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Deposit Refund

It was a great surprise to many observers in September when Ontario Premier Dalton McGuinty announced his plan for a new deposit-refund program for all alcohol beverage containers sold in the province...


It was a great surprise to many observers in September when Ontario Premier Dalton McGuinty announced his plan for a new deposit-refund program for all alcohol beverage containers sold in the province. Ontario is one of several North American jurisdictions that have recently implemented new deposit programs or expanded existing ones. California expanded its program in 2000, Hawaii and the North West Territories implemented new programs in 2002 and 2005 respectively, and there is a strong likelihood that New Yorkers will see an expanded bottle bill by next year. Ontario’s new program will deal with more than 350 million deposit bearing containers (mostly glass) formerly handled via the blue box. Interestingly, rather than return the containers to the Liquor Control Board of Ontario (LCBO) or to a depot, consumers will return the containers to The Beer Store, which already manages a successful deposit system of its own (mostly for refillable bottles).

Concurrent with the Ontario announcement was the release of the second edition of Who Pays What — An Analysis of Beverage Recovery and Costs in Canada — an independent research report from this author (CM Consulting) co-funded by provincial governments, not-for-profit agencies and the private sector. The report offers comprehensive data on recovery and costs of beverage container collection programs in Canada.

Today, six provinces in Canada operate deposit-refund programs for all beverage containers, except milk and milk-related products. Only Manitoba and Ontario operate residential curbside recycling program for beverage container recovery, along with other materials. Quebec does the same, but has a deposit-refund program for soft drinks and a voluntary program for some “similar” containers (e.g., juice packaged in cans). All beer containers carry deposits nation-wide.

For the most part, all provinces have varying curbside and depot programs for other containers and paper-based products and packaging. While curbside programs are successful for many items, some beverage containers like plastic bottles for soft drinks and water continue to experience growth in their “on-the-go” consumption (i.e., away from home and, consequently, residential curbside recycling). The recovery rates for these containers are significantly lower than their deposit counterparts. For instance, the recovery rate for PET beverage bottles (soft drinks and water) and cans (soft drinks) in non-deposit jurisdictions in Canada has been estimated at 35 per cent and 45 to 55 per cent respectively.

Non-refillable beverage containers managed in deposit systems are recovered and recycled at rates that vary between a low of 66 per cent in Newfoundland and a high of 87 per cent in Saskatchewan. While most provinces seem to be holding their recovery rates at 75 per cent and above, recovery rates seem to be slipping slightly from year to year. Several factors can be blamed for the minor decline, including the declining value of the 5-cent refund (which is the deposit on the majority of containers) as well as the emergence of “new age” containers made from composite materials like gable top, TetraPak and polypouch. While these containers carry deposits, public awareness of their refundability is not as well-established as it is with more traditional containers like PET soft-drink bottles and aluminum cans. Refillable beer bottles continue to be collected nation-wide by the domestic brewers for refilling at the astounding national rate of 97 per cent. (See recovery rate chart.)

In terms of cost, the Who Pays What analysis provides a unique picture of the cost to the individual stakeholders that fund beverage recovery systems and/or other provincial environmental programs. Interestingly, the analysis confirms that in British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia, Newfoundland and New Brunswick (for liquor), the beverage industry bear no costs to run the provincial beverage recovery program. In deposit jurisdictions, the bulk of system costs are borne by consumers who choose not to return their container (i.e., the polluter pays). This revenue, known as “unredeemed deposits,” is used to finance the programs.

The remaining costs are borne directly by consumers through a front-end or back-end fee. While some of the fees charged more than cover the cost shortfall, excess revenue is often used to fund non-related environmental programs. (See Who Pays What analysis chart.) (In a half-back system, consumers are refunded half of their deposit when they return a container.)

Beverage producers or first importers in Ontario and Quebec (including milk but excluding soft-drink and beer brand owners) are required to pay levies on all their packaging sold into the residential stream. In addition, in Quebec, soft-drink producers bear a cost equivalent to about half a penny per container sold into the province.

Historically, government-mandated beverage container recovery initiatives were initiated to mitigate litter and reliance on landfill disposal or incineration. However, recent extensive lifecycle analyses have been undertaken by both Environment Canada and the US Environmental Protection Agency (EPA) to measure the inputs and outputs from cradle to grave of various materials and products. The results provide quantifiable measurements of factors that include the amount of energy saved and the reduction in greenhouse gas emissions from recycling. These new measurements provide a much more comprehensive understanding of the environmental and economic impacts of beverage container reuse and recycling. By quantifying the amount of energy saved, it’s possible to determine savings in terms of such things as avoided crude oil procurement.

