacturers and distributors, which can be a powerful force. Market adjustments would certainly occur because supermarkets would begin to provide more bulk foods and reusable packages (smaller health food stores would pick up the slack if they did not) as cost conscious consumers began to demand them to reduce their generator pay charges. User pay also could encourage greater use of some difficult-and-expensive-to-recycle materials like plastics. This trend should be monitored to ensure that taxpayers don’t get saddled with the burden.

Moreover, the main benefactors of this shift will be better educated middle class consumers with time on their hands.

Based on current evidence, I would argue that user pay systems will have, at best, a marginal impact on encouraging product stewardship by manufacturers.

D. Conclusion

In sum, I think user pay systems have good potential to: 1) improve material recovery rates of recycling programs; and 2) increase diversion of waste from disposal in landfills or incinerators.

If user pay is adopted, then I agree with those who say that it should be extended so that charges are imposed for every pick up of blue boxes and and containers brought to centralized composting facilities.

My concern is that, in the absence of other policies to encourage product stewardship, user pay will not necessarily encourage a shift in waste management from recycling to waste reduction.

My guess is that large municipalities in Ontario will continue to avoid implementing user pay because of the difficulties associated with educating an ethnically diverse population and the great potential for increased littering and illegal disposal.

If user pay is worth supporting, I would suggest that the following configuration of measures would be optimal:

  • user pay fees for residential MSW disposal by weight. An appropriate fee should be between $1-2 per bag (about $1 for every 10-15 kilograms?).
  • user pay fees for Blue Box pick up by weight in the range of $0.50-75 for every 15-20 kilograms.
  • user pay fees for pick up of wet waste (food and leaf and yard wastes) for composting at residential dwellings to encourage home composting. However, in the short term it may not make sense to charge for use of centralized composting in the next few years to encourage development of this service in Ontario.

REFERENCES

The following list of documents is incomplete but lists some of the key sources on user pay that could be consulted.

Association of Municipalities of Ontario (AMO)

AMO’s Response to RCO’s “Who Should Pay for Recycling?”. Toronto: AMO, January 1991.

AMO’s Policy Position on Reduction and Re-use. Toronto: AMO, June 1991.

AMO’s Response to Municipal Waste Management Powers in Ontario. Toronto: AMO, July 1992.

British Columbia Ministry of the Environment Guide to Establishing User Fee Systems for Solid Waste Management. October 1992. Victoria: BC MOE.

Canadian Institute for Environmental Law and Policy (CIELAP)

A Regulatory Agenda for Solid Waste Reduction, Report prepared for SWEAP by S. Shrybman. Toronto: Solid Waste Environmental Assessment Plan, Metropolitan Toronto Works Department, July 1989.

Looking Back and Looking Ahead: Municipal Solid Waste Management in Ontario From the 1983 Blueprint to 50% Diversion in 2000 — Conference Background Paper and Conference Report. Edited by M. Winfield. Toronto: CIELAP, March 1993.

Environmentally Sound Packaging Coalition

The Consumer Interest in Economic Instruments, July 1993. Vancouver: ESP Coalition.

Honourable Ruth Grier, Former Ontario Minister of the Environment

“Ontario’s Waste Reduction Action Plan”, Speech to a conference of Eastern Ontario Mayors, Wardens and Reeves, 21 February 1991, Toronto: MOE.

The Road to a Conserver Society, Speech to the Ontario Waste Management Conference, 17 June 1991. Toronto: MOE.

Grocery Products Manufacturers of Canada (GPMC)

GPMC Packaging Stewardship Model: A Discussion Document. Toronto: GPMC, December 1992.

Ontario Ministry of the Environment (MOE)

Blueprint for Waste Management. Toronto: Queen’s Printer, 1983.

The Physical and Economic Dimensions of Municipal Solid Waste Management in Ontario. Report prepared by CH2M Hill Consultants for the Fiscal Planning and Economic Analysis Branch, MOE, November 1991. Toronto: MOE, 1992.

