Environment Committee on Oct. 20th, 2014

[The Chair, Conservative, Harold Albrecht]

I would like to call to order meeting number 32 of the Standing Committee on Environment and Sustainable Development. This morning for the first hour we have a witness from Food and Consumer Products of Canada, Ms. Rachel Kagan, vice-president, environmental sustainability. Welcome, Ms. Kagan. We normally proceed with a ten-minute opening statement from you, followed by questions from our members.

Please go ahead.

[Rachel Kagan, Vice-President, Environmental Sustainability, Food and Consumer Products of Canada]

Good afternoon, and thank you for inviting Food and Consumer Products of Canada to appear before you today. We are pleased to be able to contribute to this important and timely study on the management of waste in Canada. While we know you are studying different areas, our remarks will mostly focus on waste diversion and extended producer responsibility, or EPR, as it relates to provincially mandated and legislated packaging stewardship programs.

FCPC and its members support waste diversion and producer responsibility that is based on the principles of fairness and shared responsibility, and that result in environmental benefit. I'll start by telling you a bit about FCPC, our industry, and our role in packaging EPR programs. FCPC is the largest national industry association in Canada representing companies that manufacture and distribute food and consumer products. Our industry operates 6,000 facilities in 170 federal ridings across the country, and we employ close to 300,000 people. What is EPR, and how does it impact food and consumer product manufacturers?

EPR, or stewardship as it's sometimes referred to, shifts the financial and/or the physical responsibility for recycling from municipalities to businesses, including FCPC members. In Canada these programs are regulated by provincial governments and often municipalities retain their role of providing recycling services as part of their overall waste management responsibilities. Food and consumer product manufacturers that supply packaging materials to consumers in provinces that have legislation—that would be British Columbia, Saskatchewan, Manitoba, Ontario, and Quebec—are obligated to be part of a program, submit reports containing the type and quantity of packaging materials they make, and pay fees that are used to pay the costs associated with municipal recycling programs. I should note that fees are paid for all designated packaging materials regardless of whether or not they're recycled.

FCPC's role is to help our members comply with stewardship obligations. We also develop policy positions and participate in government consultations where new legislation is being considered. Given our experience, we're pleased to be able to share some of our insights with you. Today I'd like to provide an overview of some of the challenges with the current approach to EPR, namely the lack of harmonization, the need for better data, the misconception that EPR fosters packaging design changes, and the need for a broader view of sustainability.

I'll also be offering some suggestions on how the federal government may be able to help resolve some of these issues, which we hope you'll consider as part of your study. I'll now just take a minute to talk about our current perspective on EPR. In practice EPR in Canada has mostly focused on shifting only costs of recycling programs, and not responsibility. To us responsibility means a role for businesses in the decision-making related to program operations. In most provinces that role and responsibility is held by municipalities only, but to businesses simply being regulated to fund a portion of municipal cost is not extended producer responsibility. It is FCPC's view that if businesses are to help fund these programs then they must have a role in decision-making. A starting point for industry is to forge a truly shared responsibility model that would see businesses having a role in the decision-making with municipalities about the collection, processing, and sale of materials, and overall program operations.

Now I'd like to talk about harmonization and the role of the Canadian Council of Ministers of the Environment. FCPC is concerned by both the current patchwork approach of EPR programs, and the CCME's continued push for what have become disjointed and rushed programs and regulations. We have disparate provincial and municipal approaches because decisions are made by province or by individual municipality. We believe that greater harmonization of how programs are regulated and managed, as well as a more national and coordinated approach to the decisions related to the collection, processing, and sale of recycled packaging materials, will lead to greater efficiencies and economies of scale, and ultimately to increased waste diversion and recycling.

How does CCME fit in? Provincial governments are likely feeling pressure to introduce EPR legislation because of the CCME. In an effort to create a harmonized approach the CCME developed their Canada-wide action plan on EPR in 2009, which calls for provinces to implement packaging EPR programs by 2015. Last November CCME conducted a consultation to ask if their plan had provided the impetus required for a harmonized approach. In FCPC's view, it had not.

