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Can more recycling be a bad thing? Why including more materials in the recycling bin will do more harm economically, environmentally and socially

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Written by Calvin Lakhan, Ph.D., Faculty of Environmental Studies at York University

In a recent review of New York State’s proposed Extended Producer Responsibility (EPR) legislation, I was taken aback by the sheer number of materials that were included (more than 30 individual materials in all) – it included everything from the conventional (newsprint, magazines, corrugated cardboard, aluminum cans) to the obscure (Multi-layered and flexible packaging made out multi resin products like LLDPE, PCV and PS), and even things we know not to be recyclable (BPA, Compostable Plastics, Polycarbonate and Lexan).

While surprising, I can’t say that it was entirely unexpected. New York State is merely following the lead of jurisdictions such as Ontario, which have decided to adopt the “Kitchen Sink” model towards printed paper and packaging recycling, and attempt to recycle everything, everywhere, in order to make recycling simpler for households.

It’s an extremely easy story to sell to the public, more recycling is obviously good, and the companies who produce the packaging will need to figure out a way to recycle it effectively. While the latter comment touches on the topic of extended producer responsibility, which is not what this article is about. Rather, I want to remind readers that not all recycling is created equal, and the “Kitchen Sink” approach being proposed by New York State (and other jurisdictions), is not sustainable, and unequivocally does more harm than good – economically, environmentally and even socially.

The endogeneity hypothesis  

Whenever I refer to the “endogeneity hypothesis”, I am often met with blank stares. In its simplest terms, endogeneity (in this specific context) refers to when variables within a system are interrelated – the existence of variable A, impacts variable B, which in turn, affects variable C. This is a gross oversimplification of a rather complex issue, but I do so to illustrate a broader point: What we decide to accept in our recycling bin will not only influence our ability to recovery these materials economically, but also affect the recycling performance of individual materials that make up the recycling program.

What policy makers and advocates of the “Kitchen Sink” approach fail to recognize is that waste management infrastructure (including the development of downstream processing and end use applications) was largely designed around “core materials” – These materials, which are characterized by high levels of recyclability, stable revenue, strong end market demand and are accepted in most municipal recycling programs: Newsprint, Other Paper (Magazines, Office Paper etc.), Corrugated Cardboard, Boxboard, Gable Top Cartons, PET bottles, HDPE bottles, Aluminum Cans, Steel Cans, and Glass* (glass cullet is generally not considered a core material due to poor end market demand). While the proliferation of light weight and composite packaging has spurred innovation in the waste management sector, it would be a gross overstatement to say that these materials are readily recyclable. Recycling of flexible plastic and composite plastic packaging in particular are still in its most nascent form – research for this article could only find a handful of pilot projects (across North America) where recyclers are accepting composite and flexible packaging to be tested for chemical recycling and waste to fuel.

But what does any of that have to do with the “endogeneity hypothesis”? For every additional “non-core” material added to the recycling program, not only do the costs of the entire program go up, the costs of managing individual materials within the program go up. Materials that are difficult to sort and/or recycle have an adverse impact on all other materials being managed within the same system – this is particularly true of single stream recycling systems. The more materials accepted by a program, the greater the number of types of materials inbound into a material recycling facility. If a MRF is not configured or cannot be readily retrofitted to efficiently sort materials that fall outside of the “core material” categories, it increases both the sort time and cost of managing *all* materials, irrespective of whether it is newsprint or a multi-laminate plastic.

In essence, the decision to attempt to recycle everything not only radically increases the costs of a recycling system that was never intended to capture these materials, but it poses an externality on the materials that were already being recycled. It makes the cost for all participants within the system more expensive, a somewhat perverse outcome given that we are trying to encourage producers who use readily recyclable packaging.

What are we trying to achieve again?

When writing these articles, this is a question that I often return to – largely because I don’t think a clear answer has emerged. Based on what I am seeing in the latest legislative developments in both Canada and the United States, it appears as though increasing recycling rates may be the end goal. It’s a “Do good, feel good” activity that people can readily get behind – I agree with half of that statement.

It certainly is a feel good activity, but whether it “does good” is highly questionable. I have repeated time and time again that not all recycling is created equal – decision makers are not oblivious to this, as there was a time when certain municipalities were considering *contracting*the list of accepted materials due to the issues that it posed within the recycling system.

So why the sudden 180 degree turn – in fairness, one part of that is consumer driven. Telling households not to recycle is walking back on years of environmental messaging, and can serve as a significant source of confusion/contradiction. The second part has to do with “who pays for the system”. Municipalities were very interested in booting materials out of the Blue Box when they paid for half of the cost. However, under a 100% EPR system, the same people who wanted me to find out how to get LDPE film and Polystyrene out of the program, are now calling for producers to pay their fair share for keeping materials out of landfill.

Not all recycling is created equal

While I obviously have very strong feelings about the appropriateness of EPR for PP&P, and the efficacy of recycling in general, I want to leave you with the following. One is a tool that I had developed several years ago that allowed users to enter in either a goal recycling rate, or a goal carbon abatement target, and the model would automatically find the lowest cost way to achieve it by prioritizing the recovery of specific materials. The data is a bit outdated (2018), but the overall finding remains unchanged – it isn’t how much we recycle that matters, it’s what we recycle. The “optimized” scenario actually found that maximum carbon abatement was achieved by recycling *less* (in absolute tonnes) than what we do today, and at a lower cost. There is a decoupling of recycling rate performance and environmental impacts – no longer is recycling directly correlated with carbon abatement.

Beyond this tool, I also want to provide a material evaluation matrix that looks at the characteristics of each material being considered in the New York State EPR program. Please note that I have grouped all the sub-categories (i.e. flexible PET, flexible PP, Flexible PS) into one container category (flexible packaging). As best I could, I tried to mirror the proposed list to the ones we use in Ontario – the reason for that is that I wanted to give actual data for what the quantities and costs of recycling are in a program that has already implemented EPR.

The criteria I used to evaluate materials are based on:

·        recovery rate,

·        revenue received (using Ontario price sheet)

·        cost of recycling, (using the SO Pay in Model)

·        Is the material accepted in most programs?

·        Is there available recycling infrastructure?

·        Is there end market demand?

·        Carbon abated per tonne recycled (by material) (EcoInvent)

·        Carbon impacts per tonne landfilled (by material) and  (EcoInvent)

·        Money spent on recycling to abate one tonne of carbon (by material).

I have always felt that the last metric is the most important – how much would you have to spend recycling something in order to abate one tonne of carbon? If you refer to the second worksheet (“Cost of Carbon”) it quickly becomes apparent that some materials make virtually no sense to recover given how much you have to spend to achieve a given environmental goal, i.e. $1856.14/TCO2e for plastic laminates.

