1. Martin Stewardship & Management Strategies Pty Ltd Russ Martin, Director Martin Stewardship & Management Strategies Pty Ltd WA State Beverage Container Recovery: Data Collection & Contamination Issues Conference Call 8 November, 2006 Increasing Beverage Container Recovery in Australia

2. Martin Stewardship & Management Strategies Pty Ltd Overview Context – Recycling in Australia National Packaging Covenant Original Covenant Revised Covenant Collection Approaches Reprocessing/End Use Approaches Q&A

3. Martin Stewardship & Management Strategies Pty Ltd Context – Overall Recycling in Australia Broad coverage & support for recycling 90-95% access to kerbside recycling Limited market influence comparative low population means limited domestic demand strong overseas influence on policies and industry performance Difficult recovery logistics relatively limited knowledge of product flows dispersed population centers with high transport distances picture the lower 48 US states, with 46 being Utah Drivers local government collections industry demand through end users & National Packaging Covenant

4. Martin Stewardship & Management Strategies Pty Ltd Drivers for Original Covenant Packaging visible as an environmental issue Pushes for CDL (Bottle Bill) and EPR Funding needed to improve kerbside recycling Industry wanted flexibility and control over process National approach needed Photo source: MS2

5. Martin Stewardship & Management Strategies Pty Ltd Original National Packaging Covenant Five-year framework, commencing 1999 Co-Regulatory approach - Voluntary Covenant Action Plan commitments Funding to make kerbside recycling more efficient Regulatory National Environment Protection Measure (NEPM) Onerous take-back requirements for not signing or not complying Intended to encourage companies to sign the Covenant

6. Martin Stewardship & Management Strategies Pty Ltd Benefits of the Covenant Approach Shared responsibility Whole of supply and recovery chain approach Reduced life-cycle environmental impacts More effective use of industry funding than alternative approaches

7. Martin Stewardship & Management Strategies Pty Ltd Overview of Covenant MkII Commenced 15 July 2005 for a five-year period Overarching targets and KPIs Re-prioritisation of funding greater emphasis on Away from Home (AfH) incl. pubs, clubs, hotels, food courts, etc. Strengthened Environmental Code of Practice for Packaging (ECoPP) Strengthened NEPM and enforcement provisions

8. Martin Stewardship & Management Strategies Pty Ltd MkII Targets for 2010 1. Increased recycling rate for packaging of 65% (2003 ests.): paper & cardboard70 – 80%(64%) glass50 – 60%(35%) steel cans60 – 65%(44%) aluminium bev.70 – 75%(64%) plastics 30 – 35% (20%) 2. Landfill: no increase above current baseline. 3. Increased recycling of non-recyclable packaging: 25% (current est. 10% for 2003) Targets are system-wide, not just for industry

9. Martin Stewardship & Management Strategies Pty Ltd Uses of Covenant Funding Used differently than under the first Covenant focus on Away from Home recycling, not just kerbside primary focus on glass & paper, based on expected contribution to targets Limitations: cannot be used to subsidise prices or collection costs must be economically viable must represent good practice LG non-signatories can now apply for co-funded projects Funding directed primarily through National Projects Group

10. Martin Stewardship & Management Strategies Pty Ltd Implications of Covenant MkII 5-year framework for demonstrating product stewardship greater certainty for industry investment and action could mean EPR, European- and Canadian- style packaging levies, etc. mandated if Covenant fails to achieve objectives mid-term review end 2008 – Short time to show results Overarching targets – all sectors must work together Data collection and reporting costly, but critical Photo source: MS2

11. Martin Stewardship & Management Strategies Pty Ltd Key Performance Indicators (KPIs) Significantly more robust data is required: to ensure more accurate baseline measurement to assist in targeting areas of opportunity to help show demonstrable progress against targets and KPIs. 29 main KPIs, Industry directly responsible for 13

12. Martin Stewardship & Management Strategies Pty Ltd Data Collection - Packaging Lifecycle KPIs

13. Martin Stewardship & Management Strategies Pty Ltd Supply Chain Influence! Photo source: MS2

14. Martin Stewardship & Management Strategies Pty Ltd End Use Demand Drives Collections Solid integration of packaging supply chain Strong incentives to minimise contamination Material specifications by Australian Council of Recyclers (ACOR) http://www.acor.org.au/materials.html Kerbside & AfH collections get mixed for reprocessing Generates economies of scale Complicates data collection Some residential materials enter commercial collections Some commercial materials enter residential collections (esp. SMEs) Trials & audit results show benefits of consistent education, regardless of source, and need to tailor to local needs

15. Martin Stewardship & Management Strategies Pty Ltd Beyond Kerbside to Away from Home Photo source: MS2 and APC

16. Martin Stewardship & Management Strategies Pty Ltd Consistent Signage & Bins Graphic source: APC Environmental Management

17. Martin Stewardship & Management Strategies Pty Ltd Streetscapes – Bin Differentiation Photo sources: Manny Manatakis and MS2

18. Martin Stewardship & Management Strategies Pty Ltd HDPE – Material Specs. & Optical Sorting Photo source: MS2

19. Martin Stewardship & Management Strategies Pty Ltd PET - Material Specs. & Physical Sorting Photo source: MS2

20. Martin Stewardship & Management Strategies Pty Ltd Glass - Specs., Physical & Optical Sorting Photo source: MS2

21. Martin Stewardship & Management Strategies Pty Ltd Residuals - Physical Sorting Trials Photo source: MS2

22. Martin Stewardship & Management Strategies Pty Ltd Beverage Container Recycling Summary Key Drivers National Packaging Covenant Threats of container deposit legislation (bottle bills), EPR & prescriptive, most costly approaches Popular demand Keys to Success Focus on material specifications to meet end user needs Primary and secondary market development Good practice approach to system improvement Emphasis on cost-effective recovery - kerbside and Away from Home Reducing system losses Providing infrastructure for collection & reprocessing

23. Martin Stewardship & Management Strategies Pty Ltd Russ Martin Director Martin Stewardship & Management Strategies Pty Ltd +61 2 9940 3571 russmartin@optusnet.com.au www.MS2.com.au