We believe CCME's role is limited in this regard as they do not have the legislative authority to mandate governments to work toward achieving harmonization, which is evident in the patchwork approach that we have today. Other stakeholders who participated in the consultation agreed in a letter dated April 15 from the CCME to FCPC in response to our comments. It says, “A significant number of responses indicated that the [Action Plan] has not been successful in promoting harmonization of these programs and noted that some provinces closely follow [Action Plan] principles while others follow a different set of principles.”

However, in August CCME published a report, which stated that:

.... jurisdictions have been successful in working towards the objectives of CAP-EPR, while working towards a harmonized approach to EPR through the coordination and implementation of policies and programs across the country.

Clearly, there is a bit of a disconnect, and while we support what CCME attempted to do, they were not successful. Since approving the action plan, programs have become more complex, more rushed, more expensive, and have left little time for what is working well and what is not. That said, at the recent CCME meeting in September, ministers agreed that governments will continue to implement EPR as agreed to under the action plan. It would appear that CCME is more interested in rushing to have provinces adopt an EPR regulatory approach in absence of a well-defined and informed approach of what EPR can and should look like in Canada.

FCPC does not believe that provincial governments should follow their recommended timelines for introducing the packaging programs. We believe, and we hope this committee would agree, that the CCME needs to slow down the rush toward this fragmented approach and take the time to assess how packaging EPR programs should operate before making any further decisions. We also believe those decisions must be supported by sound data, which I'll speak to next.

Based on our experience, there is much learning and FCPC has many recommendations for packaging EPR programs. A critical one is the need for better data. I know you have heard this before. When CCME was here in June, Michael said that, “lack of data is a real problem. It's a problem for governments; it's a problem for industry; it's a problem for all stakeholders”. We certainly agree with him.

Peter Hargreave, from the Ontario Waste Management Association, who was here, also spoke to the need for data. He said:

Statistics Canada is currently the only source of broad-level information on the movement of waste materials....it does miss large portions of data, and it lacks detail that would allow businesses and policy-makers to make more informed decisions.

Again, we agree.

How can we develop effective policies unless they are based on facts? We need sound data, such as current waste generation and diversion statistics, information on collection and sorting capabilities and information on the state of the infrastructure that exists to process those materials in addition to information of where end markets exist to sell those materials once they have been processed. As municipalities have been the deliverers of these programs, it's very important that they share their historical program performance information and their cost data. This information is needed to develop effective programs when governments legislate these types of EPR models. We recommend this committee consider national and provincial data needs as part of its study.

Next I'll speak to design for environment, which is when businesses incorporate environmental considerations into the design of their products and packaging. Governments have linked EPR legislation to design for environment saying that EPR fosters packaging decisions, but we don't believe that's the case. A recent report from the European Commission said that there's no clear evidence of a strong positive impact of EPR in the eco-design of the products.

Furthermore, we believe that packaging design must be viewed through a broader sustainability lens. While recyclability is an important factor, it's one of several considerations. Others exist, such as water, energy and carbon. If possible, all these considerations must be considered as long as they are balanced within the context of the overall function of packaging, which is to preserve and protect the product and to provide consumers with important information about content.

It's also important to note that packaging is seldom designed for a provincial market. More often it is designed for a North American or global distribution system.

Due to the lack of harmonization among provincial packaging EPR programs, it is difficult for some companies to make informed decisions. It's not always clear which materials are compatible with which recycling facilities across municipal and provincial borders. EPR, as it stands today, does not wholly foster packaging design changes.

In closing, we believe environmental sustainability should naturally align with business productivity and competitiveness if the right conditions exist. While we agree with the desire to shift to a circular economy, as suggested by the National Zero Waste Council, which also appeared before you a few months ago, we question if that's possible and if those conditions do exist, given that the focus in Canada seems to be on shifting funding from municipally run recycling programs to industry, which, as we mentioned earlier, we don't believe is EPR.

I don't want to focus just on cost here but there are a few things wrong with the notion that EPR in Canada means only shifting costs. First, just because it's called producer responsibility does not mean that producers are the only ones responsible. Waste diversion and recycling are a shared responsibility. For them to achieve true, meaningful environmental benefit, everyone has a role to play: businesses, waste management companies, government, legislators, and consumers.

