sustainable financing april 15th and 16th, 2004 sacramento, california dialogue

Sustainable FinancingSustainable Financing

April 15th and 16th, 2004April 15th and 16th, 2004

Sacramento, California DialogueSacramento, California Dialogue

April 15-16, 2004 SacrameApril 15-16, 2004 Sacramento Meetingnto Meeting

PSI Paint Stewardship ProjectPSI Paint Stewardship Project 22

OverviewOverview

• BackgroundBackground

• Presentations (Workgroups G and C)Presentations (Workgroups G and C)

• Cost diagramCost diagram

• Attributes of a sustainable financing Attributes of a sustainable financing systemsystem

• Next StepsNext Steps



Boston Meeting DiscussionBoston Meeting Discussion

• PREMISE: We need to first figure out PREMISE: We need to first figure out what we want to accomplish, and what we want to accomplish, and THEN we can figure out how to THEN we can figure out how to finance it.finance it.



Boston Meeting Boston Meeting DiscussionDiscussionOverview of Overview of

Potential Financing StrategiesPotential Financing Strategies• Front-end paymentsFront-end payments

– Advanced Recycling Fee (visible)Advanced Recycling Fee (visible)•Tires, lead acid batteries, motor oilTires, lead acid batteries, motor oil•Government or industry-managed fundGovernment or industry-managed fund

– Cost internalization (invisible)Cost internalization (invisible)

• DepositsDeposits• Retail coupons/incentivesRetail coupons/incentives• Back-end feesBack-end fees



Boston Meeting DiscussionBoston Meeting Discussion

• What are the 2 main things about What are the 2 main things about financing that you would like addressed in financing that you would like addressed in dialogue?dialogue?

• Additional research/information you need Additional research/information you need to be prepared to discuss financing at the to be prepared to discuss financing at the California meeting?California meeting?

• Formed Workgroups Formed Workgroups – Redemption DepositRedemption Deposit– FinancingFinancing

Sustainable FinancingSustainable Financing Work Group GWork Group G



Team MembersTeam Members

• Scott Cassel, PSI – FacilitatorScott Cassel, PSI – Facilitator• Dave Darling, National Paint & Coatings Assoc.Dave Darling, National Paint & Coatings Assoc.• Carl Minchew, Benjamin MooreCarl Minchew, Benjamin Moore• Susan Petersen, ICI CanadaSusan Petersen, ICI Canada• Robert Wendoll, Dunn-EdwardsRobert Wendoll, Dunn-Edwards• Bill Sierks, MN Office of Environmental AssistanceBill Sierks, MN Office of Environmental Assistance• Kelly Wilson, MN Office of Environmental AssistanceKelly Wilson, MN Office of Environmental Assistance• Mike Nechvatal, IL Environmental Protection AgencyMike Nechvatal, IL Environmental Protection Agency• Irene Gleason, FL Department of Environmental Irene Gleason, FL Department of Environmental

Protection Protection



Workgroup G GoalsWorkgroup G Goals

• Provide guidance to PSI to enable a Provide guidance to PSI to enable a productive discussion on financing productive discussion on financing issues at the CA meetingissues at the CA meeting

• Develop a thorough understanding of Develop a thorough understanding of sustainable financing options.sustainable financing options.

• Bring participants up to speed on Bring participants up to speed on financing options.financing options.



How Paint Management How Paint Management Financed NowFinanced Now

• Government programs Government programs – TaxesTaxes– Waste surcharge (e.g., $.50/ton for Waste surcharge (e.g., $.50/ton for

HHW)HHW)– Bond funds (capital expenses, staff)Bond funds (capital expenses, staff)– End of life feesEnd of life fees

• RetailersRetailers– Manage own paint surplusManage own paint surplus



FEE-RELATED FEE-RELATED FINANCING SYSTEMSFINANCING SYSTEMS



British Columbia Paint British Columbia Paint ProgramProgram

• Provincial regulation (1994)Provincial regulation (1994)

• Visible eco-fee ($0.10-$1.00 CA) related to Visible eco-fee ($0.10-$1.00 CA) related to container sizecontainer size

• Program Goals: Program Goals: – Shift disposal cost to brand owner/consumerShift disposal cost to brand owner/consumer– Reduce waste disposal, promote reuse/recyclingReduce waste disposal, promote reuse/recycling

