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Transcript of Waste Diversion Act Industry Consultation Webcast Calculating the Material Levies for Obligated...
Waste Diversion ActIndustry Consultation Webcast
Calculating the Material Levies for Obligated Stewards
Calculating the Material Levies for Obligated Stewards
Webcast Presenters
Damian Bassett Dan Lantz Gordon Day Derek Stephenson
Calculating the Material Levies for Obligated Stewards
AGENDA
10:00 – 10:05 Welcome & Webcast Notes Damian Bassett – Stewardship Ontario
10:05 – 10:20 Draft Definitions for Calculating Obligated Materials Gordon Day – Stewardship Ontario, Technical Services
10:20 – 11:00 How Material Levies will be Calculated by Stewardship Ontario Dan Lantz – Stewardship Ontario, Technical Services
11:00 – 11:55 Question Period Damian Bassett – Facilitator Derek Stephenson – Program Manager Gordon Day – Technical Services Dan Lantz – Technical Services
11:55 – 12:00 In Closing Damian Bassett
Calculating the Material Levies for Obligated Stewards
WEBCAST NOTES
• To ask a question during Question Period, call 416-640-4127
• Please “speak now” and “for the record”, as your input is important
• Please also feel free to write us questions during the Consultation Period to: [email protected]
Calculating the Material Levies for Obligated Stewards
WEBCAST NOTES
• Official comments on Blue Box Program Plan, must be submitted in writing - Deadline is January 17, 2003
• Mailing address can be found at www.stewardshipontario.ca
• E-mail: [email protected]
• Workshop 2 – “Stewardship Ontario’s Business Plan” - January 16, 2003
• Draft BB Program Plan to WDO Board – January 21
• Final BB Plan to WDO – February 18• Final BB Plan to Minister – February 28
Calculating the Material Levies for Obligated Stewards
WEBCAST NOTES
• Please return to www.stewardshipontario.ca following your listening to this webcast (live or in archive) - to fill out a webcast Evaluation Form
• Industry representatives who fill in an Evaluation Form will receive an electronic version of the proposed funding model – to allow companies to complete preliminary assessment of their own projected costs
Calculating the Material Levies for Obligated Stewards
WEBCAST NOTES
• Reminder: this event will be archived for listening and comment at Canada NewsWire for the duration of the Industry consultation process
• This is a 3-part Industry consultation process. Proceedings and presentations from part-one: the December 3 Workshop 1 are posted on Stewardship Ontario website
• Please follow the easy links from www.stewardshipontario.ca
• Please visit the Stewardship Ontario website regularly for updates on January 16 Workshop 2, and all developing details and important events
Draft Definitions for Calculating Obligated Materials
Gordon Day – Technical Services
Calculating the Material Levies for Obligated Stewards
LEGAL FRAMEWORK
• The Waste Diversion Act, section 30(2) defines stewards of a designated waste as:
“…having a commercial connection to the designated wastes or to the product from
which the designated waste is derived”
• Item 5 in the Addendum to the Minister’s Request for a Waste Diversion Program for Blue Box:
“The proposed funding rules under the program will designate and define as stewards under the program, brand owners and first importers into Ontario of products that result in blue box wastes under the program”
Calculating the Material Levies for Obligated Stewards
PROPOSED RULES
• Stewardship Ontario defines “obligated steward” as:
- Brand owner of printed paper and packaging, or
- First importer to Ontario of printed paper and packaging
Calculating the Material Levies for Obligated Stewards
BRAND OWNERS• Brand owner or trade-mark owner defined as:
a) Packer-filler/publisher in Ontario that result in blue box wastes, orb) Party that causes packaging or printed materials,
orc) Brand owner’s/publisher’s Ontario subsidiary/legal entity for product packaging or printed materials imported to Ontario, ord) Where the brand owner whose legal entity is outside Ontario agrees to register with Stewardship Ontario and discharge their responsibility
Calculating the Material Levies for Obligated Stewards
FIRST IMPORTER
• Where the brand owner/publisher does not have an Ontario legal entity:
e) the first importer to Ontario is the firstperson to take possession of the product
in Ontario
Calculating the Material Levies for Obligated Stewards
SERVICE PACKAGING
• Service or in-store packaging is that which is filled and/or provided at the point of sale. Service packaging is considered primary household packaging and is therefore obligated.
