Optimizing Extended Producer Responsibility in Canada
Extended Producer Responsibility has big potential (see my last blog). But getting the details right is critical. If programs are designed well, EPR could radically improve how Canada recycles. Done poorly, it could make recycling more complicated and more costly, with few environmental benefits.
Where do Canadian EPR programs stand? Here we look at the state of EPR in Canada and six key principles for optimizing performance.
Getting up to speed
Extended producer responsibility isn’t new in Canada. Provinces and territories have been building up programs for over two decades. Provinces agreed in 2009 to work towards legislating EPR programs for a range of materials, with the long-term goal of creating a consistent regulatory framework across Canada. Each program would make manufacturers 100% financially and physically responsible for recycling waste materials from their products.
The plan includes two phases. The first requires EPR programs for packaging, printed materials, electronics, automotive parts, household hazardous products, and products containing mercury. Phase 2 expands EPR programs to construction and demolition waste, furniture, textiles and carpet, appliances, and ozone depleting substances.
There’s work to do
Progress on EPR has been slow and uneven. So far, British Columbia is the only province with programs for all Phase 1 materials. Other provinces have implemented a handful of Phase 1 programs, but they don’t cover the full list and don’t make manufacturers fully responsible. Alberta remains the only province with no regulated EPR programs (though it does have several government-administered recycling programs and is exploring the potential of EPR).
Progress on Phase 2 materials has been even slower. The goal was to have these programs implemented by 2017, but most provinces have yet to implement a single program. This gap in programming, for example, means that manufacturers have no obligation to recycle paper and packaging waste from the commercial and industrial sector. The same is true for many other material types that comprise a large portion of Canada’s total waste stream. The gap is big.
There’s also evidence that programs—once implemented—aren’t reaching their full potential. In most cases, manufacturers charge fees on the final sale price to consumers to pay for the recycling programs (e.g., electronics, appliances, beverages, etc.). These fees, however, often have no connection to environmental merits of each product. Whether a TV is easy or difficult to recycle, the manufacturer often pays the same fee. And even when fees are based on relative recyclability—for example, BC’s packaging EPR program—there’s no hard evidence it’s actually improving how manufacturers make their products.
In short, Canada can get more from EPR. Provinces have had EPR programs in place for over a decade, but national recycling rates for some materials, like plastics, remain low. There is also little information on where and how our recycled materials are ultimately processed, and even less on the environmental impacts in the countries that buy and process our waste. At the same time, it’s unclear whether EPR programs are operating as cost-effectively as they could be.
Unlike other areas of environmental policy in Canada, EPR receives little attention. Data is sparse and inconsistent across programs and provinces. There are few assessments on the relative performance of EPR programs, and even fewer that identify opportunities for reform.
In recognizing that a single blog can’t fill the research void, we focus our attention on the core principles of effective and cost-effective EPR programs (see here for a longer discussion). After all, EPR programs are built on complex and technical regulations that effectively create new markets for recycling, which are difficult to overhaul and change after programs are implemented. And given that many provinces and territories are still designing, implementing, and tweaking their EPR programs, getting the details right today can pay off tomorrow.
Here we look at six big principles to improve the economic and environmental performance of EPR: stringency, coverage, incentives, flexibility, transparency, and harmonization.
The ambition of EPR programs is anchored by legislated targets. Programs with stringent targets—and good enforcement—can divert more waste from landfills and incinerators. Increasing targets over time can also send a signal to manufacturers to continually improve performance. At the same time, targets need to reflect reality. A target to recycle 100% of plastic bags, for example, may not make economic sense. Policymakers need to find the right balance.
While most provincial EPR programs require that manufacturers recycle household materials, like paper and plastic, waste materials from commercial and industrial sectors face no such requirements. Many EPR programs also struggle with regulating online retailers that don’t have brick and mortar storefronts. Broadening coverage can reduce the number of free-riders and create a bigger and more reliable stream of materials for processing.
EPR’s big selling point is that it can provide financial incentives for manufacturers to improve how they design and make their products. Those using materials that are less recyclable should pay more, pushing manufacturers to use materials that have higher post-consumer value. In France, for example, fees are lower for manufacturers that incorporate eco-design, while fees are higher for products that can’t be recycled. In Canada, few EPR programs take this approach.
EPR programs are often operated by a centralized organization organized and financed by industry. While there are reasons for creating a single, regulated monopoly (e.g., economies of scale), there are also risks. For one, it ties manufacturers to using one provider, even if there are lower-cost options available elsewhere. Ontario, for example, is opening up its EPR programs—called Individual Producer Responsibility—with the hope of spurring cost reductions and innovation. Programs work best when they are results-based, not prescriptive.
Tracking performance requires robust data and consistent methods. Where and how materials are ultimately recycled—and at what cost—is critical information. It helps keep EPR programs honest and can (re)build public confidence in recycling. And while most EPR programs must follow strict reporting requirements, data are often incomplete or inconsistent across programs, which makes it difficult to compare performance. Provinces can help by setting better standards; harmonizing these standards across provinces would be even better.
The long-term goal is to harmonize EPR programs across Canada. Under the current approach, a manufacturer operating in each province needs to comply with up to 10 different regulatory frameworks. Reducing these regulatory hurdles can help reduce costs and create a more coordinated and streamlined system. Importantly, it can also bolster the price signal to manufacturers. As Nova Scotia or Alberta develops an EPR program for blue box materials, for example, it can align regulatory frameworks with leaders such as British Columbia.
Extended producer responsibility has enormous potential in Canada. It can help reduce how much waste ends up in our landfills and can improve how—and how much—we recycle. It can shift the financial burden from our local governments to the manufacturers who design and make the products and packaging that ultimately end up as waste. It can even help insulate Canada from volatile recycling markets.
At its core, optimizing EPR is about leveraging the power of markets. It’s about making manufacturers physically and financially responsible for their products, setting ambitious targets, and letting markets guide manufacturers toward the lowest-cost solutions. Capitalizing on the six principles in this blog will not be easy or immediate, but they are fundamental to improving waste management in Canada.