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Join us for the second public consultation meeting on the Blue Box Program Plan review for 2007 and Stewardship Ontario's funding formula for stewards. Learn about the objectives, principles, and screening criteria guiding the review process, as well as the current funding formula and stakeholders' input. Share your insights to help improve the program for all involved.
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Blue Box Program Plan Review for 2007Stewardship Ontario Funding Formula- Second Public Consultation Meeting - February 14, 2006
Introduction to Session & Website Mechanics Lyle Clarke & Neil Antymis
Welcome! • Second public consultation meeting on Blue Box Program Plan (BBPP) review for 2007 & Stewardship Ontario’s funding formula for stewards • More than 100 people here in person • Approximately 30 registered by webcast • reflects interest & participation of diverse stakeholders
Our Audiences • Webcast audience listening on-line • speakers will refer to slide numbers to prompt you to move to the next slide • email questions to: questions@stewardshipontario.ca • Archived webcast available for 180 days
Opening Remarks Derek Stephenson Program Manager
Opening Comments (1) • The work of the Steering Committee to date has been reviewed by newly expanded Stewardship Ontario Board • Board now includes wider representation from • durable products & distributors – CHHA • retail & distribution, including CRFA & Costco • consumable products, Unilever, Nestle, Kraft • Believe it has been an open & thorough review
Opening Comments (2) • Board is supportive of directions outlined, but as with each of you, individual members are thinking through carefully the impacts & issues before final decision • While program has been successful in meeting the obligation of stewards to date • 2005 target has been met • MOE received only 3 comments during most recent fee-setting • Board welcomes attendees’ input as to whether BBPP can be made better
Steering Committee Preliminary Recommendations Lyle Clarke & Neil Antymis
Objectives of review Principles guiding the review Objective of the meeting today Review of process & timelines Screening criteria used Review current funding formula Summary of input & comments Steering Committee recommendations Check against key screening criteria Next steps Topics for Today’s Presentation
Objectives of the Review • Fulfill commitment made during 2006 fee consultation process to consider modifications to BBPP fee setting methodology • Provide an opportunity for all stakeholders to: • re-evaluate the current funding formula • identify & assess potential modifications or alternative approaches
Screening Criteria (1) • Complies with legal requirements of Waste Diversion Act (WDA) • Furthers policies & goals of WDA & BBPP • Material impact that warrants change • Treats stewards & materials in a fairer manner • Strengthens incentives for 3Rs
Screening Criteria (2) • Improves simplicity & transparency • Facilitates compliance & auditing • Has a proponent • Sufficient outline of approach & data for effective modeling
The Current Funding Formula (1) • Sets fees within context of: • the goals & objectives of the BBPP • the requirements of the WDA, & • program requests made by the Minister of the Environment
The Current Funding Formula (2) • Defines Blue Box Wastes (BBW) as those managed primarily within municipal waste stream • Exempts thousands of companies generating small quantities of BBW from the program • Recognizes differences in costs to manage different material types
The Current Funding Formula (3) • Encourages the diversion of greater quantities of BBW • lowest possible total cost to stewards & municipalities • encourages recovery of next least cost tonne of BBW • shares some of the costs incurred by stewards of materials with the highest recycling rates among stewards of materials with the lowest recycling rates
The Current Funding Formula (4) • Minimizes cross-subsidization among material categories • Provides for a material specific market development fee to help remove barriers to recycling & to improve revenues, & • Shares common program delivery & administration costs across all stewards
The Current Funding Formula (5) In summary: Meets the legal obligations of stewards to share in the costs of operating municipal recycling programs in a manner which minimizes total Blue Box (BB) program costs & for fairness, shares these costs among all obligated companies.
