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Ontario Bill 91 Waste Reduction Act and the role of recyclers


By stimulating innovation, strict environmental regulations can actually enhance competitiveness.

Toward a New Conception of the Environment-Competitiveness Relationship

Michael E. Porter and Claas van der Linde

The Waste Reduction Strategy –- the Ontario Ministry of the Environment’s marketing document that accompanied its release of Bill 91 Waste Reduction Act (WRA) –- touts the WRA as a measure that will encourage, “…producers to develop products that are designed, manufactured and distributed in ways that reduce their impact on the environment.” In setting forth this lofty (and, in Ontario, entirely unachievable) objective, the environment ministry seems to have forgotten to address the more pedestrian objective of ensuring that what is collected on behalf of producers is, in fact, properly recycled.

Bill 91 proposes two environmental performance measures – a waste reduction service standard (which addresses requirements for things like the geographic coverage of designated waste collection) and a waste reduction standard (WRS) (which relates to collection targets and requirements or prohibitions regarding the reuse, recycling or disposal of designated wastes).

From what can be determined from Bill 91, the WRS seems to be intended to define reuse and recycling for a given material in regulation — a good first step.

Ideally a WRS should be clear in terms of defining an outcome without specifying a specific recycling process; something like, “Recycling widgets means recovering a minimum of 80 per cent of the component materials widgets are made of, for use in manufacturing new products or by natural ecological systems.”

Think evolving functional definitions of recycling like the McDonough Braungart Design Chemistry Cradle-to-Cradle definition or the Ellen MacArthur Foundation Circular Economy Principles. (See editor Guy Crittenden’s blog entry “Less bad is no good” from July 29, 2013.)

Such a WRS might also proscribe certain interpretations of recycling, something like, “Taking widgets and reducing them to slag in a smelter and then using the slag as aggregate replacement in road beds does not conform to the definition of widget recycling.”

To be effective, the WRS should apply to producers (meaning they cannot use a recycler that does not meet the standard) and they should apply to the recyclers themselves.

Accordingly, a recycler would not only have to meet the usual minimum site and environmental discharge approvals (i.e., environmental compliance approvals) for recycling widgets; they would also have to verify on an ongoing basis that their recycling process meets the outcomes set out in the recycling standards. This would ensure the recyclers are not disposing of materials or cherry-picking valuable components while disposing of the rest, or shuffling off half-recycled materials to another jurisdiction with lower environmental standards for further “recycling.”

Unfortunately Bill 91 Waste Reduction Act is silent with regard to the application of the WRS to recyclers.

Where producers and their intermediaries (what we know today as Industry Funding Organizations) must register with the Waste Reduction Authority, recyclers do not. (The Waste Reduction Authority will be Waste Diversion Ontario transmogrified from a poorly defined regulatory blob into a full fledged statutory authority with law enforcement powers.)

Rather, under Bill 91 a producer or its intermediary is responsible for ensuring recyclers are meeting the WRS set out in regulation.

This creates a number of problems.

First, the approach puts a heavy burden on individual producers in selecting a recycler. Where an individual producer is interested in getting competitive pricing from recyclers, it has to evaluate each and every recycler that’s proposing to supply it with a price bid against the WRS. The producer can’t rely on the fact that the recycler is adhering to a regulated WRS because the recycler isn’t regulated to any WRS.

As noted by the May 2012 draft Institute of Electrical and Electronics Engineers standard 1680.2 (Standard for Environmental Assessment of Imaging Equipment), “In jurisdictions where the manufacturer has control over the choice of initial service providers, manufacturer shall ensure that all equipment collected…is managed by initial service providers that are certified on an on-going basis to a qualified recycling standard by independent certification bodies.”

Accordingly, producers are best served in selecting recyclers if a WRS applies to all recyclers of designated materials and the Waste Reduction Authority oversees compliance with the WRS.

The second issue is that recyclers adhering to WRS and operating on behalf of producers may find themselves uncompetitive with recyclers that collect and broker the same designated products and materials in the open market where they have a financial value. The lack of a common standard between recyclers operating on behalf of producers and those operating outside of producer responsibility arrangements forces producers to pay more to their recyclers to “pull” materials away from the “unregulated” market in order to ensure that product and material recovery targets are met. This happens frequently for designated products like waste electronics.

The result is increased costs for producers and, in turn, consumers.

