There is growing consensus that we have a major waste problem that needs to be solved. Declines in commodity markets and Asian market demands have significantly impacted the viability of many commercial and municipal recycling systems. The persistence of waste, especially plastic waste, is overwhelming citizens – whether it be directly through experiences in their own communities or international headlines about the impact waste is having on the natural environment. Public and industry polling is showing an increasing demand for change, and governments at all levels are responding.
There is no doubt that based on all of this activity, including recent commitments by large multinational companies, change is coming. It is now only a question of what the change will look like.
One of the key policy actions that is being discussed across North America and around the world is producer responsibility. In this, the first of a series of articles, we will seek to better unpack the different considerations related to the development and implementation of producer responsibility policies.
The goal in this four-part series will be to move away from discussions that paint all producer responsibility approaches as the same and force one to either be in support of or in opposition to. We will compare and explore key attributes of producer responsibility policies and programs, including fee setting and materials acceptance, program performance requirements and evaluation, oversight and enforcement, and competition.
As with all policy approaches it is helpful to understand how they can be implemented in a manner that is effective, while at the same time efficient. By policy efficiency, it is meant the ability to achieve the desired outcome in the least intrusive manner.
It is also important to understand the limitations of certain policy approaches. Not to get too far ahead but, yes, producer responsibility policies have limitations.
The variations in policies in Canada in terms of producer responsibility are immense and like other policy mechanisms there has been an evolution in these policies based on gained experience.
First, what is producer responsibility? At a base level, it refers to a policy that places responsibility (financial and/or operational) for the end-of-life management of a product or packaging – that is, when it can no longer fulfill the function for which it was acquired – on the original producer and/or seller of that product.
Generally, the intent of the policy is to:
- Place responsibility on the party with the greatest ability to affect changes – whether through product/packaging design, more robust collection, reuse and processing systems, commodity market or some combination thereof; and
- Allow for a means to track and measure performance.
As mentioned, there is a diversity in how this type of policy has been implemented, so it is important to differentiate these approaches:
- Shared responsibility refers to a policy that places only financial responsibility (total or partial cost) for the end-of-life management of a product or packaging on the original producer and/or seller of that product.
- Full producer responsibility refers to a policy that places both financial and operational responsibility for end-of-life management on the original producer and/or seller.
It is important to highlight that there is a wave of change occurring across Canada in relation to producer responsibility policies:
- The federal government has recently committed to facilitate consistency in policies, specifically for plastics, through the development of guidance;
- New packaging and single-use product policies are under consideration in Alberta, New Brunswick, and Nova Scotia;
- Changes to producer responsibility policies are underway in Ontario and Quebec
- British Columbia is expanding the products captured under producer responsibility and considering expanding to the industrial, commercial and institutional (ICI) sectors.
However, we currently have a mix of approaches in Canada. The approach taken in the Maritimes and in Alberta for residential packaging remains government operated (note this does not include beverage containers, which are managed through deposit return programs). Decisions related to residential packaging recycling are made by the local authorities and the costs are covered through some form of cost recovery from residents (e.g., property taxes).
In provinces with shared responsibility models, producers generally form a collective organization (i.e., a producer responsibility organization) that allows for cost-allocation-related decisions. The model, however, provides few opportunities for producers to influence costs in any substantial way, because operational decisions are made by municipalities and/or service providers. This even leads to tensions over who is at fault for cost increases. Municipal governments and recycling facility operators blame producers over packaging choices, while producers blame municipal governments and recycling facility operators for running inefficient systems.
This shared responsibility model is how the majority of Canadian provinces currently regulate packaging and single-use products. Many critiques of shared responsibility models focus on it as simply a tax to offset municipal costs for recycling programs, which is a fair assessment. It does, however, provide a simple mechanism for government to apply to ensure recycling programs can be properly funded and can provide a cost signal to producers. Growing concerns related to the continued effectiveness and efficiency of these policies are leading a number of provinces, such as Quebec and Ontario, away from this model toward a full producer responsibility model.
Under full producer responsibility policies, producers have the ability to decide how they choose to meet outcomes, which are set notionally, like any other performance standard applied through government regulation. The regulated parties must find a way to achieve the outcome. It is argued this provides the optimal opportunity for innovation along the value chain. This approach is still early in its implementation in Canada, but concerns have been raised about the impact of improperly established targets. For example, if targets are set too high, could producers be charged? Or could recyclers be starved of materials if the targets are set too low?
Competition-related questions have also been raised by producers who are concerned they will be held hostage by service providers in meeting established targets; as well as by service providers who are concerned producers will form one entity that will abuse its position of dominance.
These are certainly important factors that will be discussed in further detail in coming articles.
Producer responsibility policies also differ in another important manner: How legal liability is established. Various approaches exist, including:
- No legal liability, because it is a voluntary program established by a producer or multiple producers;
- Legal liability is established in the policy but can be transferred to collective organization;
- Legal liability is established in the policy and cannot be transferred;
- Legal liability exists but is not enforced.
Where liability rests is important, because it impacts business decisions and influences outcomes. This is not to say that companies are not motivated to achieve outcomes without legal liability. There are many voluntary initiatives that have significantly improved outcomes due to improving the reputation of the sector or company and/or avoiding legislative action. However, a company that must meet targets to avoid facing penalties has a different drive than a disinterested company that must simply remit cheques to a third-party organization.
Typically, producer responsibility policies in Canada allow liability to be transferred to a third party, and liability is only enforced to ensure producers are paying for their part of programs. Regulations in British Columbia and Ontario seek to ensure legal liability rests with individual producers, but the actual enforcement of this is yet to be proven.
How liability and responsibility are established creates fundamentally different policies. These are important considerations that impact the outcomes.
The remaining articles in this series will discuss how costs are allocated, how targets and oversight are provided and how the entire value chain operates.