The battle over who is responsible for disposing of your used car
A few months ago I briefly touched on a concept as part of a larger issue which was the focus of my column at the time. Given what seems to be the unbridled expansion of, and enthusiasm for, the concept of Extended Producer Responsibility —EPR for short — across Canadian provinces and territories I thought that this subject warranted its own column.
For those unfamiliar with the concept of “extended producer responsibility,” it essentially means making the producer responsible for the product it puts into the marketplace at the end of its useful life (hence the grim reaper in the headline.)
That’s my simplistic definition but perhaps the Organization for Economic Co-operation and Development (OECD) described EPR the best in 2001 defining it as follows:
“The principle of EPR is that producers of products should bear a significant degree of responsibility (physical and/or financial) not only for the environmental impacts of their products downstream from the treatment (recovery) and/or disposal of the product, but also for their upstream activities inherent in the selection of materials and in the design of products. The objective of EPR is to reduce the volume and hazard from products at the post consumer stage.”
The policy objective of EPR is one that I am sure we all readily buy into. Who doesn’t want reduced amounts of waste going into landfill? And who doesn’t want consumer products that we use in our day-to-day lives to be manufactured with components and substances that won’t cause us harm while we make use of them, and which won’t cause the land, water, or air harm once the product breaks or we have finished with it and it is disposed of?
STEADY PROGRESS BEING MADE
From my perspective we’ve come a long way in some respects with regards to recycling things like papers, cans, bottles etc. now that were simply chucked in the garbage to be hauled off to the land fill when I was a kid.
I really do appreciate the public policy objective of extended producer responsibility.
However, moving from public policy theory on extended producer responsibility, to the reality of implementation in society, is a road that is fraught with incredible challenges that it seems to me that Canada is only now starting to come to grips with.
When I say “Canada” maybe I should say the thirteen provinces and territories because as many readers know, the environment is a shared jurisdiction between the federal government and the provincial and territorial governments and while waste management is primarily under provincial jurisdiction a third level of government — municipal — is also involved.
JURISDICTIONAL DIFFERENCES
Herein lies challenge number one, thirteen different jurisdictions in Canada with their respective municipalities looking to implement EPR or EPR-like programs for similar products “designated” for waste diversion (a number of which are automotive), all using slightly different approaches with authority from different pieces of legislation in the different provinces and territories.
I think you can start to appreciate the complexity and challenges for the “producers” (which typically means the manufacturer or the first importer) of the products designated for waste diversion. They must now accurately report on the number of designated products put into potentially thirteen different marketplaces and remit corresponding fees to the stewardship organizations that have been set up again, on a provincial basis not a national basis, and in most cases for a single designated product e.g. tires.
However, the stewardship programs, such as what I have just described, are not examples of EPR, but rather programs which have either been designed and operated by governments, or by administrative authorities established by governments in which producers are involved to some extent. These stewardship programs are financed by fees that are levied by government or by the administrative authority with the approval of government, on the producers or the consumers.
The current reality right now across Canada seems to be that many of these waste diversion programs are in flux with some of the existing programs changing their funding methodologies or with additional products being added to the “designated” list of products requiring stewardship — if not full EPR — plans.
COST OF BUSINESS
To a certain extent the stewardship programs in place across Canada are seen by stewards as a cost of doing business that is ultimately passed along to the consumer. Whether it is the environmental handling fee for oil and an oil filter when you take your car in for an oil change, or the few cents (or dollars, depending on the item) you pay when you purchase electronics there should be no doubt who is paying for these waste diversion programs — you and I.
Stewards dutifully report and pay the fees to the stewardship organization and those fees get passed on to you in the price of the good. I am not sure how others feel, but I don’t begrudge paying the fee knowing that the old electronics or used oil is going to be reused, recycled, or disposed of in an environmentally-friendly way. I prefer to see the price of a good without any environmental fee so that I can appropriately price compare.
This becomes another challenge for EPR programs. Under EPR theory, the producer or first importer should internalize the cost of properly disposing of the product at the end of its useful life and treat lifecycle costs as any other factor of production such as labour or raw materials.
This would all be well and good if every jurisdiction were utilizing EPR, all costs would be internalized for all market players and prices could be compared on an apples-to-apples basis.
However, that is not the case and not likely to be the case any time soon, so all that the internalization of lifecycle costs does is increase the price of goods in one jurisdiction vis-à-vis neighbouring jurisdictions, impacting economic competitiveness.
Some jurisdictions are silent as to whether environmental handling fees can be shown or not to the end consumer while for other jurisdictions the visibility of the environmental handling fee looks too much like a “tax” and as such they mandate that the fee be hidden or make it very difficult for a producer to accurately determine how to calculate the fee so that it can be shown on the invoice.
If you reflect back on the OECD definition of EPR, another challenge for Canada for the many industries — including the automotive industry — is the fact that we import so much of what is sold here from elsewhere.