The findings reveal that in one year beverage container reuse and recycling in Canada avoided the need to extract over 2.3 million barrels of crude oil, worth an estimated $186.5 million. In addition, 898,000 tonnes of greenhouse gas emissions were avoided, equivalent to taking almost 750,000 cars off the road for a year.

These new environmental indicators highlight the benefits of beverage containers reuse and recycling and offer policymakers new data to support regulatory measures to facilitate maximizing recovery.

Clarissa Morawski is principal of CM Consulting in Peterborough, Ontario and is a contributing editor of this publication. Contact Clarissa at morawski@ca.inter.net

A Historical Review of the Deposit Debate in Ontario

The battle over deposits in Ontario has been raging for more than 20 years, when in 1985 the soft-drink and grocery industries formed an alliance called OMMRI (Ontario Multi-Material Recycling Inc.), whose agenda was to replace the existing refillable system and legislation with a multi-material curbside recycling program.

The late 1980s saw OMMRI exchange $20 million of funding for the establishment of the blue box in exchange for a reduction on the soft-drink refillable quota from 75 per cent to 40 per cent. With little enforcement of the quota, it didn’t take long for the refillable soft-drink share to nearly vanish. By the early 1990s with increasing municipal blue box costs and few gains on diversion, broad-based deposits were top of mind once again. Enter CIPSI — the Canadian Industry Packaging Stewardship Initiative.

CIPSI, led primarily by the grocery lobby, soft-drink brand owners and their packaging producers, offered municipalities “top up” grants to support their blue box programs. CIPSI Ontario advanced rapidly, with municipalities and industry ready to sign.

But in June 1995 a new conservative government was elected, and not long afterward CIPSI was rejected. Almost a year later the conservatives withdrew provincial subsidies to blue box recycling leaving municipalities to bear all the costs. In 1997, municipalities (led in large part by Toronto) began investigating their recycling costs and questioning why they were handling beverage c

ontainers (which were costly, except for aluminum cans) culminating in an attempt to implement a by-law that would see the LCBO implement a deposit-refund system as a condition of licensing in that municipality. Toronto then went one step further with a ban on LCBO containers in the blue box scheduled for January 1, 1999. By late 1998, 85 per cent of Ontario’s population (as represented by municipal councils) passed resolutions endorsing a full deposit-refund program for all, or at the very least, a program for LCBO alcohol beverage containers.

In November 1998, the environment minister announced the formation of the Waste Diversion Organization (WDO) with $8 million in funds offered by the LCBO to municipalities to manage glass over two years. Municipalities took the deal and the money, as did Toronto begrudgingly. One Toronto councilor described the offer as “hush” money, and soon after that all was quiet on the municipal front once again.

With passage of the Waste Diversion Act in 2002 and subsequent approval of the Blue Box Program Plan under that Act Ontario municipalities receive 50 per cent financing for the blue box’s net costs.

In May 2005, submissions on the issue of LCBO container management were sent to an independent Beverage Alcohol System Review (BASR) panel. Once again, it was made clear that the recycling of LCBO packaging was not solved and several environmental groups recommended a serious look at a deposit refund system. Some suggested piggybacking on an existing collection infrastructure to mitigate any large capital investment related to retrofitting LCBO stores. Their suggestion was to use The Beer Store as the collection network.

This summer, Ontario municipalities released a position paper which recommended a deposit-refund system for LCBO containers, in part because low-value mixed glass cullet can create problems at recycling facilities. At the same time, Owens Illinois, one of the world’s largest container glass manufacturers, entered the debate and advocated for deposits. For decades, Owens Illinois also supported the curbside solution, but with a declining supply of clean glass cullet due to increased single-stream curbside collection it too saw the benefits of deposit refund.

Early this September, Ontario’s Environmental Commissioner Gord Miller spoke to the Standing Committee on Government Agencies of the Legislature of Ontario. He explained that with the current blue box program, only 20 per cent of Ontario’s glass is being recycled into new bottles, while the remaining 48 per cent is downcycled into low-end uses, and about 32 per cent is being sent to landfill. Miller also suggested a deposit return program using The Beer Store network of stores for collection.

At some point in the last year, government staff engaged The Beer Store on the feasibility of using their system to collect LCBO containers and the undertaking was announced on September 10 2006.

As of February 1, 2007, more than 2.4 billion Ontario alcohol containers (wine, spirits and beer) will bear a deposit for refund at more than 850 Beer Stores, Retail Partners, Agency Stores and other locations across the province.


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1 Comment » for Deposit Refund
  1. Louie says:

    Start up a recovery system in Ontario like BC !

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