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New Year's predictions


A news item that I posted recently under Headline News states that Stewardship Ontario forwarded cheques totaling $12.8 million at the end of December to municipalities to share the cost of implementing and operating Ontario’s municipal blue box recycling system.
Turns out, the December payment is the third this year, bringing the total for the 2005 program year to $51 million. The grand total since the funding program started three years ago is $81 million.
You can read the news item to learn the details, and you can get the specific breakdown of how much each municipality received via the websites mentioned at the end of the news item. (For your conveniece, I’ve pasted the news item at the end of this entry.) However, the news item provoked a philosphical thought in me.
Some critics (including me at times) charge that the blue box funding scheme is something of a sell out, with certain industries off the hook, perverse consequences in which the good guys get punished for recycling more (think “paper”), and (worst of all) industry paying only 50 per cent of net recycling costs (whereas in real producer responsibility they should pay all the costs, some say). Yet I have to admit (for once!) that when you step back and think about it, from a macro perspective, this is really incredible news.
I mean, this just isn’t happening in the United States, or in most Canadian jurisdictions (yet). Let’s set aside the complex issues of EPR and product stewardship schemes for used oil, batteries, paint, tires, etc. for a moment. It’s a Really Big Thing that in Ontario, municipalities are now splitting millions of dollars worth of cheques written by industry to offset the cost of recycling such things as used beverage containers, old newspapers, plastic peanut butter jars, and so on.
I know that I, for one, get so entangled in the minutae of recycling and funding issues that I sometimes lose sight of the bigger issue. What I’m getting at is this: A few decades ago, when someone bought a product and/or its packaging or container, that was the end of the matter. The material was thought to belong to the consumer, and they could either use it and keep it in their house, or discard it in the trash. The green garbage bags or metal container were emptied into the rear packer, and when the truck turned the corner, it was “out of sight, out of mind.” The cost of waste collection and disposal was paid for via municipal property taxes, and the garbage went to a landfill or incinerator. End of story. Okay, a high percentage of soft drink containers were once collected on deposit and even (gads!) refilled in a privately owned and operated bottling system that was arguably better from an environmental economics point of view. But again, let’s willfully ignore that for now.
Now look at what’s happening. Over time we have shifted, as a society, to a totally new paradigm about waste. We now consider only a minor fraction of discards to be true “garbage.” We now think of anything that’s recyclable or compostable as a kind of renewable resource, and we feel obligated to capture it and renew it via a recycling/composting infrastructure. We are willing to pay more for this, if necessary. But the most amazing thing is this development in blue box funding wherein we now believe that it’s the producer or brand owner’s responsibility to pay for the recycling. That it’s “their waste” and not just ours, the consumers’. Isn’t that incredible?
People are beginning to clue in, too, that our waste generation keeps rising, on both an aggreate and per capita basis, despite all our recycling. Higher energy costs, the requirement to divert waste from landfill, and (eventually) direct billing for disposal services are going to act in concert to take things to the next level, which will include genuine packaging and waste reduction, not just recycling.
Now let me make a prediction. (This is the New Year, after all.)
I predict that within ten years this paradigm will expand to include all “waste.” By 2015, I believe we’ll see the following. (And even though these concepts won’t be fully realized for ten years, we’re discussing them and making decisions right now — I predict 2006 will be a watershed year in that regard.):
1) Brand owners and first importers (let’s just call them “producers”) will pay 100 per cent (not just 50 per cent) of the net costs of recycling materials collected in the blue box (e.g., ferrous and non-ferrous metals, fibre, glass, plastic containers, etc.).
2) Producers will also pay 100 per cent of the net cost of any fraction of their materials that end up in landfill. In other words, they will fund the “bad” disposal as well as the “good” recycling/composting.
3) More producers will fund the net cost of more materials, to the point where essentially 100 per cent of what is managed in the waste stream, whatever its fate, will be funded one way or another by the producer. This will even be extended to organics. Grocers like Loblaws etc. will write cheques to help out with the cost of composting their green wastes. Since the consumer ultimately pays the tab, this will inspire change at the point of purchase and in the wholesale/manufacturing stages (which is really the whole point of producer responsibility programs).
4) Anything that can be managed in a return-to-depot deposit-refund system will be. Wine and liquor bottles will be handled in a system similar to that of the Brewers of Canada as illustrated by The Beer Store in Ontario. Watch for the emergence of new niche players in the soft drink business who will use the smart economics of local bottle refilliing systems (refillable PET, etc.) to cut into Coke and Pepsi’s business based on one-time-use “recyclable” containers. The niche players will succeed because eventually government policies in each province will make them more competitive, i.e., by imposing recycling levies to the extent that the current model (in which vast quantities of soft drinks are canned and bottled in large regional hubs) is not as appealing as local take-back systems. The soft drink companies will lobby against this like heck, but over time they’ll lose, especially because of the ongoing higher cost of energy and petroleum.
5) All of this will generate real reductions in packaging and waste volumes, because the producers will pay and the consumers will have a more direct economic signal about the cost of their wicked ways, in part because by 2015 all municipalities will directly bill for waste services, and the costs will no longer be buried in confusing property tax receipts. There will be more private contractors, but whether the service is delivered privately or publicly, new technology (and the requirement that households sort their garbage into different containers) will allow the service supplier to directly charge householders by the ounce for each material collected, with the net cost varying in real time according to shifting spot market prices for such things as aluminum, steel, glass, plastic, garden-quality compost, and so on. Entrepreneurs will gain a competitive advantage by offering customers specialized or more efficient services to take away their spent fluorescent bulbs, batteries, or other discards, either more cheaply than the municipal service provider, or actually paying for the materials because of a profitable market for the specific product. (I think this will be especially true of used computers and other “e-waste.”)
6) The new market will evolve a sea change in who are the big players. Large waste companies that currently see themselves as being in the “landfill” business, where profit margins are high and where recycling is sometimes a token activity, will become smaller players, except for those that seize the opportunity and become experts in product stewardship. Large companies often miss these kinds of changes, the most famous example being IBM’s blue suited executives and their failure to realize the importance of the personal computer, which allowed some hippy-ish young men with long hair, bears and jeans to become tycoons via Microsoft and Apple computers (among others). It may be that Bill Gates and his Microserfs are about to lose out in the next evolution, which is Internet-based instead of hardware driven, and in which people pay for software by subscription, on an as-needed basis, accessed on remote servers via their small “information appliance.” Similarly, by 2015, the waste management companies will no longer look like those of today. It will be less and less an industry of garbage trucks and landfill operators, and more and more a system involving agents and brokers coordinating a network of consumer and commercial markets with return-to-retail, return-to-depot, and direct pick up services. Their guild-like partners will be comprised of companies like HP, Dell, Safety-Kleen, Toyota, Google, eBay and companies that haven’t been formed yet. The various consortia will be linked in a high-tech wireless communications system and will include oil re-refiners, pulp and paper mills, electronics equipment manufacturers, bottle refillers, and “soil farmers” turning organic waste into garden compost and rich loam to rehabilitate desertification-affected areas in other countries. I imagine a network of small vans and UPS-type trucks picking up discards and delivering materials to recyclng plants, farms, airport or truck hubs, in place of rear packers and front-end loaders going to transfer stations and landfills. Whatever landfills are around will be high-tech operations, generating power from methane and mining the incoming material for valuable materials left over from front-end programs. Many of these may move to offshore locations in places like China and India that will receive container loads of that small fraction of urban waste not diverted by the North American system.
7) There will be, for a period of time, a sharp divergence between Canada and the United States in this area as Canada moves more rapidly toward a European-style system with lots of product stewardship and EPR programs. Companies that do business on both sides of the border, and act as though Canada and the USA are just one big market, could get into trouble. Niche players will grow rapidly by recognizing the distinct Canadian opportunity, and will then grow into the United States as it too, eventually, embraces the product stewardship model.
Much of what I’ve written above sounds fanciful today. Some of it may not play out as I have written, or the time frame may be different. But if you’re a doubter, think about this: Companies are now writing millions of dollars worth of cheques to muncipalities to underwrite the net costs of curbside recycling. Many product stewardship policies and schemes are coming on stream. Within only a couple of years, Canada’s most populated provinces will be expected to divert more than 60 per cent of their waste from landfill. Would a householder have imagined or believed this in, say, 1965? I doubt it. Back then, garbage issues were about keeping racoons out of the tin trash can, or headlines about the mob controlling “stops” on private hauling routes.
It’s incredible where we were, where we are now, and where we’re headed. I expect my own career as a journalist in this niche will last about the timeframe I’ve just described. When I retire (or, more likely, just decide I can afford to move on to pursue other interests) in or around 2015, it’ll be interesting to reflect back on this blog posting, and see whether I was right or wrong.
Now here’s the news item that got me started down this path:


