Waste Diversion Act Industry Consultation Webcast Calculating the Material Levies for Obligated...

Waste Diversion ActIndustry Consultation Webcast

Calculating the Material Levies for Obligated Stewards


Webcast Presenters

Damian Bassett Dan Lantz Gordon Day Derek Stephenson


AGENDA

10:00 – 10:05 Welcome & Webcast Notes Damian Bassett – Stewardship Ontario

10:05 – 10:20 Draft Definitions for Calculating Obligated Materials Gordon Day – Stewardship Ontario, Technical Services

10:20 – 11:00 How Material Levies will be Calculated by Stewardship Ontario Dan Lantz – Stewardship Ontario, Technical Services

11:00 – 11:55 Question Period Damian Bassett – Facilitator Derek Stephenson – Program Manager Gordon Day – Technical Services Dan Lantz – Technical Services

11:55 – 12:00 In Closing Damian Bassett


WEBCAST NOTES

• To ask a question during Question Period, call 416-640-4127

• Please “speak now” and “for the record”, as your input is important

• Please also feel free to write us questions during the Consultation Period to: [email protected]

mailto:[email protected]


WEBCAST NOTES

• Official comments on Blue Box Program Plan, must be submitted in writing - Deadline is January 17, 2003

• Mailing address can be found at www.stewardshipontario.ca

• E-mail: [email protected]

• Workshop 2 – “Stewardship Ontario’s Business Plan” - January 16, 2003

• Draft BB Program Plan to WDO Board – January 21

• Final BB Plan to WDO – February 18• Final BB Plan to Minister – February 28

http://www.stewardshipontario.ca/



WEBCAST NOTES

• Please return to www.stewardshipontario.ca following your listening to this webcast (live or in archive) - to fill out a webcast Evaluation Form

• Industry representatives who fill in an Evaluation Form will receive an electronic version of the proposed funding model – to allow companies to complete preliminary assessment of their own projected costs



WEBCAST NOTES

• Reminder: this event will be archived for listening and comment at Canada NewsWire for the duration of the Industry consultation process

• This is a 3-part Industry consultation process. Proceedings and presentations from part-one: the December 3 Workshop 1 are posted on Stewardship Ontario website

• Please follow the easy links from www.stewardshipontario.ca

• Please visit the Stewardship Ontario website regularly for updates on January 16 Workshop 2, and all developing details and important events


Draft Definitions for Calculating Obligated Materials

Gordon Day – Technical Services


LEGAL FRAMEWORK

• The Waste Diversion Act, section 30(2) defines stewards of a designated waste as:

“…having a commercial connection to the designated wastes or to the product from

which the designated waste is derived”

• Item 5 in the Addendum to the Minister’s Request for a Waste Diversion Program for Blue Box:

“The proposed funding rules under the program will designate and define as stewards under the program, brand owners and first importers into Ontario of products that result in blue box wastes under the program”


PROPOSED RULES

• Stewardship Ontario defines “obligated steward” as:

- Brand owner of printed paper and packaging, or

- First importer to Ontario of printed paper and packaging


BRAND OWNERS• Brand owner or trade-mark owner defined as:

a) Packer-filler/publisher in Ontario that result in blue box wastes, orb) Party that causes packaging or printed materials,

orc) Brand owner’s/publisher’s Ontario subsidiary/legal entity for product packaging or printed materials imported to Ontario, ord) Where the brand owner whose legal entity is outside Ontario agrees to register with Stewardship Ontario and discharge their responsibility


FIRST IMPORTER

• Where the brand owner/publisher does not have an Ontario legal entity:

e) the first importer to Ontario is the firstperson to take possession of the product

in Ontario


SERVICE PACKAGING

• Service or in-store packaging is that which is filled and/or provided at the point of sale. Service packaging is considered primary household packaging and is therefore obligated.

• Every merchandise shop, quick service and grocery establishment which provides customers with service packaging is obligated as the brand owner or first importer.

