Owens-Illinois, Inc. Beverage Container Deposit Programs Mike Smaha – O-I Manager, U.S. Government Affairs Virginia Recycling Association 2012 Conference Owens-Illinois, Inc.

Owens-Illinois in Virginia  Why is O-I a VRA member? Why are we active with VRA Government Affairs?  Two plants in the Commonwealth Toano – 269 employees. Operations since Beverage and pharmaceutical containers. Danville – 148 employees. Operations since Beverage bottles.  Recycling means manufacturing feedstock. Lower costs means U.S. plants can compete with glass bottle imports from China and Mexico. 6/10/2016Owens-Illinois, Inc. 2

Why Deposit Programs? 6/10/2016Owens-Illinois, Inc. 3  Glass, Aluminum, Paper (some), Plastic and Steel industries use post-consumer recycled material as feedstock.  80% of post-consumer glass O-I uses from 10 deposit states.  Higher quality material.

Deposits – True or False? True or False? A deposit is a…dear I say it…a TAX!!!! 6/10/2016Owens-Illinois, Inc. 4 Not true of course, because the consumer get’s their deposit back when they return their empty for redemption. They are an incentive program. Put it in the curbside bin and the municipality can get the deposit. True or False? Deposit programs are a form of EPR. True! Whaa? Deposits are actually a very early example of extended producer responsibility. Canadian beverage industry began using deposits early in the 20 th Century to incentivize consumers to bring back refillable bottles. Today, deposit programs support and sustain EPR programs (Ontario and California). Deposit programs are producer managed and producer financed.

True of False Cont. Curbside and Deposits Can’t Co-exist! 6/10/2016Owens-Illinois, Inc. 5 False! They already do in a number of states and provinces. California and Ontario both have robust curbside. Municipalities supported moving some container from the curbside to the deposit program. Saved them in handling fee costs.

True of False Cont. True of false…deposits have no impact on consumer spending. 6/10/2016Owens-Illinois, Inc. 6 True. No impact on consumer spending Massachusetts DEP study found that in the 5 states surrounding MA, prices of goods in non-deposit states matched those in deposit states and that the CDL states actually had a broader assortment of beverage choices *MASS DEP Source: Sean Sylver, John Fischer University of Florida, Bureau of Economic and Business Research Economic Analysis Program, March 2011 “The impact on beverage consumption, and therefore beverage related employment, is likely to be zero…”

How To Design A Program? There is no one-size-fits-all model for a deposit program.  Things to consider:  Stakeholder outreach 1.Industry Allies - Glass, aluminum, plastic and paper 2.Consumers 3.Retailers 4.Distributors 5.Waste Collectors 6.Municipalities 7.NGO Community 8.State Lawmakers  Weather/Climate 6/10/2016Owens-Illinois, Inc. 7

Consumers  All about convenience - Give them options on what to do with their empties.  Curbside recycling. Always include this option in your program.  Return to Retail. Still the most efficient and convenient for the consumer.  Redemption Centers. 6/10/2016Owens-Illinois, Inc. 8

Retailers  Return-To-Retail yields the highest rate of return. Most convenient for the consumer.  Regional Support From Retailers – Mid-West retailers less opposed.  Older programs mandated RTR.  Alternatives: 1.Redemption Zone Exemptions by store size or proximity. 2.RVM’s to handle the collection and deposit return. 3.Deposit return as store credit for future purchases. 6/10/2016Owens-Illinois, Inc. 9

Retailers cont.  Questions about deposits that worry retailers…. 1.Will there be an impact on sales? 2.What is the cost to my store/business? 3.What is my responsibility/role? 4.Will consumers change their shopping behavior? 6/10/2016Owens-Illinois, Inc. 10

Distributors  Give them the unredeemed deposits as long as they… 1.Accept the vital role they play in recycling beverage containers. 2.Return back-hauling to the system and use unredeemed deposits to pay for it. 3.Understand they have the option of passing the cost of handling on to consumers. 4.Some retailers of store brands may act as their own distributors.  In Oregon, the distributor who originates the deposit holds the deposit and gets to keep any unredeemed deposits after refunds have been made to stores in a timely manner.  EPR? YES! 6/10/2016Owens-Illinois, Inc. 11