• Collection depots managed by brand Collection depots managed by brand owners and some municipalitiesowners and some municipalities

• Product Care Association manages $ and Product Care Association manages $ and central bulking facility, contracts for central bulking facility, contracts for recycling servicesrecycling services




• How it works:How it works:– Brand owner makes payment to Product Care Brand owner makes payment to Product Care

based on containers sold based on containers sold – Brand owner recovers fee through sales chainBrand owner recovers fee through sales chain– Retailer recovers fee (visibly) from consumer Retailer recovers fee (visibly) from consumer

• Collected paint goes to (2003 data):Collected paint goes to (2003 data):– Non-paint uses (54%)Non-paint uses (54%)– Energy recovery (32%)Energy recovery (32%)– Reuse (7%)Reuse (7%)– Reprocessed as paint (7%)Reprocessed as paint (7%)




• Fund used for:Fund used for:– OperationsOperations– EducationEducation

• Metal paint cans and plastic pails are Metal paint cans and plastic pails are recycledrecycled



Quebec Paint ProgramQuebec Paint Program


• Invisible eco-fee ($0.25 CA) on Invisible eco-fee ($0.25 CA) on containers sold in Quebeccontainers sold in Quebec

• Goals: Promotes reuse/recycling and Goals: Promotes reuse/recycling and producer responsibilityproducer responsibility

• Collection depots managed by Collection depots managed by retailers and municipalitiesretailers and municipalities




• Eco-Peinture manages $ and contracts for Eco-Peinture manages $ and contracts for recycling servicesrecycling services

• How it works:How it works:– Brand owner pays into fund (Eco-Peinture Brand owner pays into fund (Eco-Peinture

managed)managed)

• Processed paint goes to:Processed paint goes to:– Raw material export (64%)Raw material export (64%)– Unusable/landfilled (16%)Unusable/landfilled (16%)– Energy recovery (8%)Energy recovery (8%)– Incineration (3%)Incineration (3%)




• Graduated performance goals on Graduated performance goals on amount collectedamount collected

• Paint cans are recycledPaint cans are recycled



Nova Scotia Paint ProgramNova Scotia Paint Program


• Invisible eco-fee ($0.10-$1.00 CA) Invisible eco-fee ($0.10-$1.00 CA) related to container size – but many related to container size – but many show feeshow fee

• Goals: Promote reuse/recycling and Goals: Promote reuse/recycling and producer responsibilityproducer responsibility

• Collection depots managed by Collection depots managed by municipalities (some also collect bottles)municipalities (some also collect bottles)



Nova Scotia Paint ProgramNova Scotia Paint Program

• Product Care manages program for Product Care manages program for most companiesmost companies

• Resource Recovery Fund Board Resource Recovery Fund Board provides operations for program provides operations for program

• Paint reprocessed and sold to Paint reprocessed and sold to consumersconsumers

• Paint cans are recycledPaint cans are recycled



Ontario Container ProgramOntario Container Program

• Provincial law (2002); enacted Feb. 2004Provincial law (2002); enacted Feb. 2004• Part of Blue Box Recycling ProgramPart of Blue Box Recycling Program

– Packaging and printed papersPackaging and printed papers

• Goals: waste reduction, reuse, recyclingGoals: waste reduction, reuse, recycling• Invisible (“buried”) Eco-fee:Invisible (“buried”) Eco-fee:

– 1 cent per one-gallon steel paint can1 cent per one-gallon steel paint can– 6 cents per plastic five-gallon plastic pail6 cents per plastic five-gallon plastic pail=> Funds 50% of recycling costs=> Funds 50% of recycling costs



Ontario Container ProgramOntario Container Program

• Empty paint cans collected at Empty paint cans collected at municipal depots and curbside municipal depots and curbside

• 60% diversion goal on all Blue Box 60% diversion goal on all Blue Box materials by 2008materials by 2008



Canadian Paint Return Canadian Paint Return ProgramsPrograms

SYSTEM ASPECTS WORKING WELLSYSTEM ASPECTS WORKING WELL

• Mandatory through back drop legislationMandatory through back drop legislation

• Financing systems are sustainableFinancing systems are sustainable

• Third party handles Paint Return Program Third party handles Paint Return Program – Product Care – instrumental in developing Product Care – instrumental in developing

agreements with all provincesagreements with all provinces– Eco-Peinture for QuebecEco-Peinture for Quebec– Product Care and Resource Recovery Fund Product Care and Resource Recovery Fund