• Given the large number of establishments responsible for service packaging, Stewardship Ontario would like to establish special rules for service packaging:


FRANCHISES• The franchisor shall be deemed the obligated

steward for all its Ontario franchisees and is obligated to report for all of its franchisees and corporately owned operations in Ontario with the following exceptions where:

a) franchisor does not supply the goods to plants, distribution centres, and stores

operated by its franchisees - each franchisee shall be deemed to be the steward

b) under a master franchise agreement, where the master franchisee supplies all or

substantially all of the goods to plants, distribution centres - the master franchisee shall be deemed to be the steward


OPTION 1

• Suppliers of service packaging have the option of declaring service packaging to Stewardship Ontario on behalf of those of their customers who provide service packaging to consumers

This approach would leave the matter of who pays the fee up to commercial negotiations

or


OPTION 2

• Suppliers of service packaging shall declare all service packaging to Stewardship Ontario on behalf of their customers who provide service packaging to consumers

This approach would determine by rule that it is more administratively simple for the relatively small number of suppliers of service packaging to pay fees


NEXT STEPS

• Stewardship Ontario wants to receive your feedback and comment on the proposed definitions and options presented

• Please provide your feedback through this webcast’s Question Period and Evaluation Form, and through [email protected]


How Material Levies will be Calculated by Stewardship Ontario

Dan Lantz – Technical Services


KEY BASE ASSUMPTION

The numbers presented in this model, and the model itself, are preliminary only, and will likely change in response to:

Comments received during the Consultation Process

Additional data provided by key stakeholders Policy decisions yet to be taken by the Board


INTRODUCTION

Five key principles underpin the funding allocation methodology. The fee structure should:

Reflect the true costs to manage each designated Blue Box material

Take into consideration the benefits to all stewards from high recycling rates achieved by some materials

Encourage stewards to select materials that can be recycled at lower costs

Encourage increased material recycling rates Minimize the total net costs to the members of

Stewardship Ontario (e.g., reflect positive revenues)


STEPS TAKEN TO DATE

Model was first introduced to the Stewardship Ontario Board for its consideration on November 26, 2002 Approval given for consultation on the model

Presentations given to key stakeholders and stakeholder committees

Key changes have been made as a result of consultation to date

Additional changes may result from continued consultation


MODEL OVERVIEW

The Model is comprised of three tables:

1. Waste Composition and Quantities Diverted

2. Cost to Manage• Gross Cost• Revenues• Net Cost

3. Funding Formula


MODEL OVERVIEW

The materials within the Blue Box are addressed in two streams: All printed paper

• Newspaper, telephone books, magazines and catalogues, other printed papers

All packaging• Old corrugated containers, old boxboard, aseptics,

gabletop cartons, paper laminants, plastic laminants, PET, HDPE, plastic film, polystyrene, other plastics, steel cans, paint cans, aerosols, aluminum cans, aluminum foil, clear glass, coloured glass


WASTE COMPOSITION

The quantity of each material generated in Ontario in 2001 was calculated on the basis of a series of waste audits undertaken across a number of municipalities around the province

Numbers represent waste generated in the residential sector - not sales into the marketplace


WASTE COMPOSITION

Adjusted estimates (through Dec/02) suggest 1,554,000 tonnes of recyclable materials were generated in Ontario in 2001

Quantity PercentageGenerated of Quantity

Category Tonnes Generated

PRINTED PAPERPrinted Paper Total 724,100 46.60%

PACKAGINGPaper Packaging Total 264,500 17.02%

Laminant Packaging Total 126,000 8.11%Plastics Total 167,100 10.75%Ferrous Total 67,900 4.37%

Aluminum Total 28,100 1.81%Glass Total 176,300 11.34%

PACKAGING TOTAL 829,900 53.40%

TOTALS 1,554,000 100.00%


QUANTITIES RECYCLED

The quantities diverted are taken from the

3 Rs Datacall undertaken as a joint effort by: Ministry of Environment Recycling Council of Ontario Association of Municipal Recycling Coordinators Municipal Waste Integration Network Composting Council of Canada Ontario Municipal Benchmarking Initiative Corporations Supporting Recycling


QUANTITIES RECYCLED

A total of 699,255 tonnes of material were diverted in 2001

The overall diversion rate for the program was 45%

Quantity MaterialRecovered Recovery

Category Tonnes Rate

PRINTED PAPERPrinted Paper Total 391,795 54.11%

PACKAGINGPaper Packaging Total 133,527 50.48%

Laminant Packaging Total 1,065 0.85%Plastics Total 26,859 16.07%Ferrous Total 32,582 47.99%

Aluminum Total 10,875 38.70%Glass Total 102,552 58.17%

PACKAGING TOTAL 307,460 37.05%

TOTALS 699,255 45.00%


PROGRAM COSTS

The gross cost per tonne for each material was calculated using an Activity-Based Costing (ABC) methodology