It is critical that decision makers use data and evidence to guide their decisions, and not rely on emotionally or politically driven narratives. Jurisdictions are tripping over each other trying to push forward with EPR legislation for packaging waste, but it is of paramount importance that we proceed with caution and question the approach we are taking and explore potential alternatives. Producers also need to understand that EPR systems prioritizing recycling based outcomes is likely to have many adverse impacts that need to be better understood. Now more than ever, producers cannot resign themselves to playing a passive role in legislative discussions.

Recycling is a wonderful thing, but it is not the only tool in our tool box. In fact, it should be one of our last resorts when we cannot find ways to achieve waste reduction (i.e. package light weighting) or adopting systems that make reuse easier.

There will be many people that disagree, but I encourage you all to look at the data, and see what conclusions you reach.

 

 

 

 

 

 

EPR FAQ: Answers to commonly asked questions and claims

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Written by Calvin Calvin Lakhan, Ph.D, Co-Investigator: “The Waste Wiki” – Faculty of Environmental Studies at York University

Oh goodness gracious, I appear to have really stepped in it this time (although I do suppose I have a history of doing that). My last article about EPR really rankled some feathers and resulted in some heated exchanges with people that disagree.

A little birdie even told me that the word on the collection route is that I am in cahoots with producers and that I am trying to derail the Blue Box transition. If I’m on the take, can someone please let my bank know? I apparently am not receiving any of the money they are paying me to speak out against EPR.

My response to criticism has always been more or less the same – show me the data. My last article asking for any information that supported the efficacy of EPR for packaging waste was met with radio silence. I did have one individual tell me I was wrong, but when I asked them to provide evidence, they responded that I should pay them for their time…. that was a bit of a head scratcher.

In any event, I thought I would share a document I recently put together for the Ontario Environment Ministry outlining some of York University’s responses to commonly asked questions or claims regarding EPR for packaging waste. I also want to re-iterate that I have no issues with EPR as a concept, nor do I think producers should be absolved of their physical and financial responsibility at end of life. My issue has to do with the way EPR is currently implemented, and the challenges that arise when our goal is increasing recycling.

Please note that some of these comments are Ontario specific and refer to proposed changes in the Blue Box legislation. I still think it is of value to those outside of the province to better understand the issues we face as we transition to 100% EPR.

Questions surrounding Extended Producer Responsibility

Extended Producer Responsibility subscribes to the “Polluter Pays” Principle (transferring the responsibility of managing end of life waste to the polluter.

While the polluter pays principle is certainly the spirit of EPR, people often erroneously conflate “polluter pays” with the inability to recycle a material. The most sustainable outcome is not necessarily the one that recycles the most material – from a life cycle perspective, package light weighting has far greater environmental benefits, even in instances where the package cannot be recycled. Instead of encouraging or incenting producers to develop the most sustainable solution, we are telling them to develop recyclable solutions, which in many instances, results in inferior economic and environmental outcomes. Our fixation on using recycling rates and recyclability as the measuring stick for success is why program costs are increasing by double digits year over year, while diversion is actually decreasing.

EPR is not intended to create cost containment; it purely a funding mechanism to shift the burden from the taxpayer to the consumer

A system that does not contain costs is not tenable or sustainable. This is the fundamental issue with existing approaches to EPR. Proponents will say costs are now born by the right party, but what that cost is has significant implications to all stakeholders. Further to that point, while the intended purpose of EPR is intended to make consumers responsible for end of life costs, existing and proposed approaches to legislation are obliging consumers to pay for the costs of operating the recycling system. Recycling is not and should not be the only end of life option that we consider for how printed paper and packaging is managed. Not all materials are created or recycled equally – thus, it seems prudent that we explore options that maximize environmental and economic outcomes by differentiating how and where certain materials should be managed. The decision to recycle everything, everywhere, is the foremost issue facing the long term tenability of the Blue Box program.

The proposed Blue Box transition will save Ontario taxpayers money

A common refrain made by advocates of the transition to 100% producer responsibility is that transitioning program costs to stewards will result in taxpayer savings. Under the proposed legislation, stewards will be responsible for an additional $135 million dollars in program costs (exclusive of proposed changes to what sectors are obligated). The underlying intuition behind the tax savings hypothesis is that municipalities will pass this $135 million in savings onto households, either through a reduction in property tax or utility rates.

While this would be an optimal solution, there is no evidence to suggest that this will be the case. Municipalities (particularly in a post COVID world), grapple with significant budgetary shortfalls and are in all likelihood going to take the funds “saved” from transitioning the Blue Box program and re-allocating those funds to other programs and services. In British Columbia, there is no data to suggest the transition to 100% EPR has resulted in a tax savings for households.

While there is an argument to be made that the reallocation of funds to support other municipal programs and services benefits households, the benefits that are accrued are indirect and do not offset the increase in packaging costs that are attributable to EPR.

EPR does not increase cost of living

As a tangent to the previous point, advocates of EPR often contend that there is no appreciable impact in the cost of living attributable to the transition to full producer responsibility.

An examination of how the fee model works and how producers respond to a corresponding increase in fee rates demonstrates that this is not true. In fact, the transition to a 100% EPR system has been modeled to increase “basket of goods” costs for consumers by anywhere from 6-12%.

While a supplementary document that accompanies this FAQ explains the relationship between EPR and the cost of packaged goods in greater detail, in short, the costs to consumers are both “direct” (an increase in fees directly translates into a proportional increase in packaging costs) and “indirect”(cost escalation resulting from producers passing costs onto the consumer resulting from an increase in their funding obligation).

A direct increase in costs are shown in how the fee model works. Any increase in recycling system costs are re-distributed to obligated materials in direct proportion to that materials share of overall costs. In Ontario’s case, the additional $135 million dollars in program costs that stewards are now obligated for are immediately translated into an increase in fee rates, which in turn, are built into the price of packaged goods.

Indirect costs are slightly more difficult to quantify, but are based on a log linear adaptation of an input/output model used to quantify the economic and labor impacts of waste management activities. Our adapted model attempts to isolate the specific impacts of increases in waste management costs on consumption baskets.

While the materials in the accompanying document describe this model in greater detail, increases in costs borne by producers can manifest in the following ways: 1) costs being passed directly onto the consumer in the form of increased prices or a reduction in product size 2) costs are internalized, but results in reduced investment, job losses, company contraction etc. 3) some combination thereof (most realistic outcome).

What few people seem to recognize is that the potential increase in costs borne by the consumer are multiples higher than the direct increase in the steward obligation. As an example, if producers collectively reduced their investment in the province by $135 million dollars, the overall impact on the economy is north of half a billion dollars in both direct and indirect costs (as per the input/output multiplier).

A steward lead EPR program will inherently contain costs

An argument this is made in favor of steward lead EPR programs (where producers assume responsibility for the entire system), is that they have a greater ability to control costs relative to muncipalities, as they are not bound by geographical boundaries.

