A fight has erupted between two groups who represent the interests of companies whose packaging materials are recycled through Ontario’s blue box.
The first group is Stewardship Ontario, a rough proxy for the brand owners and “first importers” whose products are sold in packaging that’s ultimately recycled via the blue box. The other represents suppliers of the packaging itself. In dispute is who should cough up new “stewardship fees” to fund curbside recycling.
Why is there a fight?
A new blue box funding program requires brand owners and first importers to pay half the net cost of municipal recycling in Ontario. The formula for calculating this net cost is complicated, but it was negotiated that in 2003 the net cost was $84 million (of which industry pays half). Stewardship Ontario is a non-profit funding organization approved by Waste Diversion Ontario (WDO) that recently began collecting the fees. (See news item, page 7.) But Stewardship Ontario devised an option that critics say could let brand owners/first importers off the hook. The option would allow packaging suppliers to “volunteer” to pay the stewardship fee on behalf of their brand owner/first importer clients.
The packaging suppliers don’t like this at all.
They say that Canadian Tire, Proctor & Gamble, Kraft, and other large companies could call up the folks who supply their boxes, bottles, cans and other containers and mention to them that they can “volunteer” to pay the stewardship fees. While the packaging supplier is free to refuse, the client is also free to switch suppliers! It’s a bit like saying “no” to a bill collector armed with a baseball bat; he doesn’t have to actually hit you to make his point.
Municipalities don’t really care who pays the 50 per cent recycling cost; they just want the money. But the packaging suppliers care a lot! And so does the provincial government, which in May asked Stewardship Ontario to suspend this option pending review.
Policymakers saw the fees as more than a bailout for cash-strapped municipalities. In keeping with European-style extended producer responsibility (EPR), the fees were part of a product stewardship vision in which packaging costs are assigned to the point in the product lifecycle where the maximum leverage can be attained to generate greater environmental and economic efficiencies. The idea is that when companies have to internalize the external costs of their packaging (e.g., environmental impacts harvesting raw materials, costs associated with recycling or disposal) they will minimize waste, change their packaging mix, practice reuse and, at the very least, pass on these costs to their customers, rightly causing consumers to pay for their specific impacts and not dissipating the costs among a pool of taxpayers.
Stewardship Ontario’s option could have the effect of letting brand owners and first importers fob this cost off on their packaging suppliers by making them what could be called “involuntary stewards.” Plastic, glass, fibre and other packaging producers are in the business of selling those materials — the more the better. No environmental efficiencies are attained in forcing them to eat the cost.
The packaging people rallied themselves on April 27 at a seminar in Toronto hosted by the Packaging Association of Canada (PAC) entitled “Blue Box Recycling: Impact on the Packaging Industry.” PAC announced the formation of the Committee for an Efficient and Rational Blue Box (CERB) — an umbrella organization that includes the Paper and Paperboard Environment Council (PPEC) and the Canadian Plastics Industry Association (CPIA), among others.
In his opening remarks Tim Woods, environmental affairs officer with Nestl Canada Inc, called the blue box funding program “really a funding program for municipalities under a cloak of deception.”
Those strong words were followed by PAC’s Director of Government Affairs Larry Dworkin who said that although his organization supports a viable blue box program, the current process is “out of control.” He said that CERB will be a “watchdog with teeth” and mentioned that a subcommittee is evaluating a potential legal challenge.
Dworkin pointed out that Ontario’s net recycling costs were artificially capped last year. (The ultimate $84 million number was less than the real costs in 2003: $100.5 million.)
“This is likely to eventually rise to $190 million,” Dworkin said, and noted that the many of the packaging suppliers simply can’t afford to be “voluntary stewards.”
Fees were supposed to be limited to $900 per $1-million in sales, Dworkin said, but a company with a million dollars in sales, for instance, could be hit with $25,000 to $40,000 in fees.
“This is a huge dent for suppliers with margins as low as just one or two per cent,” said Dworkin.
Consultant Colin Isaacs also spoke at the seminar, calling the funding rules “environmentally perverse legislation” that “penalizes the good guys” and may encourage companies to switch to non-recyclable packaging (to avoid fees). He even called for the creation of an Ontario Household Waste Management Corporation to put funding into the hands of a more accountable agency whose board minutes, for example, would be subject to freedom of information legislation.
Stewardship Ontario’s Derek Stevenson disputes the accuracy of certain statements made at the PAC meeting and says some of the claims were inflammatory. (See sidebar, pg. 18.)
In any case, whether Ontario’s environment minister eventually allows “voluntary stewards” or not, it seems the fight over sustain- able blue box funding has a few more rounds to go than was antici- pated.
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