Waste & Recycling

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Deposit This!

Encorp Pacific (Canada) is the non-profit recycling entity that beverage companies such as Coca Cola, Pepsi Cola and SunRype formed to manage their packaging waste covered by British Columbia's Bevera...


Encorp Pacific (Canada) is the non-profit recycling entity that beverage companies such as Coca Cola, Pepsi Cola and SunRype formed to manage their packaging waste covered by British Columbia’s Beverage Container Stewardship Regulation. Encorp hires independent contractors to retrieve and recycle the containers collected via the province’s mandatory deposit-return system (which was the first of its kind in North America).

On March 1, 2000 Encorp announced that brand owners from the beverage industry would show the net costs of recycling beverage containers as a “recycling fee” on a separate line in their invoices to retailers. Encorp stated that the fee was to cover losses incurred from handling the materials at depots, plus transporting and processing them into new products. The fee calculation includes the funds generated from the sale of recycled commodities and any deposits that are unclaimed by consumers.

The B.C. program’s very success poses a public-policy threat to soft-drink producers who have opposed bottle.

The fee ranges from a penny for an aluminum can up to 7 cents for a glass container larger than one litre. No fee is to be applied to drink boxes (i.e., paper-based laminates like Tetra Pak) because most deposits on these are not redeemed. (Although the situation might change from a planned education campaign, many people currently discard the empty containers as waste.) Encorp’s announcement echoes a February 2 letter from Pepsi to its retailers that instructed them to show the recycling fee as a separate item on customer cash register receipts.

Environmental groups were furious. The Recycling Council of British Columbia (RCBC) and the Society Promoting Environmental Conservation (SPEC) suspected industry was up to no good and promptly circulated memos calling for action.

The RCBC — only barely disguising its distress — reminded its members that the intent of B.C.’s used-beverage container stewardship program is “to internalize the cost of recycling containers as the cost of doing business, much in the same way that production costs such as feedstock and fuel are.” The policy anticipated that brand owners would absorb any net costs (and, for that matter, net profits) and, as has occurred historically, pass them on to consumers in the price of the retail product. There was no mention of a special fee in Encorp’s stewardship plan and no discussion with government or other stakeholders.

B.C.’s deposit-refund program is the most thorough in North America. It was expanded in 1998 to include juice, water and other beverages except drink boxes (which were added last year). In 1999 the program recovered more than 74 per cent of the province’s 6.82-million non-alcoholic beverage containers and saved taxpayers an estimated $7-million.

However, the program’s very success poses a public-policy threat to soft-drink producers who have opposed bottle bills across the continent (and usually won). SPEC Vice President Helen Speigelman calls it a “phony recycling fee” specifically designed to confuse people and undermine public confidence in B.C.’s deposit system lest it should become a model for other jurisdictions in Canada and the United States.

The idea that the new fees are a PR attack from big business was enhanced when government staff asked reps at Pepsi Cola what was going on and were told the fees were “another tax from the NDP.” If confusion was the intent, the scheme succeeded — callers to the B.C. Recycling Hotline repeatedly complained about this “new tax.”

Encorp expected all major retailers to show the recycling fee as a separate line item on receipts within six to eight weeks. Most retailers were loath to do so without a broad consumer-education program in effect. (One was scheduled to start mid-March.) One retailer jumped the gun and created panic when it showed the fees on March 1 receipts.

Several stakeholders question the legality of Encorp’s plan, particularly with respect to the Federal Competition Act and the Trade Practices Act. Non-profits, depot operators, plastic recyclers and others have expressed concern about the lack of consultation and the difficulty in determining whether the fee is valid or if consumers are being subjected to unjustified costs.

A handling fee of 3.8 cents per unit was awarded to recycling depots by arbitration and this will partly offset declining revenue from unredeemed deposits. It’s reasonable for industry to pass this cost along to consumers — as a separate fee or not — but the fee structure has the contradictory effect of raising the price of drinks sold in containers that actually get recycled and exempting drink boxes that end up in the waste bin. Questions also arise about how funds will be allocated if a particular packaging type generates a profit.

Assuming that the recycling fee is in fact legal, it’s reasonable for the Beverage Container Management Board to demand independently audited accounting from Encorp. The fee should be clearly advertised as an industry service charge and not as a government tax. Who knows? A properly designed fee system might actually be a good idea.

But it’s doubtful that improving the system was ever the intent. One can’t help imagining that this whole idea was concocted by men high up in a glass tower far away — in, say, Atlanta — whose goal had very little to do with protecting the environment on Canada’s West Coast.


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