Recycling - Sustainable Packaging Opportunities and Challenges

1. Recycling - Sustainable Packaging Opportunities and Challenges Interim Study 11-008 – Beverage Container Recycling House of Representatives, State of Oklahoma Oklahoma City, Oklahoma October 25, 2011 SAINT-GOBAIN CONTAINERS

2. About the Glass Container Industry • About Verallia • About Verallia’s Sapulpa, Oklahoma plant • Oklahoma Glass Facts • Attributes of Glass Containers • Save Energy / Improve Air Quality/ Reduce Litter by Recycling Glass Containers • Questions TOPICS SAINT-GOBAIN CONTAINERS

3. About the Glass Container Industry SAINT-GOBAIN CONTAINERS

4. The Glass Packaging Institute represents the North American glass container industry: 10 member glass container producers 35 associate member supplier companies Through GPI, glass container manufacturers advocate job preservation and industry standards; provide education; and promote sound energy, environmental, and recycling policies. About the GPI SAINT-GOBAIN CONTAINERS

5. About the GPI 48 glass container plants in 22 states comprise a $5.5 billion dollar industry … including Anchor Glass Container / Henryetta, Owens-Illinois / Muskogee, and Verallia North America / Sapulpa 102 glass container furnaces produce approximately 30 billion glass food, beverage, cosmetic, spirits, wine, and beer containers annually • 7 in Oklahomaproducing approximately 2 billion glass containers annually 18,000 salaried and represented hourly employeesin our glass container plants, warehouses, sales forces … along with thousands more in our supplier companies across the U.S., nearly 1,000 of which are employed in Oklahoma SAINT-GOBAIN CONTAINERS

6. U.S. Glass Container Industry 1985-2010Accelerated Consolidation 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 TBG (Incon) Ball-InCon Ball Corp. Saint-Gobain Containers 13 Metro Kerr Kerr +2 Foster-Forbes Tropicana Liberty O-I 17 Brockway Inc. Owens-Illinois +2 Owens-Illinois Miller Anchor Hocking AnchorGlass Midland Thatcher Diamond Anchor DiamondBathurst 8 AnchorVitro Anchor AnchorGlass Chattanooga Container Glass Container General Latchford Piramal Glass 2 Wheaton Closed 5/03 Carr-Lowery Closed 11/04 Kelman Glenshaw Arkansas Arkansas Gallo Gallo Leone Leone Rocky Mountain Rocky Mountain Longhorn Longhorn Glass Bennu Glass, LLC purchased Cameron Family Glass Packaging Cameron Family Glass Packaging 46 Plants 110 Plants SAINT-GOBAIN CONTAINERS

7. First Objective: Preserve U.S. jobs in an “Energy Intensive, Trade Exposed” environment: Improve global competitiveness Reduce foreign energy dependency Support improved materials management models, many of which currently face serious economic and performance challenges GPI Industry Recycling Goals: Achieve 50% Recycled Glass Content by 2013 SAINT-GOBAIN CONTAINERS

8. Second Objective: Support industry and U.S. sustainability objectives Conserve energy Save raw materials Reduce air emissions … including NOx, SOx, PM, and greenhouse gases (e.g. CO2) “Reduce / Reuse” in all aspect of plant operations … water, cardboard, lubricants, electricity, etc. GPI Industry Recycling Goals: Achieve 50% Recycled Glass Content by 2013 SAINT-GOBAIN CONTAINERS

9. About Verallia SAINT-GOBAIN CONTAINERS

10. About Verallia • Effective April 2010 a new brand unites all twelve Saint-Gobain glass packaging businessesaround the globe … divestiture process continues • A world class glass container producer operating in the very competitive US packaging marketplace • Serves the North American market from 13 plants / 29 furnaces • 4,000 employees produce approximately 9.1 billion glass containers annually for Beer; Food, Beverage & Spirits; and Wine customers • Committed to Reduce, Reuse, Recycle. There is a vigorous focus on sustainability … it’s good business … and good for the environment Seattle, WA Burlington, WI Milford, MA Dolton, IL Port Allegany , PA Dunkirk, IN Pevely, MO Madera, CA Lincoln, IL Wilson, NC Henderson, NC Sapulpa, OK Ruston, LA Manufacturing Plants BEER Plants FBS Plants WINE Plants SAINT-GOBAIN CONTAINERS

11. EPA ENERGY STAR Partner of the Year for 2009 & 2010. (First glass container manufacturer to earn the award and then repeat – recognizes energy conservation improvements) EPA Climate Leader (Partnered with EPA in 2009 to achieve 16% GHG reduction by 2012) Energy Star Award for Sustained Excellence in 2011 About Verallia (continued) SAINT-GOBAIN CONTAINERS

