Grocers need to manage change, not give away the store

We get it that the current BC residential Blue Box “system” is a complicated patchwork of different collection and processing arrangements and control points, with a confusing array of instructions on what does, or does not go, in the box or bag.

We get it that this patchwork needs to be transformed into a system that makes sense, is logical in structure, uniform and standardised where possible, harmonised with other programs where applicable, as well as being cost-efficient, effective,  and environmentally sound.

We get it that the provincially regulated move from 100% municipal control to 100% industry control is a major process change that has to be managed carefully and over time so that the new industry-run and paid-for system evolves with minimum disruption to consumers. We appreciate that other services (such as garbage and organics collection) are inter-related.

We get it that politics is always present when regulatory change is in the air: that some municipal leaders don’t want to lose the control they have assumed over the years; that local government workers don’t want to lose their jobs; that some fear competition with the private sector. Many of these local government voices have not exactly been shy in recent months, ratcheting up the political heat and fear-mongering through print and social media.

What we don’t get is why the drafters of this plan have so readily caved in and thrown a large bone to the local government lobby. For that is what this particular plan does.  In effect, the drafters are saying: “We (industry) will give you the ‘right-of-first-refusal’ on collection and will allow you to continue to base collection on municipal borders. We know it’s not the most efficient way to collect materials but by allowing you to stay in the game maybe you will tone down the rhetoric somewhat and ease the transition.”

The rest of the draft plan flows from this key political decision to offer local governments the “right-of-first -refusal” on collection. The private sector (which actually does most of the collection in BC today as contractors “managed” by municipalities) could be effectively shut out of competing directly for collection contracts. It will only get to bid on a piece of the action if the current (mostly local government) collection manager, decides to opt out. A local government wanting to stay in, however, could still seek a private sector contractor to do the actual work on its behalf at a lower cost than the draft plan’s “market clearing price”, then pocket the difference. Why do we need this middleman? Why shouldn’t private sector contractors be able to bid for the service directly?

There are major consequences (additional steward costs) that flow from this political decision on collection policy. Now the plan is not just a relatively simple province-wide collection plan based on the best logistics management to get the most material out: now it has to manage alternatives (should a local government opt out) to fit around municipal borders. Now the plan has to have a mechanism its drafters are calling a Market Clearing Price (MCP), an idea that hasn’t worked successfully with printed paper and packaging anywhere else, and should take years of consulting studies to sort out, if ever. Now there will be not one province-wide promotion and education administration but many (one for each of the municipalities opting in, and one from Multi-Material BC when local governments opt out). Even if they get their act together, there’s a duplication of costs here.

The most significant extra costs to stewards of this political deal on collection will come from the processing side. Under the “incremental approach” suggested by the drafters of this plan (adding new materials only “when markets become available”), BC processors could be re-designing their material recovery facilities (MRFs) several times: once to adjust to the new collection list currently being floated, then again and again as other materials are added (or maybe not) over the years.

This “brownfield” approach is the worst, most costly way to design a system. It is far better to design for the most expected eventualities upfront, a new (greenfield) operation rather than tacking on bits and pieces over time. There’s an extra benefit to going greenfield: a new MRF can be designed to handle all (not just select) printed paper and packaging materials. This leads to another option: why not collect all printed paper and packaging from the start? Sure, not all of it will find ready markets and may have to go to energy-from-waste (EFW) or landfill, but if the steward fees are fair, those non-recyclable materials will pay a penalty for that, which in itself should spur packaging re-design and reduce MRF residue rates.

But there’s a problem. Process re-design costs big money: about $25 million for a decent two-stream MRF, even more (in excess of $30 million) for a single-stream one. That’s borrowed money that has to be paid back over at least 15 years. And it won’t be loaned unless there are guaranteed contracts for the supply of materials. So BC processors need long-term contracts. A 5-7 year contract, likely all that would be guaranteed under the draft plan’s  requirements to secure tonnage from collection contractors, would be insufficient for processors to even consider innovating by building a greenfield MRF.

Allowing processor companies to bid directly for long-term collection contracts in a tendering process supervised by the steward organisation (Multi-Material BC) would at least give them the opportunity to secure that supply, but the BC draft planners have closed that particular door, forcing the processors to negotiate separate contracts with as many as 60 different municipalities. The additional administrative costs of undertaking these multiple negotiations (legal, accounting) will all be passed on to the stewards in their processing costs. So will the “risk costs” of the empty space that has been set aside at the MRF for the “someday” addition of new materials to the collection system. And what happens if the collection contractor changes at some point? Assuming that two seven-year contracts had been signed at the outset, the processor could now be left holding the bag with only half the MRF paid off.