This is a logical fallacy for a number of reasons. The foremost issue is that there is no evidence to suggest that stewards are more efficient at operating a recycling program or containing costs. Recycle BC, which is often touted as a best practice model of steward lead EPR, has experienced the highest increase in year over year recycling system costs of any province in the country. In the past 3 years, recycling system costs have increased by more than 45%. The purported benefits of cost containment by stewards can only be achieved if there is a coordinated effort that represents the collective interests of all obligated stewards. However, due to the sheer number of participants (that vary in size, sector and locality), most stewards are largely passive participants in the Recycle BC program.

A comment made by ministry staff that “Private industry has always claimed to be more efficient than government” is a bit of a half-truth. Private companies who operate in the same space/sector as a government equivalent is often claimed to be more efficient. However, handing producers the reigns to the Blue Box is not the same thing – this isn’t a situation where the Waste Managements, Emterras and GFLs of the world are being compared to municipal waste management operators. This is a situation where we are asking major CPG companies to take control of the waste management system. By their own admission (and feel free to ask – they aren’t shy in telling you), most packaging companies have no clue how to operate an efficient waste management system. They will in all likelihood have to engage in individual contracts with waste service operators (both private and municipal) who are managing the programs now…. Except, we have the added administrative costs of having to coordinate multiple companies with multiple contractors.

There is a term in economics that we refer to as “communication externalities”. Efficiency of communication and coordination becomes more difficult as a greater number of participants enter the system, particularly if participants are of unequal size, power or do not have access to the same information. Communication externalities are often sufficient to completely deter cooperation all together. This is a very real risk as producers take over the system, particularly because they lack a common voice or entity that represents their collective interests.

A steward lead EPR program will lead to new end use applications and end markets for difficult to recycle materials

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. While there have been “one off” situations where producers have worked collaboratively with the waste service providers to capture and recycle a specific materials (i.e. Green Mountain and Recycle BC partnering to recycle the K-Cup), those solutions were neither scalable (only available in one locality) or economical.

The above example highlights the issue with this line of reasoning – in the absence of a relationship that is site and situation specific, stewards do not and should not have the ability to disrupt commodity markets. If a material inherently has value, the market will signal that this material should be captured, and that there will be an end market willing to purchase that material. If commodity markets dictate that a material has nominal or no value, then attempting to collect and recycle that material will result in a significant cost, with virtually no benefit. Unless there is prescriptive recycled content legislation that mandates the use of that material in new products (which may or may not have technical barriers), then the only use for that material will be in bespoke recycling solutions that are more novel than practical.

At present, recycling markets for composite and light weight plastics remains virtually non-existent, and it is unlikely that stewards will be able to change that in the near term.

A steward lead EPR program will incent producers to design more sustainable packaging

Referring to the principles of the waste management hierarchy – reduction is preferred to reuse, and reuse is preferred to recycling, then through that lens, many producers are already developing more sustainable packaging. Once again, the issue is that most people (both policy planners and the public) conflate recycling with sustainability – if it can’t be recycled, it must be bad.

While package light weighting has often been characterized as a negative due to low levels of recyclability, most life cycle analysis studies demonstrate that the “upstream” environmental savings (resulting from a reduction in material used, efficiencies in transportation and logisitics and increased shelf life) significantly offsets the environmental impact of being unable to recycle those materials.

Existing and proposed legislation incents recycling (and in some instances, takes punitive measures towards materials that have low levels of recyclability), but offers no credit for the waste reduction that is achieved. In many ways, the existing approach may result in an environmentally and economically perverse outcome, where producers “switch back” into heavier, but more recyclable packaging.

Issues Surrounding Proposed Impacts of the Blue Box Expansion into the IC&I Sector

We have no data

EPR is fundamentally premised on being able to allocate end of life management costs to the correct obligated party. In doing so, the following information is required:

1)     Who are the generators?

2)     What is the total quantity of material being generated/recovered (by sector and by generator)

3)     What types of material (composition) are being generated/recovered (by sector and by generator)

4)     How is waste currently being managed? (who is collecting it, where does it go, where does it end up etc.)

5)     How much does it cost to manage? (Including costs by activity type – collection/sorting/baling)

At present, there is no reliable data regarding the aforementioned data points with respect to the IC&I sector. We know neither the size nor scale of the issue, and have no ability to track how waste is managed throughout the system.

In the absence of having this data, is it is virtually impossible to determine what the steward obligation should be, or how to allocate those costs to individual stewards.

We don’t have the administrative infrastructure

Collecting the necessary data (including who is responsible for gathering this information, who owns it, and how this data is verified/vetted) is something that needs to be figured out before we can even begin to have conversations surrounding expanding the Blue Box into the IC&I sector.

Further to that point, the province also needs to be able to know the roles and responsibilities of affected stakeholders regarding quantifying and allocating costs to the appropriate steward.

Given the sheer # of producers who operate in the IC&I sector, the administrative externalities associated with the above activities are enormous, and are costs that have yet to be quantified when estimating what the increase in the steward obligation may be.

We don’t know if we have the infrastructural capacity

At present, the province has no way of knowing whether there is sufficient capacity within the existing system to accommodate for increases in diversion attributable to any legislative changes. With respect to material recycling facilities for printed paper and packaging, we do not even have a list of all the private and public facilities in the province, nor do we have any estimates surrounding their approved and existing capacity.

It seems entirely plausible that capturing more PP&P from the IC&I sector would require infrastructural investments to expand system capacity (for both collection and processing), which is a cost that has not been quantified.

Ministry staff have indicated that proposed changes are not intended to take effect for 6 years, and as such, it is impossible to understand what system capacity will be then, and what changes will need to be made now. This is not an adequate answer – the decision to invest in infrastructure, even if those changes are not anticipated for another 6 years, is something that needs to be planned for now. As an example, if we know that the proliferation of light weight and composite plastics is likely to increase over time, then significant changes will have to be made to existing infrastructure will be required (although I personally feel that spending money trying to capture these materials is a fools errand).

It is not good enough to say “I don’t know what the future will look like, but you will have to pay that bill when it comes due”.

Material from schools, long term care facilities and multi-residential sectors are heavily contaminated

According to waste audits conducted for these sectors, contamination rates are significantly higher for the recycling stream when compared to waste generated from single family homes.

Schools and long term care/retirement facilities struggle with fiber contamination in particular, which significantly impairs its value, or in some instances, makes it completely unrecyclable. As such, an expansion of the steward obligation into these sectors is likely to result in an even more acute escalation in costs (beyond what has been estimated), as revenues received from the sale of collected recyclables is likely to be depressed.

Markets for recyclables are deteriorating, and an expansion is going to make it worse

Setting aside concerns surrounding contamination and its negative effect on revenue, there is also the practical issue that collecting more printed paper and packaging from the IC&I sector is going to exacerbate already deteriorating prices for recyclables.

