Industry Consultation Workshop I: New Ontario Waste Diversion Funding Obligations

Derek Stephenson Stewardship Ontario Development and Approval of the Required Blue Box Program

New Ontario Waste Diversion Funding Obligations FOR CONSULTATION ONLY The numbers presented today are not final figures They are the best available planning estimates to be used in the Industry Consultation process They must be reviewed and finalized by the Stewardship Ontario Board of Directors

New Ontario Waste Diversion Funding Obligations REQUIRED ELEMENTS OF A BLUE BOX PROGRAM PLAN Pay 50% of Blue Box net costs Funding allocation formula that:  Recognizes regional variations  Provides incentives to encourage program effectiveness & efficiency

New Ontario Waste Diversion Funding Obligations Funded research & development program to improve effectiveness & efficiency Funded program for market development Funded program for education and public awareness Fee collection mechanism to meet these costs REQUIRED ELEMENTS OF A BLUE BOX PROGRAM PLAN

New Ontario Waste Diversion Funding Obligations MATERIAL DESIGNATIONS DesignationExamples Printed PaperNewspapers, flyers, magazines, catalogues, directories & other printed paper deliveries to the home (envelopes, advertising, notices) Paper Packaging Corrugated & paperboard boxes, paper bags, molded pulp trays GlassSealed glass containers

New Ontario Waste Diversion Funding Obligations MATERIAL DESIGNATIONS DesignationExamples Ferrous Packaging Sealed food, beverage, aerosol, paint containers Aluminum Packaging Sealed food & beverage containers. Flexible & semi- rigid foil packaging PlasticsBottles, jugs, tubs, cups, lids, bags, wraps, pouches, trays, blister & other consumer packaging

New Ontario Waste Diversion Funding Obligations MATERIAL DESIGNATIONS DesignationExamples Laminate Packaging Two or more types of paper, plastic, metal or glass packaging that cannot be easily separated Textile Packaging Cloth or synthetic sacks & bags

New Ontario Waste Diversion Funding Obligations DESIGNATED “STEWARDS” The brand owner or first importer into Ontario of these materials Note: Does not include transport packaging

New Ontario Waste Diversion Funding Obligations COMPLIANCE OPTIONS Industry Choice: Companies can join an approved stewardship organization to collectively contribute 50% of the net cost of the Blue Box program, or; Seek approval from Waste Diversion Ontario to implement a program to recover their own packaging and printed paper and pay full costs  Report on the performance of the plan each year  WDO and MOE may charge fees to evaluate and monitor the ISP  Plan must have a performance equal to or better than that of Stewardship Ontario

New Ontario Waste Diversion Funding Obligations BLUE BOX PROGRAM PLAN Development Process AMO/IFO task group struck to negotiate key issues

New Ontario Waste Diversion Funding Obligations Plan development process approved by WDO September 24 th Materials & Packaging Advisory Committee Printed Paper Sub-Committee Data Reporting Advisory Committee BLUE BOX PROGRAM PLAN Development Process

New Ontario Waste Diversion Funding Obligations Industry, municipal and public consultation programs Website: “ Weekly or Bi-weekly Stewardship Ontario Board Meetings Draft plan to WDO Board January 21 st Final Plan to Minister February 28 th BLUE BOX PROGRAM PLAN Development Process

New Ontario Waste Diversion Funding Obligations BASELINE DATA Generation Planning Estimates Material CategoryTonnes (2001) Newspaper Other Printed Paper Paper Packaging Plastics Ferrous Aluminum Glass Laminates 529, , , ,600 68,600 27, , ,200 Totals1,638,000

New Ontario Waste Diversion Funding Obligations BLUE BOX PROGRAM Cost Components Municipal transfer payments (90%) Funded market development program Funded promotion and education program MOE enforcement costs Program design and startup Program implementation and administration WDO costs over and above LCBO $1M

New Ontario Waste Diversion Funding Obligations PROJECTED COSTS First 12 Months Payments to municipalities Program development, start- up, implementation & administration $31,250,000 $3,342,000 (15 months) Total Program Costs$34,592,000 LCBO Contributions CNA/OCNA In-kind $5,000,000 $1,300,000 Additional Cash Required$28,292,000

New Ontario Waste Diversion Funding Obligations COST ALLOCATION METHODOLOGY  Will not be a sales based formula  Material specific cost allocation taking into consideration: -Total tonnes generated -Material specific recovery rates -Cost to manage each material (ABC) -Incentives to increase recycling