Political decisions on collection have consequences (and costs) downstream. What is really frustrating is that there is a viable, logical, industry-led, lower-cost alternative to the draft planners’ current approach, and that the MMBC’s planners have known about this for months.

  1. Establish collection zones: The province can easily be divided into collection zones based on geographic and demographic factors. Where are the materials and what are are the most efficient logistics to capture them?  Collection based on municipal borders or where one municipal border happens to run up against another does not make economic sense. What collection zones do, of course, is place the focus on effective and efficient collection, rather than who does it (local government or private sector).

 Whoever meets Multi-Material BC’s qualifications criteria for collection should be allowed to compete. No one is excluded. Local government bids welcomed. A level playing field. If you don’t perform (whether you are a local government, private sector contractor or subscription service) you are out. Set conditions for the bids so that maximum diversion is achieved. Phase the zones in as existing contracts end, they don’t all have to start at the same time.

 

  1. Include all residential paper and packaging from the start: This meets the provincial Environmental Management Act’s Recycling Regulations section 11 (2) that “a producer must operate a collection facility for all products (printed paper and packaging) currently or previously sold…”  With this option, all stewards would have the opportunity to have their material collected (and not be paying for a program that doesn’t collect their particular items). It would create a level playing field between materials (instead of having a funding formula that is over-weighted towards the cost of recycling materials rather than penalising those that aren’t), and it would promote a consistent, harmonised, simple message (all printed paper and packaging) to consumers across the province.

 It would place an increasing emphasis on design for recycling or end-of-life (something the BC ministry also wants), forcing stewards to focus on materials that are not recyclable and/or compostable and likely headed to energy-from-waste or landfill. Steward fees should reflect the province’s stated management hierarchy. This option would also allow processors to design now for all materials, and to start processing them immediately, rather than to (as we have noted earlier) pay for the capital costs of empty MRF space and/or adding bits and pieces of equipment to MRFs later (a more expensive option for the stewards who will end up paying).

 

  1. Establish collection methods for the province: The type and proportion of materials to be collected (80% paper) and the need to maximise market revenues suggest that a two-stream approach (paper fibres and plastic, glass and metal containers) is a lower cost and efficient option. Single stream (throw everything in the box) tends to become a secondary garbage pick-up with higher residues to be sent to EFW or landfill. Householders have no problem distinguishing between fibres and containers and feel they are doing something for the environment, not simply dumping stuff in a box or bag just to get rid of it. A dedicated truck picking up fibres one week and containers the next is easy to promote and works successfully in Ottawa, and even meshes nicely with garbage and organics collection.

 

  1. Let tenders for collection and processing: A single body (MMBC) should control the letting of tenders for collection and processing (with appropriate dispute resolution mechanisms). It makes sense to have one administrative body controlling the big picture (collection, processing, logistics management and communications) and reporting to the MoE. There is no need to perpetuate the current disjointed approach and no need for a Market Clearing Price (MCP) and the endless tinkering that will result. MMBC ‘s role should be to manage and control overall program costs, liaise with local governments, and to stimulate innovation through pilot projects and research and development programs.

 We know it’s late in the day (the just-released-for-consultation draft plan is meant to be in the Minister’s hands by November 19), but stewards need to know the consequences of the path they are being led down. There’s no question that the grocers need to manage the process. Our concern is that the planners have already given away the store.

 

 

Not quite all in the bag yet

PPEC has been monitoring the proliferation of bans and/or fees on shopping bags for some time, the most recent iteration being the City of Toronto’s move to ban single-use plastic bags from sale, effective January 1st.

While we sympathise with the plastics industry in the way Toronto’s proposed ban originated (paper could equally have been targeted), this has not stopped our plastic colleagues from dissing the paper alternative. So we came to a meeting of the council’s public works committee yesterday all ready to point out the positives about paper and to address some of the key misperceptions.

When we got there, however, the meeting chairman informed all deputants that he would not allow any comments that did not directly relate to the draft bylaw itself, and he proceeded to cut off the microphone on people who strayed from that path. There were quite a few! The most memorable were those who called the city “fascist overlords” and “minions of the UN.”

