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AUOMA Program Review July 21, 2004

Alberta Used Oil Management Association. AUOMA Program Review July 21, 2004. Presentation Outline. History of development of program Regulatory framework Program administration Recovery results Highlights and benefits. Historical Background.

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AUOMA Program Review July 21, 2004

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  1. Alberta Used Oil Management Association AUOMA Program ReviewJuly 21, 2004

  2. Presentation Outline • History of development of program • Regulatory framework • Program administration • Recovery results • Highlights and benefits

  3. Historical Background 1988 – CPPI commissioned task force at request of CCME 1991 – CPPI presented position paper to national workshop in Montreal 1992 – Alberta began a multi-stakeholder, consultative process to develop provincial program 1993 – The AUOMA incorporated on April 23, to facilitate management of Pilot Project recommended by stakeholders 1995 – Alberta stakeholders approve a comprehensive program recommendation 1997 – Alberta Government approves Lubricating Oil Materials Recycling and Management Regulation

  4. Programs in Operation (4) Return to Retail Programs in Operation EPR Programs in operation EPR Programs under development

  5. Program Development • Formed task force of oil and filter manufacturers and sellers • Consulted with broad stakeholder group • Worked closely with provincial governments • Piloted program at six locations in Alberta • Refined concepts using pilot learnings • Assisted in drafting of regulation(s)

  6. Program Design Principles • Improve collections by paying Return Incentives (RI) to Collectors • Fund through Environmental Handling Charge (EHC) • Cost borne by product users • Fair distribution of costs based on sales • Funds managed by industry • Minimal market intervention • Require minimal regulatory support

  7. Funding Design Principles • Consistent in all three provinces • Self financing - not for profit • No financial penalty to those currently managing these products appropriately • No cross subsidization between products • i.e. filter $ used only for filters etc. • Funds available for special programs if collection rates are low • Cash surplus/shortage to be managed by adjusting EHC and RI rates

  8. Provincial Regulation • Oil & filter “first sellers” must have a stewardship program to sell in province • Allows option of individual company or association to manage program • Alberta requires all “first sellers” to register with Association Program • Permits Association to collect and disburse funds to support program • Requires annual plan and report to Government

  9. Additional Features • Required to establish a network of collection depots • 53 Eco-Centres in Alberta • 587 other municipal and commercial collection depots • Depots ultimately self financing • Collector/Transporters free to establish market price for materials • Designed program with ability to withdraw when no longer needed

  10. Recycling Incentives (RI) • Designed to provide an incentive to increase recycling in all geographic areas of the Province • Paid to Collector/Transporter • Oil based on actual volume collected • Filters based on weight collected • number estimated using mix of sizes by drum • Containers based on weight collected

  11. Environmental Handling Charge (EHC) • Designed to fund the RI and Public Awareness Programs • Paid by the first seller in province to management association • Can be absorbed in price or added on at retail sale • Not paid on supply sales transactions between registered members • Paid only once on first sale to non-registered buyer

  12. Pre-Program Schematic DIY End Consumers Farm/Commercial Industrial $ flow Municipal Recycling Facilities Municipal Recycling Facilities Service Stations, Quick Lubes, Mass Merch. Farm Agents Material(s) flow Resellers Collectors / Transporters Collector(s) / Transporter(s) Approved First Sellers of Materials Processors End uses End uses

  13. Program Schematic DIY End Consumers Farm/Commercial Industrial $ flow Eco-Centers and/or MRF’s Municipal Recycling Facilities Service Stations, Quick Lubes, Mass Merch. Farm Agents Material(s) flow Resellers Collectors / Transporters Collector(s) / Transporter(s) Approved Management Association Government Approved End uses First Sellers of Materials Processors End uses

  14. Return Incentive (RI) Program Zone Boundaries

  15. (RI) Payment System Collector/Transporters provided Return Incentives (RI’s) for used oil materials returned to Registered Processors: (Base Case - Zone 1) Lubricating Oil $0.08/L Oil Containers $1.09/kg Oil Filters $0.68/kg

  16. (RI) Payment Schedule Note: Used Oil Container Processor RI = $0.30/kg

  17. (EHC) Funding Schedule Program funded through Environmental Handling Charge (EHC) remitted by Wholesale Suppliers: Current Rates Lubricating Oil $0.05/L Oil Containers $0.05/L Oil Filters <203 mm $0.50 >203 mm $1.00

