September 18, 2006

Ontario to launch deposit/return system for wine, spirit containers

A deposit/return system for wine and spirit containers, due to begin next February in Ontario, will help divert another 25,000 to 30,000 tons of glass from landfills, equivalent to approximately 80 million bottles The new container return program will also free up space in Blue Boxes, giving municipal governments the opportunity to expand recycling programs, said Ontario Premier Dalton McGuinty.

Under the new program, Ontario consumers will pay a deposit when they purchase wine and spirits at the Liquor Control Board of Ontario (LCBO), agency stores, and winery and distillery retail stores. The deposit will apply on all wine and spirit containers, including glass and plastic bottles, Tetra Paks, and aluminum cans. The container return program will not include containers used in U-brew and "make your own" wine operations.

Empty wine and spirit containers will be taken back for a full refund by The Beer Store, which already operates one of the most successful container return programs in any jurisdiction, collecting 96% of refillable beer bottles. The Beer Store will handle all post-collection processing and recycling of the wine and spirit containers that they collect. It will be expected to operate the program cost efficiently, as it does with its current system, and will be subject to regular audits.

Details of the deposit rate structure will be released prior to the program start-up and will be comparable to other Canadian jurisdictions. Seven other provinces have container return systems for wine and spirit containers. Deposit rates range from five to 40 cents depending on jurisdiction and container size. The Atlantic provinces have "half-back" programs which refund only half of consumer deposits. The range of deposit rates by jurisdiction is as follows: British Columbia, 10 - 20¢; Alberta, 5 - 20¢; Saskatchewan, 10 - 40¢; Nova Scotia, 10 - 20¢; PEI, 10 - 20¢; New Brunswick 10 - 20¢; and Newfoundland, 20¢.

Beverage alcohol containers are the largest single source of glass in the Ontario municipal waste stream and account for about 7% of all Blue Box waste. Ontario's Blue Box program currently collects about 68% of glass generated by the LCBO. The Ministry of Environment says the new container program will increase by 32 to 38% the number of wine and spirit containers currently being recycled through the Blue Box and through recycling by licensed restaurants and bars.

The Ministry notes that not all glass from beverage alcohol bottles is currently recycled into higher end uses, like new glass bottles or fiberglass insulation material. The new system will ensure that a greater proportion of glass recovered in Ontario gets recycled.

The new program was commended by municipal and environmental groups. Doug Reycraft, president of the Association of Municipalities of Ontario, said, "This initiative will enhance environmental protection in Ontario and improve the efficiency of the Blue Box program."

"Deposit-return systems have proven their worth when it comes to maximizing the reuse and recycling of bottles," said Joanne St Godard, executive director of the Recycling Council of Ontario. "The Recycling Council of Ontario believes the proposed deposit-return system is a good step towards extended producer responsibility in this province," she added.

Not everyone is pleased, however,

The union representing liquor board employees called the plan "seriously flawed," saying that any new deposit/return system should be run by the LCBO to ensure that containers are re-used as much as possible. Leah Casselman, president of the Ontario Public Service Employees Union (OPSEU), asked, "If McGuinty's plan is such a great idea, why was there no public consultation? Why did the big brains in the Premier's office decide to announce it on a Sunday morning before Sept. 11?"

Casselman further pointed out that many people who shop at the LCBO never go near The Beer Store, which she said will make the deposit/return system less effective. "The only way to create a system that encourages re-use is through close co-operation between the retailer - the LCBO - and the wineries and distilleries," she said.

"The LCBO has a close business relationship and logistical links with its suppliers, and as the largest buyer of alcohol in the world, it also has considerable influence with them," Casselman continued. As a result, she said, "It has not only the obligation but also the ability to be a global leader in environmentally-friendly packaging. In contrast, The Beer Store has no connection whatsoever to wineries and distilleries."

Meanwhile, the two Ontario organizations responsible for funding and operating the province's recycling and waste diversion programs are wondering why the provincial government did not consult with them about the potential impacts of its decision to pull LCBO alcohol and spirit bottles out of the Blue Box and put them into a deposit/return system, in view of its stated support for a strong blue box system.

"The LCBO is a major financial contributor to the municipal blue box program in Ontario and the government's unexpected decision to put its wine and spirit containers on deposit brings financial uncertainty to our

government-approved stewardship program to provide industry funding to support the blue box," said Dennis Darby, Chairman of Stewardship Ontario.

Established as an industry funding organization under the Waste Diversion Act, Stewardship Ontario collects fees from companies introducing packaging or printed paper into the Ontario marketplace that are managed

through municipal blue box collection systems. In the past three years, Stewardship Ontario has contributed $93 million in direct payments and grants to municipalities. That figure is projected to rise to $130 million by the end of March 2007.

"We just announced the fees each obligated company would have to pay for 2007 but the calculation was based on Waste Diversion Ontario (WDO) approved costs including managing LCBO containers through the blue box. The calculation included the fees expected from the LCBO. Last year, LCBO's contribution amounted to $5 million," said Darby, who is the director of external relations at Procter and Gamble, a large steward under the provincial program.

Under the WDO program, stewards are informed of their fees in September to allow them to budget properly for these costs for the following year. As the LCBO will now be paying The Beer Store, a private company, for managing the glass, aluminum, steel, aseptic and plastic containers that Ontario residents will now sort out of the Blue Box and deliver to beer stores, the entire cost and fee structure for supporting municipal recycling programs will need to be re-calculated, Darby explained.

Waste Diversion Ontario, another agency created under the Waste Diversion Act, was also not consulted about the ramifications of the government's decision. WDO operates waste diversion programs for materials designated by the Ministry of Environment, including tires, oil and electronic waste. So far, Blue Box waste is the only industry sector for which a stewardship program has been developed and approved.

WDO is responsible for collecting annual recycling tonnage data and financial costs from Ontario municipalities and determining how much industry funding each should receive to offset their recycling program operating costs. Its executive director, Glenda Gies, said that in addition to the shortfall in industry funds created by the government's decision, the amount each municipality will receive for the tonnage of recyclables they divert from landfill will be reduced.

"Since the LCBO containers will no longer be included in the categories for which industry pays Stewardship Ontario, municipalities will no longer receive funds to help pay for the collection and processing of those materials. It's a significant amount, more than 75,000 tonnes of recyclables annually," Gies noted.

"No matter how many LCBO deposit containers are returned to The Beer Store, municipalities will still have trucks on the road picking up all of the other recyclables in our blue boxes and apartment bins and they'll likely still collect many LCBO containers for which they will no longer receive industry funding," she pointed out.

The government's announcement has also put the brakes on a major municipal-industry joint venture that was about to create new glass processing capacity for up to 80,000 tonnes of glass collected in municipal recycling programs in and around the Greater Toronto Area (GTA). Unical, the Montreal company that was to do most of the new glass processing,, has been advised not to proceed because the municipalities - Toronto, Durham, York, Peel as well as Hamilton and Guelph - are no longer able to commit to providing the amount of glass that is needed to run the operation. The glass processing facilities would have provided municipalities with additional stable, higher-value markets for their blue box glass, leading to reduced municipal program costs.

More information is available from Stewardship Ontario chair Dennis Darby, 416/730-4092, or from Glenda Gies at WDO, 416/226-5113, ext 296.

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