When it was our turn, we explained who PPEC represented and acknowledged that “paper” was not specifically mentioned in the draft bylaw, but that we had been dragged into the conversation by others. We had intended to cover off very briefly some of the good things about paper (renewable resource, regeneration, certified forests, furnish, use of renewable energy, recycled content et cetera). But given the chairman’s edict about talking to the bylaw only, we suggested that now was probably a good time to cut us off! He did basically, although a couple of councillors asked questions of us first, mainly about the paper bag industry’s ability to supply demand if the plastic ban went through as expected.

You can get the flavour of the event here: http://www.theglobeandmail.com/news/toronto/minnan-wong-urges-industry-to-sue-as-toronto-moves-ahead-on-bag-ban/article5319147/

So where are all those trees we are ‘killing’?

When retailers started dropping plastic bags in favour of paper a few years ago, the Canadian Plastics Industry Association (CPIA) responded by labelling paper bags as “tree-hungry.”  More recently, the lobby against Toronto’s proposed ban on plastic bags urged city councillors to “Save a tree. Reverse the bag ban.” Today, the pattern continues, with CPIA claiming that the plastic bag was invented “to protect trees and prevent clear-cutting of our forests.”((Clear-cutting is not the evil CPIA makes it out to be. It is recognised as a harvesting method by sustainable forest management standards such as PEFC, CSA, SFI and FSC. In its latest Sustainable Procurement Guide, the World Resources Institute and World Business Council for Sustainable Development acknowledges that “Clear-cutting can accomplish the following: it mimics some of the natural disturbance dynamics of the forests (e.g. fire, wind blow-downs, insects); in some ecosystems, it allows regeneration and rapid growth of certain tree species; it costs less; making forestry more economically viable; (and) it provides safer working conditions for loggers.” Sustainable Procurement of Wood and Paper-based Products, Version 3 Update December 2012, page 2.60 www.SustainableForestProducts.org))

So where are all those trees we are ‘killing’? Check out the thin black line in the sea of green below:

The line represents just how little of Canada’s commercial forest was actually harvested by the paper and lumber industries in the most recent year for which data is available. That’s the whole industry: timber for housing and construction; pulp and paper for newspapers; office supplies; tissue; and a tiny little bit for packaging grades. In total: less than 0.2%.

These are not our numbers. They come from Natural Resources Canada, the federal government department that’s charged with compiling an annual report on the state of Canada’s forests((Natural Resources Canada, The State of Canada’s Forests, Annual Report 2012, page 11. http://cfs.nrcan.gc.ca/pubwarehouse/pdfs/34055.pdf)) Here are some more inconvenient facts to consider:

  •  Over  70% of Canada’s forested area has never been harvested((OECD, Environmental Performance Reviews: Canada (Paris: OECD, 2004) 85, quoted in Conference Board of Canada How Canada Performs, Use of Forest Resources, January 2013.))
  •  Canada’s forest cover and wooded area has remained fairly constant over the past 20 years((Conference Board of Canada, How Canada Performs, Forest Cover Change, ibid.))
  •  Canada’s use of forest resources and protection of endangered species both received “A” grades in a recent comparative study of 17 countries((How Canada Performs, Use of Forest Resources, Threatened Species, ibid.))
  •  Some 38% of the world’s independent, third-party, certified forests are right here in Canada((Canadian Standards Association (CSA), Sustainable Forestry Initiative (SFI), Forest Stewardship Council (FSC). http://www.certificationcanada.org/english/status_intentions/status.php))
  •  One of the three Canadian mills that produces paper bag material uses predominantly recycled pulp (old corrugated boxes collected from the back of supermarkets and factories or from curbside) while the other two use wood chips and sawdust left over from sawmilling operations (for lumber production). For these mills, a fresh supply of tree material (to be shared with lumber) is only harvested when they can’t get enough chips and sawdust. All three mills are certified by internationally recognised, independent, third-party sustainable forest management programs((CSA, Programme for the Endorsement of Forest Certification (PEFC), FSC.))

Oh, and we almost forgot to mention that we don’t just “kill” trees, we also re-grow them. About 67% of the harvest is currently regenerated through tree planting and direct seeding (some 500  million seedlings per year or 1.4 million seedlings per day), while the remainder is regenerated naturally((Natural Resources Canada, ibid., National Forestry Database, 2010)). So basically the industry balances the harvest of the trees it needs, with the re-growth of the new forest. And according to Natural Resources Canada and the Conference Board, we’re doing a pretty good job of it.