• Every merchandise shop, quick service and grocery establishment which provides customers with service packaging is obligated as the brand owner or first importer.
• Given the large number of establishments responsible for service packaging, Stewardship Ontario would like to establish special rules for service packaging:
Calculating the Material Levies for Obligated Stewards
FRANCHISES• The franchisor shall be deemed the obligated
steward for all its Ontario franchisees and is obligated to report for all of its franchisees and corporately owned operations in Ontario with the following exceptions where:
a) franchisor does not supply the goods to plants, distribution centres, and stores
operated by its franchisees - each franchisee shall be deemed to be the steward
b) under a master franchise agreement, where the master franchisee supplies all or
substantially all of the goods to plants, distribution centres - the master franchisee shall be deemed to be the steward
Calculating the Material Levies for Obligated Stewards
OPTION 1
• Suppliers of service packaging have the option of declaring service packaging to Stewardship Ontario on behalf of those of their customers who provide service packaging to consumers
This approach would leave the matter of who pays the fee up to commercial negotiations
or
Calculating the Material Levies for Obligated Stewards
OPTION 2
• Suppliers of service packaging shall declare all service packaging to Stewardship Ontario on behalf of their customers who provide service packaging to consumers
This approach would determine by rule that it is more administratively simple for the relatively small number of suppliers of service packaging to pay fees
Calculating the Material Levies for Obligated Stewards
NEXT STEPS
• Stewardship Ontario wants to receive your feedback and comment on the proposed definitions and options presented
• Please provide your feedback through this webcast’s Question Period and Evaluation Form, and through [email protected]
How Material Levies will be Calculated by Stewardship Ontario
Dan Lantz – Technical Services
Calculating the Material Levies for Obligated Stewards
KEY BASE ASSUMPTION
The numbers presented in this model, and the model itself, are preliminary only, and will likely change in response to:
Comments received during the Consultation Process
Additional data provided by key stakeholders Policy decisions yet to be taken by the Board
Calculating the Material Levies for Obligated Stewards
INTRODUCTION
Five key principles underpin the funding allocation methodology. The fee structure should:
Reflect the true costs to manage each designated Blue Box material
Take into consideration the benefits to all stewards from high recycling rates achieved by some materials
Encourage stewards to select materials that can be recycled at lower costs
Encourage increased material recycling rates Minimize the total net costs to the members of
Stewardship Ontario (e.g., reflect positive revenues)
Calculating the Material Levies for Obligated Stewards
STEPS TAKEN TO DATE
Model was first introduced to the Stewardship Ontario Board for its consideration on November 26, 2002 Approval given for consultation on the model
Presentations given to key stakeholders and stakeholder committees
Key changes have been made as a result of consultation to date
Additional changes may result from continued consultation
Calculating the Material Levies for Obligated Stewards
MODEL OVERVIEW
The Model is comprised of three tables:
1. Waste Composition and Quantities Diverted
2. Cost to Manage• Gross Cost• Revenues• Net Cost
3. Funding Formula
Calculating the Material Levies for Obligated Stewards
MODEL OVERVIEW
The materials within the Blue Box are addressed in two streams: All printed paper
• Newspaper, telephone books, magazines and catalogues, other printed papers
All packaging• Old corrugated containers, old boxboard, aseptics,
