Recycle British Columbia’s Extended Producer .
Recycle British Columbia’s Extended ProducerResponsibility for Packaging and Paper:An Assessment of Its ImpactBY CHAZ MILLER
Table of ContentsExecutive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Why EPR? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4How Does EPR Work? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4What is Unique about EPR for Packaging and Paper? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5What Does a Producer Responsibility Organization Do?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5What is Recycle British Columbia?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Is RBC an Independent Organization?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Why is RBC the Primary Packaging and Paper EPR organization in British Columbia?. . . . . . . . . . . . . . . 6Who are RBC’s Members?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7What are RBC Members Required to Do?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7How Much Do Members Pay in Fees?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7How Do Members Pay Their Fees? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Do All Obligated Companies Participate in RBC’s Program?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Do Members Have Input into the Operation of RBC? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Which Packaging and Paper Products Does RBC Collect?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9How Does RBC Provide for Collecting Recyclables?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9How are Packages and Paper Recyclables Processed for End Markets?. . . . . . . . . . . . . . . . . . . . . . . . . . . 10Who are RBC’s End Markets?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Does RBC Cover the Full Costs of Collection? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Does EPR Achieve Its Recycling Goals?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Are EPR Recycling Rates Accurate?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12What Does RBC Leave Out of its Recycling Reports?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Does EPR Lead to More Recyclable or Less Toxic Packages?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15End Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16About the Author. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
Executive SummaryExtended producer responsibility (EPR) is a mandatedform of product stewardship under which producers areresponsible for the post-consumer recovery and recyclingof a product. Theoretically, an EPR program shifts thecost of residential recycling from taxpayers to productmanufacturers. In response, advocates believemanufacturers would create more easily recyclableand less toxic packages and products.In the United States, most EPR laws cover productsthat are hard to recycle or have hazardous constituentsor both. However, interest exists to extend EPR totraditional residential curbside recyclables such aspackages and paper products. Much of this interestis prompted by current negative market conditionsfor many of these recyclables and the existence of aprogram in the Canadian province of British Columbia.This white paper looks at how EPR for packaging andpaper products works in practice and focuses on theexperience in British Columbia. Packaging and paperproducts are the most diverse of all products potentiallysubject to EPR laws. The number of manufacturers andretailers, the types of products in the marketplace, themulti-material nature of many of those products, thesupply chain with differing distribution channels and theevolving impact of e-commerce all create a particularlychallenging form of EPR. What appears to be a relativelysimple concept is highly complex in its execution.Recycle British Columbia (RBC), the British Columbiapackaging and paper producer responsibilityorganization, reports high recovery rates at a modestcost. However, a lack of transparency makes it hard toevaluate those claims. Recovery data is inflated becausefree-riders — those who are not paying to participatein the RBC program, including some e-commercecompanies and small generators — are not includedin the universe of available recyclables, even thoughtheir products are collected for recycling. In addition,no tonnage data is provided for any type of recoveredrecyclables.Cost data is similarly underestimated and lackstransparency. Instead of paying 100% of a localgovernment’s recycling collection costs, RBC pays anincentive fee covering what it estimates is a reasonablerecycling cost. As a result, its cost data fails to includelocal governments’ actual recycling collection andadministrative costs. Local governments are upset overthis failure and the lack of transparency in calculatingthat fee. RBC cost data also fails to include the costsincurred by packaging and printed paper companiesto comply with RBC’s fee structure and reporting costs.Those costs are simply passed on, without notice, toconsumers. The impacts of these extra costs fall mostheavily on lower income citizens. And finally, as inEurope, the British Columbia program has had noimpact on packaging design.March 20193