The total gross cost of the program for 2001 was estimated at $129,200,000

The average gross cost per tonne was approximately $185.00


PROGRAM GROSS COSTS & REVENUES

Revenues were estimated at $66.7 million for 2001

TotalCategory Per Tonne Total Cost Per Tonne Revenues

PRINTED PAPERPrinted Paper Total 85.00$ 33,302,575$ 83.27$ 32,622,822$

PACKAGINGPaper Packaging Total 314.46$ 41,988,870$ 66.54$ 8,885,372$ Laminant Packaging Total 429.72$ 457,562$ 40.38$ 42,997$ Plastics Total 760.08$ 20,415,115$ 205.69$ 5,524,674$ Ferrous Total 230.00$ 7,493,860$ 54.58$ 1,778,484$ Aluminum Total 557.00$ 6,057,375$ 1,604.24$ 17,446,105$ Glass Total 190.00$ 19,484,880$ 3.90$ 399,776$ Packaging Total 311.90$ 95,897,662$ 110.84$ 34,077,408$

TOTALS 184.77$ 129,200,237$ (95.39)$ 66,700,230$

Gross Cost Revenues


NET RECYCLING PROGRAM COSTS

It is estimated that the net cost for the Blue Box program was $62.5 million in 2001

Total %'age ofCategory Per Tonne Net Cost Total Net $

PRINTED PAPERPrinted Paper Total 1.73$ 679,753$ 1.09%

PACKAGINGPaper Packaging Total 247.92$ 33,103,498$ 52.97%Laminant Packaging Total 389.34$ 414,565$ 0.66%Plastics Total 554.39$ 14,890,441$ 23.82%Ferrous Total 175.42$ 5,715,376$ 9.14%Aluminum Total (1,047.24)$ (11,388,730)$ -18.22%Glass Total 186.10$ 19,085,104$ 30.54%Packaging Total 201.07$ 61,820,254$ 98.91%

TOTALS 89.38$ 62,500,007$ 100.00%

Industry Allocation 31,250,003$

Net Cost of Current System


CALCULATING MATERIAL LEVIES

There are separate levy calculations for printed paper and for packaging Through the consultation process and improvements

to the model, separating printed paper from packaging was seen as necessary to ensure a fair distribution of the levies to both streams

Therefore, $310,000 is allocated to printed materials and $30,900,000 to packaging materials

• Equivalent to the net cost to manage those streams in the current Blue Box program


BASIS FOR FEE PAYMENTS IN 2003

The fees paid by stewards in 2003 will be based on the costs for the management of recyclables as occurred in 2001

The quantities generated, recycled and the costs for the management of each material will be updated annually



Three factors are used to calculate specific material levies Recovery Rate – 45% of total cost to industry

• Levies are inversely proportional to the recovery rate for the individual materials

Net Cost – 40% of cost• Levies are proportional to each material’s percentage of the

system current net cost Equalization Factor – 15% of cost

• Levies are proportional to each material’s percentage of the system cost if all materials were recycled at the same rate



Recovery Rate Calculation - $14,062,500 allocation Separate calculations for printed paper and

packaging Levies are calculated for materials between and

within material categories by comparing recovery rates relative to the mean for the program

The higher the recovery rate, the lower the relative levy per tonne

• Range per tonne is from $4.50 to $31.10 for packaging and $0.14 to $0.36 for printed materials



Net Cost Calculation – $12,500,000 allocation The levy is a simple linear relationship between

the net cost to manage an individual material and the applied levy

• For example, if a material represents 5% of the net cost of the current Blue Box program, it is assigned 5% of the $12,500,000 dollars assigned to this category



Equalization Calculation – $4,687,500 allocation There are significant differences in recycling rates,

attracting different costs for each material, This factor acts as a means of promoting fairness in

sharing costs assuming all materials are recycled at the same rate

For each material, the number of tonnes that would be diverted at a 75% rate is calculated

This quantity is then multiplied by the current net cost per tonne to manage

• e.g., steel cans – 59,000 x 75% = 44,250 x $175.42 = $7,762,335



Equalization Calculation – continued The cost for the material under the current program

is then subtracted• e.g., steel cans - $7,762,335 - $4,966,233 = $2,796,102

This calculation is done for all materials and the results added together

The levy is calculated by taking the cost of each material as a percentage of the total cost of the “75% program” and multiplying it by the dollars to be levied under this category

• If steel represents 5% of the program cost, it is assigned 5% of the dollars assigned to this category