Board for Nova ScotiaBoard for Nova Scotia




SYSTEM ASPECTS WORKING WELLSYSTEM ASPECTS WORKING WELL

• Industry has much control over the Industry has much control over the program and fundingprogram and funding

• Uses existing municipal infrastructureUses existing municipal infrastructure

• Markets have been developed for paint Markets have been developed for paint collectedcollected

• Programs are financially auditedPrograms are financially audited




CONCERNS EXPRESSEDCONCERNS EXPRESSED

• Not a National Paint Return Program for Not a National Paint Return Program for CanadaCanada– No uniformity, each province has own set No uniformity, each province has own set

of regulationsof regulations

• Eco-fees not visible in some provinces Eco-fees not visible in some provinces (Quebec & Nova Scotia)(Quebec & Nova Scotia)– Industry concern Industry concern – Government often prefers invisible feesGovernment often prefers invisible fees

• Recycled paint is competing with virgin paintRecycled paint is competing with virgin paint




CONCERNS EXPRESSEDCONCERNS EXPRESSED

• Concern about the composition of recycled Concern about the composition of recycled paint paint

• Mandatory recycling into paint (Nova Mandatory recycling into paint (Nova Scotia & Quebec) Scotia & Quebec)

• In Ontario, product is managed separately In Ontario, product is managed separately from packagingfrom packaging



The Ideal Canadian Program – Manufacturer Perspective• National Paint Return ProgramNational Paint Return Program

– Uniform program to include paint and aerosolsUniform program to include paint and aerosols

• Mandatory back drop legislationMandatory back drop legislation

• One company handles paint return (e.g. Product One company handles paint return (e.g. Product Care)Care)– One auditor One auditor – One fee systemOne fee system

• Manage can and paint togetherManage can and paint together



The Ideal Canadian Program – Manufacturer Perspective• Visible Eco-FeeVisible Eco-Fee

• Consumers do not return paint to retailersConsumers do not return paint to retailers

• The paint industry wants paint to be The paint industry wants paint to be reused/recycled into other products/materials.reused/recycled into other products/materials.– We are not the experts in recycling paint into We are not the experts in recycling paint into

other productsother products



Tire Fee – U.S. Tire Fee – U.S.

• 35 states with tire fee ($1-2 avg; 35 states with tire fee ($1-2 avg; $0.25-$5 range)$0.25-$5 range)

• 37 states ban whole tires from landfills37 states ban whole tires from landfills• Goal: alleviate tire piles, mgt of current Goal: alleviate tire piles, mgt of current

tire disposal tire disposal • Most states manage fundsMost states manage funds• Funds used for: market development, Funds used for: market development,

collection/processing, cleanups collection/processing, cleanups



Pesticide Registration Fee – Pesticide Registration Fee – MN MN • Federal law (FIFRA) established pesticide Federal law (FIFRA) established pesticide

registration fee programregistration fee program

• States can register pesticides and assess fee States can register pesticides and assess fee on manufactureron manufacturer

• Goal: health/env’l concerns over pesticide useGoal: health/env’l concerns over pesticide use

• MN fee dedicated to:MN fee dedicated to:– program oversight (use, storage, handling, program oversight (use, storage, handling,

disposal)disposal)– Collection/disposal of waste pesticidesCollection/disposal of waste pesticides

Redemption DepositRedemption DepositWorkgroup CWorkgroup C

Team MembersTeam Members

• PSI Facilitator: Heidi Sanborn PSI Facilitator: Heidi Sanborn • Marv Goodman, National Council on Paint Marv Goodman, National Council on Paint DispositionDisposition• Mike Nechteval, IL EPAMike Nechteval, IL EPA• Irene Gleason, FL DEPIrene Gleason, FL DEP• Barry Elman, US EPABarry Elman, US EPA• Steve Long, MA DEPSteve Long, MA DEP• Carl Minchew, Benjamin MooreCarl Minchew, Benjamin Moore• Rayna Laiosa, Benjamin MooreRayna Laiosa, Benjamin Moore• Suzette Thomason, Steel Recycling Institute Suzette Thomason, Steel Recycling Institute



