C BearingPoint Benchmarking Evaluation of DAO Stewardship Programs in Alberta Final Report Report Commissioned by Alberta Environment February 28, 2006 Business and Systems Aligned. Business Empowered. Alberta Environment Benchmarking Evaluations of DAO Stewardship Programs Final Report February 28, 2006 ISBN: 978-0-7785-6760-8 (Printed Edition) ISBN: 978-0-7785-6761-5 (On-line Edition) Web Site: http://environment.qov.ab.ca/info/home.asp Disclaimer: Although prepared with funding from Alberta Environment (AENV), the contents of this document do not necessarily reflect the views or policies of AENV, nor does mention of trade names or commercial products constitute endorsement or recommendation for use. Any comments, questions, or suggestions regarding the content of this document may be directed to: Conservation and Education Branch Alberta Environment Main Floor, Oxbridge Place 9820- 106th Street Edmonton, Alberta T5K 2J6 Fax: (780) 422-4086 Additional copies of this document may be obtained by contacting: Information Centre Alberta Environment Main Floor, Oxbridge Place 9820- 106th Street Edmonton, Alberta T5K 2J6 Phone: (780) 427-2700 (toll free by first dialing 310-0000) Fax: (780) 422-4086 Email: [email protected] Copyright in this publication, regardless of format, belongs to Her Majesty the Queen in right of the Province of Alberta. Reproduction of this publication, in whole or in part, regardless of purpose, requires the prior written permission of Alberta Environment. © H er Majesty the Queen in right of the Province of Alberta, 2007 Business and Systems Aligned. Business Empowered. Authors This report was prepared by: Charles Meredith, Manager BearingPoint LP Suite 127, Commerce Place 10150 Jasper Avenue Edmonton, AB T5J 1W4 T: 780-429-5859 F: 780-428-5190 [email protected] Brent Schultz, Management Analyst BearingPoint LP Suite 127, Commerce Place 10150 Jasper Avenue Edmonton, AB T5J 1W4 T: 780-429-5887 F: 780-428-5190 [email protected] Graham Vanderwater, Management Analyst BearingPoint LP Suite 127, Commerce Place 10150 Jasper Avenue Edmonton, AB T5J 1W4 T: 780-429-7610 F: 780-428-5190 [email protected] 2 ©2006 BearingPoint LP Alberta Environment Benchmarking Evaluations of DAO Stewardship Programs Final Report February 28, 2006 BearingPoint TABLE OF CONTENTS 1 Executive Summary 2 2 Introduction 8 2. 1 Project Objectives and Scope of Work 8 2.2 Key Questions to be Addressed 8 2.3 Project Deliverables and Timelines 9 3 Overall Findings and Conclusions 12 3 . 1 Beverage Containers 12 3.2 Scrap Tires 17 3.3 Waste Electronics 20 3.4 Overall Findings and Conclusions 26 4 Beverage Containers 29 4. 1 Alberta Beverage Container Stewardship Program 29 4.2 Overview of North American and European Beverage Container Stewardship Programs 37 4.3 Canadian Deposit Programs 38 4.4 American Deposit Programs 40 4.5 International Deposit Programs 44 4.6 Canadian Non-Deposit Programs 45 4.7 Governing Structure 47 4.8 Recovery Mechanism 48 4.9 Funding Mechanism 50 4. 1 0 Performance 52 4. 1 1 Deposits Values 58 4. 1 2 Handling Commissions 61 4.13 Scandinavian Programs 63 4.14 Ontario Analysis 67 4. 1 5 California Analysis 75 4. 1 6 Key Questions 78 ©2006 BearingPoint LP Alberta Environment Benchmarking Evaluations of DAO Stewardship Programs Final Report BearingPoint February 28, 2006 5 Scrap Tires 90 5.1 Alberta Scrap Tire Stewardship Program 90 5.2 Overview of North American and European Scrap Tire Stewardship Programs 107 5.3 International Programs 117 5.4 Governing Structure 124 5.5 Recovery Mechanism 125 5.6 Performance 125 5.7 Incentive Analysis 131 5.8 Key Questions 137 6 Waste Electronics 144 6.1 Alberta Waste Electronics Program 144 6.2 Overview of North American and European Waste Electronic Stewardship Programs 148 6.3 European Jurisdiction Summaries 151 6.4 North American Waste Electrical and Electronic Equipment Schemes 169 6.5 Governing Structure 172 6.6 Program Scope 173 6.7 Funding Mechanism 174 6.8 Recovery Mechanism 175 6 . 9 Key Questions 177 Appendix A - A lberta Handling Commission Rates (2005) 198 Appendix B - Alberta Deposit and Container Recycling Fee Rates (2005) 200 Appendix C - H istorical Price of Aluminium 202 Appendix D - S tewardship Ontario Paper & P ackaging Fee Schedule (2003-2005) 2 04 Appendix E - S candinavian Non-Refillable Deposit Program Comparason 206 Appendix F - P urchasing Power Parity Table 21 1 Appendix G - H istorical Energy Prices 213 Appendix H - E RA Advanced Disposal Surcharge Rates 215 ii ©2006 BearingPoint LP Alberta Environment Benchmarking Evaluations of DAO Stewardship Programs Final Report BearingPoint February 28, 2006 Appendix I - C alifornia Electronic Waste Recycling Fee 217 Appendix J - E l Kretsen Product Surcharge Rates 219 Appendix K - S WICO Advanced Recycling Fee Rates 222 Appendix L - S ample Recupel Product Recycling Fee Rates 227 Appendix M - E cycle Solutions Recycle Process 230 Appendix N - B everage Containers Bibliography and References 232 Appendix O - S crap Tires Bibliography and References 239 Appendix P - W aste electronics Bibliography and References 245 iii ©2006 BearingPoint LP Alberta Environment Benchmarking Evaluations of DAO Stewardship Programs Final Report BearingPoint February 28, 2006 1 Executive Summary 1 ©2006 BearingPoint LP Alberta Environment Benchmarking Evaluations of DAO Stewardship Programs Final Report BearingPoint February 28, 2006 I I 1 EXECUTIVE SUMMARY Alberta Environment manages the use of Alberta's diverse landscapes to