Russ Martin, Director Martin Stewardship & Management Strategies Pty Ltd

1. Increasing Beverage Container Recovery in Australia Russ Martin, Director Martin Stewardship & Management Strategies Pty Ltd WA State Beverage Container Recovery: Data Collection & Contamination Issues Conference Call 8 November, 2006 Martin Stewardship & Management Strategies Pty Ltd

2. Overview • Context – Recycling in Australia • National Packaging Covenant • Original Covenant • Revised Covenant • Collection Approaches • Reprocessing/End Use Approaches • Q&A Martin Stewardship & Management Strategies Pty Ltd

3. Context – Overall Recycling in Australia • Broad coverage & support for recycling • 90-95% access to kerbside recycling • Limited market influence • comparative low population means limited domestic demand • strong overseas influence on policies and industry performance • Difficult recovery logistics • relatively limited knowledge of product flows • dispersed population centers with high transport distances • picture the lower 48 US states, with 46 being Utah • Drivers • local government collections • industry demand through end users & National Packaging Covenant Martin Stewardship & Management Strategies Pty Ltd

4. Drivers for Original Covenant • Packaging visible as an environmental issue • Pushes for CDL (“Bottle Bill”) and EPR • Funding needed to improve kerbside recycling • Industry wanted flexibility and control over process • National approach needed Martin Stewardship & Management Strategies Pty Ltd Photo source: MS2

5. Original National Packaging Covenant • Five-year framework, commencing 1999 • “Co-Regulatory” approach - • Voluntary Covenant • Action Plan commitments • Funding to make kerbside recycling more efficient • Regulatory National Environment Protection Measure (NEPM) • Onerous take-back requirements for not signing or not complying • Intended to encourage companies to sign the Covenant Martin Stewardship & Management Strategies Pty Ltd

6. Benefits of the Covenant Approach • Shared responsibility • Whole of supply and recovery chain approach • Reduced life-cycle environmental impacts • More effective use of industry funding than alternative approaches Martin Stewardship & Management Strategies Pty Ltd

7. Overview of Covenant MkII • Commenced 15 July 2005 for a five-year period • Overarching targets and KPIs • Re-prioritisation of funding • greater emphasis on Away from Home (AfH) • incl. pubs, clubs, hotels, food courts, etc. • Strengthened Environmental Code of Practice for Packaging (ECoPP) • Strengthened NEPM and enforcement provisions Martin Stewardship & Management Strategies Pty Ltd

8. MkII Targets for 2010 • 1. Increased recycling rate for packaging of 65% (2003 ests.): • paper & cardboard 70 – 80% (64%) • glass 50 – 60% (35%) • steel cans 60 – 65% (44%) • aluminium bev. 70 – 75% (64%) • plastics 30 – 35% (20%) • 2. Landfill: no increase above current baseline. • 3. Increased recycling of ‘non-recyclable’ packaging: • 25% (current est. 10% for 2003) Targets are system-wide, not just for industry Martin Stewardship & Management Strategies Pty Ltd

9. Uses of Covenant Funding • Used differently than under the first Covenant • focus on Away from Home recycling, not just kerbside • primary focus on glass & paper, based on expected contribution to targets • Limitations: • cannot be used to subsidise prices or collection costs • must be economically viable • must represent good practice • LG non-signatories can now apply for co-funded projects • Funding directed primarily through National Projects Group Martin Stewardship & Management Strategies Pty Ltd

10. Implications of Covenant MkII • 5-year framework for demonstrating product stewardship • greater certainty for industry investment and action • could mean EPR, European- and Canadian-style packaging levies, etc. mandated if Covenant fails to achieve objectives • mid-term review end 2008 – Short time to show results • Overarching targets – all sectors must work together • Data collection and reporting costly, but critical Martin Stewardship & Management Strategies Pty Ltd Photo source: MS2

11. Key Performance Indicators (KPIs) • Significantly more robust data is required: • to ensure more accurate baseline measurement • to assist in targeting areas of opportunity • to help show demonstrable progress against targets and KPIs. • 29 main KPIs, Industry directly responsible for 13 Martin Stewardship & Management Strategies Pty Ltd

12. Data Collection - Packaging Lifecycle KPIs Martin Stewardship & Management Strategies Pty Ltd

13. Supply Chain Influence! Martin Stewardship & Management Strategies Pty Ltd Photo source: MS2

14. End Use Demand Drives Collections • Solid integration of packaging supply chain • Strong incentives to minimise contamination • Material specifications by Australian Council of Recyclers (ACOR) • http://www.acor.org.au/materials.html • Kerbside & AfH collections get mixed for reprocessing • Generates economies of scale • Complicates data collection • Some residential materials enter commercial collections • Some commercial materials enter residential collections (esp. SMEs) • Trials & audit results show benefits of consistent education, regardless of source, and need to tailor to local needs Martin Stewardship & Management Strategies Pty Ltd

15. Beyond Kerbside to Away from Home Martin Stewardship & Management Strategies Pty Ltd Photo source: MS2 and APC

16. Consistent Signage & Bins Martin Stewardship & Management Strategies Pty Ltd Graphic source: APC Environmental Management

17. Streetscapes – Bin Differentiation Martin Stewardship & Management Strategies Pty Ltd Photo sources: Manny Manatakis and MS2

18. HDPE – Material Specs. & Optical Sorting Martin Stewardship & Management Strategies Pty Ltd Photo source: MS2

19. PET - Material Specs. & Physical Sorting Martin Stewardship & Management Strategies Pty Ltd Photo source: MS2

20. Glass - Specs., Physical & Optical Sorting Martin Stewardship & Management Strategies Pty Ltd Photo source: MS2

21. Residuals - Physical Sorting Trials Martin Stewardship & Management Strategies Pty Ltd Photo source: MS2

22. Beverage Container Recycling Summary • Key Drivers • National Packaging Covenant • Threats of container deposit legislation (“bottle bills”), EPR & prescriptive, most costly approaches • Popular demand • Keys to Success • Focus on material specifications to meet end user needs • Primary and secondary market development • ‘Good practice’ approach to system improvement • Emphasis on cost-effective recovery - kerbside and Away from Home • Reducing system losses • Providing infrastructure for collection & reprocessing Martin Stewardship & Management Strategies Pty Ltd

23. Russ MartinDirector Martin Stewardship & Management Strategies Pty Ltd +61 2 9940 3571russmartin@optusnet.com.au www.MS2.com.au Martin Stewardship & Management Strategies Pty Ltd