Ontario blue box funding update
Stewardship Ontario will be forwarding cheques totaling $12.8 million at the end of December to municipalities to share the cost of implementing and operating Ontario’s municipal Blue Box recycling system.
“The December payment is the third this year. The fourth and final $12.8 million payment for the 2005 program year will be sent to municipalities at the end of March, 2006, bringing the total payment for 2005 to $51 million, and the grand total since the funding program started three years ago to $81 million,” announced Damian Bassett, CEO of Stewardship Ontario.
Obligated companies, called “stewards,” are those which introduce packaging and printed materials into the Ontario market that are managed through the municipal waste management system. These companies are required under the Waste Diversion Act, 2002 to report the amount of packaging and printed paper they put into the Ontario residential marketplace and to pay fees set by Stewardship Ontario.
“In 2005, more than 1,800 companies were identified as stewards,” Bassett added. “Each year the number of stewards grows as additional obligated companies are identified.”
Stewardship Ontario is the industry funding organization that collects the fees from obligated companies and distributes the funds to municipalities.
“The success that Stewardship Ontario has had in meeting its financial obligations to municipalities clearly demonstrates that the Blue Box Program Plan, the first program plan approved by Waste Diversion Ontario, is working,” said Glenda Gies, Executive Director of Waste Diversion Ontario (WDO).
The calculation of the funding allocated to each municipality is undertaken by WDO, based on information municipalities provide through an annual waste management datacall. Funding is based on:
1) quantity of each type of packaging and printed material marketed by each municipality
2) population density of each municipality, and
3) size of operation of each program.
The funding allocated to each municipality is published on the WDO website at www.wdo.ca
In addition to the direct cash payments, a further $5.7 million is available to municipalities this year (for a total of $9 million over the first two years) through the Effectiveness and Efficiency (E&E) Fund. Each year, 10 per cent of the stewards’ fees are placed in the E&E Fund to provide competitive grants to municipalities to increase the effectiveness and minimize the cost of municipal recycling programs. So far, a total of 34 projects valued at $5.1 million in support have been awarded. Information about the E&E Fund is available at www.stewardshipontario.ca.
A list of quarterly amounts paid to each municipality is also available.
For background on Waste Diversion Ontario, visit www.wdo.ca and for Stewardship Ontario, visit www.stewardshipontario.ca
Contacts:
Barbara McConnell
Communications
Stewardship Ontario
647-777-3362
After hours: 613-471-1816
Glenda Gies
Executive Director
Waste Diversion Ontario
416-226-5113


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