What is Extended Producer Responsibility?

EPR schemes task producers (or first importers) of packaging with the physical and financial responsibility of managing that material at end of life. While EPR can take multiple forms (mandatory, negotiated, voluntary, partial etc.), the overarching objective is to focus on the end of life treatment of consumer products, with the aim to increase the amount of product recovery, while simultaneously minimizing the environmental impact of waste.

While the above is an oversimplification of an incredibly complex topic, for the purposes of our conversation,  I  want  to  focus on the  following:  shifting the  physical  and financial  responsibility  of managing packaging waste, onto packaging producers (hence forth referred to as stewards). While the roles and responsibilities of waste service delivery and financially obligated parties differ across jurisdictions, I will use Ontario’s Blue Box Program as a case study to provide context.

Historically, municipalities have been responsible for managing residential packaging waste, providing recyclable collection and processing to more than 90% of all Ontario households. Since 2002, Ontario has operated under a shared producer responsibility model, with municipalities being responsible for 50% of costs related to operating the Blue Box program, and stewards (packaging producers) being responsible for the remaining 50%. There are actually a number of unique quirks and intricacies to this financial arrangement (i.e. best practice negotiated costs, a three factor effectiveness and efficiency formula, performance based municipal funding etc.), all of which are outside the scope of this conversation.

Truthfully, there are only a handful of people in the province that are even able to do a serviceable job of explaining what these things mean.

Under this arrangement, the costs of the Blue Box program have almost tripled (as of 2019, the net cost of operating the system exceeded $270 million dollars), while recycling rates have increased by less than

5%, and are in fact, trending downwards. In short, the program has been doing terribly, with year over year cost increases well into the double digits, and declining diversion performance resulting from a fundamental shift in the types of packaging being sold into market.

With this in mind, it should come as no surprise that the shift to a 100% producer responsibility model was met so warmly by both municipalities and policy makers. In fact, in August of 2019, the Province published a special report by advisor David Lindsey declaring that the transition to full producer responsibility will save Ontario tax payers money. The underlying logic is that prior to the announcement of a full EPR scheme, the costs of Ontario’s recycling system were born by both municipalities and packaging producers equally. Given the rapid escalation in net system costs since program inception, it makes sense for municipalities to advocate for a 100% producer responsibility model. Municipalities will no longer be obliged to operate and maintain a residential Blue Box program, leaving it in the hands of producers to develop their own solutions for how they choose operate the system (A model that has been adopted in British Columbia). Given this transfer of costs onto the producers of packaging, the expectation is that households will no longer bare the costs of recycling through municipal taxation, hence the conclusion that EPR will save tax payers money.

The Lindsey Report even went so far as to say that a steward led recycling program will actually drive economic growth, as keeping materials out of landfills will necessitate that producers develop new end of life applications and waste treatment options.

But is this actually the case? Is the key to a sustainable recycling program have producers take the reigns and innovate in ways that municipalities and local governments aren’t able?

What is EPR Intended to Do?

Before answering that question, let’s take a step back and better understand what EPR is intended to do, beyond a transfer of costs onto producers. Advocates of producer responsibility often claim that it results in:

1)   Encourage design for the environment: By forcing producers to bare the end of life management costs (in the case of printed paper and packaging, recycling costs) and meet recycled content quotas, the expectation is that producers will design their packaging in such a way that is more readily recyclable given existing infrastructure

2)      Contain Costs: By shifting end of life management costs onto producers, they will not only be incentivized to use more readily recyclable material, but do so in a way that minimizes material management costs. If producers are obligated to “foot the bill” of the entire system, then they have a greater incentive to reduce costs relative to a shared responsibility model where municipalities paid half.

A contention made by municipalities in the past, is that the increases observed in the cost of operating the Blue Box program were a direct result of producers developing packaging that was incompatible with the existing recycling infrastructure. Under a shared responsibility model, municipalities felt that they were “subsidizing” the packaging decisions made my manufacturers, who had less of an incentive to use materials that could be more readily recycled.

3)   Invest in recycling infrastructure to more efficiently capture and recycle light-weight materials: Under a full producer responsibility model, producers are tasked with the responsibility of operating the entire system, which not only includes a financial obligation, but a physical one as well. Previously, municipalities have traditionally served as the waste management operator, providing collection and sorting services. A 100% EPR Model will incent producers to invest and develop infrastructure that allows them to meet their legislative responsibility, which in turn, will result in investments in collection and sorting infrastructure to better capture lightweight materials.

4)    Develop healthy and robust markets for problematic packaging materials: Given that producers will bear the responsibility of managing all packaging at end of life, this will require significant investments in end markets and end use applications of light weight and composite materials. Despite the increased proliferation of light weight packaging, there remain few viable end markets for these materials. As such, if an EPR model is implemented that obliges producers to recycle their packaging, they will have to develop new and innovative ways to use these materials.

While all of this conceptually makes sense, if we were to take a comprehensive examination of publicly available data for EPR programs (i.e. Recycle BC in British Columbia), few, if any of these objectives are met. Attached at the end of this post is a study conducted by York University that examined the efficacy of the Recycle BC program using publicly available data. The genesis of undertaking this research was that Recycle BC is often touted as a best practice model for steward lead producer responsibility, and is seen as a potential model to be replicated in both Ontario and other jurisdictions across the United States. The most salient findings from this review include:

 Program costs have increased by approximately 26%, while program performance (measured as % tonnes diverted) has increased by 1%

  Despite  a  7%  increase  in  service  coverage  (measured  as  #  households  with  access  to curbside/depot collection), total collected recycled tonnes remains unchanged, while tonnes of material being sent to landfill disposal is increasing. Overall, tonnes being collected by Recycle BC (including recycling, recovery, energy from waste and disposal) is trending downwards

 The most significant driver of increase in costs can be traced to increase in per tonne material management costs (which increased by 20.5% year over year between 2017 and 2018). While the specific cause for this increase is difficult to isolate, a potential explanation is that the proliferation of light weight and composite materials cannot be readily managed in existing recycling systems.

There is no evidence to  indicate that a steward operated extended producer responsibility scheme will result in cost containment or increases in recycling performance. In fact, the rate of year over year cost increases is greater in British Columbia (steward lead) than it is in Ontario (municipally lead), when compared over the same time period

Of note, the overall carbon impact attributable to Recyclable BC has potentially decreased year over year, given the types of materials being recovered. A fall in the recovery of metals (a presumed mix of aluminum and steel), results in a lower overall carbon impact from recycling, despite the increased recovery of glass cullet, paper and plastics. This preliminary finding points to the fact that the total amount being recycled matters less than what is actually recycled.

The salient findings from the study show that program performance (measured in terms of diversion) is deteriorating over time, while material management costs (measured in terms of net costs per tonne managed) are increasing at a faster rate than any other province in Canada. Once again, I want to stress that these results were calculated using public data that was made available in the Recycle BC annual reports – numerous attempts were made to reach out to the organization to seek clarity on what certain data points meant, or whether the overall findings were consistent with their impression of the program, but the university recieved no response. I don’t say this in a way that is meant to criticize Recycle BC, my intent is to highlight that what little data does exist, paints a very damning picture for steward lead producer responsibility schemes for packaging waste.

Statements that EPR will lead to either increased diversion performance or cost containment is not born out in the data, which makes it all the more pressing that we challenge these assumptions before attempting to replicate the model in other jurisdictions.