Extended Producer Responsibility (EPR) as a public policy concept has been steadily gaining momentum inCanadaover the past decade. In recent years it has started to impact the electronic and electrical equipment category, including both major and portable appliance manufacturers, with British Columbia passing a regulation in 2009 that requires EPR programs for both portable (launched October 1st 2011) and major (by July 2012) appliances.
What Exactly is EPR?
At its heart, the principal objective ofEPRis to shift the responsibility and cost of managing end-of-life products from the taxpayer to the product producer. The philosophy behindEPRis that by shifting these costs and responsibilities to product producers and requiring them to establish programs to reuse or recycle their end-of-life products, the following outcomes will be achieved:
- The amount of waste going to shrinking landfills will be reduced;
- The cost of managing products at end-of-life will be borne by producers and consumers (i.e. those who benefited from the product) and not by all general taxpayers;
- Producers will receive economic signals (the cost of collecting and recycling their products) that will encourage them to design their products for more efficient recycling, including the use of more recyclable materials;
- Increased recycling will reduce the demand for energy and finite natural resources; and
- More recycling will generate new investment and job creation in the emerging re-manufacturing green economy.
EPR Activity in Canada
Today, virtually every province inCanadahas established, or is in the process of establishing, legislation to give them the legal authority to compel producers to establish EPR programs for their products at end-of-life. Most provinces have focused their initial efforts on common consumer products that don’t have existing recycling programs and represent a significant percentage of landfill waste.
Examples of product categories that have been mandated to createEPRprograms include: consumer packaging and newsprint through curbside recycling programs, used oil, paint, tires, household hazardous and special waste, beverage containers and electronic and electrical equipment (e.g. computers, TVs), including portable appliances.
Future Challenges to EPR
As governments acrossCanadahave progressively mandated EPR programs for the products most commonly found in landfills, they have begun to turn their attention to more value-laden products, such as major household appliances (“White Goods”) and end-of-life automobiles that don’t typically find their way into landfills. As these products start to emerge on to the EPR “radar screen”, both government and industry are starting to realize that the standard EPR program model may not be applicable to all products.
In essence, the standard EPR program model was designed to deal with products with little or no residual value at end-of-life. As such, these products could not be profitably recycled in the market economy and alternate systems of product collection and recycling (Industry Funding Organizations and Stewardship Agencies), subsidized by fees levied on brand owners and first importers, had to be created.
While this standard EPRapproach may make sense for products that have a negative recycling value at end-of-life, it may not make sense for products that have a positive recycling value (e.g. White Goods), and where market-driven recycling activity is already occurring. In these circumstances a more prudent approach for government regulators and industry would be to carefully research and evaluate the market-driven recycling system that exists to determine whether it already meets the underlying EPR policy. If the system is found to be meeting those objectives, it should be left to operate subject to periodic review to ensure its continued effectiveness. Where such market-driven systems are found to not meet relevant EPR objectives, then targeted interventions to address short-comings or market-failures should be considered.
In short, when it comes to products with positive recycling value, the more efficient and effective EPR approach is to build upon the existing market-driven systems and the economic players in those systems rather than to completely replace them with an EPR model designed for products with negative recycling value.
White Goods – A Successful Market-Driven System
In mid-2008, the Canadian Appliance Manufacturers Association (CAMA) contracted with SBR International Inc. to undertake a detailed study of the market-driven White Goods recycling system inOntario. The study examined the following key questions:
- What quantity of White Goods will enter end-of-life now and in the future?
- What quantities of composite material are being diverted from landfill?
- How will changes in material composition impact these quantities?
- What are the main collection channels and how much flows through each?
- How do end-of-life appliances flow from collection through processing?
- How are White Goods processed and what are the end-markets for materials?
- How do the economics of White Goods recycling function?
SBR found that 95 to 99 percent of end-of-life White Goods are collected for recycling and 83 to 89 percent of component materials are being diverted from landfills. These collection and diversion rates, driven principally by the metal value in the product, were found to be among the highest in the world and were achieved through a complex, yet flexible, system of collectors, including retailers and municipalities, consolidators and pre-processors, processors (metal shredders and balers), and end markets (principally, Ontario-based steel mills).
The power and effectiveness of market-driven economies are clearly evident in the performance numbers of the White Goods recycling system. As governments begin to extend the application of EPR policies to products with positive recycling value like White Goods, they would be well-served to consider adopting new EPR approaches, in particular ones that build on and supplement the power, flexibility and efficiency of existing markets, rather than duplicating or replacing them.
Jeff Newton serves as a Policy Research and Government Relations Consultant for CAMA, and has worked for the organization for the last six years. He provides a variety of important services to CAMA and its members, including government relations/advocacy, policy research and analysis, and communications support with a particular focus on the rapidly-emerging issue areas of Extended Producer Responsibility (EPR) and energy policy.
Jeff is a Principal of Corporate Policy Group LLP, a public policy research and advocacy firm focusing on issues related to environmental policy, taxation and public finance, economic development, commercial competition and trade. He has 25 years of experience in the areas of public policy formulation, public affairs, government/regulatory affairs, corporate communication and public and media relations. Jeff can be reached at JNewton@nationalbrewers.ca.