Duncan Bury

After 15 years as a federal public servant and 15 years working with municipalities, Duncan Bury formed Duncan Bury Consulting (www.duncanburyconsulting.ca) in 2010 to contribute to the planning and implementation of strategies for the enhanced diversion of material from disposal and to support the continuing development of environmental stewardship and producer responsibility.

Features

Maturing Approach

Canadian Market Report

Canada’s extended producer responsibility programs continue to evolve as they mature.

June 6, 2013

In Canada extended producer responsibility (EPR) has become a mature environmental policy and regulatory instrument widely used to manage packaging and printed papers as well as products including electronics, paint, batteries, household hazardous wastes, pharmaceuticals, tires, pesticide containers and crankcase oil.

The Canadian Council of Ministers of the Environment (CCME) has defined EPR as “an environmental policy approach in which a producer’s responsibility for a product is extended to the postconsumer stage of a product’s life cycle,” which is similar to the OECD (Organisation for Economic Co-operation and Development) definition. The fundamental principles, tenets, guidance and goals for EPR up to 2017 are set out in the CCME’s Canada-wide Action Plan for EPR (See www.ccme.ca/ourwork/waste.html?category_id=128.), which was adopted by all jurisdictions in October 2009.

From the first EPR program for waste paint that was launched in British Columbia in 1994, Canada now has more than 80 product-specific operational programs grouped into more than 50 producer responsibility plans. In Manitoba, for example, 13 EPR programs are regulated under the province’s Waste Reduction and Prevention Act (WRAP). Estimates suggest that more than C$2 billion (US$1.99 billion) flow through these programs nationally each year with significant associated employment.

Most EPR programs are regulated provincially, but EPR also is under consideration by the northern territories and by the federal government. In some product areas, such as electronics, program coverage is almost national in scope.

A number of nonregulated programs also exist, such as the one operated by Clean Farms for used pesticide containers, which are managed and funded by producers voluntarily on a national basis. The only national inventory of EPR programs and stewardship programs without producer responsibility was released by Environment Canada in 2011. (See www.ec.gc.ca/gdd-mw/default.asp?lang=En&n=9FB94989-1.)


EPR Monitoring and Reporting
Monitoring and reporting on the state of Canadian EPR regulation has been undertaken by Extended Producer Responsibility Canada, a nonprofit association interested in encouraging EPR policies, programs and best practices (See www.eprcanada.ca.). EPR Canada surveyed the provinces, territories and federal government and issued a report card in July 2012 on the state of EPR in Canada for the year 2011. An evaluation of government commitment, implementation and accountability for EPR programs in 2012 is currently underway. Actual program performance is not being measured.


EPR Program Structure
EPR regulations identify designated products and the obligated producer or first importer, prescribe reporting obligations and set targets for collection and recycling.

In the case of most EPR programs, producers have come together to form nonprofit producer responsibility organizations (PROs) to undertake the funding and management responsibilities and obligations. Some regulations have focused on collective producer responsibility, whereas others have placed the responsibility more explicitly on individual producers. The producer is responsible for funding the program, often choosing to do so through visible, point-of-purchase “eco-fees” and for operating the program, either directly or through a service provider, such as Product Care or Encorp, or through contracts with municipalities.

In the case of packaging and printed papers (PPP), municipalities have commonly retained operational responsibilities for recycling programs with varying levels of funding provided by producers depending on the province (Ontario 50 percent, Saskatchewan 75 percent, Manitoba 80 percent, British Columbia and Québec 100 percent).


Municipal Roles & Responsibilities
The steady growth in the number of EPR programs in Canada and the increasing scope of those programs has meant changing municipal roles and responsibilities.

As EPR programs are implemented and costs are shifted from property tax and rate payers to producers, municipalities are changing from recycling program operators and funders to service providers. Because of municipalities’ historic investment in waste management infrastructure, they are often well-placed to operate drop-off depots and other collection systems for products that are covered under EPR regulations. What has changed is that municipalities increasingly provide their facilities under contract to the obligated producer and PRO. PROs also use their own collection and return to retail systems, but the use of municipal facilities for depots and for special one-off collection events is still very common.

In the case of PPP in British Columbia, producers, through Multi-Material British Columbia, also have been given responsibility for collection, and municipalities have the option of vacating the field of municipal curbside recycling completely.


Infrastructure Growth
With the growth of EPR programs, new infrastructure for collection and processing has grown in parallel and new end markets have been developed for collected materials. The infrastructure investment by the private sector has been significant, and investment and contracting opportunities will continue to grow as EPR programs continue to expand. Aside from the traditional scrap metals industry, little of this investment, or associated employment, existed before the establishment of municipal recycling and EPR programs.

EPR programs also have been instrumental in the development of new products using recycled materials, as producers have sought new opportunities to market secondary materials. In the case of used tires, recycled crumb rubber is being used to manufacture roofing shakes, athletic flooring, playground surfacing, livestock mattresses and rubber mulch. Most of these end markets have grown or been established in direct response to the establishment and growth of the EPR programs for tires.


Issues and Challenges

Efforts by governments over the past number of years have focused on the drafting, consultation and passage of regulations mandating EPR for designated products. At the same time, producers have focused their efforts on program roll out; the establishment of funding mechanisms and collection, processing and material marketing infrastructure; and program communications.