gabletop cartons, paper laminants, plastic laminants, PET, HDPE, plastic film, polystyrene, other plastics, steel cans, paint cans, aerosols, aluminum cans, aluminum foil, clear glass, coloured glass
Calculating the Material Levies for Obligated Stewards
WASTE COMPOSITION
The quantity of each material generated in Ontario in 2001 was calculated on the basis of a series of waste audits undertaken across a number of municipalities around the province
Numbers represent waste generated in the residential sector - not sales into the marketplace
Calculating the Material Levies for Obligated Stewards
WASTE COMPOSITION
Adjusted estimates (through Dec/02) suggest 1,554,000 tonnes of recyclable materials were generated in Ontario in 2001
Quantity PercentageGenerated of Quantity
Category Tonnes Generated
PRINTED PAPERPrinted Paper Total 724,100 46.60%
PACKAGINGPaper Packaging Total 264,500 17.02%
Laminant Packaging Total 126,000 8.11%Plastics Total 167,100 10.75%Ferrous Total 67,900 4.37%
Aluminum Total 28,100 1.81%Glass Total 176,300 11.34%
PACKAGING TOTAL 829,900 53.40%
TOTALS 1,554,000 100.00%
Calculating the Material Levies for Obligated Stewards
QUANTITIES RECYCLED
The quantities diverted are taken from the
3 Rs Datacall undertaken as a joint effort by: Ministry of Environment Recycling Council of Ontario Association of Municipal Recycling Coordinators Municipal Waste Integration Network Composting Council of Canada Ontario Municipal Benchmarking Initiative Corporations Supporting Recycling
Calculating the Material Levies for Obligated Stewards
QUANTITIES RECYCLED
A total of 699,255 tonnes of material were diverted in 2001
The overall diversion rate for the program was 45%
Quantity MaterialRecovered Recovery
Category Tonnes Rate
PRINTED PAPERPrinted Paper Total 391,795 54.11%
PACKAGINGPaper Packaging Total 133,527 50.48%
Laminant Packaging Total 1,065 0.85%Plastics Total 26,859 16.07%Ferrous Total 32,582 47.99%
Aluminum Total 10,875 38.70%Glass Total 102,552 58.17%
PACKAGING TOTAL 307,460 37.05%
TOTALS 699,255 45.00%
Calculating the Material Levies for Obligated Stewards
PROGRAM COSTS
The gross cost per tonne for each material was calculated using an Activity-Based Costing (ABC) methodology
The total gross cost of the program for 2001 was estimated at $129,200,000
The average gross cost per tonne was approximately $185.00
Calculating the Material Levies for Obligated Stewards
PROGRAM GROSS COSTS & REVENUES
Revenues were estimated at $66.7 million for 2001
TotalCategory Per Tonne Total Cost Per Tonne Revenues
PRINTED PAPERPrinted Paper Total 85.00$ 33,302,575$ 83.27$ 32,622,822$
PACKAGINGPaper Packaging Total 314.46$ 41,988,870$ 66.54$ 8,885,372$ Laminant Packaging Total 429.72$ 457,562$ 40.38$ 42,997$ Plastics Total 760.08$ 20,415,115$ 205.69$ 5,524,674$ Ferrous Total 230.00$ 7,493,860$ 54.58$ 1,778,484$ Aluminum Total 557.00$ 6,057,375$ 1,604.24$ 17,446,105$ Glass Total 190.00$ 19,484,880$ 3.90$ 399,776$ Packaging Total 311.90$ 95,897,662$ 110.84$ 34,077,408$
TOTALS 184.77$ 129,200,237$ (95.39)$ 66,700,230$
Gross Cost Revenues
Calculating the Material Levies for Obligated Stewards
NET RECYCLING PROGRAM COSTS
It is estimated that the net cost for the Blue Box program was $62.5 million in 2001
Total %'age ofCategory Per Tonne Net Cost Total Net $
PRINTED PAPERPrinted Paper Total 1.73$ 679,753$ 1.09%
PACKAGINGPaper Packaging Total 247.92$ 33,103,498$ 52.97%Laminant Packaging Total 389.34$ 414,565$ 0.66%Plastics Total 554.39$ 14,890,441$ 23.82%Ferrous Total 175.42$ 5,715,376$ 9.14%Aluminum Total (1,047.24)$ (11,388,730)$ -18.22%Glass Total 186.10$ 19,085,104$ 30.54%Packaging Total 201.07$ 61,820,254$ 98.91%
TOTALS 89.38$ 62,500,007$ 100.00%
Industry Allocation 31,250,003$
Net Cost of Current System
Calculating the Material Levies for Obligated Stewards
CALCULATING MATERIAL LEVIES
There are separate levy calculations for printed paper and for packaging Through the consultation process and improvements
to the model, separating printed paper from packaging was seen as necessary to ensure a fair distribution of the levies to both streams
