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PRODUCT STEWARDSHIP: EPR Becoming Widespread in Canada

Canada's 3rd National Workshop on Extended Producer Responsibility, "Learning from Practice," was held from March 3rd to 5th at the Lord Nelson hotel in Halifax, Nova Scotia. The most recent of the biennial series -- hosted by Duncan Bury of Envir...


Canada’s 3rd National Workshop on Extended Producer Responsibility, “Learning from Practice,” was held from March 3rd to 5th at the Lord Nelson hotel in Halifax, Nova Scotia. The most recent of the biennial series — hosted by Duncan Bury of Environment Canada and Barry Friesen of the Nova Scotia Department of Environment & Labour — attracted representatives from every province and also other countries who discussed a wide array of industries and EPR programs. The event coincided with a meeting held by the OECD EPR Working Group the day before.

It was clear from the meeting that European-style EPR is coming to Canada in a big way. Policy ideas that were only concepts a few years ago are being translated into concrete actions in every province.

On the first day Christina Seidel, executive director of the Recycling Council of Alberta, offered and NGO (non-governmental organization) perspective on challenges in designing and implementing EPR programs. As part of a detailed description of how EPR should work, she spoke of the importance of good governance at third-party Producer Responsibility Organizations (“PROs”) that manage many product stewardship initiatives, and the need for environmental or citizens’ group representatives on the board to act as the PRO’s “conscience.” This matter has been in the news in Canada recently as the proposed design for initiatives for tires, used oil and other materials have been criticized for being too much a reflection of industry’s agenda and not the environment or consumers. (See Editorial, page 4.)

In-depth presentations updated delegates about new and existing programs in the Maritime provinces, Quebec, Ontario, the Prairies and British Columbia. The list of existing or imminent EPR programs goes beyond the country’s extensive deposit-refund programs for beverage containers and Ontario’s new industry funding scheme for its blue box recycling system. (See pages 26-27.) EPR is now being implemented for electronics waste, batteries, scrap tires, refrigerants, paint, used oil and packaging materials. Future designated materials could include mercury (i.e., in switches), fluorescent tubes, pharmaceutical products and even organics. The group also heard from reps of programs for cell phones in Australia, autos in the EU, electronics in Holland, and film plastic plus other materials in Ireland.

Issues of concern included fairness and how to deal with “free riders” and other challenges from voluntary programs, and whether fees should be visible or hidden. Harmonization was also a big issue. Industry reps — especially from the Retail Council of Canada — were worried about the difficulty for brand owners and first importers who distribute their goods across the country and even North America in complying with what may evolve into a patchwork of programs and regulations that vary greatly from province to province, and between Canada and the United States. It’s possible that an umbrella organization will evolve to represent industry concerns at the federal level.

Other delegates stated that advance disposal fees can undermine EPR programs, turning them simply into collection and disposal schemes and not systems that drive product design changes and other environmental efficiencies, since the brand owner is not involved. (Such disconnected programs can also become consumer rip-offs. For instance Alberta’s program for scrap tires charged a visible fee to consumers, then collected $28 million more than was needed to operate the program.)

Beyond the debates over how to design and implement EPR programs, this new environmental approach is gaining wide acceptance across Canada as cash-strapped municipal governments heed the weariness of taxpayers and seek other mechanisms to keep materials out of the nation’s diminishing number of landfills.

Ontario Stewardship Shenanigans

Used oil, tires and packaging suppliers

Throughout March a fairly heated behind-the-scenes battle was waged between various stakeholders with interests in certain extended producer responsibility (EPR) programs that Ontario is attempting to implement.

The most tense battles occurred between representatives for the used-oil re-refining industry (i.e., Safety-Kleen) and the Ontario Used Oil Management Association (OUOMA). This magazine published an editorial in its December/January edition (“Lubricating Public Policy”) that was critical of OUOMA’s draft plan. The theme of that editorial was reiterated in a similar article printed in the Financial Post op-ed page in the National Post newspaper on February 20 entitled “An eco-crank case.” (The newspaper article may be found under the “posted documents” button at our website www.solidwastemag.com) That article updated the earlier trade magazine editorial with the revelation that OUOMA had attempted to bury a consultant’s study that didn’t fit with its agenda. The study, subcontracted by the Ontario Waste Management Association, made use of quite credible data available on the Ontario environment ministry’s waste generator manifest database, and showed that used oil is currently collected and kept out of the environment at a rate of about 79 per cent. (The study actually presents a range of possibilities slightly higher or lower than this middle number.)