Beginning with the Chinese sword and further compounded by the global economic slowdown resulting from COVID, prices for most PP&P is languishing. As a result, any proposed legislative change that is likely to result in more recyclable material being marketed is going to make a bad situation even worse. With that being said, that is not necessarily an outcome that needs to be avoided – as noted earlier, allowing commodity markets to operate freely is likely to result in the most economically efficient outcome.

However, lower prices for recyclables poses significant challenges to domestic recycling brokers and re-processors, which necessitates that any legislative change that can potentially affect commodity prices is approached with caution.

Existing estimates surrounding the cost of expanding the steward obligation assumes a fixed IC&I material management cost

Current estimates by the ministry surrounding the proposed expansion of the Blue Box into the IC&I sector does not take into account the composition of material from these sectors. The general expectation is that stewards will be obligated for the total system cost of servicing these sectors, and will negotiate individual relationships with PROs for how this material gets managed.

For as much as I can understand and appreciate that the obligation does not refer to specific material categories, we cannot in good faith estimate a cost for servicing these sectors without taking into consideration what materials are generated by these sectors.

Collecting uncontaminated office paper from Office Buildings is fundamentally different than collecting a mixed bale of contaminated fiber and tetrapaks from a school yard. The delta in material management costs is enormous. To say that we don’t need to take that into consideration when developing our existing estimates completely ignores the reality of the situation.

No one size fits all approach

A sentiment expressed earlier is that not all materials are created equal, and neither is all recycling. So with that in mind, why should legislation treat all materials the same way?

Proposed legislative changes under the Blue Box transition has the potential to adversely affect a significant number of stewards, particularly those who manufacture light weight and composite plastics. However, these same changes are being embraced by beverage stewards, who are looking to capture as much material as they can from both the residential and IC&I sector. Ideally, legislation should be able to allow stewards the approach that yields to most economic and environmentally sustainable outcome, while ensuring that they meet their legislative requirements.

This is why it is so critical that the goals of Blue Box legislation should be outcome based (total carbon abated) as opposed to tonnage based (recycling/diversion rates). It is possible to recycle less material in an absolute sense, but achieve a superior environmental and economic outcome by prioritizing certain materials for recovery.

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About the Author

Calvin Lakhan, Ph.D, is currently co-investigator of the “Waste Wiki” project at York University (with Dr. Mark Winfield), a research project devoted to advancing understanding of waste management research and policy in Canada. He holds a Ph.D from the University of Waterloo/Wilfrid Laurier University joint Geography program, and degrees in economics (BA) and environmental economics (MEs) from York University. His research interests and expertise center around evaluating the efficacy of municipal recycling initiatives and identifying determinants of consumer recycling behavior.

New York Enacts Legislation Requiring Paint Manufacturers to Establish a Program for Collection and Recycling of Unused Consumer Paint

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Written by Aaron Goldberg and Sarah Kettenmann , Beveridge & Diamond PC

New Yorkers will soon have a convenient way to ensure that their unwanted and unused paints are properly recycled. On December 16, 2019, Governor Cuomo signed into law the Postconsumer Paint Collection Program, a law that requires paint producers to collect, transport, reuse, recycle, and properly dispose of postconsumer paint in an environmentally sound manner. It applies to “architectural paint,” or “interior and exterior architectural coatings sold in containers of five gallons or less.” Architectural paint does not include industrial, original equipment or specialty coatings.

The law requires paint producers (either individually or collectively, for example through a non-profit organization) to register with the New York Department of Environmental Conservation (“NYDEC”) by July 1, 2020, and pay a registration fee. As part of the registration process, each producer or collective organization must submit its plan to comply with the new law, including its paint acceptance program, treatment, storage, transportation and disposal plan, and a list of locations within New York where consumers may drop off unused paint (which may include some municipal waste collection facilities, retail stores, and other facilities). 

Within 6 months after NYDEC approves the plan (or by January 1, 2021, if that comes later), the producers or collective organization must begin to implement their plans for collection and recycling/reuse/disposal of unused consumer paint. Paint manufacturers must also provide educational materials to help raise consumer awareness of the unused paint collection program.

The program will be financed by a new fee added to the price of architectural paint sold to retailers and distributors in the state (which may be passed on to consumers). The collection sites identified in the plan of the producers or collective organization are prohibited from charging for receipt of the postconsumer paints.  

Other states have already enacted similar paint stewardship programs, with help from the American Coatings Association and the Product Stewardship Institute.

This law is yet another step forward for New York’s growing Product Stewardship Initiative to address the health, safety, environmental, and social impacts of products and their packaging throughout all lifecycle stages. The State has adopted mandatory product stewardship requirements for managing several categories of products at their end of life, including electronics, rechargeable batteries, and mercury thermostats.  It has more limited programs for other end-of-life products, including beverage containers, cell phones, plastic bags, lead acid batteries, and waste tires.

This are was republished with the permission of the authors. It was first published on the Beveridge & Diamond website.


Aaron Goldberg applies his encyclopedic knowledge of hazardous waste regulatory law to help companies comply under federal and state laws—throughout all 50 states—and abroad. He holds an advanced degree in chemistry, has extensive training in economics, and is a former U.S. Environmental Protection Agency consultant. His unique, multidisciplinary background—law, science, economics, and government—informs nearly every aspect of his work and makes him a useful bridge between attorneys, engineers, business managers, consultants, and regulators.

Sarah Kettenmann uses her knowledge of environmental law and the physical sciences to help clients solve complex problems in a conservation-minded manner. She maintains a diverse environmental practice, which includes litigation matters involving toxic torts and products liability and class action litigation concerning environmental and regulatory claims. Her regulatory practice includes advising clients on compliance with, and enforcement of, land use restrictions and remediation, and due diligence for waste facility permits under federal and state statutes. She also counsels clients on procedural and substantive aspects of permitting and environmental impact review, and related strategic planning for project development.

Halifax Regional Council considering extended producer responsibility program

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In an effort to manage the cost of managing municipal solid waste generated within the Halifax, Nova Scotia regional municipality, the Regional Council is considering making package producers responsible the their waste.

In a recent report from the Halifax Regional Municipality (HRM) Environment and Sustainability Standing Committee the utilization of fees on package producers is considered.

The recent report is an update to previous reports and staff presentations outlining the opportunities and challenges for HRM with full Extended Producer Responsibility (EPR) for packaging and paper products.

EPR is a policy approach in which a producer, who designs and markets a product and/or package, accepts the full cost, risks and liabilities for managing waste at the end of its lifecycle, instead of the municipal taxpayer. A producer has the greatest ability to prevent or reduce waste associated with packaging design.

In 2015, Halifax Regional Municipality spent nearly $110 million on its waste management program. That marked a 50 per cent increase in costs from a decade earlier and almost per cent of its entire budget.