Second, for EPR to really be EPR we have to see more than just a financing arrangement. Businesses need to have decision-making powers when it comes to the oversight of these programs. We know there are opportunities to use resources more efficiently but we won't be able to get there if we continue to focus only on recycling. We need to step back and ensure we are working together with the same understanding, objectives, and knowledge base of how these programs can and should operate in the most harmonized and efficient way to achieve greater environmental benefit. It can't be overstated how important the consumer role is in the success of recycling programs. Ultimately, it is consumers who decide how to dispose of their recyclables. Programs will only be successful if residents are aware of and understand their role in sorting waste from recyclables. At the end of the day if we as a country want to manage waste more effectively we need to have a more coordinated approach, with government creating the conditions necessary to encourage the most efficient use of all resources across the entire supply chain.

Thank you.

[The Chair, Conservative, Harold Albrecht]

Thank you very much for that opening statement.

We'll move now to the opening round of seven minutes each.

We'll begin with Mr. Carrie.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

I found your opening remarks quite interesting.

I had the privilege of attending the CCME in Charlottetown. I was quite interested to see how they work. You mentioned the challenge with lack of harmonization. Even in the discussions there they were saying how some provinces are doing a very good job and in other provinces it's just horrible. I could see the challenges too with being provincial, or let's say a jurisdiction that is not federal. How can we help?

Do you have any insight regarding best practices? What have other jurisdictions done, whether in North America or around the world? What have you seen as best practices?

[Rachel Kagan]

That's a great question.

Everyone is a little different. North America doesn't have these types of legislated EPR programs. A lot of them are doing it the way we used to do it. As you know, whether or not there is a legislative program, you're getting recycling services. Local governments will always provide those services to their residents. It's just a matter of whether the government is going to legislate an EPR-type model. In the U.S. I think maybe one or two states have gone into EPR. I'm talking now just about packaging, blue-box materials and not other products. The U.S. is not interested in having these mandated programs. They want to continue with the way it is now. In Europe I think 25 EU states have mandated EPR programs and as far as I know they have very similar issues. There's a lack of a coordinated approach and some of the programs are competitive. Some only have one group running the program, so there are pros and cons for both. We're certainly looking at other jurisdictions.

You asked specifically about best practices. It's really difficult to look at some of the better programs. Often people will say Belgium has a very good approach. We're looking at that closely and would be happy to share with you later. I think it depends on what kind of best practices you're looking for: municipal best practices, how they are sorting.... I think you'll talk to certain municipalities that have made a lot of investments and they have the Cadillac version of a recycling facility. You can go somewhere else, and it's the opposite. Business best practices would be closer to looking at how the packaging is made, and how the consumer uses it at the end of the day, considering all the different things that go into it. Some companies are excellent at that. There are a lot of different ways to answer it. It's not the clearest answer.

I'll just leave you with the thought that there's no one clear silver bullet here of the best model, and that is the difficulty.

[Colin Carrie, Conservative, Oshawa, ON]

Okay.

When looking at packaging and waste management, everybody talks about the four Rs: reduce, reuse, recycle, and recover. You talked a little about recycling.

Which methods do you see as the most effective in managing waste, or is it the combination of all of them? Should we be focusing on one or the other?

[Rachel Kagan]

At FCPC we tend to focus a lot on recycling because of these legislative programs. So it does force you to say, wait a minute, let's step back. As I mentioned in my remarks, I personally believe that focusing just on recycling, as these programs tend to do, takes away from other issues such as water usage and energy usage, which our members do look at when creating their packaging.

But unfortunately, the way of the world right now is that there are limited resources at companies in any way you work, and those resources are going to be forced to look at certain things. Where there are provincial governments that have these mandated programs, you're going to be forced to look at the recyclability of packaging and maybe that means you're not going to be looking at some of the other areas.

I think there is a reason it's a hierarchy. Reduction is the number one and we are seeing our members reduce the size of their packaging, though that's a whole other very complicated kettle of fish. There is a function to packaging, there are food safety requirements.