Redemption DepositRedemption DepositWorkgroup GoalsWorkgroup Goals

• Conduct research on retail deposit Conduct research on retail deposit programs with consumer incentivesprograms with consumer incentives

• Consider how funds are paid into Consider how funds are paid into deposit/redemption programsdeposit/redemption programs

• Analyze feasibility of national paint Analyze feasibility of national paint deposit deposit

• Provide findings and background on Provide findings and background on the feasibility of implementing a the feasibility of implementing a deposit/redemption strategydeposit/redemption strategy



Research Research

• Developed 18 questionsDeveloped 18 questions

• Developed format for responsesDeveloped format for responses

• Programs researchedPrograms researched



DEPOSIT-RELATED DEPOSIT-RELATED FINANCING SYSTEMSFINANCING SYSTEMS



Auto Battery Deposit – U.S.Auto Battery Deposit – U.S.• ““It works because it has too”It works because it has too” • Shortages of raw materialsShortages of raw materials • Deposits insure that they will have product to sellDeposits insure that they will have product to sell • Retailers have potential to increase profitsRetailers have potential to increase profits • Out with the old, in with the newOut with the old, in with the new



Auto Battery Deposit – U.S.Auto Battery Deposit – U.S.

• There is legislation in 37 states but do they need it?There is legislation in 37 states but do they need it?– Require retailers/wholesalers take back old batteries when sell Require retailers/wholesalers take back old batteries when sell

newnew– Some states require collection fee of $1-3Some states require collection fee of $1-3– Other states require refundable deposit of $5-10Other states require refundable deposit of $5-10

• Some retailers charge $5-7 “core charge” that is returned Some retailers charge $5-7 “core charge” that is returned

only if consumer brings back old battery in specified time only if consumer brings back old battery in specified time periodperiod

• Old batteries have value up to $2/each on commodity Old batteries have value up to $2/each on commodity marketmarket

• 97% level of participation in recycling speaks volumes 97% level of participation in recycling speaks volumes



Bottle Bill Deposit - MABottle Bill Deposit - MA

• Mandatory – Enacted in 1983Mandatory – Enacted in 1983• Goal – anti-litter and reclaiming materialGoal – anti-litter and reclaiming material• Deposit 5 cents, 2003 redemption: 69%Deposit 5 cents, 2003 redemption: 69%• Bottlers pay 2 ¼ cent handling fee to redemption Bottlers pay 2 ¼ cent handling fee to redemption

centers/retailerscenters/retailers• Retailers required to take back what they sellRetailers required to take back what they sell• $ Held by state, used to be dedicated to recycling$ Held by state, used to be dedicated to recycling• Unredeemed $ goes to MA general fundUnredeemed $ goes to MA general fund• Met goals but needs collection efficiency Met goals but needs collection efficiency

improvementsimprovements



Australia Beverage Container Australia Beverage Container Deposit Program Deposit Program

• Regulatory 5¢ to 10¢ full deposit return Regulatory 5¢ to 10¢ full deposit return program (contracted handling fee) program (contracted handling fee)

• Managed by manufacturer contracted Managed by manufacturer contracted "Super Collectors" (EPA approves contracts) "Super Collectors" (EPA approves contracts)

• Goal - Reduce littering and encourage Goal - Reduce littering and encourage recycling recycling

• 84-90% recycling rate, 74% plastic 84-90% recycling rate, 74% plastic • Participant deposit refund available from Participant deposit refund available from

depot/retailer, "Super Collector" reimburses depot/retailer, "Super Collector" reimburses deposit and pays handling fee deposit and pays handling fee



Maine Pesticide Container Maine Pesticide Container Deposit ProgramDeposit Program

• Regulatory $5 to $10 full deposit return program on Regulatory $5 to $10 full deposit return program on restricted pesticide containers (possibly sunsetting) restricted pesticide containers (possibly sunsetting)

• Managed by manufacturers/dealers with government Managed by manufacturers/dealers with government provided stickers, special collections, and fund to offset provided stickers, special collections, and fund to offset handling costshandling costs

• Goal - Stop illegal dumping of containersGoal - Stop illegal dumping of containers