The HRM report draws on the experience in British Columbia where glass bottles/jars, plastic film & bags and Styrofoam products were transitioned from the curbside to a depot drop off model as this was more efficient and cost effective for industry to deliver services.

Concurrently with the HRM Report, Nova Scotia Solid Waste Regional Chairs Priorities Working Group recently led the development of a report entitled: “Preserving the Culture of Recycling: A Proposal for Extended Producer Responsibility for Packaging and Printed Paper in NS” (NS EPR Proposal). The working group engaged with Nova Scotia Federation of Municipalities (NSFM) members, industry and business stakeholders and submitted the NS EPR Proposal to NS Environment Minister Gordon Wilson on May 30, 2019. The NS EPR Proposal responds to NS Environment’s request for a model that demonstrates consensus amongst municipalities and businesses and has sufficient detail for the province to consider public policy impacts. The report identifies how a model could work for NS to further enhance success in diversion.

Nova Scotia’s solid waste-resource management regions

For the 2018/2019 budget year, the HRM recycling program cost a net $6 million based on cost of collection and processing of $7.8 million and revenues from recyclables of $1.8 million. Through the implementation of an EPR program, the HRM would save $6 million per year is currently spends on the recycling program.

Making Producers Pay – From Stewardship to Innovative EPR Programs in Canada

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Written by Mark Youden and Maya Stano, Associate Lawyers at Gowling WLG

Product and packaging waste is increasingly drawing public attention across the globe. This stems, in part, from a growing awareness of massive plastic pollution accumulation zones in our oceans, government bans of single use plastics, China’s recent import ban on scrap plastics, and news of the Philippines wanting to return Canadian “recyclables.”  In this era, governments are increasingly turning to innovative waste management and diversion policies and laws.

To date, Canada has focused on two approaches for managing products and their packaging at end-of-life: (1) extended producer responsibility or “EPR”, and (2) product stewardship programs. For the most part, these programs (which cover various categories) fall under provincial jurisdiction.    

To varying degrees, these programs shift the end-of-life waste responsibility away from governments (and tax payers) and on to producers (e.g., brand owners, manufacturers and first importers).  Depending on the program, this responsibility includes reporting and funding (at least in part) the management of the waste created by their products.  

Stewardship versus EPR

Although often used interchangeably, there are key policy differences between product stewardship and EPR programs (as well as significant corresponding financial implications for companies). Generally speaking, EPR programs place responsibility (and costs) on product producers, whereas product stewardship programs generally rely on consumer-paid environmental fees or public funds. Although the emphasis in Canada has historically been on product stewardship programs, there is a growing shift towards transforming those initiatives to full-fledged EPR programs. Such EPR programs place full responsibility for designing, operating and financing diversion programs, and accountability for the program’s environmental performance, on producers.  The concept is intended to incentivize companies to not only bear responsibility for, but actually reduce, their product waste footprint (e.g., through recyclable product and packaging innovation).

Status of EPR Programs

Provincial Level

In 2014, British Columbia became the first jurisdiction in Canada to implement an EPR system making producers fully responsible for funding and managing curbside and drop-off recycling programs for packaging and printed paper. Under the province’s Environmental Management Act and Recycling Regulation, producers must recover 75% of the paper and packaging they produce, and face fines if they don’t achieve this target.

Full EPR programs have not yet been implemented in other provinces – some provinces do require producers to pay for part of their recycling, but none outside of BC require producers to manage the actual system. At the local level, municipalities often bear the burden of dealing with urban waste generation, and towns and cities are increasingly expressing support for full EPR implementation to help cover the costs of expensive recycling programs. For example, the City of Calgary recently passed a motion to push the province into looking into EPR programs. 

Similarly, in Ontario producers are required to pay for 50% of the recycling system, but municipalities are actively calling for a full EPR model. In 2016, Ontario passed a groundbreaking bill that instituted an EPR requirement for all product categories. The bill also sought to prevent producers from discharging their liabilities to a third party, thereby making them fully responsible. These efforts culminated in the adoption of several new laws, including the Waste Diversion Transition Act, 2016 (which includes payments to municipalities to cover their costs associated with the blue box recycling program), and the Resource Recovery and Circular Economy Act, 2016 (which led to the development of the Strategy for a Waste-Free Ontario: Building the Circular Economy).

Federal Level

At the federal level, the Canadian Council of Ministers of the Environment began taking action in the late 1990’s in regard to its waste reduction target of 50% of the product waste that is placed into the market. Since 2004, the CCME has published several reports, analyses, studies, tools and progress reports in regard to the Canada-wide Action Plan for Extended Producer Responsibility, with product packaging recognized as a priority in that plan.

International Level

EPR has a long history in Europe, where it has existed in varying forms since 1990. Sweden and Germany led the way by encouraging industries that made and sold products to be responsible for the waste stage of those products. EPR programs subsequently spread to other EU countries and beyond.

Challenges with recycling recently led to the EU’s approval of a law banning 10 types of single-use plastics by 2021 as part of its shift towards a circular economy (which aims to keep resources in use for as long as possible, extract the maximum value from them whilst in use, and recover and regenerate products and materials at the end of each service life). Canadian federal MP Nathan Cullen has recently introduced a private member’s bill, Bill C-429, the Zero Waste Packaging Act, which seeks to follow the EU lead.1 Stay tuned on the progress of those efforts as they evolve here in Canada.

The Spotlight on Product and Packaging Waste

A dispute between the Philippines and Canada has recently drawn attention on Canada’s product and packaging waste system.  In April 2019, the Philippines demanded that Canada take back shipping containers full of waste and recyclable plastics. Canada originally argued that it is not responsible for returning the waste that was shipped. This dispute, spanning over 5 years now, is complicated by obligations under international law (including the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, 1992).  As threats from the Philippines President escalated in late April 2019, Canada offered to accept and pay for the return of close to 70 shipping containers.Those containers are now on their way back to Canada. 

This international dispute has placed the spotlight on the state of recycling in Canada (as many did not realize Canada ships its waste elsewhere).  This, coupled with the public criticism over the effectiveness of Canada’s recycling regime, could spark local governments to expedite implementation of waste reduction policy and full-EPR programs. 

In summary, EPR and product stewardship programs are here to stay and will increasingly impose significant requirements on product producers.  Our Gowling WLG team has extensive experience in the detailed requirements that must be followed to ensure legal compliance. Should you have any concerns or questions regarding your company’s product stewardship and EPR duties, please contact one of our knowledgeable team members.


1 https://www.parl.ca/DocumentViewer/en/42-1/bill/C-429/first-reading#enH123


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.

