April 2008

Canadian auto recyclers want vehicles processed prior to shredding

While 95 percent of the approximately 1.2 million cars that are retired annually in Canada are sent to shredding operations, about 500,000 of those vehicles do not pass through automobile recyclers and subsequently, are shredded with the various fluids and mercury switches intact.

The Automotive Recyclers of Canada (ARC) is looking to reduce that number considerably and with the help of federal, provincial and territorial governments, to establish a system that would see nearly every vehicle pass through a recycling process to ensure that fluids are drained; mercury switches, acid batteries, gas tanks and recyclable parts are removed.

Steve Fletcher, the managing director of the ARC, says this would bolster the revenues of automotive recycling operations with additional re-used parts.

Outdoor racking at Carcone’s Auto Recycling in Aurora Ontario holds recovered parts from vehicles prepared for recycling.

With scrap steel in serious demand, Fletcher says that automotive recyclers and those seeking to sell directly to shredders are competing to acquire vehicles.

“In a normal environment, there is not a lot of friction between the two parties,” he says, “but with scrap at almost historic highs, there tends to be competition for the car on the street. In Ontario, there is an absolute glut of vehicles because everybody is chasing after that car.”

He added that the rate of auto recycling tends to be higher on the Canadian west coast, with Ontario below average and Quebec having an average rate.

There are about 10 shredders in Canada, with 5 in Ontario and the remainder in urban centers and ports. Because shredding operations tend to be located adjacent to major ports and transportation hubs, in isolated areas such as Alberta, vehicles sold to shredders may receive $100, while those in Ontario pay $150 per vehicle.

“In Alberta you have a surplus of cars and it’s only recently that we’ve heard of people going to Alberta looking for scrap – this is a good thing for our industry,” says Fletcher. “Many shredders need to buy the vehicles in bulk to get them over the mountains into British Columbia. The more we can prevent abandonment, where it is not worth the effort for the last owner to pay someone to take the car, we at least end with a revenue neutral situation.”

There are no automotive recycling operations in Canada’s northern territories, but Fletcher notes that municipal dumps are now making efforts to have scrap dealers make visits to acquire those vehicles.

Environment Canada, an arm of the federal government, is currently funding five different vehicle scrappage programs for about $500,000 per program. These are ‘early retirement’ incentive programs out of Calgary, Winnipeg, Vancouver, Halifax and Montreal.

In March 2007, the Feds earmarked $36 million to create a national scrappage program, with $30 million for incentives for a person to retire their vehicle and $6 million to create the program’s infrastructure and promote it.

Fletcher says this could either lead to the strengthening of existing regional programs or a national program where Canadians could contact a single organization.

“This will result in lowering green house gas (GHG) emissions because the odds are that a person retiring a pre-1995 vehicle will purchase a newer car with better emission controls,” he says. “Basically 1995 and older cars have very poor environmental controls. It is estimated that 15 percent of the cars on the road are pre-1995 and they generate 50 percent of GHG emissions of the total fleet.”

In terms of incentive, owners could receive $500 worth of public transit passes. The existing program uses a $1,000 incentive to buy a new vehicle, and that program retires 20,000 vehicles per year.

With the car retired, the ARC wants those vehicles routed to an auto recycler. ARC represents 420 of the approximately 1,700 operations in Canada.

“They should go through a system so that the vehicle does not become a waste hazard should it fall into the wrong hands,” says Fletcher. “When you are crushing a car without draining the fluids and removing the mercury and lead, you are contaminating the automobile shredder residue, making it a hazardous material that contaminates the landfills, as well as the shredding operation itself.”

He stresses that there is little or no government oversight when it comes to recycling and shredder operations.

“Part of this national program is to implement a code of practice for our industry to ensure that the vehicle is properly handled,” says Fletcher.

Unlike the United States, there is no mandated program for the removal of mercury switches. A voluntary program was announced last December that places the onus on the auto manufacturers and steel producers to develop programs.

“They won’t have the plans in place until July,” says Fletcher. “But the manufacturers have said they will not pay for the removal. We told them they would have lower recovery rates compared to the United States.”

Steel mills would prefer to not have mercury in the scrap steel they process because that results in emissions of mercury and the need to install expensive scrubbers that have not been proven effective. Mills have some leverage by paying more for green hulks versus a standard hulk, but they still accept contaminated steel.

“This is part of the message that we are giving to the insurance companies, garages and general public,” says Fletcher. “A reused part is an environmentally responsible part. Alternators, transmissions and engines can be rebuilt. An engine is worth $30 as metal, but a reused engine is worth $500.”

The ARC would like to see more shredders refuse undrained vehicles and those with hazardous parts.

Markets are developing for drained fluids. In Ontario, a liter of oil is worth five cents and most provinces have stewardship programs for tires, batteries and oil. Ontario does not have any.

“This gives us good leverage,” Fletcher says. “With good working models that point to successes, it helps to persuade legislators to pass legislation.”

The ARC is hoping that future car design allow for easier dismantling at the end-of-life stage and that discussions with the auto industry in North America and governments will reach the level that has been achieved in Japan and Europe.

Fletcher stresses that legislation is not enough.

“We need certain things from the manufacturers and you need governments to help push those things,” he says. “If you just pass legislation, unintended consequences are rampant. But if you encourage dialogue and cooperation, which is kind of the Canadian way of going about things, benefits can occur faster and better.”