Rigid Plastic Packaging Container Regulations Economic and Fiscal Impact Analysis Presented by: Neal Johnson March 8, 2009

 82 Product and Container Manufacturers and 10 Material Processors Submitted Responses  Only 30 Product and Container Manufacturers Submitted Responses with Cost Data ◦ 11 manufacturers responded that there were no operating cost impacts. ◦ 18 manufacturers responded that there were no capital cost impacts. ◦ 8 California-based manufacturers responded. ◦ 4 manufacturers claimed to be small businesses.

 Staff completed an Initial Economic Impact Analysis using the survey data, however the Economic Study Review Panel rejected the analysis as the survey data was not adequate to perform a representative analysis.  The Panel directed Staff to perform a more extensive analysis that is now being finalized.

STEP 1--Calculation of Amount of RPPCs Used Annually RPPCs Disposed (Millions of Pounds) Recycling Rate (%) RPPCs Recycled (Millions of Pounds) RPPCs Used (Millions of Pounds) PET Bottles HDPE Nat’l Bottles All RPPCs

‣Amount of regulated and exempt products/containers ‣Percentage of California-based manufacturers ‣Percentage of small business manufacturers ‣Average container weights ‣Percentage of regulated containers by compliance options

‣American Chemistry Council Resin Production and Sales Data ‣US Census Data ‣US Dept of Commerce Data ‣DOF Population Data ‣Virgin and Recycled Resin Prices ‣Plastic News, Plastic Technology and IDES.com ‣Conversations with Survey Respondents

STEP 2-CALCULATION OF AMOUNT AND COST OF IMPACTED CONTAINERS Weight of Regulated Containers (Millions of Pounds) Number of Regulated Containers (Millions) Postconsumer Material Needed (Millions of Pounds) Clamshells Buckets, Tubs, Pails, Etc All Impacted RPPCs

STEP 2-CALCULATION OF AMOUNT AND COST OF IMPACTED CONTAINERS Price Difference Between Virgin and Postconsumer ($) Increased Cost of Impacted Containers (Millions of $) Cost Impact Per Impacted Container ($) Clamshells Buckets, Tubs, Pails, Etc All Impacted RPPCs

STEP 2—CALCULATION OF AMOUNT AND COST OF IMPACTED CONTAINERS Weight of Regulated Containers (Millions of Pounds) Number of Regulated Containers (Millions) Source Reduction Material Decrease (Millions of Pounds) PET Containers HDPE Containers All Impacted RPPCs

STEP 2—CALCULATION OF AMOUNT AND COST OF IMPACTED CONTAINERS Price Difference Between Resin Types ($) Increased Cost of Impacted Containers (Millions of $) Cost Impact Per Impacted Container ($) PET Containers HDPE Containers All Impacted RPPCs

 Used 25% postconsumer (PCM) content compliance method.  Determined how much PCM was needed to comply.  Multiplied PCM weight by “PCM to virgin price differential” to calculate the added cost for impacted containers.

STEP 3—CALCULATION OF PRODUCT MANUFACTURER COST Increased Cost of Impacted Containers (Millions of Dollars) Total Product Manufacturer Cost (Millions of Dollars) California- based Product Manufacturer Cost (Millions of Dollars) Clamshells Buckets, Tubs, Pails, Etc All Impacted RPPCs

 Assumed added cost for impacted containers was fully borne by product manufacturer.  25% of product manufacturers are located in California.

STEP 4—COST IMPACTS ON RPPC END-USERS Total Product Manufacturer Cost (Millions of Dollars) “Mark- Up” Factors Total Statewide Cost to RPPC “End-Users” (Millions of Dollars) Cost Impact on All Regulated Containers ($) Clamshells Buckets, Tubs, Pails, Etc. RPPC Total

 Total manufacturer costs multiplied by “mark-up” factors to calculate total statewide cost to end-users.  RPPC products are consumed by businesses (about 40 percent) and residents (60 percent).  Individual California Resident Cost: Total statewide cost divided by population.  All Regulated RPPC Cost Impact: Total statewide cost divided by 3.94 billion regulated RPPCs.

Small and Typical Manufacturer Costs  Cal Recycle product manufacturer certification data for amount of impacted containers  Used methodology to calculate cost impacts for each regulation amendments and manufacturer totals.

Environmental Benefits  Reduced Disposal of Plastic Materials  Reduced Greenhouse Gas Emissions  Reduced Litter Clean-Up

Alternatives Considered  Post-Industrial Material Could be Substituted For Postconsumer Material  Resin Switching to Achieve Source Reduction Compliance

 RPPC Web Site: ◦  RPPC Regulations Web Site: ◦