Therefore, $310,000 is allocated to printed materials and $30,900,000 to packaging materials
• Equivalent to the net cost to manage those streams in the current Blue Box program
Calculating the Material Levies for Obligated Stewards
BASIS FOR FEE PAYMENTS IN 2003
The fees paid by stewards in 2003 will be based on the costs for the management of recyclables as occurred in 2001
The quantities generated, recycled and the costs for the management of each material will be updated annually
Calculating the Material Levies for Obligated Stewards
CALCULATING MATERIAL LEVIES
Three factors are used to calculate specific material levies Recovery Rate – 45% of total cost to industry
• Levies are inversely proportional to the recovery rate for the individual materials
Net Cost – 40% of cost• Levies are proportional to each material’s percentage of the
system current net cost Equalization Factor – 15% of cost
• Levies are proportional to each material’s percentage of the system cost if all materials were recycled at the same rate
Calculating the Material Levies for Obligated Stewards
CALCULATING MATERIAL LEVIES
Recovery Rate Calculation - $14,062,500 allocation Separate calculations for printed paper and
packaging Levies are calculated for materials between and
within material categories by comparing recovery rates relative to the mean for the program
The higher the recovery rate, the lower the relative levy per tonne
• Range per tonne is from $4.50 to $31.10 for packaging and $0.14 to $0.36 for printed materials
Calculating the Material Levies for Obligated Stewards
CALCULATING MATERIAL LEVIES
Net Cost Calculation – $12,500,000 allocation The levy is a simple linear relationship between
the net cost to manage an individual material and the applied levy
• For example, if a material represents 5% of the net cost of the current Blue Box program, it is assigned 5% of the $12,500,000 dollars assigned to this category
Calculating the Material Levies for Obligated Stewards
CALCULATING MATERIAL LEVIES
Equalization Calculation – $4,687,500 allocation There are significant differences in recycling rates,
attracting different costs for each material, This factor acts as a means of promoting fairness in
sharing costs assuming all materials are recycled at the same rate
For each material, the number of tonnes that would be diverted at a 75% rate is calculated
This quantity is then multiplied by the current net cost per tonne to manage
• e.g., steel cans – 59,000 x 75% = 44,250 x $175.42 = $7,762,335
Calculating the Material Levies for Obligated Stewards
CALCULATING MATERIAL LEVIES
Equalization Calculation – continued The cost for the material under the current program
is then subtracted• e.g., steel cans - $7,762,335 - $4,966,233 = $2,796,102
This calculation is done for all materials and the results added together
The levy is calculated by taking the cost of each material as a percentage of the total cost of the “75% program” and multiplying it by the dollars to be levied under this category
• If steel represents 5% of the program cost, it is assigned 5% of the dollars assigned to this category
Calculating the Material Levies for Obligated Stewards
CALCULATING MATERIAL LEVIES
The base levy is calculated by taking the assigned levies across each of the three factors Recovery Rate Factor levy + Net Cost Factor levy +
Equalization Factor levy Changing the weightings will have an impact on
the levies assigned to each material The current weightings place 45% of the emphasis
on recovery rates, 40% on net costs, and 15% on sharing costs
• Numbers established through a series of sensitivity analyses to establish similar levies between material categories
Calculating the Material Levies for Obligated Stewards
DE MINIMIS / COMPLIANCE
To the base levy, a de minimis/projected Year 1 compliance rate is applied
De Minimis: It is required that a de minimis be established Proposed that small businesses (<$2,000,000
Ontario sales) are exempt from paying levies