OUOMA ignored this important information and shortly thereafter submitted its scheme to the Waste Diversion Organization (WDO) quoting a much lower assumed used oil collection rate of just 55 per cent. This astounded close observers of the policy development process, who were confounded as to why the organization would choose its assumed number — which was simply extrapolated from the situation in Alberta years ago — and ignore the best-available empirical data. The issue is significant, since if the OWMA report is more accurate (as is likely), then Ontario is already ahead of the OUOMA’s five-year targets.

A number of backroom debates transpired over what numbers to use, and at one point it even appeared that OUOMA was attempting to “negotiate” a number with staff at the environment ministry, rather than simply determine facts. OUOMA even produced a “fact sheet” to defend against the negative PR from Safety-Kleen and this magazine. (We’ve posted the fact sheet on our website under “posted documents.”) In the end, WDO has rejected the Used Oil Program Plan prepared by OUOMA and as a result OUOMA didn’t meet the March 31st deadline to submit a plan to the minister of the environment.

The WDO also had concerns about the financial incentive provisions of the plan relative to six return incentive zones and payments to used oil collectors. According to the OWMA, fundamental issues also arose regarding the plan provisions that would permit burning of used oil despite restrictions in the Waste Diversion Act. The WDO has requested a 90-day additional time period during which WDO will spearhead an attempt to redefine OUOMA’s plan provisions and resolve outstanding issues and concerns. (This magazine will report on the next iteration of the plan.)

The plan for scrap tires put forward by Ontario Tire Stewardship (OTS) met a similar fate, not so much because of data manipulation as because the OTS pointedly ignored a warning from the environment minister that the brand owner or first importer must be the program steward, not the retailer. As a result of the minister’s direction, the scrap tire plan was unable to be submitted to WDO for approval and submission by the March 31st, 2004 deadline. As a result, WDO will be requesting an extension for plan submission to allow for a complete retooling of the OTS plan. As we went to press, discussions were underway. (For details on the tire scheme, see Editorial, page 4.)

Voluntary stewards?

A perhaps more troubling argument has erupted over the definition of “steward” with respect to who funds Ontario’s blue box recycling program. This fight cuts to the heart and soul of the altar of recycling, and comes on the
he
els of what had been perceived as good news: industry is registering with Stewardship Ontario and finally cutting cheques to municipalities to pay half the net cost of curbside recycling in the province. Ironically, at this very time, Stewardship Ontario has redefined “steward” in such a way that some parties believe lets the “brand owner/first importer” (yet again) off the hook.

How so? The tale is convoluted, but the gist is that a packaging material supplier (the people who make boxboard, steel cans, plastic containers, etc.) is allowed to volunteer to be the steward. At first blush this sounds fine — if XYZ steel or plastics company wants to pay stewardship fees, what do we care?

The trouble is that the brand owners will inevitably lean on their suppliers and say words to the effect of, “If you want us to buy your [boxes, bags, etc.], we expect you to eat the stewardship fee.” Apart from the fact that isn’t what EPR is supposed to achieve, the stewardship fee might actually be higher than the profit margin of certain kinds of packaging. Whole industries could be dislocated.

On March 18 Damian Bassett, CEO of Stewardship Ontario, received a letter from Glenda Gies, executive director of the WDO, notifying Stewardship Ontario that the WDO had “received a request from the Canadian Plastics Industry Association, on behalf of Paper and Paperboard Packaging Environmental Council and the Packaging Association of Canada, that a dispute resolution process be implemented to address their concern regarding Stewardship Ontario’s administrative policy for voluntary stewards.” (This letter is also posted on our website under “posted documents.”)

Guy Crittenden is the editor of this magazine, which will be following these issues as they unfold and report back to readers. Also, Crittenden will chair an expert panel discussion on blue box funding on the final day of the mWIN conference, June 9-11 in Markham, Ontario. Panelists will include PPEC’s John Mullinder, consultant Colin Isaacs, Product Care’s Mark Kurschner and the Packaging Association of Canada’s Larry Dworkin. It should be a lively discussion!


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