Another issue is that even if producers or their intermediaries are diligent in selecting and overseeing recyclers and those recyclers nonetheless cut corners and ship materials where they are not supposed to go, there is not a thing the Ministry of the Environment can do to rectify the issue, other than enforce against the producer or intermediary. Undoubtedly producers and intermediaries will avail themselves of a due diligence defense (and hopefully fire the recycler in question).

There will always be a tension between adherence to standards and cost — it will be up to how well the system is regulated to ensure ongoing outcomes.

If the system isn’t well regulated, recyclers that have invested and innovated against meeting the WRS may find their investments and innovations devalued as they compete with recyclers that producers or their intermediaries allow to cut corners.

The application and oversight of the WRS to all recyclers receiving designated materials is really the lynchpin to ensuring environmental outcomes and economic efficiency (primarily driven by innovation) in the end-of-life management of products and materials.

Regulating recyclers means meaningful enforcement; as a proposed statutory authority the Waste Reduction Authority provides an opportunity to oversee and enforce the WRS on both producers and recyclers.

For a producer or intermediary to send designated materials to a given recycler, that recycler should be required to register with the WRA and agree to compliance audits irrespective of where it operates. To level the playing field between recyclers operating in Ontario, any recycler receiving designated waste — irrespective of whether through producer efforts or via the open market — should be required to adhere to the WRS. Failure in meeting the standard means losing the eligibility to receive designated materials.

Bill 91 should be amended to provide a recycler oversight function for the WRA. By doing so, producer costs and risks will be reduced, there will be less opportunity to cheat the system, recycling markets will enjoy a level playing field (which will drive investment and innovation) and the Ontario government and citizens will have greater certainty that environmental objectives are being met.

 


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4 Comments » for Ontario Bill 91 Waste Reduction Act and the role of recyclers
  1. Hardy Wong says:

    Surely, Mr. Valiante’s suggestion would provide a much more comprehensive regulatory regime for the entire waste recycling industry. But the argument fails to consider a lot of practical issues – there are many “levels” of recyclers in the secondary resources market – the collectors, the processors for segregation of recyclable materials, the users of “recycled commodities” and the manufacturers who incorporates the recyclable materials as ingredients for the final products, etc, not to mention the huge resources that the Ministry would be required for inspection and enforcement.

    • Usman Valiante says:

      I haven’t failed to consider practical issues I just don’t have space to go into them on a blog. Having participated in the development of Ontario’s used tires program, the BC printed-paper and packaging program and having grappled the issue of environmental standards from the perspective of recyclers themselves, I agree that the Waste reduction Standards need to be reasonable in terms of ensuring materials are actually recycled without creating massive regulatory burden.

  2. Lyle Hoffman says:

    In a utopian world this may work. One of the downsides would be smaller recyclers that only do a portion of the dis-assembly and then sell those materials to a downstream recycler would have to bear the added costs/burdens without gaining any benefit. Recycling of products such as e-waste is commonly done by a number of downstream recyclers who each only recycle a portion of the whole product. Another downside would occur when the producer is forced to either greatly increase price due to MORE government regulation or not bother to sell their product into the Ontario market which would be “out-of-touch” with the rest of the Canadian market and programs. Within a global market (outside of Toronto), many recyclers would just refuse to deal with all of the problems that the WSR could create.

    • Usman Valiante says:

      No Utopias from me. You cite electronics. Perhaps one of the best recycling standards that exist in Canada today is the Electronics Products Recycling Association’s (EPRA) Electronics Recycling Standard (ERS) under the Recycler Qualification Program (RQP). All what you describe is supposed to be tracked under the standard. It isn’t prefect but it’s pretty good. Enforcement of the standard is lacking because the Recycler Qualification Office isn’t adequately resourced – not unexpected when electronics products producers that set the standard then have to pay to enforce it.

      I would suggest without some reasonable standard there is no point to wasting our time with EPR. All that happens is that e-waste gets stripped for its valuables and the rest is dumped. If that’s what we want we might as well just forgo all regulation and call it a day.

      I don’t put much stock into the idea that a company like Apple will forgo selling Ipads into Ontario because the cost of recycling went up a few dollars. Likely, what will happen is Apple will search out for a cheaper recycling solution that meets regulatory requirements. It’s called free market competition and its proven to work.

      Finally, as it stands Ontario has some great e-waste recycling companies that do meet the ERS. I am sure they won’t lose to much sleep if e-waste recyclers outside of Ontario aren’t interested in meeting reasonable environmental standards in order to compete for Ontario sourced e-waste.

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