About the Authors

Mark Youden is an associate lawyer in Gowling WLG’s Vancouver office, practising in the firm’s Environmental and Indigenous Law groups. Mark is called to the bar in British Columbia, Alberta and Ontario and advises a wide range of clients on all aspects of environmental, Indigenous and regulatory law issues.

Prior to studying law, Mark obtained a Master of Science focused on biophysical interactions and the fate of contaminants in terrestrial and aquatic systems. He also worked as an environmental consultant for an international engineering firm.

Mark’s scientific expertise and multidisciplinary approach to the law help him provide clients with practical solutions to complex environmental and Indigenous law matters.

Maya Stano is a Vancouver-based Gowling WLG associate lawyer who practises natural resource, environmental and Indigenous law.

Maya has a wide range of legal experience assisting individuals, companies and Indigenous Nations and other levels of governments on natural resource projects, including mining, forestry, large and small scale hydro projects, oil and gas projects, and nuclear projects. Maya provides timely and effective advice at all stages of project life, from early planning and tenure applications, through construction, operations and final closure, decommissioning and reclamation. Maya’s services cover due diligence matters, permitting (including environmental assessments), land rights (including leases and other land access and tenure agreements), regulatory compliance, and engagement and agreement negotiations between First Nations, the Crown and proponents.

Maya also assists Indigenous Nations in various government-related matters, including drafting laws and bylaws, drafting and implementing trust instruments for sustainable long-term financial management, managing land use and rights on reserve, and working with land codes and other governance matters.

Maya studied law at the University of British Columbia, graduating with a specialization in environmental and natural resource Law. After graduation, Maya clerked at the Federal Court of Canada for the Honourable Mr. Justice John A. O’Keefe. Concurrently, she completed an LLM at the University of Ottawa, focusing on the legal implications associated with lifecycle management of metals.

Maya is also a professional geological engineer and previously worked on mining projects both domestically and abroad, as well as on contaminated sites across British Columbia, and on oil and gas projects in northern Alberta.

Ontario Government’s Proposed E-Waste & Battery Regulations

The Government of Ontario is consulting on proposed regulations for specified waste electrical and electronic equipment (WEEE) and used batteries under the Resource Recovery and Circular Economy Act, 2016.
 
The new regulations will affect participants of the current Waste Electrical and Electronic Equipment Program operated by Ontario Electronic Stewardship (OES).
 
The Ontario government has directed OES to wind up its operations to support the transition of the current waste diversion program for electronics to a new system that makes producers environmentally accountable and financially responsible for their products at end-of-life.

The proposed regulations would require:

  • producers to establish free collection networks for consumers
  • producers to achieve resource recovery (i.e. reduction, reuse and recycling) targets
  • producers to provide promotion and education materials to increase consumer awareness
  • producers and service providers to register, report and keep records and meet other requirements

The regulations would also encourage producers to reduce waste associated with the regulated products they supply into the Ontario market.

Review the draft regulations and register for a consultation webinar.

The Resource Productivity and Recovery Authority will be the regulator mandated by the Government of Ontario to enforce the requirements of the new WEEE and used batteries regulations once they take effect.

Ontario Electronic Stewardship will continue to operate the current program without disruption until the proposed regulations take effect.

Extended Producer Responsibility for Textiles? Not So Fast…..

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Written by Calvin Lakhan, Ph.D, Faculty of Environmental Studies at York University

In the Ontario Environment Ministry’s Reducing Litter and Waste in Our Communities Discussion Paper, the question was posed:

What additional materials do you think should be managed through producer responsibility to maximize diversion?

Stakeholders from across the used textile collection sector highlighted textiles as being a potential candidate for extended producer responsibility (EPR).

Given the hundreds of thousands of tonnes of used textiles being generated annually, it seems only logical that producers should be tasked with the physical and financial responsibility for managing these items at their end of life.   

However, when the university was asked to take a position supporting a producer responsibility scheme for textiles, I hesitated.

I want to preface this by saying that I feel that producer responsibility has a place in promoting a circular economy – In theory,  EPR is supposed to encourage design for the environment (have producers use more sustainable materials), promote positive environmental outcomes (increased diversion), and contain costs (incentive to minimize costs associated with end of life management).

Would EPR for textiles achieve these desired outcomes?

Before answering this, let’s remember what EPR is actually designed to do –  EPR is a cost recovery tool to finance the operational and administrative expenses associated with managing a material at its end of life.

Steward fees (what industry pays to finance a producer responsibility program) is based on net cost of material management. As an example, the fees associated with Blue Box materials are in direct proportion to the system costs attributable to said material. For packaging like plastics film and polystyrene, producers pay an extremely high steward “fee” because the net cost of material management is in excess of $1500 a tonne. Conversely, aluminum producers do not pay any fees, as they have a negative net cost (the revenue received supersedes the cost of material management).

Why this matters for textiles is that at present, net cost of material management for textiles is negative. Due to the high value of used textiles as a commodity, numerous organizations from across the for profit/not for profit sector collect used textiles, using a range of collection mediums.

Textiles, unlike most other waste streams, are being collected by third party operators, even in the absence of material specific legislation. The value of used textiles results in a self-sustaining collection network that ultimately negates the need for cost recovery schemes such as extended producer responsibility.

There is even an argument to be made that the low diversion rates for textiles is attributable to a lack of opportunity and awareness among households (as opposed to a lack of organizations willing to collect the material).

At present, there are no *net* costs to recover for used textile collectors, and EPR becomes moot.

Where this situation may change is in situations where used textile collectors begins to incur operational expenses that exceed the revenue that they receive from the material. This could be attributable to any number of things – management of low grade materials that have minimal value at end of life, a decrease in commodity value (due to either increasing supply of used textiles, or decreases in demand), and the development of domestic processing/recycling capacity that require infrastructural investments.  In these instances, EPR could be seen as a potential cost recovery tool.

Practical challenges to implementing a producer responsibility scheme for textiles

If EPR is adopted at a provincial (or national) scale, we must be cognizant of the enormous administrative challenges of developing such a program. The creation of an IFO/ISP, calculating and collecting fees, disbursing fees to service providers etc. are all necessary steps when developing a producer responsibility program.

Furthermore, the technical challenges of being able to readily quantify end of life material management costs, and then allocating those costs to specific stewards will require a fundamental overhaul in how we collect and interpret data related to textile generation/recovery. Of note, all EPR programs differentiate fees based on product or material type (i.e. a fee for a television is greater than the fee for a cell phone because of the differences in end of life management costs). This process would need to be replicated for all textile types being sold into the market in order to correctly allocate costs.

Simply put, formal programs for textile diversion are in their infancy, and we are still a long way from having the understanding to conceptualize what a producer responsibility scheme might look like. To provide context, Ontario’s Blue Box, which has had a (partial) producer responsibility scheme for the better part of two decades, continues to struggle with how to reconcile the opposing interests of both stewards and municipalities. It is a highly contentious process that is fraught with difficulty as stakeholders try to determine what is fair and reasonable.

