Solid Waste & Recycling


Container Conundrum

Each spring, CM Consulting releases an annual report entitled Who Pays What -- An Analysis of Beverage Container Recovery and Costs in Canada. By offering current data (2001-2002), discerning analysis...

Each spring, CM Consulting releases an annual report entitled Who Pays What — An Analysis of Beverage Container Recovery and Costs in Canada. By offering current data (2001-2002), discerning analysis and identification of a number of trends in beverage-container recovery, Who Pays What provides a comprehensive examination of programs in Canada.

Most Canadians are proud of their success when it comes to recovering beverage containers. Overall, Canada maintains a total recovery rate of 70 per cent, representing just over 10 billion units collected per year. About 63 per cent of beverage containers are sold into a deposit-return regime, with an 86 per cent recovery rate; the remaining 37 per cent are sold into a curbside system, with roughly half that recovery rate.

In general, refillable beer bottles and beer cans, which make-up over 25 per cent and 8 per cent of all the beverage containers sold (respectively), contribute most to the national success.

Chipping back this success are the curbside programs like Ontario (where non-beer containers make up about 26 per cent of the total units sold) and Quebec (non-beer and non-soft-drink containers make-up about 8 per cent of the total). It’s estimated that their beverage container recovery rate is less than 42 per cent (from the residential sector). In these provinces, beverage containers consumed away from home are not accounted for and recovery rates are surely much lower.

Refillable beer bottles continue to be collected at high rates (97 per cent), which can be attributed to several factors including: that these containers have been collected via deposit-return programs for nearly three decades; a portion are consumed in licensed establishments; and (most notably) that bottles are sold in multi-packs making the perceived refund 10-cent multiples of 6, 12 and 24, or 60-cents, $1.20 and $2.40.

Beer cans (aluminum) carry a 10-cent deposit-refund and are recovered at rates from 75 to 93 per cent, with non-beer aluminum (5-cent refund) recovered at rates from 66 to 83 per cent.

Aluminum cans in Ontario’s curbside are recovered at about 40 per cent. Given that a third of the population lives in Ontario, one billion cans with a net worth of $23-million go to landfill every year. The manufacture of rolled-aluminum sheet to make those one billion drink cans is equivalent to about .91 thousand billion Watt-hours from the time the raw materials are extracted through to final production. That lost energy equals the total output of Ontario’s large Pickering nuclear power plant over a 25-day period in 1999.

PET plastic and glass bottle recovery remains steady from 70 to 80 per cent in deposit programs. In curbside programs the recovery rate for PET is 38 per cent from the residential sector (which is about 37 per cent of PET bottle unit sales). Roughly two-thirds of PET bottles are sold away from the home and recycling rates are assumed to be negligible. Therefore the overall provincial recycling rate for PET in non-deposit programs is somewhere between 14 and 42 per cent (slightly higher than the 2002 U.S. rate of 19 per cent). With double-digit annual growth in the plastic water-bottle market, it’s likely that the rate will decline further. (In the U.S., PET recovery has decreased 50 per cent since 1995.)

Other beverage packaging, like juice boxes, bag-in-the-box, polycoat, HDPE and bi-metal are achieving relative gains in all recovery systems as programs mature and awareness expands.

Shifting the costs to consumers

In most deposit-return programs around the world, the beverage industry pays for the bulk of system costs. Canadian programs have evolved in such a way that the beverage industry passes along its costs to customers in the form of front-end or back-end fees. These include Container Recycling Fees (CRF) (zero to 8-cents/unit), Environmental Handling Charges (3- to 7-cents), a non-refillable levy (2-cents) and a half-back on non-refillables (5-cents or 10-cents). Most of these fees (except the CRF) raise more revenue than required to fund the beverage-container recovery program. Excess funds are used to finance other environmental programs or end up in general provincial coffers.

The handling of containers (collection and sorting) is the most expensive part of any recovery system and therefore warrants close monitoring. Traditional handling fees were 2-cents per unit. More recently, however, depots (those that charge the fee) have lobbied for higher fees, arguing they haven’t kept up with inflation. As a result, fees have increased in most provinces in the last five years.

Generally, one fee is charged on all units in order to keep things simple. However, with the onset of “activity based costing” (ABC) more complex fee schedules have been devised to reflect the extra work, time or space required for some containers. For example, a large glass container costs more to handle than an aluminum can. Across Canada, handling fees range from 2-cents to 8-cents/unit size and type.

Earlier this year, an Alberta court decision forced the Alberta Beverage Container Management Board (BCMB) to rework its proposed handling fee schedule to one based on a “utility rate setting model” which will require that all depots report their costs so as to include wage rates, taxes, utility expenses, employment hours, working capital, depreciation on assets, return on capital, etc. This will reveal the true collection costs by container type and establish a benchmark for rate setting across Canada.

Among deposit-return programs, keeping handling fees at a reasonable level will be a challenging area of cost control in future.

Who pays what

In order to provide a clearer picture of the associated program costs, a new approach called “Who Pays What” has been developed by CM Consulting. This approach provides a transparent picture of the associated program cost/unit as this relates to the various “funders” or stakeholders in the system. The funders may include: industry, municipalities, the province, and beverage consumers.

