Sustainable Financing
April 15th and 16th, 2004
Sacramento, California Dialogue
Overview
• Background
• Presentations (Workgroups G and C)
• Cost diagram
• Attributes of a sustainable financing system
• Next Steps
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
2
Boston Meeting Discussion
• PREMISE: We need to first figure out what
we want to accomplish, and THEN we can
figure out how to finance it.
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
3
Boston Meeting Discussion
Overview of
Potential Financing Strategies
• Front-end payments
– Advanced Recycling Fee (visible)
• Tires, lead acid batteries, motor oil
• Government or industry-managed fund
– Cost internalization (invisible)
• Deposits
• Retail coupons/incentives
• Back-end fees
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
4
Boston Meeting Discussion
• What are the 2 main things about financing that
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you would like addressed in dialogue?
Additional research/information you need to be
prepared to discuss financing at the California
meeting?
Formed Workgroups
– Redemption Deposit
– Financing
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
5
Sustainable Financing
Work Group G
Team Members
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Scott Cassel, PSI – Facilitator
Dave Darling, National Paint & Coatings Assoc.
Carl Minchew, Benjamin Moore
Susan Petersen, ICI Canada
Robert Wendoll, Dunn-Edwards
Bill Sierks, MN Office of Environmental Assistance
Kelly Wilson, MN Office of Environmental Assistance
Mike Nechvatal, IL Environmental Protection Agency
Irene Gleason, FL Department of Environmental
Protection
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
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Workgroup G Goals
• Provide guidance to PSI to enable a
productive discussion on financing issues
at the CA meeting
• Develop a thorough understanding of
sustainable financing options.
• Bring participants up to speed on
financing options.
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
8
How Paint Management
Financed Now
• Government programs
– Taxes
– Waste surcharge (e.g., $.50/ton for HHW)
– Bond funds (capital expenses, staff)
– End of life fees
• Retailers
– Manage own paint surplus
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
9
FEE-RELATED
FINANCING SYSTEMS
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
10
British Columbia Paint Program
• Provincial regulation (1994)
• Visible eco-fee ($0.10-$1.00 CA) related to
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container size
Program Goals:
– Shift disposal cost to brand owner/consumer
– Reduce waste disposal, promote reuse/recycling
• Collection depots managed by brand owners and
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some municipalities
Product Care Association manages $ and central
bulking facility, contracts for recycling services
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
11
British Columbia Paint Program
• How it works:
– Brand owner makes payment to Product Care based
on containers sold
– Brand owner recovers fee through sales chain
– Retailer recovers fee (visibly) from consumer
• Collected paint goes to (2003 data):
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Non-paint uses (54%)
Energy recovery (32%)
Reuse (7%)
Reprocessed as paint (7%)
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
12
British Columbia Paint Program
• Fund used for:
– Operations
– Education
• Metal paint cans and plastic pails are
recycled
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
13
Quebec Paint Program
• Provincial regulation (2001)
• Invisible eco-fee ($0.25 CA) on containers
sold in Quebec
• Goals: Promotes reuse/recycling and
producer responsibility
• Collection depots managed by retailers
and municipalities
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
14
Quebec Paint Program
• Eco-Peinture manages $ and contracts for
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recycling services
How it works:
– Brand owner pays into fund (Eco-Peinture managed)
• Processed paint goes to:
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Raw material export (64%)
Unusable/landfilled (16%)
Energy recovery (8%)
Incineration (3%)
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
15
Quebec Paint Program
• Graduated performance goals on amount
collected
• Paint cans are recycled
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
16
Nova Scotia Paint Program
• Provincial regulation (2002)
• Invisible eco-fee ($0.10-$1.00 CA) related
to container size – but many show fee
• Goals: Promote reuse/recycling and
producer responsibility
• Collection depots managed by
municipalities (some also collect bottles)
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
17
Nova Scotia Paint Program
• Product Care manages program for most
companies
• Resource Recovery Fund Board provides
operations for program
• Paint reprocessed and sold to consumers
• Paint cans are recycled
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
18
Ontario Container Program
• Provincial law (2002); enacted Feb. 2004
• Part of Blue Box Recycling Program
– Packaging and printed papers
• Goals: waste reduction, reuse, recycling
• Invisible (“buried”) Eco-fee:
– 1 cent per one-gallon steel paint can
– 6 cents per plastic five-gallon plastic pail
=> Funds 50% of recycling costs
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
19
Ontario Container Program
• Empty paint cans collected at municipal
depots and curbside
• 60% diversion goal on all Blue Box
materials by 2008
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
20
Canadian Paint Return Programs
SYSTEM ASPECTS WORKING WELL
• Mandatory through back drop legislation
• Financing systems are sustainable
• Third party handles Paint Return Program
– Product Care – instrumental in developing
agreements with all provinces
– Eco-Peinture for Quebec
– Product Care and Resource Recovery Fund Board for
Nova Scotia
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
21
Canadian Paint Return Programs
SYSTEM ASPECTS WORKING WELL
• Industry has much control over the program and
funding
• Uses existing municipal infrastructure
• Markets have been developed for paint collected
• Programs are financially audited
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
22
Canadian Paint Return Programs
CONCERNS EXPRESSED
• Not a National Paint Return Program for Canada
– No uniformity, each province has own set of
regulations
• Eco-fees not visible in some provinces (Quebec
& Nova Scotia)
– Industry concern
– Government often prefers invisible fees
• Recycled paint is competing with virgin paint
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
23
Canadian Paint Return Programs
CONCERNS EXPRESSED
• Concern about the composition of recycled paint
• Mandatory recycling into paint (Nova Scotia &
Quebec)
• In Ontario, product is managed separately from
packaging
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
24
The Ideal Canadian Program –
Manufacturer Perspective
• National Paint Return Program
– Uniform program to include paint and aerosols
• Mandatory back drop legislation
• One company handles paint return (e.g. Product Care)
– One auditor
– One fee system
• Manage can and paint together
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
25
The Ideal Canadian Program –
Manufacturer Perspective
• Visible Eco-Fee
• Consumers do not return paint to retailers
• The paint industry wants paint to be
reused/recycled into other products/materials.