  18. Used Oil Material Depots For location nearest you - www.usedoilrecycling.com - 1-888-922-2298 Total Used Oil Material Depots - 640

  19. Registered Collectors/Transporters/Processors Note: Example only, for complete listing contact AUOMA at (780) 414-1510

  20. Administration • Managed by industry elected board • 6 from industry, • one provincial government, • one municipal government, • one consumer advocate • One full time Executive Director • Staff provided by accounting firm • Accounting firm collects all money (company data is secure)

  21. Oil - very good recovery Used Oil Program Continues to Grow Steadily as it Approaches Maturity Oil Recycledmillions of litres Recovery Rates 96/97 - 56% 02/03 - 73% 2002/03 – Maintain steady growth in collections through enhanced public education and outreach programs. 98/99 99/00 00/01 01/02 96/97 EST 02/03 PLAN

  22. Filters - a solid success Oil Filter Program Has Reached Maturity (80+% recovery) Filters Recycledmillions Recovery Rates 96/97 - 17% 02/03 - 89% 2002/03 – Fine tune new weight based collection reconciliation system while maintaining recovery rate in 80% range. 98/99 99/00 00/01 01/02 02/03 PLAN 96/97 EST

  23. Containers - growing rapidly Oil Container Program is our Major Challenge and Our Primary Focus Containers Recycledthousands of kilograms Recovery Rates 96/97 - 7% 02/03 - 45% 2002/03 – Increase recovery rates through innovative programs resulting from a comprehensive field study of key industry sectors. 98/99 99/00 00/01 01/02 96/97 EST 02/03 PLAN

  24. Program Highlights • Developed and managed by Industry • All consumers participate equally • Maintains free market principles • Comprehensive coverage of products and geographic areas • Backed by government regulation • Administratively simple • Designed for easy withdrawal

  25. Program Benefits • Converts waste to products with value • Fosters development of recycling industry including new technology • Improves management of three waste streams • Promotes landfill diversion • Integrated across provincial boarders (in prairies) • No government funding • user pay system

  26. Recycling Investment Analysis If you purchased $1,000.00 of the following stocks one year ago, todays value would be: Nortel - $49.00 Enron - $16.50 Worldcom - $ 5.00 (or less) If you purchased $1,000.00 of Molson’s (the beer not the stock) one year ago, drank all the beer and recycled the cans for the 10 cent deposit You would have - $214.00 “Investment Advice: Drink heavily and Recycle”

  27. Challenges in development • Potential resistance to EHC fees • Can look like a tax • Careful to communicate as industry charge • Large recyclers were concerned • Can create new competition • Need to keep them involved • Retailers needed system changes • Allow flexibility to include in price or show separate line on cash tape • Provide adequate lead time to implement

  28. Challenges in operation • Locating new large collection facilities • Benefit vs risk unknown • High urban land values • Managing contamination of products • Contaminated products of reduced value • Fees paid out based on quantity • Needed to institute disincentives • Increasing collection of oil bottles • Infrastructure for recycling is limited but growing

  29. Keys to success • Inclusion of three waste streams • Regulation to level playing field • Management by industry • Incentives/disincentives set to drive program in right direction • Right to audit all participants • Harmonization with adjacent provinces • Strong public education required

  30. Top 5 Used Oil Collectors Performance For the Period January 1 to March 31, 2003 Change in Volume Collections:

  31. Used Oil Collectors Performance Growth in Collections 1998 Top Ten Companies % Growth 1998 – 2002 • Status of Missing Three • One Burned Down • One Sold (Still in Top Ten) • One Sold (No Longer in Business) • Note: Seven Still in Top Ten Company 3 Company 5 Company 2 Company 6 Company 1 Company 7 Company 4

  32. Filter Collectors Performance Growth in Collections 1998 Top Ten Companies % Growth 1998 – 2002 • Status of Missing Two • One Burned Down • One Sold (No Longer in Business) • Note: Eight Still in Top Ten Company 3 Company 2 Company 1 Company 6 Company 7 Company 5 Company 8 Company 4

  33. Container Collectors Performance Growth in Collections 1998 Top Ten Companies % Growth 1998 – 2002 • Status of Missing Four • One US Parent Bankruptcy • Two Moved Out of Top Ten • One Sold • Note: Six Still in Top Ten Company 3 Company 2 Company 6 Company 1 Company 5 Company 4

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