Disposal Levies: Waste Diversion Act Review RCO Annual General Meeting Annual General Meeting January 20, 2010
Purpose To provide an update on: The WDA Review The proposal on levies in the Minister’s Report Jurisdictional research and key findings To identify discussion topics
Background:WDA • WDA established in 2002 to “promote the reduction, reuse and recycling of waste and to provide for the development, implementation and operation of waste diversion programs.” • Act sets out roles and responsibilities for: Minister of the Environment • designates wastes for diversion • requests WDO/IFOs to develop programs and approves programs • carries out enforcement Waste Diversion Ontario (WDO) • oversees development and implementation of diversion programs • establishes or works with Industry Funding Organizations (IFOs) to develop programs • recommends program plans to the Minister Industry Funding Organizations (IFOs) • Develop, implement and operate diversion programs • Identify and notify obligated producers • Establish and collect fees from obligated producers to cover costs of program
Background:WDA Four programs approved and established since 2004 • Blue Box Program Plan • Packaging such as aluminium cans, glass and plastic bottles, plastic containers, cardboard, printed paper such as newspapers, flyers, etc. • Residential only; municipalities deliver programs; industry reimburses them for 50 percent of net cost • Municipal Hazardous or Special Waste (MHSW) Program • Paints,oil filters and containers, batteries, antifreeze, pressurized containers, fertilizers and pesticides,fluorescent light bulbs, pharmaceuticals, corrosives and irritants and mercury containing devices such as thermometers • Residential and small quantity IC&I waste; 100 percent producer responsibility starting July 1, 2010 • Waste Electrical and Electronic Equipment (WEEE) Program • Computers, monitors, televisions, printers, computer peripherals, copiers, phones, and audio-visual equipment such as stereos • Residential and IC&I waste; 100 percent producer responsibility • Used Tires Diversion Program • Passenger, truck, and off-road tires • Residential and IC&I tires; 100 percent producer responsibility
WDA Review Ministry began a legally required review of the WDA in Fall 2008 Six years of experience with Act and extensive stakeholder consultation informed proposed changes to Ontario’s waste diversion framework
WDA Review From Waste to Worth: The Role of Waste Diversion in the Green Economy posted on Environmental Registry for public comment. Proposal seeks to achieve four broad outcomes: Increased waste diversion Innovation in sustainable product and packaging design Investments in green processes and technologies Opportunities for Ontarians to participate in waste diversion Six areas of change proposed in report: Outcomes-based individual producer responsibility A clarified concept of diversion A long-term schedule for diversion Effective oversight Support for producer responsibility Transition of existing programs
Support for Producer Responsibility: Proposal in Minister’s Report Support for producer responsibility - 3 main tools: Disposal Levy Implement levy on per tonne of waste sent to disposal Narrow the gap between cost of diversion and disposal Encourage behaviour shifts toward greater diversion Complementary Measures Use disposal levy revenue to support waste diversion efforts of businesses, consumers, and municipalities Bans Support producer requirements and increase diversion of designated materials by banning them from disposal Materials would be banned a reasonable time after waste diversion plans are in place; and when a viable alternative to disposal exists for a designated material
Disposal Levy The Disposal Levy proposal in more detail: Implement levy on per tonne of waste sent to disposal: Apply to waste from IC&I and residential sectors Narrow the cost gap between diversion and disposal: Cost of waste disposal in Ontario ranges from $58 to $75 per tonne Average net cost to divert Blue Box materials ranges from $150 to $180/tonne Average cost to divert IC&I waste is around $95/tonne Encourage behaviour shifts towards greater diversion: Narrowing the cost gap between diversion and disposal to encourage behaviour shift of consumers and businesses Revenue from levy could be used to support the waste diversion efforts of businesses, consumers and municipalities
Stakeholder Feedback Discussion Paper – Consultations 2008-09 Support among all stakeholder groups for making disposal more difficult and costly, in order to incentivize diversion. Minister’s Report – Consultations 2009-10 Support among all stakeholder groups for the implementation of a disposal levy to help drive materials to diversion. Municipalities, waste management and ENGOs support setting the disposal levy high enough to encourage behaviour change. Some municipalities believe the disposal levy should apply only to landfill (not EFW) in order to encourage investments in new technologies. General agreement among all stakeholder groups that levy revenue should be dedicated to waste diversion, and not into the Consolidated Revenue Fund. Producers support the development of clear and transparent criteria for distribution of levy revenue - used to fund waste initiatives. Ministry should consult with industry when distributing levy fund. Municipalities concerned with additional costs associated with levy; believe costs to municipalities should be returned through levy revenue and that producers should pay levy for designated materials that end up in the waste stream.