Be careful what you wish for

While most stakeholders involved in used textile collection advocate for EPR, it is important to keep in mind that under a 100% EPR model, stewards will assume ownership of all recovered materials. While yes, they will be physically and financially responsible for all end of life material, they will also be entitled to the revenue received from the sale of that material.  

At present, it is unclear what the implications of a 100% producer responsibility model would be for used textile collectors, particularly in the charitable/not for profit space. Stewards may ultimately decide to rely on the existing collection networks in place (as opposed to doing it themselves), and designate certain organizations as a preferred service provider. It is entirely possible that charities/not for profits would then compete with other collectors to be a service provider, essentially reverting to a “bid/tender” process.

What should we do?

While the future of textile legislation, and what role EPR should play remains unclear, the key to developing a sustainable, circular textile market lies in flexible, non-prescriptive legislation. A necessary first step is to designate textiles as a priority material, but leave it up to the market to organically develop solutions to keep material out of landfill, and maximize the economic, environmental and social impact of recovery. Rapid changes in textile end markets, the types and quantities of textiles being generated, and technologies to recycle/reprocess textiles requires legislation that can grow and adapt to reflect the conditions of an evolving market place.

Note: This article reflects the sole opinion of the author. He does not speak on behalf of the university or any of its stakeholders.


About the Author

Calvin LAKHAN, Ph.D, is currently co-investigator of the “Waste Wiki” project at York University (with Dr. Mark Winfield), a research project devoted to advancing understanding of waste management research and policy in Canada. He holds a Ph.D from the University of Waterloo/Wilfrid Laurier University joint Geography program, and degrees in economics (BA) and environmental economics (MEs) from York University. His research interests and expertise center around evaluating the efficacy of municipal recycling initiatives and identifying determinants of consumer recycling behavior. Calvin has worked as both a policy planner for the MOECC and as a consultant on projects for Stewardship Ontario, Multi Material Stewardship Manitoba, and Ontario Electronic Stewardship. Calvin currently sits on the editorial board for Advances in Recycling and Waste Management, and as a reviewer for Waste Management, Resources Conservation and Recycling and Journal of Environmental Management

Europe Announces ban of Single Use Plastics and Extends Extended Producer Responsibility Programs

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The European Parliament recently agreed on the ambitious measures proposed by the European Commission to ban selected single-use products made of plastic as well as introduce extended producer responsibility (EPR) for new products.

The new rules are an attempt to lesson marine pollution by plastic and abandoned fishing gear and oxo-degradable plastics.

Once the rules are in place, cotton bud sticks, cutlery, plates, straws, stirrers, sticks for balloons that are made of plastic will be banned in the European Union (EU).

The new rules also ban cups, food and beverage containers made of expanded polystyrene and on all products made of oxo-degradable plastic. Oxo-degradable plastics are made of petroleum-based polymers(usually polyethylene (PE)) that contain additives (usually metal salts), which accelerate their degradation when exposed to heat and/or light. The argument for banning oxo-degradable plastics is that they are similar to conventional plasticmaterials but have artificial additives. They do not actually biodegrade but merely fragment into small pieces and potentially harm the environment and endanger recycling and composting operations.


While often confused with biodegradable plastics, oxo-degradables are a category unto themselves. They are neither a bioplastic nor a biodegradable plastic, but rather a conventional plastic mixed with an additive in order to imitate biodegredation.

The new rules include EPR schemes for cigarette filters and fishing gear.
Producers of cigarettes with filters (the filters are not biodegradable) will help cover the costs of waste management and clean-up. Producers of plastic fishing gear will be required to cover the costs of waste collection from port reception facilities and its transport and treatment. They will also cover the costs of awareness-raising measures.  Producers will also be given incentives to develop less polluting alternatives for these products

Single-use drinks containers made with plastic will only be allowed on the market if their caps and lids remain attached. Also, the diversion target for plastic bottles was set at 90% by 2025. One method to achieve the high diversion rate is deposit refund schemes.

The rules on Single-Use Plastics items and fishing gear, addressing the ten most found items on EU beaches place the EU at the forefront of the global fight against marine litter. They are part of the EU Plastics Strategy – the most comprehensive strategy in the world adopting a material-specific lifecycle approach with the vision and objectives to have all plastic packaging placed on the EU market as reusable or recyclable by 2030. The Single-Use Plastics Directive adopted by the European Parliament today is an essential element of the Commission’s Circular Economy Action Plan as it stimulates the production and use of sustainable alternatives that avoid marine litter.

Vice-President Jyrki Katainen, responsible for jobs, growth, investment and competitiveness, added: “Once implemented, the new rules will not only prevent plastic pollution, but also make the European Union the world leader in a more sustainable plastic policy. The European Parliament has played an essential role in laying the foundation for this transformation and in giving a chance to the industry to innovate, thus driving forward our circular economy.”

The Single-Use Plastics Directive voted on by the European Parliament today tackles directly marine litter thanks to a set of ambitious measures:

  • A ban on selected single-use products made of plastic for which alternatives exist on the market: cotton bud sticks, cutlery, plates, straws, stirrers, sticks for balloons, as well as cups, food and beverage containers made of expanded polystyrene and on all products made of oxo-degradable plastic.
  • Measures to reduce consumption of food containers and beverage cups made of plastic and specific marking and labelling of certain products.
  • Extended Producer Responsibility schemes covering the cost to clean-up litter, applied to products such as tobacco filters and fishing gear.
  • A 90% separate collection target for plastic bottles by 2029 (77% by 2025) and the introduction of design requirements to connect caps to bottles, as well as target to incorporate 25% of recycled plastic in PET bottles as from 2025 and 30% in all plastic bottles as from 2030.

The proposed Directive follows a similar approach to the successful 2015 Plastic Bags Directive, which brought about a rapid shift in consumer behavior. The EU claims that , when implemented, the new measures will bring about both environmental and economic benefits. The economic benefits claimed by the new rule implementation include €22 billion in avoidance of environmental damage by 2030 and €6.5 billion to consumers in savings in the form of reduced waste treatment by public authorities.

Next steps

Following this approval by the European Parliament, the Council of Ministers will finalise the formal adoption. This endorsement will be followed by the publication of the texts in the Official Journal of the Union. The Member States will then have two years to transpose the legislation into their national law.

Consultations begin on Ontario Electronic Stewardship’s Wind-Up Plan

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The Ontario Resource Productivity and Recovery Authority (RPRA) is consulting with stakeholders and the public on Ontario Electronic Stewardship’s (OES) Wind-Up Plan for the Waste Electrical and Electronic Equipment (WEEE) Program. Public comment on the 85-page OES Wind up Plan will be accepted by the RPRA until April 18th.