Ontario Ministry of the Environment and the Office of the Greater Toronto Area (OGTA) The Waste Crisis in the Greater Toronto Area: A Provincial Strategy for Action, released by the Minister of the Environment, 27 June 1991. Toronto: MOE and OGTA.

Ontario Ministry of Municipal Affairs
Municipal Waste Management Powers in Ontario. Toronto: Queen’s Printer, March 1992.

Ontario Waste Management Association (OWMA)

Position Papers on the 3Rs, Flow Control, Incineration of Municipal Solid Waste and the Regulation of Rates Charged. Submitted to the Ministry of the Environment Toronto: OWMA, January 1993.

Recycling Council of Ontario (RCO)

Who Should Pay for Recycling? Toronto: RCO, August 1990.

Achieving a Balance: Public and Private Sector Roles in the Development of a 3Rs Infrastructure. Toronto: RCO, January 1992.

Waste Reduction Advisory Committee (WRAC), Ontario Government

The Shared Model: A Stewardship Approach to Waste Management in Ontario (For Dry Recyclables and the IC&I Stream). Toronto: WRAC, February 1992.

Resource Stewardship in Ontario: A Shared Responsibility. Toronto: WRAC, November 1992.

Generator Pay Charges: A Discussion Paper. Toronto: RAC, December 1989.

Notes

1. Most municipalities that expressed interest in implementing user charges for residents in their jurisdiction did not do so because they wish to avoid controversy and possible legal challenges.

2. See Biocycle, April 1992.

3. RCO, Presentation on User Pay Systems to CIELAP Conference, January 23, 1993 in Winfield et al. (1993)

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About the Author

Mr. McRobert is a team leader, lawyer, and Policy Advisor with extensive government regulatory sector and Non-Government Organization (NGO) experience.  He has in-depth knowledge of environmental law and policy in Ontario along with experience in the administrative, aboriginal and municipal law fields, providing leading edge advice and analysis on compliance and policy options that empower organizations and clients to make better decisions.  David provides practical ways to solve complex policy and operational problems and implement change.  He works well with diverse management styles to achieve organizational goals; enjoys multi-faceted projects working with multidisciplinary teams where employing well developed analytical skills is essential.

Canadian Electronics Makers at Risk with e-Waste Exports

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by Jonathan Cocker, Partner at Baker McKenzie

“Canada continues to allow exports of hazardous e-waste to flow to developing countries (in this case, China and Pakistan)… These are all likely to be illegal.”
Export of e-Waste from Canada, October 10th, 2018, Basel Action Network

The release of this report by the Basel Action Network, subtitled A Story as Told by GPS Trackers, has thrown a veritable thunderbolt into the midst of the waste electrical and electronic equipment recycling industry in Canada (and beyond as these issues are not unique to any one country). Not only are current stakeholders engaging in the continued export of toxic materials to unlicensed (and unregulated) locations in developing countries, but these exports may well violate one or more laws, including national laws adopting the original Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal.

e-Waste Monopolies and the Limits of Due Diligence
A question arises as to how manufacturers of electronics could allow their products and their industry representatives to engage in these exports long after the harmful environmental and societal impacts of such exports have come to light and addressed through international agreements. The answer lies in their proximity to the compliance activities undertaken on their behalf. In Canada, the makers of electronics are mandated to participate in a single government-approved WEEE recycling organization in each province. Decisions around this reverse supply chain are simply too remote to many in the electronics industry.

More importantly, there is too little incentive for the government designate to rigorously oversee the end-of-life compliance of the waste they transfer, as painfully demonstrated by the Export of e-Waste from Canada Basel Ban report. Instead, the organizations can rest upon the recycler qualifications and standards as due diligence and blame the bad apples when these scandals come to light. Their compliance mandate can be viewed as essentially process, not results, driven and they have little organizational risk, as the monopoly party, in whatever mischief happens thereafter. Equally, individual electronics manufacturers aren’t invested in the environmental outcomes as they are not at risk. It’s no coincidence that the report itself does not name one electronics company as culpable.