IntroductionWhy EPR?Extended producer responsibility (EPR) is a mandatedform of product stewardship under which producers areresponsible for the post-consumer recovery and recyclingof a product. In Europe, EPR is widely used to manageelectronics and packaging. In the United States, 33 stateshave passed 86 EPR laws, most of which cover productswith hazardous constituents such as mercury, or arehard to recycle, or both. No state has imposed EPRon traditional curbside recyclables such as packagingand paper.1EPR advocates often cite the Organization forEconomic and Cooperation and Development (OECD)for the “why” behind EPR. According to the OECD,EPR shifts the responsibility from the municipality andgeneral taxpayer towards the producer. Theoretically,because it is now responsible for those additional costs,the producer has incentives to incorporate environmentalconsiderations into the design of its products,5 thoughOECD’s 2015 review of EPR did not find this to happenin practice.6In Canada, by contrast, over 120 provincial EPRprograms exist with only one province, Alberta, havingnone. British Columbia has the most EPR programs with19 stewardship agencies managing 22 stewardship plans.2British Columbia is also home to Recycle BritishColumbia (RBC), originally known as Multi-MaterialBritish Columbia. RBC is the only EPR programunder which producers cover the “full” financial andmanagerial responsibility for residential recycling ofpackaging and printed paper.3 Four other provinceshave EPR programs for packaging and paper underwhich companies and local governments share thecost of recycling.4 Advocates of EPR programs forpackaging and paper products in the U.S. point toRBC as the model for EPR in this country.How Does EPR Work?The remainder of this paper will focus on EPR forpackaging and paper, using the RBC program as theprimary example. The word “package” will generallybe used to cover both packaging and paper products.EPR laws require producers to take “responsibility”for the end-of-life management of their products.In all cases, this responsibility applies to theircollection, processing and recycling. Individualproducers can assume “individual” responsibilityor join together for “collective” responsibility.In the individual responsibility model, each companydirectly manages the end of life of its product.This approach has inherently higher costs and ahigher environmental impact due to the numberof small, individual programs and their inability toachieve economies of scale. As a result, it is rarely used.However, it has the advantage of directly assigningresponsibility to individual producers with a betterchance that EPR goals will be met.The high cost of individual responsibility causesproducers to opt for the collective approach.In this case, they join a producer responsibilityorganization that is responsible for managing thecollection, processing and sale of their discardedproducts. This collective approach allows costs andthe environmental impact of collection and processingto be shared among a wide array of producers. In somecases, this is based on the company’s market share or asimilar factor. In other cases, a fee is levied upon eachproducer based on an assessment of the cost to recyclethat company’s packaging and paper products.4
Theoretically, consumers will notice higher costs forproducts under EPR and will change their purchasingdecisions to reward products with lower stewardshipcosts. However, in practice, those costs are simplyhidden in the purchase price of the product, making itimpossible for consumers to compare environmentalcosts among different products.What is Unique about EPRfor Packaging and Paper?EPR laws in the U.S. cover products such as mercurythermostats, automobile switches, mattresses or carpet.They are easily defined and have a limited number of“obligated parties,” such as manufacturers and retailers.These products lack both a robust collection andprocessing infrastructure. By contrast, while packagingand paper products have a robust collection andprocessing infrastructure, they are an extraordinarilydiverse universe of thousands of different packagesand products that vary by type, composition, weightand volume and that have a very large number of“obligated parties”. As a result, packaging and paperproduct companies join a producer responsibilityorganization that will manage recycling for them.Theoretically, consumers will noticehigher costs for products underEPR and will change theirpurchasing decisions to rewardproducts with lower stewardshipcosts. However, in practice,those costs are simply hiddenin the purchase price of theproduct, making it impossiblefor consumers to compareenvironmental costs amongdifferent products.What Does a ProducerResponsibilityOrganization Do?Under the collective responsibility model, a producerresponsibility organization arranges for the collectionand processing of the covered materials. For curbsiderecyclables, the organization determines what it believesto be a reasonable collection cost. It then contracts forthe processing of the collected recyclables. Marketingthe recyclables is usually the processor’s responsibility.This organization is usually responsible for recyclingeducation and promotion.The product stewardship organization also defineseach specific package and paper product along withits different components. It then assesses a collectionand processing cost for each of them. Those costsare determined by consultants hired by the producerorganization. The producers in turn, pay that cost.What is RecycleBritish Columbia?Recycle British Columbia is the packaging and paperproducer responsibility organization for BritishColumbia, as authorized by the Ministry of theEnvironment in April, 2013. At the time, RBCwas known as Multi-Material British Columbia.7RBC does not actually recycle anything, insteadit arranges for the collection and processing ofresidential recyclables.Is RBC an IndependentOrganization?No. RBC is a not-for-profit Corporation8 governed bya four person Board of Governors.9 RBC, however,is effectively a subsidiary of another organization,the Canadian Stewardship Services Alliance (CSSA),which appoints the RBC Board of Directors.10As noted in RBC’s Annual Report, “The Organization’sboard of directors consists of 50% (2016 - 67%) who5
