Solid Waste & Recycling

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Alberta's Deposit-Refund System

Eighty per cent container recovery at 0.8 cents per unit soldThe net cost of deposit-refund systems for beverage containers is the subject of intense debate. Some suggest that deposit-refund systems o...


Eighty per cent container recovery at 0.8 cents per unit sold

The net cost of deposit-refund systems for beverage containers is the subject of intense debate. Some suggest that deposit-refund systems operate at extremely high costs that are then passed on to the consumer. Others contend that if administered properly, deposit-refund systems offer a cost efficient means of improving beverage container diversion, with well run systems breaking even or generating a profit. Recent audit data from the Province of Alberta provides some empirical insight into the costs of operating a depot-based deposit-refund system.

The Alberta Beverage Container Recycling Corporation (ABCRC) is a private, not-for-profit organization that collects monies from manufacturers, pays out handling commissions to redemption depots, and markets recovered beverage containers. In 1997, the ABCRC reported a total recovery rate of 80 per cent, representing 593,341,000 containers (42,181 tonnes)–an increase of 15.5 per cent from 1996.

Under Alberta’s new beverage container recycling regulation, all beverage containers–with the exception of milk products–carry a deposit. Non-refillable containers are redeemable at any of the over 200 province-wide depot centres. Retailers may only redeem refillable containers.

For more than twenty years, Alberta has maintained a deposit-return system. Last year, the provincial government passed the Beverage Container Recycling Regulation. This regulation passes the regulatory and enforcement function from the provincial government to a nine-member multi-stakeholder board made up of three manufacturers, three depot operators, one environmental representative, one municipal government representative, and one representative from the provincial government. The Beverage Container Management Board is financed by depot operators and manufacturers through a charge of $0.0005 (0.05-cents) per container recovered. With the costs of operation, regulation, and enforcement fully borne by the system, Alberta provides an excellent case study of costs associated with a depot-based deposit-return system.

Costs

In 1997, the net system cost per container sold in the province was 0.008(0.8 cents) (see chart). The ABCRC continues to improve the efficiency of its system and in 1997 successfully reduced its processing costs by 9 per cent per container. This year, the ABCRC is pursuing initiatives to reduce total system costs by working with depot operators to decrease handling costs, by possibly reducing the 40 onsite container sorts to twelve, and likely calculate recovery rates using weights instead of manual counting.

Alberta’s recycling does not end with deposit-return on beverage containers. For example, Calgary operates a municipal depot system for $1.9-million per year or $87 per tonne. All fibre streams and non-beverage containers are collected through 36 depots located at supermarkets, shopping centres, and transportation corridors throughout the city. In addition, the private sector operates 15 fibre depots.(See article, page 58.) Estimates show that in addition to the 17,000 tonnes of beverage containers recovered through deposit-return, 26,000 tonnes of other recyclables were collected in 1997. Calgary’s per capita recycling rate is 54 kg per person, a rate equivalent to that of the Region of Peel in Ontario, a municipality with a similar population and a 1997 per capita recycling rate of 55 kg per person. In Ontario, the average recycling cost is estimated to be $86 per tonne.

Written by Clarissa Morawski of CM Consulting, based in Toronto, Ontario.

REVENUES TABLE NOTES
Funded by Participants. Includes: “out-of-pocket” $15,620,000 In 1997, total unredeemed deposits were equal to 20 per cent of
money from manufacturers of $5,681,539; plus containers sold (741,676,250*20 per cent = 148,335,250). At a weighted average
revenue from unredeemed deposits of $9,938,461 of 6.7-cents per weighted average of 6.7-cents per container, these revenues were
$9,938,461. (148,335,250 unredeemed x *6.7-cents = $9,938,461)
Sale of processed Containers $11,871,600
TOTAL $27,491,600
EXPENSES
Beverage Container Management Board $22,000 In 1998 this expense rise to approximately $296,670, based on a $0.0005 per container
funding fee and 1997 recovery rates.(593,341,000 containers) (* $0.0005 = $296,670)
Handling Commissions paid to depots $21,417,600
ABCRC Expenses $6,052,000
TOTAL $27,491,600
Total cost to manufacturers per container sold in $0.008 The total cost to the manufacturer per container sold is .8-cents based on their total
Alberta (741,676,250 containers) (0.8-cents) “out-of-pocket” contribution, divided by the total containers sold in 1997.
($5,681,539/741,676,250 = $0.008 or 0.8-cents)

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