The Blue Box Program Plan
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Description
Waste management has been one of the most controversial issues in Ontario over the past four years. Ever since the Adams Mine controversy re-emerged in the late 1990s, policy makers have focused on how to divert more waste from disposal. One such program, the municipal Blue Box system, was given a boost in December 2003, when the Minister of the Environment approved the Blue Box Program Plan (BBPP) under the Waste Diversion Act (WDA).
Under the BBPP, industries (called “stewards”) that generate printed paper and packaging materials which enter the municipal Blue Box system are required to fund 50 per cent of the total net costs of the residential stream of the system – approximately $3 million each month – beginning February 2004. (Under a de minimis rule, small companies that meet certain criteria are exempt from paying fees.) The BBPP also describes initiatives to increase the recovery rate for Blue Box waste and reduce costs by improving the efficiency of the system.
Waste Diversion Ontario (WDO), created by the Ministry of the Environment in 2002, established Stewardship Ontario to represent the stewards and to prepare a draft Blue Box Program Plan. The WDO sent the draft program to MOE in February 2003 for approval, and the ministry posted it on the Environmental Registry for public notice and comment.
Definitions of Blue Box waste
There are now two Ontario regulations that define Blue Box waste: O.Reg. 101/94, for municipalities, dating back to 1995; and O.Reg. 273/02, for stewards, dating from February 2004.
O. Reg. 101/94 under the Environmental Protection Act requires that all municipalities with a population of more than 5,000 provide residential recycling. Basic Blue Box materials are defined as newsprint and food and beverage containers made from aluminum, steel, polyethylene terephthalate (PET), or glass. Supplemental Blue Box waste includes aluminum foil, fine paper, textiles and magazines. Municipal Blue Box systems are required to collect the basic materials, plus at least two supplemental wastes.
On September 23, 2002, the Ontario government passed O. Reg. 273/02, which defines Blue Box waste as “glass, metal, paper, plastic, textiles.” Stewards are expected to comply with this regulation by paying a fee based on how much waste the steward generates for each of these materials. Municipalities will continue to collect Blue Box waste as defined under O. Reg. 101/94, and since they collect only packaging and printed materials, it was decided that the BBPP would include only these materials.
Diversion targets
One of the key expectations of the BBPP is the setting of diversion targets, i.e., the amount of Blue Box waste that will be diverted from landfill into the recycling stream in a year. The BBPP estimates the target diversion rate for 2003 as 45 per cent (the actual diversion rate in 2000). The BBPP also proposes a second diversion scenario of 50 per cent, to be achieved by 2006. Diversion targets for specific Blue Box materials, such as glass, paper, and aluminum were not provided.
The primary objective of the BBPP is to define a funding mechanism for the residential stream of the Blue Box system, describing how the total municipal net cost and total stewardship fee are calculated, as well as determining the amount owed to each municipality and owed by each steward. (A detailed description of the funding mechanism can be found in the Supplement to this report, pages 114-129.)
Market development
The BBPP includes several market development initiatives to increase diversion rates. During the first year, the priority will be to prepare market development plans for each type of material marketed and to address issues related to glass. Stewardship Ontario will investigate the need for a glass recycling facility and alternative market outlets for recovered glass. Since Stewardship Ontario’s projections indicated that program costs could double within five years, the BBPP included several strategies to contain these costs. Strategies include identifying the true market value of Blue Box materials, working toward reducing excess capacity in municipal recycling facilities, and investigating new technologies.
Implications of the decision
The economic impact of the BBPP on stewards in Ontario is significant: stewards will contribute $34 million toward municipal Blue Box systems in 2004. Stewardship Ontario expects about 4,500 stewards to be registered in the BBPP in 2004 (although the Canadian Federation of Independent Businesses estimates that 85 per cent of its 40,000 members will be exempt under the de minimis rule for sales). The impact is also significant from a process perspective: stewards must be able to track the amount and type of packaging used in their consumer products sold in Ontario and on which they will be charged a levy. (For estimated levies for specific BBPP materials, see page 123 of the Supplement.)