sustain a h ealthy environment, a p rosperous economy and strong communities. Alberta is committed to protecting the province's air, land, and water while striving to be a leader stewarding the environment. To support this goal, Alberta Environment engaged BearingPoint to conduct a b enchmarking evaluation of Alberta’s DAO Stewardship Programs versus comparable programs in other jurisdictions. The review focuses on three programs: • Non-milk beverage containers (managed by the Beverage Container Management Board — BCMB), • Scrap tires (managed by the Alberta Recycling Management Authority, Tire Recycling Alberta — TRA), and, • Waste electronics (managed by Alberta Recycling Management Authority, Electronics Recycling Alberta — ERA). The information is required as a basis to inform policy and program decisions for improving the environmental outcomes of the programs in a cost effective manner, while maintaining a h igh level of public confidence. The key objective for this evaluation and related analysis is to benchmark Alberta Environment’s effectiveness and cost-effectiveness with programs in other jurisdictions. Effectiveness focuses on the achievement of specific objectives while cost effectiveness focuses on the relationship of cost and effectiveness (cost per incremental unit of achievement of objectives or effectiveness) in comparison to programs or approaches to waste stewardship that are carried out in other provincial/state/national/intemational jurisdictions. * * * Beverage Container Recycling Program Alberta ’s beverage container recycling program is mature and very effective — but has plateaued. Alberta has one of the broadest program scopes in North America and Europe, driving significant diversion of beverage containers from the Alberta waste stream. Few other programs include “non traditional” products in their scope that typically have far lower recovery rates — most programs focus strictly on beer and non-beer aluminium, ' plastic and glass containers. 4 Recoveries in Alberta are comparable to all other jurisdictions with similar structures and are far superior to 1 jurisdictions with non-deposit programs. Alberta’s overall recovery is approximately 80% and typically only marginal i points behind the leader of any container category. Virtually all of Alberta’s beverage containers are recycled or re- ( used in what is essentially a closed loop system. Alberta’s beverage container recycling program costs are competitive to comparable jurisdictions with the highest recoveries. Transportation and processing costs compare very favourably to other jurisdictions despite duplication created by two recycling streams — beer and non-beer. Alberta handling commissions are an issue as they offset these transportation and processing efficiencies. Handling commissions in bottle depots, driven by average labour rates approaching $15 per hour for handling waste beverage containers, are generating a significant financial burden on the overall system. 2 ©2006 BearingPoint LP Alberta Environment Benchmarking Evaluations of DAO Stewardship Programs Final Report BearingPoint February 28, 2006 There is an interesting comparison of different program structures between Alberta and Ontario. Ontario’s program is based on a municipal Blue Box program (with a very broad scope) with no deposits on containers, and with program costs shared between municipalities and industry. Taking non-beer beverage containers in isolation, Ontario’s recoveries are about half of Alberta’s (40% versus 75%), but Ontario’s program costs are less than a t hird of Alberta’s ($0,017 versus $0,058) on a unit recycled cost basis. The cost benefit analysis of the comparison of these two programs is a matter of public policy along with provincial and municipal environmental stewardship strategy. Alberta recovery rates are excellent and compare to those in leading jurisdictions, but they have plateaued during the past seven years. Alberta should consider increasing and potentially harmonizing deposit rates (including adjusting recycling levies) to drive increased recoveries, adding milk containers to broaden the program scope, implementing technology based innovations to increase efficiencies in the collection stream, and focusing marketing efforts on increasing consumer awareness for categories such as tetra packs, gable tops, as well as aluminium cans. Other jurisdictions — California and Saskatchewan — have increased their recoveries in their previously plateaued programs primarily through increasing deposit rates with success. Finally, while the current structure is sound and generates excellent results compared to other programs, there is an inherent conflict when funding the beverage container recycling program through unredeemed deposits and recycling fees or levies. This structure creates an incentive for industry to minimize recovery rates to avoid higher recycling levies that would increase to the total purchase price of beverages. Scrap Tire Recycling Program Alberta ’s scrap tire program is effective but high cost — the policy to not burn tires and to invest in research and development for alternative uses creates significant cost impacts. Scrap tires as a component of the waste stream are typically benign and individually have little environmental impact other than the space required to manage them and the resources wasted by not recycling the materials. When stored in volume, the potential risk becomes exponential with tire fires being a p