Overview of Input & Comments (1) • Suggestions received since the BBPP first approved (December 23, 2002) • October 27 Advisory Committee meeting to identify additional suggestions & review the long list of ideas • December 8 public stakeholder meeting input
Overview of Input & Comments (2) • Additional written comments received following December 8 meeting • summary of comments posted on Stewardship Ontario website • January 25 Advisory Committee meeting to review preliminary direction of Steering Committee
Issues Raised by Stakeholders (1) • Insufficient sharing of costs incurred by high recycling rate materials among low recycling rate materials: • represents a disincentive to promoting even higher diversion of easily recyclable materials • may encourage stewards to select low recycling rate materials to reduce fees
Issues Raised by Stakeholders (2) • Excessive sharing of costs incurred by high recycling rate materials among low recycling rate materials: • conflicts with nexus requirements of the WDA • some materials must be collected by regulation • penalizes non-recyclable materials for which there is no practical alternative • does not take into consideration other environmental & social factors • municipalities choose what materials collected
Issues Raised by Stakeholders (3) • Revenue from sale of some materials is not calculated accurately or fairly attributed to stewards of those materials. Currently: • benefit of sales revenue that is shared with contractors under municipal recycling contracts is distributed across all materials • surplus revenue from aluminum lowers all stewards financial obligations • The costs of managing materials exempted under de minimis provision, non-compliance & inaccurate data falls to “compliant stewards”
Issues Raised by Stakeholders (4) • The aggregation of some material types blunts the impact of the price signals that are built into the funding formula to encourage greater recycling • The funding formula is overly complicated, difficult to understand & describe • Recycled content credit should be allowed to recognize contribution to demand for recyclable materials
Summary of General Recommendations (1) • Improve accuracy of material-specific net costs by the changing way in which revenue & material prices are calculated • Provide an opportunity for a recycled-content credit program to be incorporated into subsequent annual fee setting calculations within the existing market development component of the fee setting formula • stewards within material sectors would submit detailed plans for such programs for Stewardship Ontario approval
Summary of General Recommendations (2) • Aggregate materials with similar characteristics (handling, revenue, etc.) for fee setting purposes • Do not give exemption or credit for biodegradability • Leave de minimis level as it is • Leave allocation of common costs as it is • Continue to calculate generation using waste audit data cross-checked against steward data
Short-listed Options for Detailed Review (1) Evaluated two alternatives for modifying the funding formula: Modifications to current 3-factor funding formula, keeping core structure same New 2-factor model Decided that Option (a) would be the focus of consultation
Short-listed Options for Detailed Review (2) Option a) Modifications to current 3-factor funding formula selected because: • Greater flexibility to equitably allocate costs to achieve objectives of BBPP & WDA • Ability to meet requirements of nexus • Modeling simplicity
Modifications to Current Funding Formula (1) In addition to general recommendations, e.g. modified calculation of revenue • Simplify recovery rate factor calculation • replace statistical calculation with simplified calculation based on relative recovery • same result with simpler steps
Modifications to Current Funding Formula (2) • Reduce target recovery on equalization factor from 75% to 60% • reflects the 60% diversion target for BBW set by the Minister & rewards highest recovery materials
Modifications to Current Funding Formula (3) • Adjust weightings of 3 factors • shift some of the weighting from recovery rate factor to equalization factor • greater sharing of cost of achieving higher diversion among all materials • can adjust weightings to achieve marginal change or more significant change
Slide 34 Net Cost to Manage Fees Reflecting Cost to Manage Each Material Fee Rates Reflecting 100% Cost 200 160 120 Total Fee Rate ($/tonne) 80 40 0 OTB Steel OMG Glass Other Paper Printed Plastics -40 Paper Aluminum News Packaging Other News CNA/OCNA -80
Slide 35 Current 2006 40/40/20 Net Cost to Manage Impact of Current Funding Formula Current 2006 Fee Formula: Recovery = 40%, Cost = 40%, Equalization = 20% 200 160 120 Total Fee Rate ($/tonne) 80 40 0 OTB OMG Glass Steel Plastics Paper Packaging -40 Aluminum CNA/OCNA News Other Printed Paper Other News -80 • Formula transfers portion of obligation from materials with higher recovery rates to materials with lower recovery rates, e.g. plastics at 18% overall
Slide 36 Impact of Modifications to Current Funding FormulaBefore Impacts of Aggregation/Dis-aggregation Revised Fee Formula: Recovery = 20%, Net Cost = 40%, Equalization = 40% 200 Proposed 20/40/40 160 Current 2006 40/40/20 120 Net Cost to Manage Total Fee Rate ($/tonne) 80 40 0 Steel OTB Glass Plastics OMG Paper Packaging CNA/OCNA News -40 Aluminum Other Printed Paper Other News -80 • Modified formula results in similar fees by category • Biggest impacts on plastic & aluminum