Although municipalities are still expected to fund, on average, 50 per cent of their net costs, this injection of cash into a system that has been primarily funded for years through property taxes is welcomed by municipalities. It’s estimated that northern programs will receive more than the provincial average per tonne allocation. Municipalities will also have promotional support provided by the CNA/OCNA (newspaper associations) in-kind contribution of $1.3 million as advertising.
Since fees increase as the quantity of Blue Box material produced by stewards increases, stewards may look at ways to decrease their Blue Box material by redesigning their packaging or may switch to a material that they perceive to be more favourably treated under the BBPP but that, unfortunately, may have a lower recycling rate.
Public participation and the EBR process
Opportunities for stakeholders to comment on the proposed BBPP were provided at two stages – during the initial drafting of the BBPP and again when it was posted on the Environmental Registry. MOE received 90 submissions during the 60-day comment period. Industry raised numerous concerns about the complex fee calculations, the frequent changes to the formulae during the initial consultation period, and the definition of “steward.”
Some industry representatives noted that a weight-based levy creates a bias against heavy packaging like steel, glass and paper, and that the BBPP promotes contamination of recyclable materials. Some industry spokespeople have indicated that existing glass recycling facilities are under-utilized. Industry also suggested that the proposed levy actually discourages recycling of some materials since the more that is recycled, the more industry is required to pay. Industry was particularly concerned with the BBPP’s overhead costs and with the projected municipal costs, over which it has no direct control.
Municipalities were supportive of the proposed BBPP and urged MOE to approve it as soon as possible. However, eastern and northern Ontario and rural municipalities expressed concern that estimates of net costs were far below their actual net costs. Municipalities also questioned the value of the CNA/OCNA in-kind contribution, since they have found newspaper advertising to be ineffective in changing recycling habits.
The Canadian Environmental Law Association (CELA) noted that the BBPP did not include diversion targets for most years, that it did not provide sufficient incentive for brand owners to choose highly recyclable packaging, and that the reporting requirements were not sufficient to verify that diversion targets are being met. The Recycling Council of Ontario noted that the BBPP did not include any direct initiatives to reduce or reuse Blue Box wastes and was very disappointed that the diversion target is only 50 per cent. It was also concerned that in order to reduce their fees, stewards may switch to lighter-weight packaging, despite its being generally less recyclable, and that stewards are not being encouraged to use recycled content.
MOE response to comments
In addition to posting the draft BBPP on the Environmental Registry, MOE also held two Round Table stakeholder meetings to discuss a number of concerns. In response to comments from the public and from stakeholders, MOE requested that the WDO submit policies and practices by March 2004 that would lead to at least a 60 per cent diversion by 2008 through reduction, reuse or recycling. Since MOE believed the most pressing issue was the long-term containment of municipal Blue Box system costs, the ministry has asked the WDO to prepare a cost containment strategy, including policies and practices related to containing municipal costs and keeping WDO and Stewardship Ontario administrative costs to 5 per cent of total program costs. MOE also asked for target diversion percentages for each Blue Box material, benchmark diversion targets for municipalities, and a projected schedule of stewardship fees.
ECO Comment
In our 1998 annual report, the ECO recommended that MOE promote product stewardship, requiring industry to take increased responsibility for the management of the wastes associated with their products. With BBPP, MOE has taken some modest steps toward implementing product stewardship for Blue Box materials and has fundamentally changed how diversion of these materials is funded. The BBPP has met the primary objective of funding 50 per cent of the total net costs of the municipal Blue Box system by levies charged to stewards, even though some stakeholder concerns have yet to be fully addressed. It will take time to determine whether the other objectives of increasing the diversion rate for Blue Box materials and improving the efficiency of the municipal Blue Box system are being met.
