Waste Diversion Act Industry Consultation Workshop & Simulcast: Building the Blue Box Program Plan 1

Damian Bassett Stewardship Ontario Welcome 2

TODAY’S INSTRUCTIONS Remember: veterans and rookies alike in audience Participants listening on-line as well Save question for Q&A at the end Those on-line:  download slides and supporting documents  questions to Deadline for official comment extended to January 24 th 3

TODAY’S OBJECTIVE Today’s objective is to provide an overview of the key elements of the Blue Box Program Plan Plan will be posted on January 21 st 4

DRAFT PROGRAM PLAN Review key issues to be addressed in the plan Not yet approved by Stewardship Ontario Board Must also be reviewed and approved by WDO Final approval rests with Minister of Environment 5

DISCHARGING YOUR OBLIGATIONS OPTION 1: Membership in Stewardship Ontario  Discharge legal obligation OPTION 2: Industry Stewardship Plan  Follows approval of Blue Box Program  Review and approval of WDO required  Meet or exceed Blue Box Program  Subject to WDO and MOE fees  Monitoring and reporting requirements 6

PLAN DEVELOPMENT PROCESS INPUT Stewardship Ontario Board of Directors Advisory Committees  Materials & Packaging Advisory Committee  Printed Paper Subcommittee  Data & Reporting Advisory Committee AMO/Stewardship Ontario Task Group Public Consultation Municipal Consultation Industry Consultation Website   7

KEY CONSULTATION MESSAGES Industry Lack of time to understand, prepare and budget Unclear what and when have to report and pay Levy formula complicated, weighting and amounts have changed Impact of non-compliance on first year levies 8

KEY CONSULTATION MESSAGES Municipal Process too slow, dollars need to flow faster Year 1 funds not enough Effectiveness and Efficiency Fund is too big Not enough municipal control 9

KEY CONSULTATION MESSAGES Public Target measures not high enough Increased education and awareness is a number 1 priority More dollars needed for north, rural and multi-family programs 10

Gordon Day Stewardship Ontario Definitions & de minimis Update 11

BLUE BOX WASTE Regulation e defines Blue Box Waste as: Waste that consists of any of the following materials, or any combination of: paper, plastics, metal, glass, textiles. Definition is broad in scope, encompassing packaging, printed materials and a wide range of consumer products. Municipal blue box programs collect packaging and printed materials and do not generally collect consumer products. Blue Box Program Plan addresses only consumer packaging material and printed papers commonly found in household wastes. 12

BRAND OWNERS Brand owner or trade-mark owner defined as: a) Packer-filler for products/title owner or publisher for printed paper in Ontario that result in Blue Box Wastes; or b) Party that causes packaging or printed materials that result in Blue Box Wastes; or c) Brand owner’s/publisher’s Ontario legal entity for product packaging or printed materials imported to Ontario; or d) Where the brand owner whose legal entity is outside Ontario agrees to register with Stewardship Ontario and discharge their responsibility 13

FIRST IMPORTER Where the brand owner/publisher does not have an Ontario legal entity, the legal obligation resides with first importer to Ontario: a) The first person to take possession of the product in Ontario. b)Except where brand owner outside of Ontario agrees to register and discharge responsibilities through Stewardship Ontario 14

DE MINIMIS EXEMPTION Ministerial requirement for the program plan Difficult to find balance between level playing field and burden on small business Current formula requires stewards to absorb the 50% share of costs for materials exempted under de minimis rule Estimate impact of 2%-5% of tonnage Estimate exemption of >30,000 small businesses 15

DE MINIMIS UPDATE Level 1 Generators of Blue Box Waste exempt from obligation if Ontario wholesale sales are below $2 million* in 2002 Level 2 Generators with sales >$2 million in 2002 are required to register with Stewardship Ontario Stewards could be exempt if they generate less than 15 tonnes* of packaging or printed paper in 2002 * Reviewed annually to assess impact 16

DE MINIMIS FLOWCHART Do you generate Blue Box Wastes in Ontario? Exempted from financial obligations to Stewardship Ontario for Step 1 Were your Ontario sales $2 million or greater in 2002? Did you generate >15 tonnes* of blue box wastes in Ontario in 2002? NO YES Step 2 Step 3 Step 4 Obligated to contribute to Stewardship Ontario through material levy on tonnes of blue box wastes in Ontario for 2002 * >75 tonnes for newspaper publishers 17