The base levy is calculated by taking the assigned levies across each of the three factors Recovery Rate Factor levy + Net Cost Factor levy +

Equalization Factor levy Changing the weightings will have an impact on

the levies assigned to each material The current weightings place 45% of the emphasis

on recovery rates, 40% on net costs, and 15% on sharing costs

• Numbers established through a series of sensitivity analyses to establish similar levies between material categories


DE MINIMIS / COMPLIANCE

To the base levy, a de minimis/projected Year 1 compliance rate is applied

De Minimis: It is required that a de minimis be established Proposed that small businesses (<$2,000,000

Ontario sales) are exempt from paying levies

Compliance: It will take time to “capture” all stewards Lower rates are assumed for first year as program is

established


DE MINIMIS / COMPLIANCE

De Minimis/Compliance Approaches to ensure most materials included being

addressed • Discussion of definitions

Over-collecting/Under collecting If more money is collected for a category than was

originally projected, money will be credited back to those stewards in that material and future de minimis/compliance rates will be adjusted accordingly

Vice-versa applied


EXAMPLE LEVIES

The final levies are converted into levy per tonne Costs per unit package can then be calculated

Printed Paper, Paper Packaging and Polycoat examples

Packaging Type Product Packaging Example

Unit Weight (Grams) $/tonne

Estimated Levy Cents/Unit

Printed Paper Newspaper - Toronto Sun weekday 249 0.03$ 0.0007

Magazine - Vanity Fair 820 1.02$ 0.08

Paper Paperboard box - 525 gram cereal 104 63.35$ 0.66

Packaging Paperboard box - 1.05 kg granola bars 94 63.35$ 0.60

Kraft bag - 4 kg of pet food 82 53.37$ 0.44

Polycoat 2 litre milk carton 63 63.35$ 0.40

250 ml drinking box 10 63.35$ 0.06


EXAMPLE LEVIES

Ferrous, Aluminum and Glass examples




Ferrous 1.36 litre juice can 153 41.35$ 0.63

540 ml soup can 73 41.35$ 0.30

12 ounce food can 48 41.35$ 0.20

Aluminum 355 ml soft drink can 15 (62.52)$ -0.09

Glass 473 ml juice bottle 228 41.64$ 0.95

750 ml juice flint bottle 335 41.64$ 1.39

750 ml olive oil green bottle 335 43.55$ 1.46


EXAMPLE LEVIES

Plastics and Laminants examples




Plastics 600 ml PET bottle 30 69.77$ 0.21

4 litre HDPE water bottle 65 78.01$ 0.51

PP - yogurt cup (no lid) 6 95.46$ 0.06

LDPE - outer milk bag 8 104.48$ 0.08

8 ounce PS coffee cup 8 95.33$ 0.08

Laminant Pasta bag 5 99.06$ 0.05

Frozen concentrated juice can 29 67.59$ 0.20

Cookie bag 12 67.59$ 0.08


NEXT STEPS

Consultation to review all aspects of the model Primary focus expected to be on the weightings

assigned to the three factors Recovery Rate – 45% Net Cost – 40% Equalization – 15%

Policy decision needed on which sales to apply the fee Review by Stewardship Ontario Board January 15th

Will establish preliminary fees

Final fee decision in February Feedback to Stewardship Ontario welcome/wanted

QUESTION PERIOD

Please call 416-640-4127


IN CLOSING

• Official comment on Blue Box Program Plan, must be submitted in writing - Deadline is January 17, 2003

• Mailing address can be found at www.stewardshipontario.ca

• E-mail: [email protected]




IN CLOSING

• Please return to www.stewardshipontario.ca following your listening to this webcast (live or in archive) - to fill out a webcast Evaluation Form

• Industry representatives who fill in an Evaluation Form will receive an electronic version of the proposed funding model – to allow companies to complete preliminary assessment of their own projected costs



IN CLOSING

• Reminder: this event will be archived for listening and comment at Canada NewsWire for the duration of the Industry consultation process

• This is a 3-part Industry consultation process. Proceedings and presentations from part-one: the December 3 Workshop 1 are posted on Stewardship Ontario website

• Please follow the easy links from www.stewardshipontario.ca

• Please visit the Stewardship Ontario website regularly for updates on January 16 Workshop 2, and all developing details and important events


THANK YOU

See you at the Workshop on January 16

Waste Diversion Act Industry Consultation Webcast Calculating the Material Levies for Obligated...

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