One of the issues—not to get off track—is that we're looking at food waste right now and what we're actually seeing sometimes is that companies change their packaging so that it's bigger. I've seen this with cheese, there is more of a zip-lock compartment to it now so it lasts longer, but they might have had to make that package bigger. There are trade-offs, so it's very complicated. But obviously reduction is the star. Recycling is very important and it's something we're looking at, but because of these disparate programs you want to step back and ask: wait a minute, can we do this in a more efficient way to make sure that everything is being recycled across Canada, and not just in certain provinces?

[Colin Carrie, Conservative, Oshawa, ON]

You mentioned stuff that perked my interest. You talked about water uses and energy uses.

I wonder which methods you most commonly see your member companies use, and what you can teach the committee sitting here today that would perhaps make us step back to look at this as a bigger picture. As I was saying earlier, everybody knows the four Rs but it looks as though you're actually taking a step back and saying, wait a minute—water uses, energy uses—we have to look at a few different things.

What lessons can you tell us that it might be wise for the committee to look at?

[Rachel Kagan]

A couple of years ago at FCPC, we surveyed our members. Again, the focus has always been recycling programs but we took a step back and we surveyed them on what they were doing to reduce carbon emissions and energy usage and water. Were they tracking, did they have goals in place?

The results were very telling. In a lot of areas they are monitoring and tracking and measuring, so they're aware, which is very important.

I think we need to ensure that everyone understands that everything is a resource. Packaging is a resource, and it's also a commodity at the end of the day. It is sold on the aftermarkets.

But water, energy, and carbon have costs and we have to make sure we're using those resources efficiently. We need to ensure that we understand how things are made; how they're used; what innovations are out there to reduce the reliance on those resources; what tools the government can offer businesses without being overly prescriptive. We also need to ensure there is an awareness that these are resources we have to manage accordingly and in a balanced way; and what kind of incentives can be offered to make sure companies are using them in the most efficient way that the business case—

[The Chair, Conservative, Harold Albrecht]

We'll have to cut you off there and we'll move to the next questioner.

Mr. Bevington.

[Dennis Bevington, NDP, Northwest Territories, NT]

Thank you for your presentation. It reminds me that in the mid-nineties I used to be on the Federation of Canadian Municipalities' board of directors and we tried to get a packaging protocol developed at that time and it was very difficult. There are many factors that come into that.

I come from a rural and remote region of Canada and there recycling has to be looked at with a bit of a jaundiced eye because of course sometimes the energy costs in recycling are greater than the cost of producing a new package. I'm a little concerned about this idea of uniform standards across the country when our country is not uniform. There are many smaller remote communities that, if forced into a pattern of behaviour that's not correct, won't reduce greenhouse gas emissions, and won't do the job that Toronto may well do.

How can we be sure that those communities are well served by any uniform regulation across the country?

[Rachel Kagan]

Again, that's a really good point. I think we do need to consider geography and that each province is different. You can understand each province having their own “made in their province” solution or program. I guess where we are coming from is that each province, each government, is defining extended producer responsibility in a slightly different way. Businesses operating across all provincial borders are dealing with different sets of rules, a patchwork set of legislation, when they are all trying to achieve the same thing, increasing waste diversion.

I think there are opportunities. I don't know if it's a standard or something uniform but I think the conversation needs to get there. How we can step back to ensure that governments are working toward the same objective but not in this completely different way? If in Manitoba one item is recyclable but next door in Ontario it's not, is there a way they can work together better? Maybe that's an opportunity.

I certainly hear what you are saying. I think special considerations need to be given to remote and northern communities. We've just seen a program roll out in British Columbia. You can imagine, with the ocean and the mountains, it's very different there. You have to make sure those programs are able to be operated effectively and consumers have access to them.

What can we do to make sure that the definitions are the same, to make sure that programs can operate across borders and provinces, to share best practices and information? I think that's where we're coming from.