Following on these successes, increasing attention is being paid to program performance and reporting and to issues related to program implementation and funding.

Program reporting and targets. All EPR program regulations come with reporting obligation, but not all programs come with mandated waste collection and diversion goals. Regulations are also usually silent on the consequences for failure to meet performance measures and targets. Products also come with their own unique program measurement challenges related to such issues as short or long product life expectancy and availability for collection.

In all cases, setting targets and standards for collection, recycling and environmental performance warrant careful consideration on a product-by-product basis. These challenges and the calculation and adoption of other measures, such as greenhouse gas reduction, are slowly attracting more attention on the part of government oversight bodies, the public and producers.

Cost internalization or visible consumer fees. As noted earlier, many EPR programs in Canada use eco-fees, which are paid by consumers and explicitly added at the cash register, as the preferred mechanism to fund producer EPR obligations.

At the same time, a number of EPR programs (pesticide containers, rechargeable batteries, pharmaceuticals and some electronics and paint programs) internalize the costs of the EPR program into the advertised and posted price.

Under the cost-internalization approach, expenditures on the EPR program are paid by the obligated producer and are viewed as a cost of business in the same way as the cost to manufacture, distribute and market the product.

Québec has addressed eco-fees in all its EPR programs by allowing producers to communicate that a product price includes an end-of-life management fee but by banning the explicit addition of the fee at the cash register. A similar approach has been taken by New Brunswick for its paint and used oil EPR programs.

Eco-fees attracted considerable public attention in Ontario in July 2010 in response to a new phase of the EPR program for household hazardous waste (HHW) and again in April of this year in response to announced increases in eco-fees in the electronics and tire programs. Ontario’s environment minister has hinted that in response to the recent controversy, a cost internalization approach similar to Québec’s is being considered. Other jurisdictions have generally avoided controversy about eco-fees but are undoubtedly watching the developments in Ontario, Québec and New Brunswick with interest.

Harmonization. Most EPR programs in Canada operate in a similar way; but, because most are regulated provincially, they all have their unique nuances and requirements. Producers have consistently argued that these differences create administrative complications and inefficiencies and are expensive. Governments have acknowledged the benefits of harmonizing programs but generally have shown themselves to be less capable of actually addressing the concerns.

Producers have increasingly shown that they can play a major role in harmonizing programs and have acted in a number of program areas by centralizing administrative functions and using common communications. The creation of organizations such as the National Used Oil Management Association are a strong indication that producers are starting to work together to manage programs on a more national basis beyond the narrow confines of provincial regulation.

In some cases governments have worked with producers to harmonize programs; but, generally these cases are the exception, not the rule. One obvious case where such cooperation has occurred is with the electronics EPR programs in Nova Scotia and Prince Edward Island, where regulations are similar, product lists and communications were harmonized and producers use the same PRO, Atlantic Canada Electronics Stewardship (ACES), in both jurisdictions.

Maintaining environmental standards and a fair marketplace. With the establishment of large PROs, concerns have arisen in some quarters about the ability of producers to influence the marketplace through such means as setting the prices paid to processors and assigning processing tonnages.

The issue has arisen most visibly in Ontario in the electronics EPR program, where Sims Recycling Solutions and the Ontario Waste Management Association have both publicly raised concerns about Ontario Electronic Stewardship’s (OES’s) contract practices. Most recently, particular concern also was expressed about the assignment of collected e-waste to low-cost overseas processors that did not meet environmental or safety standards (An editorial on the topic appeared in The Tornonto Star: www.thestar.com/opinion/editorials/2013/04/27/ontarios_costly_recycling_program_for_electronics_falls_short_editorial.html). These accusations have not been verified yet but are being investigated by Waste Diversion Ontario.

Oversight. Under an EPR program, government plays a major role in overseeing EPR program performance. In many jurisdictions these responsibilities have been at least partially given to quasigovernment agencies such as Waste Diversion Ontario and Recyc-Québec. In an era of government budget constraint, the ability of provincial agencies to properly monitor the activities of PROs and EPR programs is being stretched. For example, questions are starting to be raised about the capacity of governments to ensure there are no free riders in EPR programs. As policy, and in response to funding constraints, some governments have required PROs to help fund the oversight functions for their programs. It is an open question whether or not such transfers from PROs to oversight agencies is appropriate given the possible negative perceptions and consequences for independent auditing that could be associated with such funding.


Here to Stay

EPR is here to stay in Canada and whether it is an appropriate policy and regulatory instrument is no longer debated. In fact, EPR policies and programs are now so well-established that they appear immune to changes in government or political direction.

EPR programs have shown themselves to be effective ways to enhance waste diversion, properly manage hazardous and problematic wastes and shift costs away from municipal property tax and rate payers. EPR programs also have fostered a new secondary materials infrastructure and have created new business opportunities in a number of areas, including materials collection and processing, program operations and the development of recycled content products.

With the maturity and continuing growth of programs, more attention is being paid to the environmental performance of EPR programs and the challenges associated with program implementation and funding. These are likely to be the major areas of debate and influence on program design, implementation and management in Canada over the next years.

 

After 15 years as a federal public servant and 15 years working with municipalities, Duncan Bury formed Duncan Bury Consulting (www.duncanburyconsulting.ca) in 2010 to contribute to the planning and implementation of strategies for the enhanced diversion of material from disposal and to support the continuing development of environmental stewardship and producer responsibility.

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