Who Pays What analysis confirms that the beverage industry bears no direct costs in running provincial beverage-recovery programs in British Columbia, Saskatchewan, Manitoba, Nova Scotia, Newfoundland and New Brunswick (for liquor).

In September 2002, Alberta implemented a Container Recycling Fee (CRF) similar to the program in British Columbia; this will reduce the beverage industry’s cost to nothing for fiscal 2003 and beyond.

Beverage producers (including milk) in Ontario may be required to pay levies on all their packaging sold into the residential stream if the new environment minister approves the Blue Box Program Plan developed under the Waste Diversion Act. Material-based levies have been established using an ABC methodology for Ontario’s multi-material Blue Box program. The levies were based on a province-wide system cost of $62-million from fiscal 2001. Costs for 2002 were determined to be $84 million (a 35 per cent increase). It’s therefore reasonable to assume that levies will increase as well (except aluminum, which currently provides stewards with a credit).

It’s likely that Quebec will implement a similar levy-based funding structure for the Blue Box system that will see all beverage packaging (including milk, but excluding soft-drink and beer containers) carry an industry levy. Quebec packaging levies have not yet been determined.

Therefore, in Canada, the beverage industry will only be required to fund beverage-container recovery in Ontario and Quebec. In all other Canadian provinces, beverage companies do not bear any program costs for container recovery. The bulk of system costs are borne by those consumers who choose not to return their containers. These “wasteful consumers” forfeit their deposit.

A small portion of a front- or back-end consumer fees (EHC and half-back) is used directly to offset the system costs. In half-back provinces most or all of the half-back is used to fund non-related environmental programs. (See “Who Pays What” chart.)

Moving forward< /b>

Over the last couple of years a significant amount of analysis has been completed on the real costs of container collection for both deposit-return and blue-box recovery systems. The next logical step is to begin to compare both systems in terms of their costs relative to performance. CM Consulting has also developed the “Bang for your Buck” analysis to measure how much it costs per unit to attain a certain level of performance. The results of this analysis will for the first time provide an apples-to-apples system cost comparison. This magazine will publish the results when they’re available.

The Who Pays What report is available online at

Clarissa Morawski is principal of CM Consulting in Toronto, Ontario and is a contributing editor to this magazine.

Who Pays What


all (excluding all (excluding all (excluding all (excluding all (excluding all (excluding
wine/spirits non-alcohol domestic beer refillable beer refillable beer all (excluding soft drinks wine/spirits refillable beer refillable beer refillable beer wine
and milk) and milk) and milk) all beer) and milk) and milk) and milk) /spirits
per unit sold per unit sold
Beverage Industry Cost $0 $0 $0.014 $0 $0 Packaging $0.005 $0 n/a $0 $0 $0
Fee Schedule
Operating Agent
Cost/Surplus ($0.006) ($0.004) ($0.0003) $0.0014 n/a n/a ($0.029) ($0.005)
Provincial Liquor $0.04 $0 $0 $0 $0 $5,000,000 $0.0096 $0 ($0.003) n/a
Commission Cost/Surplus
Municipal Government Cost $0 $0 $0 $0 n/a* n/a** n/a*** $0 $0 $0 $0 $0
Recycling Consumer Cost $0.022 $0.008 $0 $0.018 $0.02* $0 $0 $0.067 n/a $0 n/a n/a
Wasting Consumer Cost $0.115 $0.069 $0.056 $0.09 $0 $0 $0.050 $0.183 n/a $0.15 $0.075 … $0.12 n/a
Consumer Non-System
Related Cost for 2001-2002 $0 $0.0062**** $0 $0.034 n/a* $0 $0 $0.025 n/a $0.046 $0.025 n/a

*In Manitoba, part of the revenue generated from the 2-cent levy on beverage containers subsidizes recovery of other materials in the municipal curbside program. The portion of revenue dedicated to beverage container recovery is unavailable. The beverage industry is charged the levy and passes it on to consumers at the point of purchase.

**In Ontario and Manitoba all residentially generated containers are collected via municipally operated curbside recycling. In Quebec, wine, spirits, water, juice, and new age beverage containers are collected via municipally operated curbside recycling. As such beverage container units are mixed in with non-beverage containers making it difficult to allocate per unit costs. In addition, data on unit sales for Ontario and Quebec is not available.

***In Quebec, the .5-cent per unit cost represents the deficit (handling fees minus unredeemed deposits). Material revenues, transportation & processing costs are considered proprietary.

****In British Columbia surplus CRF revenue not used to off-set the program costs for 2001 was used to fund the system in 2002. CRFs are adjusted annually to account for any deficit or surplus that may have occurred the previous year.

Expression of proposed Ontario levies by beverage container type in CENTS per unit

Source: Blue Box Program Plan — Feb 2003 — WDO

2-litre gable-top 0.3
1-litre gable-top 0.19
250ml Tetra Pak 0.05
1.36 litre steel can 0.56
473ml clear glass bottle 0.85
750ml clear glass bottle 1.25
2-litre PET bottle 0.39
600ml PET bottle 0.2
4-litre HDPE water bottle 0.43
outer milk bag – LDPE film 0.05
355ml aluminum can -0.08

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