When Ontario introduced its blue box program almost 20 years ago it managed a modest five materials: newspaper, steel cans, aluminum cans, glass bottles and jars, plus PET plastic. Since then the program has expanded to collect over 20 different materials in many, if not most, curbside systems in the province. The program, in various forms, has also been widely copied across North America.
Undoubtedly the blue box is, and can continue to be, hugely successful in diverting material from disposal. But system costs have increased significantly over the past few years. And now, the province’s environment minister has announced the goal of diverting 60 per cent of waste from landfill disposal by 2008; which will push the blue box system even further. We must stop and ask ourselves, “Are we expecting too much from the blue box?” Should it be the only mechanism used to manage the growing number, weight, volume and pieces of material, irrespective of cost? Or should it be just one component of an integrated waste management program?
When Ontario set its 60 per cent diversion goal it suggested that specific material targets could be set. We took an initial look at the implication of system costs relative to material targets in the article “Diversion At What Cost?” in the June/July 2004 issue of Solid Waste & Recycling magazine. The projections then were based on the 2002 net costs of $98 million. Since that time, net blue box system costs rose to $118 million for 2003 (a 20 per cent increase) and diversion went up 15 per cent (from 46 per cent to 53 per cent).
Simply put, for the most part, the system has already captured the “easy” tonnes. To, now, reach the minister’s target there are many different approaches, based on differing principles, that could be adopted. First, we examine the cost to reach 60 per cent diversion that we presented in our first article:
A system where the focus is primarily on the next least costly tonne (NLCT); and
A level playing field (LPF), where all materials in the blue box reach a 60 per cent diversion rate.
And then we consider a completely different system to reach the goal — a system focused on recovery of (primarily) only the original recyclables for which the blue box was invented; a “back to basics” approach.
The recovery rates assigned to each material under each scenario are shown in Table 1, and the estimated costs associated with each scenario are presented in Table 2. (See pages 12-13.)
We use the gross cost per tonne and the revenues for the individual materials as defined by Stewardship Ontario. (These were used to establish the 2005 stewardship fees.) Across all options we assume that, even with changes in the quantities managed, there are no savings from economies of scale or cost increases associated with potential improvements needed to manage the new material tonnages. Also, we assume the inflation rate for gross costs and revenues is two per cent per annum.
We use the current system (2003 data) as a benchmark against the three scenarios. The overall recovery rate of the current system is 53 per cent (with printed paper at 67 per cent and packaging at 42 per cent). The gross cost of the current system is $182 million with revenues of $65 million, resulting in a net system cost of $118 million. This equates to a net cost per tonne of $151. Projecting forward to 2008 (and assuming that the diversion rates for all materials remain static), the net cost of the system is going to increase to $142 million, or $166 per tonne.
Next least costly tonne approach
The “next least costly tonne” (NLCT) option focusses on increasing the diversion of those materials that cost the least to manage. No material exceeds a recovery rate of 80 per cent. The system would, of course, focus on recovering more aluminum, newspaper and mixed paper, whose impacts on system costs are small. The proposed targets generate an overall recovery rate of 60 per cent with printed paper recovery at 72 per cent and packaging recovery at 51 per cent. The estimated total net cost of this scenario is $162 million, and the net cost per tonne is $167. Compared to the base case, the cost to achieve the additional seven percentage points of diversion will be $20 million.
Level playing field approach
Some have suggested that targets should be the same (i.e., equal) across all packaging and printed materials, so that no individual material receives an unfair advantage. The “level playing field” (LPF) model looks at the costs that would be associated with setting the diversion targets for all materials in the blue box at 60 per cent. For the sake of comparison between systems with the same overall diversion rate, this would result in a “decrease” in diversion of printed paper from 67 per cent to 60 per cent, and a major increase for packaging up to 60 per cent. Under this approach, the costs of the system substantially increase, almost tripling that of the current system with the net cost of the system totalling approximately $321 million, and a net cost per tonne of $333.
Back to basics
A lot has been said and written that if the costs for the blue box system continue to increase, the program may not be viable in future for municipalities or industry stewards. Yet public pressure to add material after material to programs has escalated the rate of cost increases, with little increase in system diversion performance. As an example, adding one tonne of plastic film increases system costs by more than $1,600 while adding one more tonne of other printed paper adds just $110. This is a more than 14-fold difference, for the same increase in diversion performance!
Stepping back and looking at how the blue box strategy could be implemented more cost effectively , the final option — our “back to basics” approach — reduces the number of materials managed via the blue box. This option is presented for illustration purposes only. We are not at this time proposing that blue box programs be scaled back to do less or collect fewer materials. But the results of this exercise are worth thinking about. The only materials that would be collected are: all printed paper (ONP, magazines, catalogues, telephone books, residential mixed paper), OCC, OBB, PET, steel cans, aluminum cans and glass bottles and jars. Remember, the point of this scenario is to increase the diversion rates of these materials, which are generally lower cost materials, and still achieve an overall diversion rate of 60 per cent.
The savings in this scenario are significant.
The total net system cost is $135 million and the net cost per tonne is $140. What does this mean? This is $7 million lower than the cost projections for the current system in 2008. It is also a decrease of $11 per tonne over the current net cost per tonne. Some of the benefits of this options include: the elimination of materials that are hard to manage; an easier system for the public to understand (i.e., which materials are included in the programs); and, a future decrease in the amount of MRF infrastructure required.
This analysis highlights the importance of how and what individual targets are set for each specific material to reach the overall 60 per cent diversion goal. And, more importantly, it causes us to re-think the ultimate purpose and role of the blue box.
What are we trying to achieve through the blue box system? Is it reasonable to achieve 60 per cent diversion by adding an increasing list of materials to one system, many of which are very difficult and expensive to effectively manage? Or does it make more sense to think of the blue box as only one element of a larger solution? If we decide that the blue box is the only mechanism we are willing to use for diversion of all of these materials, then we have to be prepared for the costs attached to the system. However, if we are willing to look “outside the box” and consider alternative solutions for managing some of the high cost materials more effectively, then the possibility is within our grasp to finally
bilize costs and the system as a whole.
Bronwen Smith is a technical analyst and Dan Lantz is a partner and practice leader in the Solid Waste Management Group with MacViro Consultants Inc., in Markham, Ontario. Contact Bronwen at firstname.lastname@example.org or contact Dan at email@example.com
TABLE 1: RECOVERY RATES
PROJECTIONS 2008 — FUTURE SCENARIOS
2003Base Case NLCTLPF Back to Basics
Magazines and Catalogues72%72%80%60%80%
Other Printed Paper39%39%40%60%60%
Printed Paper Total67%67%72%60%76%
Old Corrugated Containers72%72%75%60%80%
Paper Packaging Total48%48%58%60%51%
Food & Beverage Cans53%53%70%60%75%
Food and Beverage — Flint53%53%70%60%80%
Food and Beverage — Coloured48%48%70%60%80%
LCBO — Flint65%65%70%60%80%
LCBO — Coloured62%62%70%60%80%
TABLE 2: GROSS AND NET COSTS
PROJECTIONS 2008 — FUTURE SCENARIOS
2003Base CaseNLCTLPFBack to Basics
Revenue$64,900,000$ 78,100,000$ 97,100,000$87,600,000$92,600,000
Net Cost per Tonne$151$166$167$333$140
2003 Net Cost per Tonne$151$151$151$151