Derek Stephenson Stewardship Ontario Year 1, Projections, Fees & Governance 18

PROJECTED DATE OF OBLIGATION Plan submitted to Minister on 28 February days review by Ministry with concurrent 30 days posting on Environmental Bill of Rights Enabling Regulation March 31 Notification period of 60 days Obligation date for stewards of June 1,

YEAR ONE MUNICIPAL PAYMENTS Total Net Municipal Program Cost in 2001 was $62,500,000 Industry responsible for 50% of that total = $31,250,000 Date of Obligation = June 1, therefore: 7/12’s Industry Obligation$18,229,167 CNA/OCNA In-kind Contribution$1,300,000 Total Municipal Payments$16,929,167 20

OTHER PROGRAM IMPLEMENTATION COSTS Market Development program including - Green Procurement Program$100,000 - Glass Market Development$475,000 Waste Audits$250,000 Data Collection and Analysis$75,000 Financial/Engineering Audits$300,000 Best Practices$200,000 MOE Enforcement$100,000 WDO share of costs0 Management & Administration$3,342,000 Total$4,842,000 21

YEAR ONE OBLIGATION 7/12’s Industry Obligation$18,229,167 CNA/OCNA In-kind Contribution$1,300,000 Total Municipal Payments$16,929,167 Other Programs$4,842,000 TOTAL$21,771,167 22

LEVY SETTING METHODOLOGY Three factors taken into consideration in calculating material specific levies:  The recycling rate of each material  The net cost to recycle each material  An equalization factor reflecting costs that would have been incurred if all materials recovered equally 23

PROPOSED WEIGHTING AND RATIONALE Reviewed numerous weighting scenarios, changing each of the three factors Continuing to consult on flexibility of Equalization Factor  Initial agreement on 15% An emphasis on recovery favours materials with higher recovery rates An emphasis on net cost favours materials with the lowest cost to manage Recommended balance is 42.5/42.5/15 24

YEAR 1 MATERIAL SPECIFIC LEVIES 25

YEAR 1 MATERIAL SPECIFIC LEVIES 26

YEAR 1 MATERIAL SPECIFIC LEVIES 27

LEVIES TOO HIGH OR TOO LOW Total levies received from stewards will be compared with levies calculated for each specific material category  If the levies received are greater than required, the excess will be credited back to stewards on the next installment and the assumed de minimis/compliance rate estimate changed  If the levies received are less than required, the assumed de minimis/compliance rate will be decreased with additional fees requested from stewards on the next installment 28

PROJECTED RECOVERY SCENARIOS Natural Growth: Recovery Rate stays at 45% 50% Scenario: Recovery Rate increases to 50% with individual recovery rates set for each material 29

FIVE YEAR COST PROJECTIONS 30

WHY COULD COSTS INCREASE? Population and household growth Increased waste generation rates Increased material recovery rates  Increased promotion  New recycling approaches Weak revenue forecasts Expiry of existing municipal contracts Inclusion of municipal indirect costs 31

COST CONTROL ELEMENTS 50/50 cost sharing Municipal funding allocation formula Audits of municipal costs and programs Audits of stewards reports 10% Effectiveness and Efficiency Fund  program investments and incentives  engineering audits  promotion of best practices Market development program Spreading WDO/Stewardship Ontario program costs across other designated waste streams 32

GOVERNANCE Members  All obligated stewards Directors  Representative of “sectors” of members Principle  “He who pays, plays” Founding Board  Associations representing obligated stewards from WDO Board 33

GOVERNANCE Future Board  Approximately 20 directors  Put in place to fairly represent contributions by obligated stewards Committees of the Board  Future structure  Audit Meeting frequency  To date: as required 34

KEY DATES January 21 – Draft plan presented to WDO Board and posted 24 – Final date for industry comments to draft plan 29 – WDO Board revisions to 1 st draft plan February 6 – Stewardship Ontario review of draft plan 11 – Revised draft plan submitted to WDO 18 – WDO Board meeting to finalize plan 28 – Final plan submitted to Minister. Posted to EBR for 30 days comment 35

KEY DATES March 31 – Projected approval date for Minister with Regulation June 1 – Industry’s obligation begins days after promulgation of Regulation 36

BREAK 37

Steve Savage BDO Dunwoody Demo: On-line Data Management & Reporting 38

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Question Period 40

Thank You 41