Electronics Industry Facing Coming Individual Producer Responsibility
Ironically, it is the Canadian e-Waste government designates which will lose their monopoly positions in the marketplace under the coming individual producer responsibility model (IPR) for many waste streams, including electronics. Under IPR, it will be individual producers who will assume direct responsibility for the proper resource recovery of the electronics they place on the market. These electronics companies will retain the liability for outcomes such as illegal shipments to:

“an area well documented as being a global e-waste trafficking and smuggling hub.”

The risks to the electronics industry participants become real, both regulatory and reputational, truly motivating them to ensure that their oversight role doesn’t end at a qualification program, in the same way that international brands in many other industries are increasingly scrutinizing their (front end) supply chains. Canada’s Province of Ontario will have IPR for e-Waste in 2020.

Small(er) Is Beautiful in Managing e-Waste
To conduct this kind of effective auditing and verification, electronics makers will want to stay closer to their reverse supply chains (and potentially lucrative secondary markets) through individual or smaller, market-segmented groups to best structure reverse supply chains which meet their individual or group needs. Leaving it in the hands of a single monolith entity acting on behalf of a myriad of parties, from manufacturers to retailers and everyone in between, across the broad spectrum of waste-relegated electronics and electrical equipment, will continue to prove ineffective in ensuring e-Waste compliance. It will be up to the producers themselves to finally bring these e-Waste exports to a permanent halt.

This article was originally published on the Baker McKenzie website.

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About the Author

Jonathan D. Cocker heads the Firm’s Environmental Practice Group in Canada and is an active member of its Global Consumer Goods & Retail and Energy, Mining & Infrastructure groups. He participated in founding one of North America’s first circular economy producer responsibility organizations. Jonathan 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 most recently the author of the first edition of The Environment and Climate Change Law Review (Canada chapter) and the upcoming Encyclopedia of Environmental Law (Chemicals chapter).

Toronto Wins by Turning Waste into Renewable Natural Gas

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by City of Toronto Staff

City of Toronto recently won a 2018 Energy Vision Leadership Award for its innovative renewable natural gas project.

The City, in partnership with Enbridge Gas Distribution Inc., will begin installing new equipment at the Dufferin Solid Waste Management Facility in 2018. The new technology will allow the City and Enbridge to transform the raw biogas produced – from processing Toronto’s Green Bin organics – into renewable natural gas (RNG) and inject that gas into the natural gas grid. Once in the grid, the City will be able to use the RNG to fuel its collection trucks.

This project is one of the first of its kind in Canada and North America and will allow the City to reduce fuel costs for its fleet of collection trucks and significantly reduce its carbon footprint. Current estimates suggest that the Dufferin RNG facility will produce approximately 5.3 million cubic metres of RNG per year – enough to power 132 heavy duty garbage trucks, about 90 per cent of the City’s solid waste collection fleet.

The project supports the City’s Long Term Waste Management Strategy and move toward a circular economy by using a closed-loop approach where organics collection trucks are ultimately powered by the waste product they collect.

This is the first of four waste-to-RNG production opportunities identified by the City.

Circular model showing how waste can ultimately be used to create green energy.

Toronto’s Path to RNG

The City of Toronto’s existing and closed landfill sites and anaerobic digestion (organics processing) facilities are some of the largest producers of biogas and landfill gas in Ontario. Over the last few years, the City’s has been looking for opportunities to harness the green energy potential of these gases and identified renewable natural gas (RNG) as a top priority for biogas management.

The City has been transitioning from diesel-powered trucks to quieter and more environmentally friendly natural-gas-powered trucks since 2010, when the first small-scale pilot hit the road. To support the move away from diesel, the City also constructed a number of natural gas fuelling stations.

After identifying RNG as a priority, the City began searching for technologies and partnerships to upgrade its biogas and landfill gas to RNG. When looking at the different technologies and options for upgrading and transporting biogas, the City took a triple bottom line approach that considered the economic, social and environmental benefits.