– We are not the experts in recycling paint into
other products
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
26
Tire Fee – U.S.
• 35 states with tire fee ($1-2 avg; $0.25-$5
range)
• 37 states ban whole tires from landfills
• Goal: alleviate tire piles, mgt of current
tire disposal
• Most states manage funds
• Funds used for: market development,
collection/processing, cleanups
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
27
Pesticide Registration Fee – MN
• Federal law (FIFRA) established pesticide
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registration fee program
States can register pesticides and assess fee on
manufacturer
Goal: health/env’l concerns over pesticide use
MN fee dedicated to:
– program oversight (use, storage, handling, disposal)
– Collection/disposal of waste pesticides
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
28
Redemption Deposit
Workgroup C
Team Members
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PSI Facilitator: Heidi Sanborn
Marv Goodman, National Council on Paint Disposition
Mike Nechteval, IL EPA
Irene Gleason, FL DEP
Barry Elman, US EPA
Steve Long, MA DEP
Carl Minchew, Benjamin Moore
Rayna Laiosa, Benjamin Moore
Suzette Thomason, Steel Recycling Institute
Redemption Deposit
Workgroup Goals
• Conduct research on retail deposit
programs with consumer incentives
• Consider how funds are paid into
deposit/redemption programs
• Analyze feasibility of national paint deposit
• Provide findings and background on the
feasibility of implementing a
deposit/redemption strategy
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
31
Research
• Developed 18 questions
• Developed format for responses
• Programs researched
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
32
DEPOSIT-RELATED
FINANCING SYSTEMS
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
33
Auto Battery Deposit – U.S.
• “It works because it has too”
• Shortages of raw materials
• Deposits insure that they will have product to sell
• Retailers have potential to increase profits
• Out with the old, in with the new
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
34
Auto Battery Deposit – U.S.
• There is legislation in 37 states but do they need it?
– Require retailers/wholesalers take back old batteries when sell new
– Some states require collection fee of $1-3
– Other states require refundable deposit of $5-10
• Some retailers charge $5-7 “core charge” that is returned only if
consumer brings back old battery in specified time period
• Old batteries have value up to $2/each on commodity market
• 97% level of participation in recycling speaks volumes
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
35
Bottle Bill Deposit - MA
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Mandatory – Enacted in 1983
Goal – anti-litter and reclaiming material
Deposit 5 cents, 2003 redemption: 69%
Bottlers pay 2 ¼ cent handling fee to redemption
centers/retailers
• Retailers required to take back what they sell
• $ Held by state, used to be dedicated to recycling
• Unredeemed $ goes to MA general fund
• Met goals but needs collection efficiency
improvements
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
36
Australia Beverage Container
Deposit Program
• Regulatory 5¢ to 10¢ full deposit return program
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(contracted handling fee)
Managed by manufacturer contracted "Super
Collectors" (EPA approves contracts)
Goal - Reduce littering and encourage recycling
84-90% recycling rate, 74% plastic
Participant deposit refund available from
depot/retailer, "Super Collector" reimburses
deposit and pays handling fee
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
37
Maine Pesticide Container
Deposit Program
• Regulatory $5 to $10 full deposit return program on
restricted pesticide containers (possibly sunsetting)
• Managed by manufacturers/dealers with government
provided stickers, special collections, and fund to offset
handling costs
• Goal - Stop illegal dumping of containers
• 80% recycling rate? Uncertain sales & recycling numbers
• Participant affidavits given to dealer for deposit returns &
government for tracking
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
38
Used Oil Deposit - CA
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Legislated 1991, no sunset
Deposit amount: 4 cents/quart
Goal: pollution prevention, recycle a resource
Return rate 48% in 2002
State agency manages fund
$ Distributed as block and competitive grants
Block grant is noncompetitive and distributed
statewide based on cents/per capita
Studies show retailers get $12 in sales when
customers return oil
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
39
OTHER
FINANCING SYSTEMS
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
40
Pesticide Container Recycling
Program in Continental US
• Managed by non-profit industry-affiliated organization
– Funded by more than 30 member companies
– Voluntary member assessment based on market share
• Goal to subsidize recycling/reduces local waste
management burden
• Approximately 20-25% recycling rate
• Four contractors service public & private collection sites
– 2,000 to 3,000 sites in 48 states
– 6.7 million pounds of plastic collected (2003)
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
41
Rechargeable Batteries – U.S.