Compliance: It will take time to “capture” all stewards Lower rates are assumed for first year as program is
established
Calculating the Material Levies for Obligated Stewards
DE MINIMIS / COMPLIANCE
De Minimis/Compliance Approaches to ensure most materials included being
addressed • Discussion of definitions
Over-collecting/Under collecting If more money is collected for a category than was
originally projected, money will be credited back to those stewards in that material and future de minimis/compliance rates will be adjusted accordingly
Vice-versa applied
Calculating the Material Levies for Obligated Stewards
EXAMPLE LEVIES
The final levies are converted into levy per tonne Costs per unit package can then be calculated
Printed Paper, Paper Packaging and Polycoat examples
Packaging Type Product Packaging Example
Unit Weight (Grams) $/tonne
Estimated Levy Cents/Unit
Printed Paper Newspaper - Toronto Sun weekday 249 0.03$ 0.0007
Magazine - Vanity Fair 820 1.02$ 0.08
Paper Paperboard box - 525 gram cereal 104 63.35$ 0.66
Packaging Paperboard box - 1.05 kg granola bars 94 63.35$ 0.60
Kraft bag - 4 kg of pet food 82 53.37$ 0.44
Polycoat 2 litre milk carton 63 63.35$ 0.40
250 ml drinking box 10 63.35$ 0.06
Calculating the Material Levies for Obligated Stewards
EXAMPLE LEVIES
Ferrous, Aluminum and Glass examples
Packaging Type Product Packaging Example
Unit Weight (Grams) $/tonne
Estimated Levy Cents/Unit
Ferrous 1.36 litre juice can 153 41.35$ 0.63
540 ml soup can 73 41.35$ 0.30
12 ounce food can 48 41.35$ 0.20
Aluminum 355 ml soft drink can 15 (62.52)$ -0.09
Glass 473 ml juice bottle 228 41.64$ 0.95
750 ml juice flint bottle 335 41.64$ 1.39
750 ml olive oil green bottle 335 43.55$ 1.46
Calculating the Material Levies for Obligated Stewards
EXAMPLE LEVIES
Plastics and Laminants examples
Packaging Type Product Packaging Example
Unit Weight (Grams) $/tonne
Estimated Levy Cents/Unit
Plastics 600 ml PET bottle 30 69.77$ 0.21
4 litre HDPE water bottle 65 78.01$ 0.51
PP - yogurt cup (no lid) 6 95.46$ 0.06
LDPE - outer milk bag 8 104.48$ 0.08
8 ounce PS coffee cup 8 95.33$ 0.08
Laminant Pasta bag 5 99.06$ 0.05
Frozen concentrated juice can 29 67.59$ 0.20
Cookie bag 12 67.59$ 0.08
Calculating the Material Levies for Obligated Stewards
NEXT STEPS
Consultation to review all aspects of the model Primary focus expected to be on the weightings
assigned to the three factors Recovery Rate – 45% Net Cost – 40% Equalization – 15%
Policy decision needed on which sales to apply the fee Review by Stewardship Ontario Board January 15th
Will establish preliminary fees
Final fee decision in February Feedback to Stewardship Ontario welcome/wanted
QUESTION PERIOD
Please call 416-640-4127
Calculating the Material Levies for Obligated Stewards
IN CLOSING
• Official comment on Blue Box Program Plan, must be submitted in writing - Deadline is January 17, 2003
• Mailing address can be found at www.stewardshipontario.ca
• E-mail: [email protected]
Calculating the Material Levies for Obligated Stewards
IN CLOSING
• Please return to www.stewardshipontario.ca following your listening to this webcast (live or in archive) - to fill out a webcast Evaluation Form
• Industry representatives who fill in an Evaluation Form will receive an electronic version of the proposed funding model – to allow companies to complete preliminary assessment of their own projected costs
Calculating the Material Levies for Obligated Stewards
IN CLOSING
• Reminder: this event will be archived for listening and comment at Canada NewsWire for the duration of the Industry consultation process
• This is a 3-part Industry consultation process. Proceedings and presentations from part-one: the December 3 Workshop 1 are posted on Stewardship Ontario website
• Please follow the easy links from www.stewardshipontario.ca
• Please visit the Stewardship Ontario website regularly for updates on January 16 Workshop 2, and all developing details and important events
THANK YOU
See you at the Workshop on January 16