New Ontario Waste Diversion Funding Obligations DATE OF OBLIGATION Current planning date: May 1, 2003

New Ontario Waste Diversion Funding Obligations DE MINIMIS PROVISION “The program will include a rule to exempt stewards under subsection 30(1)(e) of the Act based on de minimis criteria” Proposed de minimis provision – less than $2 million Ontario sales or minimum tonnage threshold (t.b.d.) exempted

New Ontario Waste Diversion Funding Obligations REPORTING OPTIONS Options:  Option 1 – report actual Ontario data  Option 2 – report actual national data  Option 3 – use Stewardship Ontario “Quick Calculator” There will be an opportunity to develop sector specific quick calculators

New Ontario Waste Diversion Funding Obligations PROPOSED FUNDING FORMULA METHODOLOGY Step 1 – Determine the total quantity of Blue Box wastes generated Current planning estimate: 1,638,000 tonnes

New Ontario Waste Diversion Funding Obligations Step 2 – Determine total costs to Stewardship Ontario in Year-One Current planning estimate: $ 34,592,000 PROPOSED FUNDING FORMULA METHODOLOGY

New Ontario Waste Diversion Funding Obligations Step 3 – Allocate these costs across the designated blue box materials to determine a per tonne/per kilogram levy rate  Current planning methodology uses three weighted factors:  Recovery rate for each material category – 45%  Net cost to manage each material category – 40%  Equalization factor (had all materials been recovered at the same rate) – 15% PROPOSED FUNDING FORMULA METHODOLOGY

New Ontario Waste Diversion Funding Obligations Step 4 – Assigns a de minimis & compliance factor to each material category PROPOSED FUNDING FORMULA METHODOLOGY

New Ontario Waste Diversion Funding Obligations MATERIAL LEVY RATES Preliminary Levy Estimates Material Categories Preliminary Ranges (cents/kg) Newsprint Printed Paper Paper Packaging Plastics Laminate Packaging Ferrous Aluminum Foil Glass

New Ontario Waste Diversion Funding Obligations MATERIAL LEVY RATES Not Yet Set Worked examples from proposed methodology will be presented during the December 17 th web-cast Posted on website December 12 th

New Ontario Waste Diversion Funding Obligations OBLIGATED TONNAGE Option 1 Stewards will declare and report that portion of total printed paper and packaging that is sold to consumers through retail, vending and direct distribution channels Printed paper & product packaging sales produced exclusively for non-residential use is exempted

New Ontario Waste Diversion Funding Obligations OBLIGATED TONNAGE Option 2 Consumable/Quick Turnover Product Report all printed paper & packaging that is produced primarily for households/consumers, regardless of sales or distribution channels Durable & Semi- Durable Products Stewards to determine that portion of printed paper & packaging sold into commercial accounts & deduct these from the fee calculations

New Ontario Waste Diversion Funding Obligations OBLIGATED TONNAGE Exemptions Shipping & transport packaging that is NOT intended for use or management in the home (e.g. shipping boxes recycled by grocery retailer, plastic pallet wrap) Industrial use and bulk packaging that is not intended primarily for household consumer use (e.g. bulk flour bags)

New Ontario Waste Diversion Funding Obligations REGISTRATION PROCESS

New Ontario Waste Diversion Funding Obligations REGISTRATION PROCESS

New Ontario Waste Diversion Funding Obligations ROLE OF WDO VS. IFO WDO Board continues to discuss what functions to house within the WDO itself versus the roles and responsibilities of the designated IFO AMO has proposed that these responsibilities should be held within the WDO but paid for by Industry Funding Organizations:  Measuring and reporting on progress towards targets  Public consultation on the plan  Public education and awareness activities  Calculation of funds due to individual municipalities  Distribution of these funds to municipalities  Conducting and interpreting data calls related to material recovery rates  Conducting and interpreting data calls related to the financial net cost calculation  Administering a program effectiveness and efficiency fund The WDO has not yet made a decision on this key issue.

New Ontario Waste Diversion Funding Obligations KEY DATES TO REMEMBER Plan submitted to Minister February 28 th Minimum 30-day posting on EBR (Environmental Bill of Rights) Ministerial approval expected within 60 days of plan submission

New Ontario Waste Diversion Funding Obligations WHAT YOU SHOULD DO TO PREPARE Identify designated materials Quantify those materials (audit) Budget for 2003 based on the estimated levies that will be identified in the Plan - and a projected start date of May 1 st, 2003

Thank You