Dispelling Misinformation about Packaging EPR in Ontario and Canada

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Written by Neil Savio Menezes, President at EcoCompass

Ontario is at a critical juncture for the future of recycling in the province. Regulations are being drafted to transition Ontario’s Blue Box program to full producer responsibility which will make producers of residential packaging, paper and packaging-like products (PPPP) operationally and financially responsible for managing their materials at the end-of-life. This concept has been discussed ad nauseum for almost two decades in Ontario following the introduction of the Waste Diversion Act in 2002 which gave us our current shared responsibility model.

While there has been no shortage of debate on the merits of transitioning recycling costs from municipalities to producers over the years, the noise has recently grown louder following stakeholder consultations by the Ministry of Environment, Conservation and Parks (MECP). Well informed debate is a crucial element of good policymaking but I’m concerned by the misinformation and half-truths circulating and their potential to influence policymakers into weakening the proposed regulations. We are at risk of losing sight of what is most important: implementing a proven policy tool as equitably as possible.

In my experience, clarity is best achieved through thoughtful analysis of good data. Over the last decade, I have worked with producers, municipalities, packaging suppliers, government agencies and stewardship programs to analyze data that has been used to inform arguments on both sides of this debate. I have conducted Activity Based Costing (ABC) studies, updated annual producer fees, verified municipal recycling costs, optimized municipal recycling operations and assessed the limitations of British Columbia’s producer responsibility program. Needless to say, I have had unparalleled access to an abundance of data that has enlightened my views on these issues. Arguments based on misconceptions and data missteps, as outlined below, are muddying the conversation and this is my attempt to cut through the noise.

Claim 1: EPR will not save taxpayers money.

Under a full producer responsibility, municipalities will no longer be regulated to collect and process recyclable materials. This responsibility will now fall on producers, where the regulations will set targets for their materials and they will need to find a way to meet them. Some municipalities may still incur costs if they opt to continue recycling services for non-eligible sources or non-eligible PPPP under the new regulations; however, with one less service for municipalities to provide, it’s hard to imagine a scenario where municipalities will not see net savings overall. These savings will not translate into a cheque in the mail to residents or a direct reduction in property taxes given that recycling programs tend to represent a small percentage of a municipality’s total annual budget (e.g. $60 million out of $11.12 billion in Toronto or 0.5% in 2018), but the savings do free up funds to offset other municipal costs. With the financial toll of COVID-19 rising, these savings could not come at a better time for cash-strapped municipalities.

Claim 2: Costs of Producer-Led EPR are rising in British Columbia and the same will happen in Ontario.

British Columbia adopted a full producer responsibility model for PPP in 2014. As the only province to have done so, it is often used as the benchmark for producer responsibility in Canada. Opponents of producer responsibility have latched onto rising costs in BC to argue that producer-led programs are no more effective than a municipally-operated program. This argument is being made in Ontario to influence policymakers but they should be wary of drawing concrete conclusions from the BC experience about the efficacy of full producer responsibility.

For one, Recycle BC (formerly Multi-Material British Columbia) did not service all municipal programs when it started. Notably, City of Vancouver did not fully transition to Recycle BC until October 2016. As municipal programs were added each year, it follows that Recycle BC costs would increase in turn. Secondly, the program is relatively young. With only five years worth of data and much of it not publicly available, any modeling or projections for Ontario based on the BC experience are imprecise at best. Lastly, BC has a parallel beverage deposit program that removes much of the high-value materials (PET and Aluminum) from the program. Given that this is not an apples to apples comparison, using BC data to estimate system costs in Ontario under full EPR is nonsensical. A direct comparison of system costs between BC and Ontario, without accounting for these variations is misleading, and inaccurate.

Claim 3: EPR will be an economic burden on Ontario households.

According to a York University Study, a transition to 100% producer responsibility in Ontario for PPPP has been modeled to increase the “basket of goods” costs for consumers by anywhere from 6-12%. As always, the value of a model is dependent on the quality of the data used and the assumptions made by the modeler. According to my calculations, the increase is more realistically less than 1% – a number that would barely register on an individual receipt. Unfortunately, the study has not been released to allow for a proper peer review. I tried to replicate the results of the model from a bottom-up and top-down approach, and I can’t come close to the results:

Example 1: Let us cherry pick the most damaging example of the impact of producer responsibility on an individual product in the Blue Box. The simplest way to do this would be to pick the material with the highest cost to manage (EPR fee) and the lowest retail cost to consumers.

In Ontario’s program, the packaging with the highest EPR fee is a multi-layered drink pouch, also called a plastic laminate. The cheapest product I could find was a case of 10 juice pouches that retails for $2.00 (20 cents per pouch). With a weight of 4 grams per pouch and a 2020 EPR fee of 35 cents per kg, this would equate to a total EPR fee of 0.14 cents for each pouch. The EPR fee on a case of ten drink pouches would be 1.4 cents today, and if you doubled it (transition to full producer responsibility) it would be just under 3 cents or 1.5% of the total cost. A household would need to buy approximately 700 juice pouches to see a one dollar increase to their grocery bill over the course of a year. If that’s as scary as it gets, I don’t think consumers have much to worry about.