Context: Other Jurisdictions • In using disposal levies, jurisdictions have tried to achieve the following main objectives: • Shift a tax burden from an economic good (e.g., employment income or investment) to an environmental bad (e.g., pollution, resource depletion or waste) • Create a behaviour change to achieve an environmental goal (e.g., minimize the amount of waste generated or improve recycling rates), or • Raise funds to promote a desired activity (e.g., recycling over disposal) by supporting the development of its infrastructure • Disposal levies in Canada, the United States and the European Union range from approximately $1.00 to $142.00 per tonne of waste disposed. • Lower levies are generally used to raise funds for waste diversion activities (e.g., fund diversion programs, grants and loans) • Higher levies (>$30 per tonne) are generally used to influence behaviour
Context: Other Jurisdictions LOW LEVY Per metric tonne MEDIUM LEVY Per metric tonne HIGH LEVY Per metric tonne • Oklahoma ($1.57) • Ohio ($1.68 - $4.95) • California ($1.76) • Pennsylvania ($7.56) • Manitoba ($10) • Quebec ($10.67) • France ($15 - $23) • Wisconsin ($13.25) • Italy ($16-78) • Ireland ($31) • United Kingdom ($70) • Sweden ($67) • Belgium ($95-119) • Denmark ($100) • Austria ($138) • Netherlands ($142) Influence Behavioural Change
Key Research Findings MOE research on levies; some key findings: Disposal levies work best when accompanied by other supporting measures such as financial incentives, bans and regulatory instruments. Disposal levies are most effective at driving behaviour change when they operate on a “polluter pays” basis and the fee is paid by the waste generator. To increase diversion from disposal, additional waste diversion capacity is required. If alternatives do not exist, disposal rates may not change. A weight based levy is most likely to be effective at changing behavior than other levy types (i.e. fixed fee or volume based). Small to modest landfill charges can generate large revenues and still be insufficient to affect behavior change. The effectiveness of a levy depends more on the size of its relative increase (i.e. % increase) than the absolute value of the change.
Discussion Questions How should the levy be applied to waste sent for disposal? Types of waste (i.e. municipal, IC&I, small quantity exemptions) Disposal options (i.e. landfill, other activities) What should be the dollar value of the levy? Who should pay the levy? How should levy revenue be spent? Groups targeted (i.e. municipalities, consumers, businesses) Types of activities How should revenue be administered?
Appendix Case Studies: Other Jurisdictions
Case Study #1:Netherlands Overview: Mandate to reduce the amount of waste sent to landfill. Landfill tax of 13€ per ton in 1995. Rate since raised and split into two tiers: 13€ per ton for inert waste and 90€ per ton for designated waste (highest tax rate of the EU) Administration of the Tax: Revenue collected goes to the consolidated government fund and is distributed through their budget process according to priorities. Impact: Following introduction of the levy, from 1995 to 2003 the amount landfilled decreased by approximately two thirds: In 1995, 35% of municipal waste and 43% of IC&I waste was landfilled; by 2003, 6% of municipal waste and 11% of IC&I waste was landfilled Amount incinerated increased by around 75% and the amount recycled increased by around 30% For IC&I waste: Disposal cost did not affect the amount of waste generated but affected disposal choices (i.e. diverted waste from landfill to recycling and incineration)
Case Study #1:Netherlands (cont.) Impact (cont): • For municipal waste: • Municipalities that linked disposal costs directly back to the generators (“polluter pays” through “pay as you throw”) showed the following results in areas with a high concentration of unit-based (e.g., $/tonne, $/volume) pricing schemes • Generated less waste per capita • Disposed of less waste to landfill • Sent a greater amount to incineration • Generators started to recycle more waste • Municipalities that charged a flat fee for waste collection saw no change in behavioural response Contributing Factors: • Success in diverting waste from landfill attributed to the high tax rate and the supporting policy tools introduced at the same time such as: • A disposal ban that applies to: • Recyclables, Combustible waste, Untreated waste (must be sorted, compresses and/ or reduced in size first), hazardous Waste • Promoting EFW in diversion policy • Ban on export for purpose of landfill • Promoting “polluter pays” approaches
Case Study #2: United Kingdom Overview: Mandate to divert waste from landfill. Initial tax rate set at 2 pounds/tonne for inert waste and 7 pounds/tonne for all other waste In 1999, to drive additional results, government introduced escalating tax rate at regular intervals: The tax rate was increased to 10 pounds/tonne in 2000, and increased by 1 pound/tonne every year to 15 pounds/tonne in 2004 Government felt that a price increase of 25 pounds per tonne was needed to bring about the desired behaviour change Administration of the Tax: A Landfill Tax Credit Scheme (LTCS) was introduced for licensed landfill operators to contribute up to 20% of annual tax liability to registered environmental bodies. Landfill operators claimed up to 90% of these donations as a tax credit 80% of the fees paid went to the government’s central revenue and distributed according to government priorities Environmental bodies funded projects with the following objectives: Encourage more sustainable waste management practices, including recycling, reuse and waste minimization Fund local improvements to compensate communities with landfills
Case Study #2: United Kingdom (cont.) Impact: Tax did not impact waste generation, but was successful at improving diversion from landfill; recycling increased slightly from 7 to 11%. Landfill tax failed to provide significant incentive for alternative methods of waste management; landfilling remained the most economical disposal option available. Sufficient funds raised to cover environmental and social projects. Contributing Factors: Waste disposal levy complemented by other environmental measures, including: climate change levy, incentives for recycling, and generation of energy from waste. Portion of revenue generated from tax used to significantly invest in recycling capacity. UK now has the infrastructure in place to divert more from landfill