[Dennis Bevington, NDP, Northwest Territories, NT]

You know of the four Rs, “reduce” is one that does work in isolated, remote communities. Right now I know the Government of the Northwest Territories has instituted a 25¢ charge for any plastic bag in a store. That's pretty well taken out the plastic bags, which is a dead-end street: plastic bag in, plastic bag out. There is no economics in it to do that anyhow. There's been a fairly large behaviour modification with that kind of pricing.

I suppose in some ways the packagers are not that interested in reducing. Do we have some resistance in the manufacturing sector about reducing packaging? Is there an issue with that where if we're reducing we're taking out the volume of goods provided by packagers?

[Rachel Kagan]

You hit on two things there. The plastic bag is a good example of how important the consumers' role is. You saw a tremendous consumer behaviour change in terms of their being incentivized to not take a plastic bag.

To your question specifically about resistance to reducing packaging. I don't think there is resistance. I do know that we have seen changes in packaging over the years. Manufacturers have worked quite hard to reduce package size, change the way packages are formulated so you don't have an extra liner bag where you don't need it, making sure you are still complying with different regulations. While we represent consumer product manufacturers, the majority of our members are food manufacturers. There are federal laws with regard to ingredients and nutrition facts tables, so sometimes that size has to stay.

We are seeing a lot of examples of them reducing packaging. In terms of extended producer responsibility often there has been a link made: if you do have legislated programs you are going to incent yourself to reduce your packaging. We haven't seen that happen. It's very difficult to do that if some provinces are recycling some materials and some aren't. How do you make a packaging decision if you want to make it smaller or lighter, but there is inconsistent information depending where it is collected, processed, and recycled in Canada?

[Dennis Bevington, NDP, Northwest Territories, NT]

When it comes to that process of consumer identification, another program was instituted: an environmental tax is put on every can and bottle. Once again the consumer is paying for convenience. Is that an approach that should be taken up more across the country so we encourage people to move to goods that don't require as much packaging?

[Rachel Kagan]

Are you talking about the bottle deposit return program that exists in some of the provinces?

[Dennis Bevington, NDP, Northwest Territories, NT]

In the Northwest Territories, bottles, cans, and all containers have an environmental tax now because that's the way they've chosen to reduce and to incentivize the return of these products out of the waste stream.

[Rachel Kagan]

To be honest with you, I'm not that familiar with the beverage side of things, especially the tax and the bottle deposit return system. There's another association, the Canadian Beverage Association, that is more knowledgeable in that area. I'd be happy to follow up with you after about—

[Dennis Bevington, NDP, Northwest Territories, NT]

This is not simply beverages, it's every product that's in a container.

[Rachel Kagan]

I didn't know that.

[The Chair, Conservative, Harold Albrecht]

Maybe we can follow up on that later.

Mr. Sopuck, for seven minutes, please.

[Robert Sopuck, Conservative, Dauphin—Swan River—Marquette, MB]

Thank you.

I want to follow up on Mr. Bevington's point, which I thought was an excellent one. He talked about the high energy costs and the difficulties in remote and rural communities. In terms of costs of recycling, the really simple question is do we recycle at any cost?

[Rachel Kagan]

I'm not sure if I'm the best person to answer because there are other recyclers out there who will have more data than I would on that particular issue. As a general rule of thumb for packaging recycling in metropolitan areas where you're seeing the sale of material, it's cheaper to recycle that material rather than to create virgin material, so there is an economic case there.

Now, are there diminishing returns? Right now in Ontario, we're recycling about 64% of blue box materials, but if we got to 80% or 90%, I would think that maybe there could be diminishing returns, but I'm not quite sure.

It is a good question, and I take your point.

[Robert Sopuck, Conservative, Dauphin—Swan River—Marquette, MB]

Does the recent decline in commodity prices make recycling programs more uneconomical?

[Rachel Kagan]

The recent decline in commodity markets definitely negatively impacts the recycling programs. Businesses pay fees to fund these programs. They are developed based on the cost of how to recycle the material, the cost of collection and processing, and then they're offset by the commodities.

It's kind of complicated, but there is usually a two-year period, so there's an offsetting period. You'll remember the crash of 2008. There was a huge dip in commodities. The fees associated with the blue box program in 2010 went right up. You're not going to see an immediate impact, but, yes.