So we have to ask: how are the plastic guys doing? Where’s their independent, third-party certification of how they extract their primary raw materials (crude oil and natural gas) from Alberta, China, or somewhere else? And how exactly do they plan to re-grow that oil and gas? Just asking.

What BC’s new “Blue Box” Program Plan should look like

The province of British Columbia has asked industry “stewards” (brandowners and retailers) to design an industry-funded program for the collection, processing and marketing of residential printed paper and packaging. This is what the Program Plan should look like:

1. It should include all printed paper and packaging

There should be no exceptions. No Ontario/Quebec/Manitoba-type systems where maybe 80% of the materials are collected with the rest to come at some distant time in the future. Why? Because that’s what the BC Ministry of Environment is asking for, for one. The BC regulation clearly says “all printed paper and packaging”. It does not say “the materials for which there are currently markets.”  It says all. Having all materials in the program is a game-changer.

It means several things, in addition to meeting the stewards’ legal obligations. It means that all stewards will have the opportunity to actually have their materials collected (and not be paying for a program that doesn’t collect their particular items). It means a level playing field between materials (instead of funding formulas that are over-weighted toward the cost of recycling materials rather than penalising those that aren’t). It promotes a consistent, harmonised, one-message to consumers across the province on what is collected (all paper and packaging, no exceptions). And it places an increasing emphasis on design for recycling or end-of-life (something the BC ministry also wants).

2. If all materials are in, then clearly both collection and processing are going to be much different than what exists today.

Collection: The collection program is going to have to be able to handle a wide range of printed paper and packaging materials (some 115 different types, according to a list compiled by Dan Lantz of Cascades Recovery). The current program cannot do that, and is inefficient partly because collection is based on individual municipal borders and jurisdictions. This is no fault of the municipalities, they have inherited the situation. But collection is more efficient when it is based on collection zones that make geographic and demographic sense, rather than when one municipal border runs up against another.

Collection of over 100 different materials also means collection methods need to be unified and consistent. Given that BC’s proposed recovery program is predominantly a paper one (80%), it would seem to make sense to collect in two different streams (paper fibres, and glass, plastic and metal containers). Two-stream collection has proven to be lower cost (important to the stewards funding it); to maximize the quality and value of the materials collected; and to offer more flexibility in program design.

Processing: Processing over 100 different materials also requires new design formats upfront. A strong processing industry (including PPEC members) already exists in BC, and is prepared to invest in new material recovery facility (MRF) design once the stewards/province agree that the program covers all printed paper and packaging (not just materials that are widely recycled now). It is far more cost-efficient to design upfront rather than add on pieces later at considerable steward expense.

To make those investments, the processors have to raise capital, and they can only do that if they have in their hands some strong guarantees that the materials they are designing their plants around will actually arrive in the quantities and qualities expected. It also makes sense for processors to use these same plants for industrial, commercial and institutional (IC & I) materials being recycled. There are proven economies of scale in working this way, and lower steward costs (for the residential sector materials) as a result.

3. Municipalities will clearly be involved in the transition and beyond

The BC government wants to move from a municipal controlled and taxpayer funded program to one that is industry-controlled and industry-funded. That means that the current collection infrastructure (mostly contracted out to the private sector on a municipal border basis) needs to be closely scrutinised for improved efficiencies. There is no reason, however, why a municipality should not bid for a collection or processing contract in the future along with private sector bidders. And because municipalities are responsible for managing the collection of other material streams from BC households (organics, garbage etc.), they will continue to interface with the new industry-run printed paper and packaging program anyway. This is the time for the province and the stewards to grasp the opportunity to deliver something very special in BC, not for emotion and turf protection and politics to get in the way.

Environmental Labelling

Proposed environmental labeling system could lead to claims of industry greenwashing

The US-based Sustainable Packaging Coalition (SPC) has transplanted a UK environmental labelling idea to a North American context and is encouraging Canadian companies to pilot it. While we commend the initiative, in our opinion there is a serious danger that companies adopting it could leave themselves open to claims of greenwashing.