• 80% recycling rate? Uncertain sales & recycling numbers 80% recycling rate? Uncertain sales & recycling numbers

• Participant affidavits given to dealer for deposit returns & Participant affidavits given to dealer for deposit returns & government for tracking government for tracking



Used Oil Deposit - CAUsed Oil Deposit - CA• Legislated 1991, no sunsetLegislated 1991, no sunset• Deposit amount: 4 cents/quartDeposit amount: 4 cents/quart• Goal: pollution prevention, recycle a resourceGoal: pollution prevention, recycle a resource• Return rate 48% in 2002Return rate 48% in 2002• State agency manages fund State agency manages fund • $ Distributed as block and competitive grants$ Distributed as block and competitive grants• Block grant is noncompetitive and distributed Block grant is noncompetitive and distributed

statewide based on cents/per capitastatewide based on cents/per capita• Studies show retailers get $12 in sales when Studies show retailers get $12 in sales when

customers return oilcustomers return oil



OTHER OTHER FINANCING SYSTEMSFINANCING SYSTEMS



Pesticide Container Recycling Pesticide Container Recycling Program in Continental USProgram in Continental US

• Managed by non-profit industry-affiliated organization Managed by non-profit industry-affiliated organization – Funded by more than 30 member companiesFunded by more than 30 member companies– VoluntaryVoluntary member assessment based on market share member assessment based on market share

• Goal to subsidize recycling/reduces local waste Goal to subsidize recycling/reduces local waste management burden management burden

• Approximately 20-25% recycling rate Approximately 20-25% recycling rate

• Four contractors service public & private collection sites Four contractors service public & private collection sites – 2,000 to 3,000 sites in 48 states2,000 to 3,000 sites in 48 states– 6.7 million pounds of plastic collected (2003)6.7 million pounds of plastic collected (2003)



Rechargeable Batteries – Rechargeable Batteries – U.S.U.S.

• Voluntary industry initiative (1994)Voluntary industry initiative (1994)– Response to MN and FL lawsResponse to MN and FL laws

• Rechargeable battery manufacturers Rechargeable battery manufacturers established non-profit corporation (RBRC)established non-profit corporation (RBRC)– Members paid for right to use recycling logoMembers paid for right to use recycling logo– Fee assessed based on market shareFee assessed based on market share– Cost “internalized” into product priceCost “internalized” into product price– RBRC conducted entire program (education, RBRC conducted entire program (education,

collection, processing, etc.)collection, processing, etc.)



Rechargeable Batteries – Rechargeable Batteries – U.S.U.S.

• Collection at municipalities, retailers Collection at municipalities, retailers (voluntary, businesses)(voluntary, businesses)– Free for consumers and municipalitiesFree for consumers and municipalities– Small charge for businessesSmall charge for businesses

• Concern over “free riders” so Concern over “free riders” so legislation enacted after RBRC createdlegislation enacted after RBRC created

• No program goalsNo program goals• Little government involvementLittle government involvement



Used Oil Recycling Bill – MA Used Oil Recycling Bill – MA

• Proposed changes to existing legislationProposed changes to existing legislation• Hybrid: Deposit and Fee elementsHybrid: Deposit and Fee elements• $.05 per quart “recycling incentive payment” by $.05 per quart “recycling incentive payment” by

petroleum manufacturer or oil distributor at petroleum manufacturer or oil distributor at wholesale level into state Used Oil Fundwholesale level into state Used Oil Fund

• $.05 per quart payment to collection centers $.05 per quart payment to collection centers (municipal, private) based on hauler manifests(municipal, private) based on hauler manifests

• Consumers receive $.05 incentive payment from Consumers receive $.05 incentive payment from collection centers collection centers

• Fund created by unredeemed oil (sales-payment)Fund created by unredeemed oil (sales-payment)




• Goals: Pollution prevention, reuse Goals: Pollution prevention, reuse resource resource

• Regulatory relief for retailer (under Regulatory relief for retailer (under existing collection requirement)existing collection requirement)– Small retailer exemptionSmall retailer exemption– Retailer opt-out/flexibilityRetailer opt-out/flexibility

• Coupon allowance as alternative to Coupon allowance as alternative to payment (at least 2x $0.20/gallon)payment (at least 2x $0.20/gallon)




