September 2003

Ontario Recycling Plan Costly; Will Not reduce Solid Waste

'Producer Responsibility' Law May Shape Other Legislation

Washington, D.C.— Companies selling consumer products in Canada’s Ontario Province may end up paying millions of dollars in new packaging fees and administrative costs to comply with a law requiring industry to reimburse 50 percent of local government recycling costs. “The proposed fee system does little to improve recycling or reduce waste,” according to recycling policy expert Michele Raymond.

Ontario’s Bill 90, enacted in 2002, shifts half the cost of local “Blue Box” curbside recycling programs to industry without providing any incentives to improve recycling rates or the efficiency of the curbside programs.

“The implementation plan submitted to the Ministry of Environment by Stewardship Ontario will cost industry about $50 million (U.S.) just to calculate the fees on 19 types of consumer packaging,” Michele Raymond, president of Raymond Communications, Inc., said recently. Raymond has been tracking recycling policy since 1987 and publishes State Recycling Laws Update and Recycling Laws International.

“Administrative costs will be high because manufacturers in North America have never had to weigh their packaging, though it is common to pay weight-based fees in Europe and Asia. Companies pay packaging recycling fees in 24 countries,” Raymond said.

“Total fees and administrative costs may well exceed $150 million (U.S.) over the next three to four years,” she said. If approved by the Ministry of Environment, Ontario will be the first Province or state to enforce a “producer responsibility” law on all types of packaging in North America. Quebec also has an enabling law, and is expected to follow Ontario soon with similar fees.

The plan developed by Stewardship Ontario would apply to about 5,000 to 10,000 companies, including many major U.S. firms. The fees will especially impact food, cleaning supplies, cosmetics and electronics companies.

Bill 90 also applies to “printed papers,” so companies will also have to weigh and calculate fees on paper inserts, fliers and manuals, for the first time anywhere in the world.
Manufacturers that supported Bill 90 are now smarting over the unanticipated complexity and expense, Raymond said. “The big brand owners were told the fees would be for a ‘basket of goods,’ and that the newspaper industry would pay for about 30% of the total,” she said.

However, the newspaper industry showed that municipalities break even on old newsprint recycling, so the entire $22 million (U.S.) in projected first year fees falls on the other brand owners, she said.

Instead of charging fees based on the cost to recycle a material per ton, the fees are averaged out based on how many tons are recycled. “As a result, the more your material is recycled, the more you pay,” Raymond said.

Generally, European countries have instituted “extended producer responsibility” or “take back” systems on a national level, not on the provincial or state level as in Ontario.

“European systems are designed to pay for themselves rather than just raise capital. Ontario’s plan has a financial goal, and under the plan, industry will have no control over the actual recycling process,” Raymond said. In Ontario, all recycling will continue to be handled by local governments. Most European countries take a “shared responsibility” approach to recycling, with industry taking responsibility once the material has been separated.

Ontario’s curbside recycling system has some built-in inefficiencies that industry must now reimburse. “For example, communities in Ontario with a population of 5,000 or more are required to have Blue Box programs even if a drop-off system for a smaller city is more efficient,” Raymond said. Industry’s portion of Blue Box costs is expected to rise from about $22 million (U.S.) in the first year to $44 million (U.S.) by 2005.

“Since this is a reimbursement program, there is no incentive for industry to actually improve recycling. Industry has no real control over the recycling programs. Unlike other producer responsibility approaches, the Ontario law fails to provide any incentive encouraging manufacturers to use more recyclable packaging,” Raymond said.

“This policy sets a dangerous precedent in North America. If Quebec and other provinces or even U.S. states copy the idea, industry will end up with a very costly patchwork of fees that that may not lead to any real environmental improvement,” she said.