Slide 37 Impact of Modifications to Current Funding Formula Revised Model - Alternative Weightings 200 Current 2006 40/40/20 160 Proposed 20/40/40 Alternative 30/40/30 120 Alternative 20/35/45 80 Total Fee Rate ($/tonne) 40 0 Steel OTB Glass Plastics OMG Paper Packaging CNA/OCNA News -40 Other Printed Paper Other News Aluminum -80 • Factor weighting can be used to shift fees to low recovery & high cost material … biggest impact on plastic
Printed Paper Aggregation • Currently Printed Paper completely dis-aggregated • Recommend partial aggregation • treat “like with like” • spread effects of de minimis, non-compliance, imprecision of data • balance fee rates on newspapers & municipal payment levels • Separate categories for CNA/OCNA newsprint & other newsprint • OMG, OTB, other printed paper together
Slide 39 Current 2006 40/40/20 Fully Dis-aggregated Alternative 20/40/40 Fully Dis-aggregated Printed Paper Aggregation (1) Printed Paper Current Dis-aggregation 90 80 70 60 Total Fee Rate ($/tonne) 50 40 30 20 10 0 CNA/OCNA News Other News OMG OTB Other Print Paper • Minimal impact of modified 3 factor model • Largely due to revised material prices
Slide 40 Printed Paper Aggregation (2) 90 Current 2006 40/40/20 Fully Dis-aggregated 80 Alternative 20/40/40 Fully Dis-aggregated 70 Alternative 20/40/40 Fully Aggregated 60 50 Total Fee Rate ($/tonne) 40 30 20 10 0 CNA/OCNA News Other News OMG OTB Other Print Paper • Other printed paper fees impacted significantly & in line with other paper categories
Slide 41 Current 2006 40/40/20 Fully Dis-aggregated 80 Alternative 20/40/40 Fully Dis-aggregated 70 Alternative 20/40/40 Fully Aggregated 60 Proposed 20/40/40 Partial Aggregated CNA/OCNA News Other News OMG OTB Other Print Paper Printed Paper Aggregation (3) Printed Paper Partial Aggregation 90 80 70 60 50 Total Fee Rate ($/tonne) 40 30 20 10 • Recommended partial aggregation to reflect that generally handled together & given data aggregation, but also reflecting some differences in cost & recovery - fairer to other paper categories
Plastic Packaging Aggregation • Currently Plastic Packaging fully aggregated • Recommend partial dis-aggregation • PET bottles • HDPE bottles & jugs • other • film, plastic laminants, polystyrene, other plastics, (including other PET & HDPE packaging)
Slide 43 Current 2006 40/40/20 Fully Aggregated Alternative 20/40/40 Fully Aggregated Plastic Packaging Aggregation (1)Before Impact of Dis-aggregation 600 Plastic Packaging Current Aggregation 500 400 Total Fee Rate ($/tonne) 300 200 100 0 PET Bottles HDPE Bottles & Jugs Plastic Film Plastic Laminants Polystyrene Other Plastics • Modified model initially shifts costs to lower recovery plastics
Slide 44 Current 2006 40/40/20 Fully Aggregated Alternative 20/40/40 Fully Aggregated Alternative 20/40/40 Fully Dis-aggregated Plastic Packaging Aggregation (2) Plastic Packaging Dis-aggregation 600 500 400 Total Fee Rate ($/tonne) 300 200 100 0 PET Bottles HDPE Bottles & Jugs Plastic Film Plastic Laminants Polystyrene Other Plastics • Complete plastic dis-aggregation impact on plastic laminants is dramatic
Slide 45 Current 2006 40/40/20 Fully Aggregated Alternative 20/40/40 Fully Aggregated Alternative 20/40/40 Fully Dis-aggregated Proposed 20/40/40 Partial Dis-aggregated Plastic Packaging Aggregation (3) Plastic Packaging Partial Aggregation 600 500 400 Total Fee Rate ($/tonne) 300 200 100 0 PET Bottles HDPE Bottles & Jugs Plastic Film Plastic Laminants Polystyrene Other Plastics • Partial aggregation recognizes differences in handling & recovery rates, but is fairer & more balanced
Paper Packaging Aggregation • Currently Paper Packaging fully aggregated • Recommend partial dis-aggregation • OCC & OBB • aggregated together • polycoat, paper laminants, aseptic • aggregated together
Slide 47 Current 2006 40/40/20 Fully Aggregated Alternative 20/40/40 Fully Aggregated Old Corrugated Containers Gabletop Paper Laminants Aseptic Containers Old Boxboard Paper Packaging Aggregation (1) 120 Paper Packaging Current Aggregation 100 80 Total Fee Rate ($/tonne) 60 40 20 0 • Modified model initially shifts costs down marginally
Slide 48 Current 2006 40/40/20 Fully Aggregated Alternative 20/40/40 Fully Aggregated Alternative 20/40/40 Fully Dis-aggregated Paper Packaging Aggregation (2) 120 Paper Packaging Fully Dis-aggregation 100 80 60 Total Fee Rate ($/tonne) 40 20 0 Old Corrugated Containers Gabletop Paper Laminants Aseptic Containers Old Boxboard • Full dis-aggregation does not recognize material handling reality … does not treat “like with like”
Slide 49 Paper Packaging Aggregation (3) 120 Paper Packaging Partial Dis-aggregation 100 80 Total Fee Rate ($/tonne) 60 Current 2006 40/40/20 Fully Aggregated 40 Alternative 20/40/40 Fully Aggregated Alternative 20/40/40 Fully Dis-aggregated 20 Proposed 20/40/40 Partial Dis-aggregated 0 Old Corrugated Containers Gabletop Paper Laminants Aseptic Containers Old Boxboard • Partial aggregation treats materials fairly & balances impact between materials
Slide 50 Impact on Material Fee Rates 250 Comparison of Fee Rates Current 2006 Model 40/40/20 200 Proposed 3-Factor Model 20/40/40 150 Total Fee Rate ($/tonne) 100 50 0 OTB OMG Steel Al Cans Col Glass CNA/OCNA News Other News -50 Clear Glass PET Bottles OCC & OBB HDPE Bottles & Jugs Foil & Other Al All Other Plastics Other Print Paper Other Paper Pckg • Changes vary by material - some adjustments may need to be considered