Through multiple studies, the City identified RNG production opportunities at four locations: its two anaerobic digestion (organics processing) facilities (Dufferin and Disco Road) and two of its landfill sites. The first site to get new equipment to upgrade its biogas to RNG is the Dufferin Solid Waste Management Facility.

Once all four RNG sites are up and running, estimates suggest that the City will be able to produce approximately 65 million cubic metres of RNG per year – the equivalent in greenhouse gas emission reductions of taking 35,000 cars off the road for a year.

Biogas Upgrading

Both biogas and landfill gas can be upgraded to create RNG. The biogas produced through anaerobic digestion is made up primarily of methane, but also includes carbon dioxide, oxygen, nitrogen, water, sulphur, and various non-methane organic compounds.

Biogas upgrading involves purifying the gas to remove carbon dioxide and other contaminants. The result is a gas that is more than 90 per cent methane and can be injected directly into natural gas pipelines. The RNG can then be transported to the City’s natural gas fueling stations and used to fuel its trucks.

Biogas at the City’s anaerobic digestion facilities is currently flared (burned), which is common industry practice for managing biogas, but does not take advantage of its renewable energy potential.

Inside of the Toronto Dufferin Source Separated Organics Management Facility (Photo Credit: CCI Bioenergy)

The Benefits of RNG

While chemically identical to traditional natural gas, RNG is a renewable resource that can be produced using materials that are readily accessible through the City’s Green Bin organics program.

RNG is also less expensive and more environmentally friendly than fossil fuels such as diesel. Once injected into the natural gas pipeline, it can be used to fuel vehicles or provide electricity or heat to homes and businesses.

RNG generated from food waste is actually considered carbon negative, because the reduction in emissions by not extracting and burning petroleum-based fuel, and the emissions avoided by not sending organics to landfill, exceed the direct emissions associated with the production and use of RNG.

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.

 

Waste Accumulation Problems and Opportunities

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by Zoltan Kish, Ph.D., Quasar ScienceTech

An incredible amount of waste is produced in Canada and around the world. Humans are dumping 2.12 billion tons of garbage every year and polluting the oceans, land, and air.  Consequently, we need sustainable and effective waste management to protect our environment and save our world.

In 2016, the Ontario government released its Strategy for a Waste-Free Ontario, diverting our wasteful ways towards an entirely circular economy.  The proposed strategy requires appropriate tools and an innovative approach to solving the tremendous waste accumulation problem.

The urgency for made-in-Canada solutions for waste management has sped up with the fact that China severely restricts the types of recyclables it accepts.  Prior to the plastic waste restrictions instituted in December 2017, China was the home to 45 percent of the world’s plastic waste since 1992.

Under the new circumstance, some municipal governments could get out of the recycling business altogether, and the recycled waste will end up in the landfills and the energy in waste is mostly lost.  Landfilling plastics would severely lessen the landfill capacity in Canada, already a growing concern as chronicled by Fraser Institute, the Ontario Waste Management Association, and others.

Canadian Solutions

We need more effective and sustainable ways to manage the produced waste.  Government in Canada should implement appropriate tools for the waste management challenge.  One tool would be the encouragement of using waste as a resource.  One person’s trash can be another person’s treasure.  For example, depending on the waste plastic composition and level of contaminations, the plastic feedstock could be effectively converted into high-value products through pyrolysis and waste steam gasification technologies.

If the plastic feedstock is clean and has an appropriate composition, pyrolysis (heating in the absence of oxygen) can be applied to depolymerize plastic and convert it mostly into liquid fuel.  The steam gasification reformation technology is more suitable for contaminated plastic waste conversion into high energy value syngas and hydrogen.  Additionally, syngas can be converted into liquid fuels and green chemicals using Gas-to Liquid catalytic process.

The use of advanced and effective waste-to-energy (WTE) technology applications in combination with a reliable scrubbing/cleaning system can provide a solution for biodegradable and non-biodegradable waste disposal, clean energy production, and sustainable product regeneration. The waste, potentially, can be converted into various forms of clean energy products, such as electricity, hydrogen, liquid synthetic fuels, and “green” chemicals.