Example 2: Even the “frightening” example above overstates the impact to consumers as it incorrectly assumes that brand owners will apply the packaging recycling fee to every bill. System costs post-transition will be addressed through national or international pricing structures. In other words, the cost of recycling borne by producers post-transition will be spread out across all of their products across Canada. To put things into perspective, retail sales were over $225 billion in Ontario and $605 billion nationally in 2018, according to the Retail Council of Canada. The Blue Box program at its current cost of $300 million a year represents a total of 0.15% of total retail sales in the province, or 0.05% nationally. Since producers in Ontario are already footing half the bill today, you can see how negligible the cost will be in the grand scheme of things.

Claim 4: There have yet to be any examples in Canada where stewards have been able to develop new end markets or viable end use applications for composite and light-weight materials.

Ultra-specific statements like these always illustrate to me either an inherent bias or a lack of understanding of producer responsibility. Limiting the discussion to Canada where EPR is relatively new obscures the impact EPR can have on recycling investments. In Europe and Asia where EPR has been around for decades, this policy tool has resulted in significant investments to recycle obligated materials, including those that are considered difficult to recycle. One example is Hahn Plastics which manufactures new plastic products from used rigid and flexible plastics. I had an opportunity to visit their facility three-years ago and saw first-hand how the Packaging Regulation introduced by Germany in 1991 has incented investments in innovative processes to recycle lightweight plastics.

However, if citing Canadian examples of end market development for composite and lightweight plastics is the only way to settle this debate, we need look no further than these examples of EPR-induced investment:

When examining the impact of EPR, it’s also important to remember that Canada is unique compared to other jurisdictions in that EPR has been applied at the provincial level rather than nationally, or entire trade blocs as is the case with the European Union. Even with a patchwork of policies across the country, Canadian stewards, steward organizations, municipalities and other stakeholders have made significant investments to improve sorting operations and develop successful end markets for recyclable materials. Take glass recycling for example: Stewardship Ontario funded a glass recycling facility in 2008 and Éco Entreprises Québec (EEQ) committed $40 M to improve glass recycling in Quebec. These investments were made under a shared financial responsibility model. As full EPR spreads across Canada, economies of scale will fuel even greater investment.

I will admit that not all investments have been successful nor will EPR guarantee success after transition; we have seen facilities shutter their operations despite significant investment here in Ontario. However, the current status quo will see investments slowdown until there is clarity and commitment to move forward. We have seen other provinces adopt innovative approaches to recycling and producer responsibility as we fall behind. This transition is an opportunity for Ontario to lead once again.

Claim 5: Packaging that offers greater environmental benefit, such as carbon abatement, but is expensive to recycle should not be recycled.

Setting ambitious recycling targets through producer responsibility does not need to come at the expense of low-carbon packaging. In fact, a recent commitment by major corporate players demonstrates that light-weighting and source reduction can go hand-in-hand with recycling targets. Just a few weeks ago, 60+ brands, retailers, government agencies and NGOs signed the US Plastics Pact. Companies like Coca-Cola, Unilever, Wal-Mart, The Clorox Company, and others agreed to take measures to eliminate problematic or unnecessary packaging by 2025, and by the same year, take steps to ensure all packaging is reusable, recyclable or compostable; recycle or compost 50% of plastic packaging; and, increase the average recycled content or responsibly sourced bio-based content in plastic packaging to 30%. This commitment does not prioritize one environmental issue over another, it recognizes that the combined issues of climate change, resource scarcity and plastic pollution require a suite of measures to overcome. I firmly believe that this embrace of circular economy principles by major corporate players and recognition of the control afforded by full producer responsibility to create circular material flows will improve the lifecycle impacts of packaging in Ontario.

It’s time to move forward.

The transition toward full producer responsibility has been a long-time coming and most stakeholders believe it is the right path forward. Unfortunately, we are seeing a repeat of lobbying efforts to derail this process using exaggerated cost estimates and other misleading arguments as opponents have successfully done in the past. To keep it on track, policymakers must be guided by sound logic and robust data.

Regulated outcomes like producer responsibility policies, coupled with strong corporate commitments, are what is necessary to drive change. Give producers the freedom to decide which is the more economical decision: either change their packaging to meet targets or develop end-of-life solutions for packaging materials that do not have one today. This is the basic intention of full producer responsibility. Ontario has an opportunity to support companies in their pursuit of a circular economy by getting the incentives right, leveling the playing field and giving them the certainty they need. Let’s cut through the noise and get this done.

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About the Author

Neil Savio Menezes is the President at EcoCompass, an environmental consulting firm that specializes in helping municipalities and companies achieve their recycling and diversion goals.

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