are also members of the CSSA board of directors andCSSA has the ability to elect board members; therefore,the CSSA board of directors has control over theOrganization.”11 In other words, even though RBC isincorporated as an independent non-profit, it has alwaysbeen under the control of a third party. This use of thesame directors by separate organizations creates aninterlocking directorate through which one organizationcan control another seemingly independent organization.CSSA, is “a national, not-for-profit organization,founded in 2012 to provide efficient administrativeand management services that are common to allstewardship programs.”12 As part of this relationship,RBC entered into a Management Service Agreementwith CSSA for administrative and technical supportand other services. In 2017, RBC paid CSSA 6.3million for these services (note: all dollar references inthis paper are in Canadian dollars). CSSA also managesthe packaging stewardship programs in Manitoba,Ontario and Saskatchewan through its provincialsubsidiaries along with an Ontario program for severalhousehold hazardous wastes and a national programfor oil filters, empty oil containers and antifreeze andempty antifreeze containers.13Why is RBC the PrimaryPackaging and Paper EPROrganization in BritishColumbia?RBC argues that bigger is better because it giveseconomies of scale and economical efficiencies.The British Columbia Ministry of the Environmentappears to agree. In 2016, the Ministry rejected anapplication from a potential competitor in part overconcerns about the impact of competition on theexisting organization.14This raises an obvious question: Is Recycle BritishColumbia too big to fail? This organization controlsall aspects of residential recycling in the province.In essence, the province put all of its recycling eggsinto one basket.In a narrow sense, RBC is not the province’s soleorganization managing curbside recyclables. Beveragecontainers are subject to a deposit and specificallyexcluded from EPR. Encorp Pacific (Canada) isresponsible for managing those containers.15 TheBrewer’s Recycling Container Council manages therecovery of beer-related packaging and printed papersuch as cardboard cases sold with glass bottles andboxboard cartons sold with metal cans.16 Most of themare returned by consumers when they redeem theircontainer deposits.17Is Recycle British Columbiatoo big to fail? This organizationcontrols all aspects of residentialrecycling in the province.In essence, the provinceput all of its recycling eggsinto one basket.In addition, the province recently authorized NewsMedia Canada as the stewardship organization fornewspapers.18 This decision resolved a conflict in whichthe newspaper industry refused to participate in RBC onthe grounds that its costs would drive smaller papers outof business and could prove a crippling cost for largernewspapers. Instead of paying a fee, newspapers providein-kind advertising. Just as happened before thisdecision, newspapers continue to be collected andprocessed by RBC as mixed paper.RBC’s monopoly status in British Columbia is notunique. Most countries with nationwide EPR packaginglaws have a single collective responsibility organizationin charge of recycling those products. A few countries,preferring not to have a sole producer responsibilityorganization and a desire to encourage competition,have more than one organization.196
Who are RBC’s Members?RBC members are “organizations that supply packagingand paper to BC consumers, as defined by the RecyclingRegulation. These obligated materials generallyencompass the materials that are provided to consumersand are taken home for recycling or disposal.”201,290 companies are either registered (“an organizationor company that is resident in BC and is either a brandowner, first importer or franchisor that supplies obligatedpackaging and/or paper products to residents (householdconsumers”)21 or voluntary (“a brand owner not residentin British Columbia who supplies packaging and/orpaper product into the province and has elected toassume responsibility for its material.”22) Registeredstatus is by far the most common.Originally, EPR was to apply to all BC companies thatsupplied packaging and paper. However, an uproar fromsmall businesses lead to the creation of an exemptionfor businesses that have less than 1 million in annualrevenues, or supply less than 1,000 kg (one tonne) ofpackaging and paper product to BC residents, or operateas a single point of retail sale and are not supplied oroperated as part of a franchise, a chain or under abanner, or are a registered charity.23What are RBC MembersRequired to Do?Members, or “stewards” as they are often referred to,are required to “report the quantities of obligatedmaterials they supply into the BC marketplace each yearand pay fees based on supplied quantities.”24 Then theyare required to send quarterly checks to cover the cost ofcollecting and processing those materials. “Low-volume”stewards that supply less than 15,000 kg a year can payone of four flat fees ranging from 600 to 6,000. If theychoose, however, those stewards can instead submit whatRBC calls its “detailed annual report.”25How Much Do MembersPay in Fees?RBC reported 83.4 million in revenue from feepayments in 2017.26 The 2019 budget estimates feerevenue will be 98 million.27 The increase is driven byhigher supply chain, promotion and education costs.28The supply chain cost increase is proba
Extended producer responsibility (EPR) is a mandated form of product stewardship under which producers are . Recycle British Columbia is the packaging and paper producer responsibility organization for British Columbia, as authori
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