rimary concern. Stockpiles are also excellent artificial breeding habitats for disease carrying insects (i.e. West Nile Virus). The Alberta program scope encompasses passenger, light truck and commercial tires; and excludes off-road tires that are typically larger construction and mining equipment tires. Virtually all programs have comparable scopes, as few handle problematic off road tires due to the infrastructure required — off road tires tend to be exceptionally large, heavy and difficult to handle. Alberta’s recoveries are exceptionally high and comparable to leading jurisdictions with similar program scopes. Most of these tire programs are mature and recycle virtually every tire sold, reporting recoveries approaching 100%. Alberta’s overall program costs are higher than most comparable programs. Despite this, the actual collection, transportation and process costs — incentives paid — ranged between $2.62 and $2.92 per tire, and these are comparable to most other jurisdictions. Two key policies drive Alberta’s program costs higher than others: Most jurisdictions elect to bum tires and report acceptable environment stewardship outcomes. Alberta’s policy to not bum tires results in the subsidization of alternative end use products — all more expensive than burning. Alberta’s end uses for tires include civil engineering products (e.g. shred lining for landfills, asphalt, etc) and manufactured products (e.g. mats, bricks flooring, etc). This policy makes Alberta’s program more expensive than most other programs thus Alberta may want to revisit this policy. An important consideration is that crumb rubber is an alternative fuel source 3 ©2006 BearingPoint LP Alberta Environment Benchmarking Evaluations of DAO Stewardship Programs Final Report BearingPoint February 28, 2006 commodity that is influenced by the price of traditional fuel sources — the rising price of oil, gas and coal typically increases the value of scrap tires as a f uel source. In addition, Alberta has committed to fund research and development into alternative end uses for scrap tires. Over 40% of the Alberta program revenues over the past three years have been expended on research and development for alternative end uses for tires along with program marketing (public education). Few other jurisdictions allocate funds for comparable research and development, thus Alberta is essentially “going it alone” and has generated minimal results to date. The policy question is who should conduct research and development, and how should it be conducted and funded? Alternative models for research and development should be considered involving both industry and stakeholders in other jurisdictions nationally and internationally. Alberta should consider burning all categories of tires while continuing to support alternative end use products, developing end of life solutions for these end use products ensuring a closed loop system, broadening the program scope to include off road tires, and devising an alternative research and development strategy for end uses for scrap tires incorporating manufacturers along with other stakeholders to more effectively and equitably pursue long term solutions. Waste Electronics Recycling Program Alberta ’s waste electronic recovery program is in its infancy — most European programs have much broader scopes driving efficiency and exponentially greater waste diversion. Rapid technological advancement combined with declining product life cycles is creating a global proliferation of electronic products. Despite the drive towards miniaturization, the overall tonnage of electronics manufactured and sold throughout the world is ever increasing. The resulting waste streams are creating issues both locally in Alberta, and across the world. Waste electronics consist primarily of metal and plastic; with much smaller amounts of glass, rubber, and a h ost of other materials including many toxins such as lead, mercury and freon. Total metals and plastics comprise approximately 12% of the current overall waste stream in Alberta. Scrap electronics contribute a p ortion of this tonnage, and the associated toxins create a s ignificant environmental stewardship concern. There are few formal electronics recycling programs actually implemented — there are only two others besides Alberta in North America with the balance being in Europe and Asia. Most other North American jurisdictions deal with electronics on a project basis (e.g. annual round-ups, etc) with larger metal-centric goods (e.g. appliances) being recycled haphazardly driven primarily by geography and commodity prices. Europe hasn’t moved much faster — it appears that only six of the 25 European countries have actually implemented a p rogram, with the balance of European countries still developing a p rogram, despite a E urope wide directive to have a p rogram in p lace in 2005. Alberta’s eWaste program’s scope is comparable or better than the other North American programs in Delaware and California. Alberta has a much narrower program scope than the European programs — driving a much lower diversion of waste electronics from the Alberta waste stream. European programs include white goods (washers, dryers, etc), brown goods (smaller household appliances such as blenders, toasters, etc), power tools, gardening tools, toys, medical equipment and lighting (tubes and fixtures). Medical equipment and lighting are of particular interest given their propensity to contain toxins. 4 ©2006 BearingPoint LP