Background on the Ontario Electronic Stewardship

Ontario Electronic Stewardship (OES) is an Industry Funding Organization (IFO) designated to operate the waste diversion program for waste electrical and electronic equipment (WEEE) under the Waste Diversion Transition Act, 2016 (WDTA). Since its inception in 2009, the WEEE program has diverted over 67 million electronic devices or over 500,000 tonnes of waste electronics from Ontario landfills. The WEEE program promotes the re-use and refurbishment of waste electronics and ensures that the valuable resources found in waste electronics, that cannot be re-used, are processed and recycled in an environmentally responsible manner.

Why is OES being wound up?

In 2016 the Ontario legislature passed the Resource Recovery and Circular Economy Act, 2016 (RRCEA) which creates a new legislative framework for managing waste in Ontario. Current waste diversion programs and related IFOs, such as Ontario Electronic Stewardship, will be wound up subject to provisions under the WDTA. Under the RRCEA, producers will be responsible for the implementation of new waste diversion programs that must meet recycling targets and objectives established under that Act.

Under the WDTA wind up process IFOs are required to develop wind up plans in accordance with specified statutory requirements once directed to do so by the Minister. Subsection 14 (13) of the WDTA requires IFOs to consult with stewards, municipalities and other stakeholders affected by termination of the program in developing wind up plans. IFOs submit wind up plans to the Resource Recovery and Productivity Authority (RPRA) which reviews and approves the plan if it is consistent with the Minister’s direction and statutory requirements.

In February 2018, OES received direction from the former Minister of Environment and Climate Change to wind up the WEEE program by June 30, 2020. (Note: In July 2018 the Honourable Rod Phillips, Minister of Environment, Conservation and Parks, assumed responsibility for administering the RRCEA and WDTA statutes.)

What’s Next in Ontario with respect to WEEE?

After wind up, electrical and electronic equipment will be managed under a new, mandatory individual producer responsibility (IPR) framework. This means that producers of electrical and electronic equipment will be responsible for ensuring their products and packaging are collected and reused or recycled at end-of-life. The RPRA is mandated by the Government of Ontario to oversee the wind up of Ontario’s current waste diversion programs and enforce IPR requirements.

Public Information and Feedback Sessions

The RPRA is hosting several sessions to present key elements of the plan for feedback and to answer any questions you may have. The sessions are open to all WEEE Program participants, municipalities, the public and other interested stakeholders.

The RPRA is encouraging all interested organizations and persons to attend to learn more about the wind-up, the new framework for electrical and electronic equipment.

The sessions consist of a presentation that will explore key aspects of OES’s proposed wind-up plan and there will be time for your questions. The Authority will also consult on OES’s revised projection for program surplus, which is based on information that was not available at the time of OES’s consultations.

The schedule for public consultations can be found in the table below.

LocationDate and TimeRegistration
WebinarThursday, March 21
1 p.m. – 3 p.m.
Register here
LondonFriday, March 22
10 a.m. – 12 p.m.
Register here
Ottawa (Kanata)Wednesday, April 3
9 a.m. – 11 a.m.
Register here
North BayThursday, April 4
9 a.m. – 11 a.m.
Register here
TorontoTuesday, April 9
9 a.m. – 12 p.m.
Register here
WebinarWednesday, April 10
10 a.m. – 12 p.m.
Register here

Feedback on the Wind-Up Plan is due by 5 p.m. on Thursday, April 18. You can provide feedback via email to [email protected].

Ontario: Orphaned Eco-Fees Raises Legal Questions for Electronics Industry

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by Jonathan D. Cocker, Baker McKenzie

Ontario’s waste electrical and electronic equipment (e-waste) stewardship obligations are being transitioned to a circular economy legal regime.  The government-overseen e-waste program is being wound-up and will effectively cease as of June 30, 2020. The program has managed to generate such a surplus of funds from consumers it otherwise would pay the electronics recycling industry that it’s obtained approval from the Ontario government to grant the industry, and presumably in turn, consumers a “fee holiday” in order to expend the surplus. The fee holiday started on February 1st, 2019 and runs until June 30, 2020.

This means no eco-fees (or Environmental Handling Fees) on electronics are to be charged and remitted for the next 17 months when the program ends.

No Relaxation For Electronics Industry During Fee Holiday

But what if the electronics supply chain and retailers somehow continue to pass the now orphaned eco-fee down the supply chain and ultimately to consumers in spite of industry’s inability to remit it.  Most consumers will not likely be aware of this reprieve in obligation. Most suppliers and retailers have systems already programed to charge the fee. It’s not clear any regulatory authority is actively policing industry on this. So if it’s business as usual in electronics sales, where will the money go and what are the risks?

Whose Money Is it Anyway?

The e-waste program, like all government-overseen plans in the province, funds its ongoing program costs with an eco-fee cost imposed upon consumers. The rates are rigidly set and the supply chain and retail parties simply pass the eco-fee through to point-of-sale and then remit to the program. No risks or rewards are assumed by these parties and there is no opportunity to internalize or otherwise alter the eco-fee for competitive or profit purposes.

The fees have not been, and cannot credibly be claimed as, margin adjustments when charged in an identical manner to unwitting consumers.  It would be difficult for industry to claim title to the monies, whether as an advance or an investment. The monies are simply consumer overpayments relative to the costs of the soon-to-be-defunct program, and the amount at issue is not insignificant. Orphaned eco-fees which could be passed to consumers during the holiday could potentially be as high as one hundred million dollars.

Duty of Care for Orphaned Eco-Fees

As the e-waste program can no longer accept eco-fees charged after February 1st, 2019, it raises questions as to what proactive measures the electronics industry, including brand owners and importers, must take to ensure no such fees continue to be passed on to consumers who should otherwise be enjoying the fee holiday they’ve effectively funded.

Ignorance of the holiday may not protect electronics companies. Through their participation in the e-waste program, industry will be deemed to have knowledge that any post-February 1st, 2019 eco-fees are effectively orphaned.  Nor are any parties clearly insulated from risk. Continued charging of the eco-fee by supply chain parties, effectively compelling retailers to recapture the costs from consumers, may also create legal uncertainty. All parties may have a duty of care here.

Be Neither Recipient Nor Beneficiary of Orphaned Eco-fees?

Resetting systems and processes to eliminate the eco-fee will be laborious. Instead, some parties within the electronics industry may be inclined to accrue the orphaned eco-fee for a future mutually-beneficial use, such as supporting industry-segmented private producer responsibility organizations which will rise from the ashes of the government program. This, however, may appear as industry doing indirectly what it cannot do directly and may not be defensible if and when someone comes asking about the treasure trove of orphaned fees.

It’s clear that the 17-month fee holiday journey to a private circular economy model for electronics provides no time off for industry.  It must act now to address any unsanctioned charging of orphaned eco-fees.  The holiday has already started.


About the Author

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