Solid Waste Collectors 6/10/2016Owens-Illinois, Inc. 12 Concern: loss of valuable materials from curbside, that they then sell. Glass’ market value is low. Cost to process it is high. How to bridge that gap? 1.O-I accepts that fact and pays an additional fee for processed glass from a deposit state. CA and Ontario model. 2.Solid Waste receives compensation through the pool of unclaimed deposit money. 3.What if the recycling rate is so high that the fund becomes in solvent?

Municipalities  Concern: they also lose valuable materials from their waste stream. 1.Some consumers will still use the bin. 2.Municipalities can set up their own redemption center to collect materials. 3.Work with Solid Waste Collectors to use unredeemed deposits to fund education and curbside programs. 6/10/2016Owens-Illinois, Inc. 13

Municipality Cost Savings Collection costs for recyclables Processing costs for recyclables Collection costs for disposal Landfill tipping fees Litter collection pick-up costs Collection from public litter bins Storm drain (or waterway) clean up costs Monetization of environmental benefits REVENUE LOST: Sale of recyclables (scrap value) 6/10/2016Owens-Illinois, Inc. 14

Non-Governmental Organizations  Take consensus model to business groups/organizations and ask for support. You’ve done the hard part, should be an easy win.  Manufacturing groups/associations. Why recycling = jobs.  Outdoor sporting/hunting/boating groups.  State Farm Bureau or agricultural advocates.  State Recycling Association.  Environmental advocates. 6/10/2016Owens-Illinois, Inc. 15

Lawmakers  Get your program designed, get your stake holders on board or neutralized, line up outside support…and then go to the lawmakers.  State politics determine the message. Jobs? Protect U.S. manufacturing? Environmental benefits?  Multi-year legislative efforts. O-I understands. 6/10/2016Owens-Illinois, Inc. 16

Oregon  Deposit Value: $.5 cents  Beverages Covered: Beer, malt, carbonated soft drinks, & bottled water.  Containers Covered Any individual, separate, sealed glass, metal or plastic bottle, can, jar containing a beverage.  Reclamation Method: Return to Retail mandatory. Stores of 5,000 square feet of space or larger must take back empty containers and pay the refund value even if the containers are different sizes or brands than the store sells. Stores of less than 5,000 square feet may refuse to take back any empty beverage containers of any kind, size and brand that they do not sell.  Unredeemed Deposits: Maintained by distributors/bottlers.  Handling Fee? None. 6/10/2016Owens-Illinois, Inc. 17

California  Deposit Value: 10¢: (24oz. and greater) and 5¢: (under 24oz.).  Beverages Covered: Beer, malt, wine & distilled spirits coolers, all non-alcoholic beverages, except milk. Excludes vegetable juices over 16oz.  Containers Covered: Aluminum, glass, plastic and bi-metal. Exempts refillables.  Reclamation Method: State certified redemption centers, registered curbside operations, drop-offs.  Unredeemed Deposits: Property of program: used for program administration and grants to non-profits.  Handling Fees: Yes, paid by state to supermarket sites, nonprofit convenience zone recyclers, and rural region recyclers. $.85 cents.  Other Fees: Processing fees and processing payments 6/10/2016Owens-Illinois, Inc. 18

Michigan  Deposit Value: $.10 cents  Beverages Covered: Beer, soft drinks, carbonated & mineral water, wine coolers and canned cocktails.  Containers Covered: Any airtight metal, glass, paper, or plastic container, or a combination, under 1 gallon.  Reclamation System: Return to Retail.  Unredeemed Deposits: 75% to state for envt'l programs, 25% to retailers.  Handling Fees: None. 6/10/2016Owens-Illinois, Inc. 19

Contact Information: Mike Smaha Cell: (Owens-Illinois State Government Affairs) 6/10/2016Owens-Illinois, Inc. 20