12. About Verallia’s Sapulpa Oklahoma Plant SAINT-GOBAIN CONTAINERS

13. About Verallia’s Sapulpa Plant • Built in 1912 • Three furnaces: One recently rebuilt (June 2011), with the two remaining furnaces scheduled for rebuild in 2017 / 2018 • Production of 3.0 – 4.0 million containers / day • Major Customers • Anheuser Busch • Pepsi • Micro breweries • Employees • 300 Union (approximately) • 50 Salary (approximately) • Contribution to local economy • $58 million – material costs • $29 million – 2010 payroll and benefits • $1.5 million – State taxes i.e., property, sales and use, OK Franchise, OK withholding and unemployment SAINT-GOBAIN CONTAINERS

14. Oklahoma Beverage Container Facts SAINT-GOBAIN CONTAINERS

15. Oklahoma Beverage Container Facts • Estimated beverage containers consumed by Oklahomans each year: • Aluminum = 1,156,037,000 47% • Plastic = 790,861,000 32% • Glass = 413,460,000 18% • Tetra Pack = 85,227,000 3% 2,445,585,000 • Estimated beverage containers disposed of in Oklahoma landfills or downcycled each year*: • Aluminum = 750,268,000 40% • Plastic = 683,304,000 36% • Glass = 362,191,000 19% • Tetra Pack = 85,227,000 5% 1,880,990,000 77% * Aluminum, plastic, glass recycling rates taken from CRI website. Tetra Pack is not included in OKsingle stream recycling. (Note: Collection / recovery rate data is often incomplete / inaccurate.) SAINT-GOBAIN CONTAINERS

16. Attributes of Glass Containers SAINT-GOBAIN CONTAINERS

17. Attributes of Glass Containers – Why Choose Glass? • A preferred package for thousands of years • Raw materials used to produce glass containers (sand, soda ash, limestone, recycled glass [“cullet”]) have changed very little over time and their chemical characteristics are well understood • Glass containers are inert, with little likelihood of leaching / migration occurring during the life of the food / beverage contents, thus ensuring purity and safety • Consumers Choose Glass – • 82% believe glass is the healthiest packaging material • 78% believe glass packaging material provides more purity for the foods it contains • 75% believe glass packaging materials provide the truest taste SAINT-GOBAIN CONTAINERS

18. Save Energy / Improve Air Quality / Reduce Litterby Recycling Glass Containers SAINT-GOBAIN CONTAINERS

19. Recycling: Great for the Environment and for Business • Approximately 7,500,000 metric tons of glass produced annually in the US • The glass container industry could use 100% of this glass to make new bottles and jars but it is not available … i.e., we can account for about 2,500,000 metric tons being recycled / recovered annually (approximately 33%) … the substantial majority of which comes from the bottle bill states • Approximately 5,000,000 metric tons of glass was downcycled (approximately 20%) or placed in landfills (approximately 47%) SAINT-GOBAIN CONTAINERS

20. Recycling: Great for the Environment and for Business (continued) • Glass is endlessly Recyclable – “Bottle to Bottle” … over and over, without practical limitation • Glass bottle recycling / recovery rates are very low in the US (about 12% in non-bottle bill states and 64% in bottle bill states*) • Saves natural resources • One ton of cullet substitutes / saves approximately 1.17 tons of the earth’s natural resources • Reduces energy expended in mining and transportation * http://www.container-recycling.org/facts/all/data/recrates-depnon-3mats.htm (accessed June 23, 2010) SAINT-GOBAIN CONTAINERS

21. Recycling: Great for the Environment and for Business (continued) • Reduces emissions and extends furnace life … because cullet takes less energy / lower temperatures to melt than virgin raw materials • A 10% increase in cullet further improves air quality by reducing: • Particulates as much as 8% • Nitrogen Oxide as much as 4% • Sulfur Oxides as much as 10% • Energy requirement by 3-4% • For every 6 tons of cullet used, 1 ton of CO2 is reduced SAINT-GOBAIN CONTAINERS

22. Recycling: Great for the Environment and for Business (continued) • Why such a low recycling / recovery rate in the United States? • Many rural areas have limited recycling opportunities • Waste haulers and municipalities moved to “single stream” curbside recycling collection to reduce costs / increase recycling rates … resulting in negative impact on recovery rates SAINT-GOBAIN CONTAINERS

23. Recycling: Great for the Environment and for Business (continued)Challenges / Next Steps • There is a robust market for recyclable commodities … in fact, demand often exceeds supply • Recovery rates for beverage containers are optimized with container deposit legislation • There is growing concern / debate about what to do: • Municipalities / solid waste management districts are facing serious economic challenges • There is vigorous debate underway regarding extended producer responsibility (EPR) / product stewardship (PS) financing models • Based on recent Oklahoma polling … the citizens of Oklahoma support recycling • Next steps – Stakeholder Dialog aimed at finding a win-win solution to avoid continuing stalemate on issues of considerable importance SAINT-GOBAIN CONTAINERS

24. Questions SAINT-GOBAIN CONTAINERS