The problem lies in the current use of the word “Recycled” or “Recycling” in the SPC logos. In Canada, as in the US, claims about the recyclability of packaging hinge on the access question: on whether the consumer has access to recycling for that material through curbside, depot, deposit or whatever. Claims for recyclability in both countries have nothing to do with whether that material is actually sent for recycling.

So here’s the problem. The words on the three category boxes SPC has chosen (Widely Recycled, Limited Recycling, and Not Yet Recycled) do not mention access at all. But they imply that recycling has taken, or is taking place, at the levels cited (at least 60%, between 20% and 60%, and less than 20%).

Some examples of where the results of this approach can be very misleading:

Example 1:  In Canada, the Carton Council (according to a 2011 press release) claims “nearly 94%” access to the recycling of gabletop and aseptics (and therefore under the SPC model would be able to claim “Widely Recycled”). But in fact, at least in Ontario’s residential Blue Box program, the actual sent for recycling rate for gabletops and aseptics in 2010 was only 34% and 12% respectively. That’s not exactly “Widely Recycled”, although we recognise that one province’s numbers, while admittedly a major one, don’t tell the whole story.

Example 2: While access to polystyrene recycling in Canada  is increasing (placing it in SPC’s between 20% and 60% “Limited Recycling” category), its actual sent for recycling rate (again using Ontario residential numbers only) was only 4% in 2010 (the latest year for which data is currently available).

Under the SPC model, both examples cited above would appear to be over-claiming, and in effect, blurring the crucial distinction between access and actual recycling. Indeed the media (and presumably consumers), would be totally misled by the recent treatment in Canadian Packaging and Canadian Manufacturing magazines of a CPIA press release on access to plastics recycling. CPIA was meticulous in qualifying its statements with the “access” word. Canadian Packaging, however, completely missed the qualifiers and stated the access numbers as recycling numbers in its headline and text. If the packaging trade press, which should know something about packaging issues, can’t get it right, what hope do consumers have?

A chart outlining the differences between claimed or assumed access to recycling and what was actually sent for recycling is attached for information.

The solution would appear to be simply changing the wording in the boxes and reference chart by including the word “access” as below:

Labelling

This way it is very clear that we are not talking about actual recycling rates but rather whether consumers have access to recycling for that material. That’s supposed to be what claims for recyclability turn on (access). The last thing we want is for industry to be accused of greenwashing (yet again)!

Claimed "Access" vs. "Sent for Recycling"

Giving paper due credit

How often have you seen this graphic commonly A full Blue Box used to signify Ontario’s Blue Box System?  It’s even on Waste Diversion Ontario’s website.  You’d be forgiven for thinking that bottles and cans are the only materials being recovered.

Wrong. Big Time.  In fact, plastic, glass and metal containers represent just over 20% of what Ontario’s Blue Box System recovers.  The rest (almost 80%) is paper of one kind or another, mainly old newspapers (ONP) and old corrugated (OCC).

The Real Blue Box

The real Blue Box

And what’s the most valuable material in Ontario’s Blue Box System?

While used aluminum cans are valuable in the sense that their worth in the marketplace is more than their cost to recover, the largest dollar contribution to Blue Box revenues is paper (specifically ONP and OCC). Indeed, if you put all paper together, sales of used paper fibre represented an impressive 60% of the total value of all Blue Box materials in 2010, the latest year for which data exists.

Blue Box Chart

Material Revenues Ontario Blue Box

Of course, in provinces with beverage deposit programs, the dollar contribution to a Blue Box system from aluminum, steel, glass and plastic containers is greatly diminished, making the maximising of paper revenues even more important.

British Columbia has golden opportunity to get it right.

British Columbia is the latest province in Canada to regulate extended producer responsibility (or EPR) for printed paper and packaging. Publishers, packaging brandowners and first importers (collectively known as stewards) have until November 19 to deliver a plan on how to do it. The big difference with BC is that industry will not only be paying the full cost, it will also be having a large say in program design and execution (a first for North America).

So the BC stewards have a golden opportunity to design a program that works for them and that is not encumbered or restricted by elements of the current system (for example, municipal control of contracts and program design). The stewards need to assert control from the start by clearly defining the program scope. What exactly does it cover? This is not the time to produce a “patch-up” job that sits somewhere between steward and municipal interests. This is the time to design something that works for the stewards while meeting all regulatory obligations. What happens in BC has implications for stewards far beyond that province and is a great opportunity to create a new EPR model.

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