Increasing the diversion rate
The ECO is disappointed that the BBPP adds further expense to the Blue Box system without a clear commitment to improving the diversion rate, and without material-specific diversion targets. It will be important that these targets are defined to ensure that less and less packaging goes to landfill in the future.
One of the primary objectives of the Waste Diversion Act is to “promote the reduction, reuse and recycling of waste.” Although significant reductions in the amount of packaging were made in the 1990s, many Ontarians still believe that products are over-packaged. In addition, reuse initiatives have been limited. The ECO is encouraged that the Minister of the Environment has asked the WDO to consider reduction and reuse initiatives as a means of achieving 60 per cent diversion by 2008.
It has been suggested that the regulation affecting municipalities, O. Reg. 101/94, be modified to include more materials to bring it in-line with the broader definition of Blue Box system wastes in O. Reg. 273/02. This would have the potential of diverting more waste from landfill without necessarily requiring that additional facilities be built.
The ECO agrees that a review of O. Reg. 101/94 is warranted and urges MOE to consider this option, in consultation with the WDO and other stakeholders, as a possible way to increase diversion rates.
Improving efficiency
Some industry representatives and CELA are concerned that the levies encourage stewards to change packaging materials to those that result in the lowest stewardship fee. They have warned that some stewards may switch to plastics (e.g., from glass), which would decrease the diversion rate and increase net costs. The ECO does not expect that many stewards will switch, however, since the decision involves numerous factors, not just stewardship fees. However, if such changes do occur, they may be very difficult to reverse, and the ECO urges MOE to monitor changes in packaging closely to ensure that the stated objectives are achieved.
Transparency
Although the BBPP includes a description of the formula for calculating stewardship fees, the actual formula has not been made available. Industry is allowed to view the formula under Stewardship Ontario’s supervision, but in the opinion of the ECO, this approach is impractical for the estimated several thousand stewards and further undermines trust in a process that has already been found to be faulty, according to some stewards. The ECO urges MOE to require the WDO and Stewardship Ontario to make the formula public so that it can be independently reviewed for integrity and fairness.
The BBPP is a long and complex document that is not easily understood by the general public. The ECO believes that plain language material should be developed to assist the public in understanding the BBPP, making it easier for them to participate in future revisions to this program.
Conclusion
The BBPP does achieve its objective of having industry fund 50 per cent of municipal net costs for the residential stream of the Blue Box system. But considerable work remains to be done if significant improvements are to be achieved in diversion rates and in the effectiveness and efficiency of the system. Furthermore, the BBPP has been developed without the benefit of an overall waste management strategy. The Waste Diversion Act provides a framework for developing waste management programs for specific wastes, but this piecemeal approach to program development means that large sectors of the economy, such as the industrial, commercial and institutional sectors, are not necessarily brought under the WDA umbrella. The ECO believes that some of the concerns of stewards would be addressed if they were assured that generators of waste that goes to landfill or incineration would also be required to pay the costs of managing their wastes. This could be further supported by enacting legislation under s. 88 of the Environmental Protection Act prohibiting the use or sale of certain types of packaging, and prohibiting products that pose waste management problems.
The ECO is pleased that the Minister of the Environment has recognized that significant concerns remain outstanding and has requested the WDO to prepare policies and procedures to achieve 60 per cent diversion by 2008 and to continue work on a cost containment strategy. Finally, the ECO understands that the BBPP represents a significant change for stewards and that it requires time to be understood and implemented. As the full implications of the BBPP become apparent, the primary stakeholders – the municipalities and the stewards – must be prepared to modify the BBPP and the Blue Box system to ensure that the original objectives are being achieved and to build industry and public confidence.
The Blue Box and Aluminum Soft Drink Cans
| This is an article from the 2003/04 Annual Report to the Legislature from the Environmental Commissioner of Ontario. |
Citing This Article
Environmental Commissioner of Ontario. 2004. "The Waste Diversion Program for Blue Box Waste." Choosing our Legacy, ECO Annual Report, 2003-04. Toronto, ON : Environmental Commissioner of Ontario. 78-85.
