It’s Only Garbage if you Design it that way. What will Extended Producer Responsibility (EPR) Look Like?

During the holiday season we generate more garbage than any other time of year. Many of us live in a place where the waste is taken to the magic land of “away”, and we don’t have to worry about it. However, as we shift toward a greener economy, is this the best way to serve our communities and to stimulate local economic development? What if we looked at waste as a resource that can be mined to make products we want and create jobs locally? By strategically rethinking the waste stream, politicians, governments, citizens, and businesses can work together to generate wealth from what is currently a financial, environmental, and social cost.

Strategic thinking from a business perspective can be quite simple. Crystal ball future needs and get positioned to meet those needs. For example, a clear strategic decision was made by the Bush family (former US presidents) wherein they acquired approximately 100,000 acres of farm land on the border between Brazil and Paraguay. While running a ranch may be part of the plan, the purchase sits on top of significant natural gas reserves as well as one of the largest underground water resources in the world. It is projected that both will be in high demand in the coming years, and now the Bushes are positioned to provide those resources once the price point tips to profitability. Is it possible that garbage dumps can become strategic resources too? We think so, and it appears some businesses and governments are positioning themselves to be players in this emerging resource industry.

While buying a 100,000 acre garbage dump might not seem as lucrative as the above deal, it depends on what the demands of the future really will be. Typical urban waste is around 50% organics, which if composted becomes soil enriching fertilizer. Given our need for rich soil to grow food, by extracting the organics out of the waste stream we enhance our food production capabilities, and reduce our ‘garbage’ and demand for landfills by 50%. We also save money by reducing how much we pay to have our waste removed and fertilizer is bought. But what about the other 50% still in the landfill?

As we move into an increasingly resource constrained world, the solid waste stream will become more important as a source for resources to produce the various products we demand. In most cases, the current perspective is simply to get the waste out of sight and out of mind as quickly and as cheaply as possible. This view will change and savvy businesses are starting to lead the charge in mining the waste stream profitably. For example, there is Urban Ore in Berkeley, California, Gibsons Resource Recovery Centre in British Columbia, and Kretsloppsparken in Gothenburg, Sweden. And this is just the start of the “gold rush” since studies by the World Bank indicate the potential annual production of solid waste to reach 27 billion tons/year by 2050. This is roughly the equivalent of 50 times the number of passenger cars in the US, which means there are plenty of opportunities for other players to enter the arena. We know that some companies have already figured out how to “mine’ the marine plastic in the Pacific to make packaging.

In Canada and the United States there is a movement by some large companies to form or support not-for-profit organizations (NFP) to introduce or administer recycling programs currently offered by local governments. In this case we are talking about the creation of NFP Producer Responsibility Organizations to start managing recycling programs under the auspices of increasing recycling rates typically to 75%. In BC, participating businesses are primarily in the food services industry such as restaurants and grocery stores and are supporting Multi-material British Columbia. While in the US, Reinventing Recycling is being supported by significant players such as Nestlé Water North America.

To solve our current challenges related to waste diversion, we need to engage the business community, but the critical question is “What is the best way to achieve success”?

There is much discussion in the waste management industry about moving to an Extended Producer Responsibility (EPR) model. The concept is to decrease the environmental impact of a product making the manufacturer of the product responsible for the entire life-cycle of the product including disposal. Given the costs of waste removal are covered through taxes, the idea of transferring those costs onto the producer and those who purchase their products sounds like a good idea. However, it is the implementation that will determine who benefits.

Which brings us from thinking strategically to thinking tactically. EPR has been mandated in British Columbia by the Ministry of the Environment, and in response Multi-material British Columbia (MMBC) was formed as a not-for-profit organization to implement EPR across the province. Their mandate is to reclaim 75% or all packaging identified in the regulations. So, from a tactical business perspective, if something cannot be stopped, then it should be managed. A perspective that became clear when Alan Langdon, chair of the MMBC board, stated “From a producer point of view, if we’re going to have full financial responsibility, we want to have a say in how efficient it is.” So what changes are afoot?

First, there will be a management shift away from local governments and to a Command and Control model driven by producers and retailers through MMBC and the Recycling Council of British Columbia. This becomes a philosophical perspective with implications for the economy, society, and the environment. A shift to a command and control (CnC) structure for recycling can actually stymie local creativity in addressing waste issues because of the one model fits all approach. Meaning if an enterprising individual identifies a business opportunity that uses the waste stream as a resource, such as Eco-flex in Alberta, they would have to compete with the provincial entity for that resource. Such a scenario is likely and would lead to lost opportunities for local economic development.

Second, there will be a financial infusion from industry into recycling. BC’s Minister of Environment Terry Lake, claims the EPR program will reduce the financial burden to general taxpayers by $60-million to $100-million a year. However, the costs of an EPR would still be passed on to the consumer, and most likely disproportionately given many of the products and packaging we get comes from outside of BC. Further, additional environmental issues are likely to arise as the waste that was distributed through the province would then have to be recollected and centralized for processing, which will increase transportation costs and associated greenhouse gas emissions.

The third big shift will be the management of waste from government (i.e. municipalities) to Producer Responsibility Organizations such as MMBC. While the stated intention is to increase recycling rates, it also undermines a local community’s abilities to use the waste stream as a resource for local job creation and as economic stimuli.

As an advocate for cultivating the green economy and having the private sector provide the products and services we want and need, I am not suggesting we prevent the private sector from taking over the management of the waste stream. However, the old management style of CnC that is being developed for managing the EPR program is as likely to damage the emerging green economy as it is to address our waste stream challenges. We need to be more creative by developing a distributed solution.

In the true spirit of sustainable business practices, the program must be 100% transparent and accountable. This means the need to have government safe guards in place to ensure the interests of the public are protected. Will a centralized organization located 100s of kilometers and in some cases over 1,000 km away be able to ensure the best interest of local municipalities? Are local authorities giving up local autonomy and the opportunity to cultivate the green economy? Time, of course, will tell.

This article was originally published on Greenomics
Erich Schwartz is the Founder and President of Greenomics.   For over 20 years, Erich has been providing effective strategic and project management services in the Americas, Europe, Africa, the Middle East, and Australia.  In managing and working with globally distributed teams, he has engaged with stakeholders of diverse backgrounds and responsibilities including business leaders, service professionals, bureaucrats, politicians, and community stakeholders. His focus is to take his unique skill set and apply them to one of the greatest challenges facing modern businesses, which is to transform them into Sustainable Businesses that develop healthy triple bottom lines.

One Response

  1. Region6

    “making the manufacturer of the product responsible for the entire life-cycle of the product including disposal.” Ideal – Disposal costs are part of true end-of-life management, not just recycle costs. I also caution against a sole NFP or private management of the EPR system. Municipalities have a vested interest that businesses would likely overlook; namely social and environmental. I like the suggestion that “In the true spirit of sustainable business practices, the program must be 100% transparent and accountable.” This requires a large role still to be played by the local government.