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To Build a Broader Coalition for EPR in the U.S. Advocates Need to Abandon Some Cherished Ideas, Part 2

October 28, 2014

Today’s Guest Blog article is by Dick Lilly. It originally appeared in UPSTREAM on September 29, 2014.

So what’s the alternative?  It’s worth looking at the middle ground which might be reached through quasi-governmental or quasi-utility structures governed by appointed commissions or boards of directors whose membership can be balanced by statute among producers, waste management industry businesses and local governments. Costs to producers and payments to service providers can then be negotiated in a transparent forum similar to the way utility rate cases are handled. The greater sense of fairness likely to result from such a system, could go a long way to bringing local governments and the waste management industry to the side of EPR.

Beyond changes like this which would broaden support for EPR, there are other areas where the current approach to EPR needs modification. In a couple areas, in fact, EPR laws don’t accomplish what EPR advocates want to accomplish. Most laws don’t directly drive increases in recycling rates and they don’t really push design-for-recycling changes in products and packaging. These goals are widely taken on faith, the former through mostly toothless legislated “targets” (an exception, B.C. requires cash damages a few years down the road), the latter on the assumption that if producers are paying, they will make design changes to reduce the difficulty and therefore the cost of recycling. For this, the primary tool is differential cost structures based on the end-market value of the recycled material. Aluminum gets a credit and plastics pay, with the 3—7s paying more. As unit costs per package, however, the differences are trivial and do not significantly affect packaging decisions which are made to maximize sales, the bottom line impact of which usually dwarfs increments in EPR assessments.

Looking at these rather weak incentives, the waste management industry attacks EPR, pointing out that increases in recycling rates can more quickly be driven by expansion of single-stream curbside (which the Recycling Reinvented report relies on), pay-as-you-throw (PAYT), and disposal bans. Though these arguments sidestep the justifiably fair producer-consumer funding benefits of EPR, to a degree they are right. But to move recycling beyond what can be achieved by these waste industry-favored strategies, EPR laws need clear and effective mechanisms that will drive up recycling rates and create product and packaging materials changes beyond what happens now.

As noted, the costs assessed in EPR systems are closely tied to the value of recovered materials. EPR pays for recycling. If recycling goes up, producers pay more so, actually, they have no incentive to increase recycling (other than those vague “targets”) because it will cost them more. After a flurry of activity, with recycling at some plateau which can easily be little higher than pre-EPR, producers can stop pushing and leave a large part of their waste (though recyclable) in the garbage.

Fortunately, there is a way around this lack of incentives: EPR laws can (and should) require producers to pay for the tonnage of their products and packaging still in the garbage. They don’t now. Further, the unit costs to producers for what’s left in the garbage should be higher than the unit costs paid for recycling. As a result, producers will have an incentive to reduce costs by moving products and packaging from disposal (or incineration) to recycling. Because the penalty for garbage would be in law and unavoidable, recycling rates would go up almost automatically as producers sought to avoid more costly disposal. Likely such a garbage-cost penalty would also positively influence design for recycling, though the results are less certain.

Additionally, there’s a very good use for the garbage-penalty revenues going to the stewardship board. Clearly, those funds should not go to local governments or waste management companies. Insofar as they are the same agencies and companies the stewardship board pays for recycling services, they already have an incentive to increase recycling that disposal payments would nullify. So where should the money go?  One way to put it to good use would be a grant program administered by the stewardship board. Grants could fund public education and promotion and, best of all, capital improvements to materials recovery facilities (MRFs), an area where technical improvements often lag for lack of funds. MRF performance is a critical constraint to increased material recovery and the quality of recovered materials.  The value of investments in MRFs cannot be overstated.

And, finally, here’s another strategy that can be written into EPR laws to further drive recycling rates upward: don’t pay all recyclers equally; pay them based on results. For example, some local governments achieve great recycling rates above 50 percent, others struggle along at 20 or 30 percent. Nevertheless, both the high and low achievers may spend similar amounts running collection trucks, modified only somewhat by a tonnage factor. To its credit, MMBC has introduced an incentive for agencies that increase the quantity of recyclables collected per household. This is a promising approach. It can (and should) be expanded and included directly in EPR laws. In other words, the stewardship board’s payment to collectors should be set on a sliding scale based on a collector’s or city’s recycling rate so that, say, at a recycling rate of 85 percent and not until then the payment fully covers collection costs. That builds in an incentive for local agencies to increase recycling.

Dick Lilly is Manager for Waste Prevention and Product Stewardship for Seattle Public Utilities and the city’s representative on the Northwest Product Stewardship Council’s Steering Committee. However, the views expressed here are his own and do not represent policies advocated by Seattle Public Utilities or the NWPSC.

NERC welcomes Guest Blog submissions. To inquire about submitting articles contact Athena Lee Bradley, Projects Manager. Disclaimer: Guest blogs represent the opinion of the writers and may not reflect the policy or position of the Northeast Recycling Council, Inc.

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