Waste can be a cost-effective and environmentally-sound feedstock in the generation of clean energy, replacing a portion of fossil fuels.

High quality liquid synthetic fuels, without sulfur contamination, can be produced from waste materials by a combination of a Waste-to-Gas technology with a Gas-to-Liquids technology based on the Fischer–Tropsch catalytic process.

Regrettably, mass burn incineration has been often considered as a WTE technology to process waste for an astonishing cost and relatively minimal energy production.  For example, a new mass burn incinerator was built in York and North Yorkshire in the United Kingdom at a cost of £1.4 billion ($2.4 billion Cdn.)  The incinerator will divert more than 230,000 tonnes of household waste but will produce only 24 MW of power.

Allerton Waste Recovery Park, North Yorkshire, United Kingdom

Another example of an enormous and costly incineration facility is the one planed in Hong Kong. The incinerator will cost $4 billion and process 3000 tonnes of waste per day (1,050,000 tonnes/year).  The total amount of energy the facility will produce per year is 489 million kWh/year of energy, which is equivalent to 57 MW of power.

In my professional opinion, incineration is a very costly and inefficient way for waste conversion into electricity.  The highly pollutants generated from incineration require very expensive air pollution controls.

In a circular economy, advanced emerging waste conversion technologies (e.g., Waste-to-Energy, Waste-to-Gas, and Gas-to-Liquids technologies) can play a pivotal role in waste disposal.  Efficient waste conversion technology applications can be a path to a working circular economy. Recycling is not only based on simple reusing the waste products.

The purpose of recycling is to redesign and convert waste into forms retaining as high value as possible in a circular economy. Contaminated waste products are challenging to recycle and reuse. Garbage can be converted into high-value products through mechanical/physical, thermochemical, and biochemical processes. The waste can be transformed into various forms of sustainable and clean energy products utilizing effective waste conversion technologies in the circular economy.

The increasing amount of waste is one of the most challenging problems facing the world, which creates global environmental challenges. Contaminated waste products (e.g., plastic, paper, diapers, medical waste, waste biomass, and industrial byproducts) are challenging to recycle and reuse in the traditional way.  Therefore, we have an urgent requirement to deal with the tremendous waste accumulation.  At the same time, we have a tremendous business opportunity to convert waste into usable sustainable products.

The circular economy can be based on efficient waste conversion technologies, such as traditional gasification, steam gasification, pyrolysis, and anaerobic digestion.  Mostly, the steam gasification reformation of waste is more efficient and cost-effective than other thermo-chemical and bio-chemical technologies and able to convert both biodegradable and non-biodegradable carbonaceous waste contents into higher value clean/renewable energy products.

 

It is essential that sustainable waste management become an integral part of urban development. With the right approach, we could have a comprehensive and cost-effective solution for waste disposal, clean energy production, and sustainable product regeneration as a combination of biodegradable and non-biodegradable waste processing.

 About the Author

Dr. Zoltan Kish has a Ph.D. in Chemistry with over 25 years of diverse industrial and academic experience and contributed to more than 70 scientific publications. He has developed and managed complex research and development programs related to alternative/renewable energy, clean technologies, GHG, sustainability, and advanced materials applications, such as solar energy technology, ceramic engine & cutting tool components, materials processing, and electronics. Dr. Kish was the Director of Research & Development at two major Canadian alternative energy companies where he focused on R&D and commercialization of unique Waste-to-Energy technologies and reliable scrubbing/ cleaning systems to produce clean and sustainable energy products. In response to global environmental challenges and the need for scientific evaluations of new technologies and advanced materials applications, he has established a consulting company – Quasar ScienceTech (www.quasarsciencetech.com) to provide multidisciplinary science and technology consulting in the areas of Natural & Applied Sciences, Clean Technologies & Energy, Waste Conversion, Technical Due Diligence, Climate Change Mitigation, Circular Economy, Sustainability, Innovation, and Advanced Materials Applications.