It was clear from the plethora of presentations at Environment Canada’s 3rd National Workshop on Extended Producer Responsibility (EPR) in Halifax this March that this European-style approach to waste diversion is sweeping the nation. The list of existing or imminent EPR programs in Canada includes electronics waste (see articles pg. 23, 28), batteries, scrap tires, refrigerants, paint, used oil and packaging materials. Future designated wastes could include mercury, fluorescent tubes, pharmaceuticals and even organics.
EPR keeps the cost of waste recycling or disposal out of taxpayers’ hands by making manufacturers responsible for the downstream fate of their products. EPR proponents say that when companies internalize the full lifecycle costs of their materials, they become more efficient, eliminate packaging waste, make their products easier to reuse or recycle, and support markets for spent materials.
Despite EPR’s potential benefits, program design, implementation and funding can be controversial. Many manufacturers use continent-wide distribution and retail systems that function as though borders don’t exist. Can you imagine the raised eyebrows in boardrooms from Houston to Schenectady when company execs are told they’re responsible for special stewardship fees in a Canadian province?
Industry is motivated to resist EPR and a whole industry of lobbyists has sprung up to lend a hand.
Typically, an EPR program is administered by a third-party producer responsibility organization or “PRO.” Current PROs include provincial scrap tire management boards, beverage container recovery boards, and used-oil management associations (among others). The third-party status of these organizations supposedly minimizes conflicts of interest, potential collusion and the public perception that fees are just another government “tax.”
However, lobbyists may advance their clients’ agendas by stacking the boards of PROs with people who are friendly to the industry’s viewpoint. For appearance’s sake they might allow an NGO (non-governmental organization) to participate, but never a threatening consumer or environmental advocacy group. Provincial recycling associations are a safer choice because their own boards are populated by members of the affected industries. The PRO may even be one of their financial supporters!
This governance problem has led to a real danger that Canada’s EPR programs will do for the environment what Enron did for energy. Except there will be no media crisis: ministers will get their photo-ops and industries will garner green PR. Consumers will pay for programs with big shortcomings and tune out criticisms as “inside baseball” for consultants.
The first principle of true EPR is that program costs should be borne at the point of product design. If a program simply slaps an advance disposal fee on the consumer, brand owners or first importers have no real interest in changing the way they do business. Yet this is the very outcome the lobbyist seeks, as Ontario’s tire lobby recently demonstrated.
Ontario generates far more scrap tires than any other province but is one of only two that lack a stewardship program. The province’s former environment minister Chris Stockwell requested that the province’s Waste Diversion Organization (WDO) oversee the development of an EPR program for tires in which “brand owners and first importers” would be the “stewards.”
A PRO named Ontario Tire Stewardship (OTS) was formed with board members from Michelin, Goodyear, Wal-Mart Canada, OK Tire Stores, the Ontario Tire Dealers Association, the Rubber Association of Canada and Canadian Tire. (Canadian Tire’s rep Gail Bebee also leads the charge for the Ontario Used Oil Management Association.) These are all industry people; no one directly represents consumers or the environment.
Not surprisingly, the OTS plan — presented in March — called for a visible fee on new tire sales of $4 per passenger tire and $6 per commercial tire. The plan also called for retailers to be the “stewards” instead of brand owners and first importers, despite the fact that Ontario’s new Environment Minister Leona Dombrowsky had given written clarification that this would not be acceptable. OTS argued that the brand owners don’t have retail sales figures after their tires are shipped to distributors. Also, leases for some retailers (especially in malls) are determined as a percentage of sales, so a hidden fee might inflate lease costs. (See article, pg. 14.)
It’s obvious that the brand owners could obtain the retail sales figures if they really wanted, and retailers could show the EPR levies to their landlords (even if they’re invisible to consumers). The real reason for the resistance is that tire prices are established continent-wide by head offices south of the border, and the Canadian outfits will likely have to eat a stewardship fee that doesn’t start and end with the consumer.
While the OTS scheme would keep used tires out of scrap piles it’s not true EPR: the consumer as “steward” lets the brand owner off the hook. The program could repeat the inefficiency of Alberta’s system that collected $28 million more in funds than were needed to run the program.
Staff within the environment ministry and other departments were under intense industry pressure to accept the OTS plan but the minister stood her ground, insisted that brand owners and first importers remain the stewards, and rejected the OTS plan. This is a victory for EPR proponents, but until the governance problems at such PROs are corrected consumers and the environment are at risk from more pseudo-EPR schemes cooked up by lobbyists.
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