• Voluntary industry initiative (1994)
– Response to MN and FL laws
• Rechargeable battery manufacturers established
non-profit corporation (RBRC)
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Members paid for right to use recycling logo
Fee assessed based on market share
Cost “internalized” into product price
RBRC conducted entire program (education,
collection, processing, etc.)
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
42
Rechargeable Batteries – U.S.
• Collection at municipalities, retailers
(voluntary, businesses)
– Free for consumers and municipalities
– Small charge for businesses
• Concern over “free riders” so legislation
enacted after RBRC created
• No program goals
• Little government involvement
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
43
Used Oil Recycling Bill – MA
• Proposed changes to existing legislation
• Hybrid: Deposit and Fee elements
• $.05 per quart “recycling incentive payment” by
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petroleum manufacturer or oil distributor at
wholesale level into state Used Oil Fund
$.05 per quart payment to collection centers
(municipal, private) based on hauler manifests
Consumers receive $.05 incentive payment from
collection centers
Fund created by unredeemed oil (sales-payment)
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
44
Used Oil Recycling Bill – MA
• Goals: Pollution prevention, reuse resource
• Regulatory relief for retailer (under
existing collection requirement)
– Small retailer exemption
– Retailer opt-out/flexibility
• Coupon allowance as alternative to
payment (at least 2x $0.20/gallon)
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
45
Used Oil Recycling Bill – MA
• Funds used for:
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Recycling incentive payment to collection centers
Public education
Training and equipment grants
Curbside recycling pilot projects
“Insurance” fund for contaminated oil
• Multi-stakeholder dialogue
– Full consensus reached in 1996
– Bill in MA Ways & Means Committee awaiting
Governor’s support
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
46
Program Design Options (examples)
• Uniform national program or state/local variation?
• Cover oil-based and water-based products or just oil•
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based?
Establish uniform fee/deposit for all paint products or
differentiate among products (e.g., oil-based vs. waterbased; risk-based)?
Visible vs. Invisible fee?
Who collects fee/deposit?
Who manages the fund (government vs. third party)
How are the funds distributed?
Deposit: Focus on paint and can together or the paint
alone?
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
47
Cost Diagram
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
48
Ideal World – Financing
• Paint has value so no need for financing
system to subsidize collection and
processing.
• Funds collected are only those needed to
collect and manage paint; there would be
no excess funds.
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
49
Key Financing Questions
• Can we get the cost of managing leftover
paint to zero?
• What can be done to contribute to making
paint collection and management
programs profitable?
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
50
Key Financing Questions
• At what point do we think it will be
profitable to collect and process leftover
paint?
– What needs to happen from now to then?
– Is funding needed in the interim?
• Under what scenario might funding be
necessary?
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
51
Strategies for Reaching
Profitability
• Education to reduce leftover paint
• Reduce regulatory barriers/disincentives
• Increase reuse opportunities
• Implement cost-effective collection
programs
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
52
What Might Need to be
Financed?
• Capital costs (collection)
• Operating costs (collection, transportation,
processing)
• Education/outreach
• Pilot projects
• Market development
• Enforcement
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
53
Next Steps
• What more information do you need to
determine if financing will be needed?
• What should the workgroup do to prepare
you for a financing discussion in DC?
• What do we want that DC financing
discussion to be?
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
54
Attributes of a Sustainable
Financing System
• Fair for all manufacturers and retailers
• Flexibility to lower or eliminate cost to
consumer as program costs decrease
• Non-government managed fund
• Maximum manufacturer/retailer flexibility
• Performance measures
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
55
Attributes of a Sustainable
Financing System
• Provides consumer convenience and
incentive for product return
• Consistent nationally
• Allows for third party program management
April 15-16, 2004
Sacramento Meeting
PSI Paint Stewardship Project
56