• Funds used for:Funds used for:– Recycling incentive payment to collection Recycling incentive payment to collection

centerscenters– Public educationPublic education– Training and equipment grantsTraining and equipment grants– Curbside recycling pilot projectsCurbside recycling pilot projects– ““Insurance” fund for contaminated oilInsurance” fund for contaminated oil

• Multi-stakeholder dialogueMulti-stakeholder dialogue– Full consensus reached in 1996Full consensus reached in 1996– Bill in MA Ways & Means Committee awaiting Bill in MA Ways & Means Committee awaiting

Governor’s supportGovernor’s support



Program Design Options Program Design Options (examples)(examples)

• Uniform national program or state/local variation?Uniform national program or state/local variation?• Cover oil-based and water-based products or just Cover oil-based and water-based products or just

oil-based?oil-based?• Establish uniform fee/deposit for all paint Establish uniform fee/deposit for all paint

products or differentiate among products (e.g., products or differentiate among products (e.g., oil-based vs. water-based; risk-based)?oil-based vs. water-based; risk-based)?

• Visible vs. Invisible fee?Visible vs. Invisible fee?• Who collects fee/deposit?Who collects fee/deposit?• Who manages the fund (government vs. third Who manages the fund (government vs. third

party)party)• How are the funds distributed?How are the funds distributed?• DepositDeposit: Focus on paint and can together or the : Focus on paint and can together or the

paint alone?paint alone?



Cost DiagramCost Diagram



Ideal World – FinancingIdeal World – Financing

• Paint has value so no need for Paint has value so no need for financing system to subsidize financing system to subsidize collection and processing.collection and processing.

• Funds collected are only those Funds collected are only those needed to collect and manage paint; needed to collect and manage paint; there would be no excess funds.there would be no excess funds.



Key Financing QuestionsKey Financing Questions

• Can we get the cost of managing Can we get the cost of managing leftover paint to zero? leftover paint to zero?

• What can be done to contribute to What can be done to contribute to making paint collection and making paint collection and management programs profitable? management programs profitable?



Key Financing QuestionsKey Financing Questions

• At what point do we think At what point do we think it will be it will be profitable to collect and process profitable to collect and process leftover paint?leftover paint?– What needs to happen from now to What needs to happen from now to

then? then? – Is funding needed in the interim?Is funding needed in the interim?

• Under what scenario Under what scenario might funding might funding be necessary?be necessary?



Strategies for Reaching Strategies for Reaching ProfitabilityProfitability

• Education to reduce leftover paintEducation to reduce leftover paint

• Reduce regulatory Reduce regulatory barriers/disincentivesbarriers/disincentives

• Increase reuse opportunitiesIncrease reuse opportunities

• Implement cost-effective collection Implement cost-effective collection programsprograms



What Might Need to be What Might Need to be Financed?Financed?

• Capital costs (collection)Capital costs (collection)

• Operating costs (collection, Operating costs (collection, transportation, processing)transportation, processing)

• Education/outreachEducation/outreach

• Pilot projectsPilot projects

• Market developmentMarket development

• EnforcementEnforcement



Next StepsNext Steps

• What more information do you need What more information do you need to determine if financing will be to determine if financing will be needed?needed?

• What should the workgroup do to What should the workgroup do to prepare you for a financing prepare you for a financing discussion in DC?discussion in DC?

• What do we want that DC financing What do we want that DC financing discussion to be?discussion to be?



Attributes of a Sustainable Attributes of a Sustainable Financing SystemFinancing System

• Fair for all manufacturers and retailersFair for all manufacturers and retailers

• Flexibility to lower or eliminate cost to Flexibility to lower or eliminate cost to consumer as program costs decreaseconsumer as program costs decrease

• Non-government managed fundNon-government managed fund

• Maximum manufacturer/retailer Maximum manufacturer/retailer flexibility flexibility

• Performance measuresPerformance measures



Attributes of a Sustainable Attributes of a Sustainable Financing SystemFinancing System

• Provides consumer convenience and Provides consumer convenience and incentive for product returnincentive for product return

• Consistent nationallyConsistent nationally

• Allows for third party program Allows for third party program management management

sustainable financing april 15th and 16th, 2004 sacramento, california dialogue

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