DRAFT for EXPERT REVIEW

Transcription

1 Submitted to: Zero Waste Business Case DRAFT for EXPERT REVIEW Environmental Standards Branch C/O 3 rd floor, 2975 Jutland Rd Victoria BC V8W 9M1 Attn: Jennifer Maxwell Jennifer.maxwell@gov.bc.ca Submitted by: Innes Hood, P.Eng Innes Hood Consulting Inc. 338 East 14 th St North Vancouver, BC V7L 2N6 Tel innes_hood@shaw.ca In association with: Earthvoice Strategies, Kelleher Environmental May,

2 Table of Contents Glossary... 6 Acronyms... 6 Summary... 8 Context... 8 Scope and Methods... 8 Results... 8 Introduction Objectives Scope of Analysis Zero Waste Approach to Increased Diversion Provincial Waste Management Hierarchy Data limitations Report Structure Methodology Overview of Collection, Recycling and Disposal Process in BC Analytic Framework Materials Quantification Methodology Material Forecast Disposal by Material (2010) Diversion by Material (2010) Disposal and Diversion Forecast by Scenario Incremental Diversion by Material and Scenario (2025) Incremental Diversion by Milestone Period Economic Analysis Methodology Assumptions Data Sources for Costs and Revenue Municipal Costs Commodity Revenue Industry Stewardship Costs & Revenues Material Diversion in the Zero Waste Scenarios Costs and Revenue by Material and 5Rs Activity

3 Calculation of Costs and Benefits Employment Impact Methodology Input-Output Multipliers Reuse-Recycling-Recovery: Jobs-Per-Tonne-of-Material Ratios Energy and GHG Impacts Human Health and Toxicity Impacts Results Economic Business Case Distributional Impacts Sensitivity Analysis Job Creation and Economic Impact Results Direct, Indirect and Induced Impacts Downstream Impacts GHG and Energy Impacts Zero Waste Business Case Results Summary Discussion Distributional Impacts Impact of Increased Diversion on Landfill Costs Leakage Conclusions Recommendations References Appendix: Local Government Survey on Waste Management Costs and Practices

4 List of Tables Table 1: Business Case for Zero Waste Summary... 9 Table 2: Recycling, Reuse and Remanufacturing Sector Categories Table 3: Materials Quantification Task List Table 4: Waste Forecast by Sector ( ); Business as Usual Scenario Table 5: Waste Forecast by Sector ( ); 62% Diversion Scenario Table 6: Waste Forecast by Sector ( ); 81% Diversion Scenario Table 7: Disposal Tonnage by Material, (2010) Table 8: Diversion by Material (2010), [tonnes] Table 9: Percent of 2010 Disposed Tonnes Which Will Be Diverted by Table 10: Scenario Two Incremental Diversion by Category and Segment, 2025 (Tonnes) Table 11: Scenario Three Incremental Diversion by Category and Segment, 2025 (Tonnes) Table 12: Scenario Two Incremental Diversion by Milestone Year and Material Table 13: Scenario Three Incremental Diversion by Milestone Year and Material Table 14: Economic Impact Analysis Task List Table 15: Material Allocation by 5Rs Activity Table 16: Unit Costs and Revenues by Material and Activity Table 17: Calculation of Net Costs & Benefits Table 18: Employment Impact Task List Table 19: Input Output Multipliers, (Jobs per $1 million) Table 20: Input Output Calculation Table 21: Downstream Jobs-Per-Tonne-of-Material Ratios Table 22: GHG Emissions from Waste Diversion Options Compared to Landfilling, Including Carbon Sinks (tonnes CO2e/tonne), Scenario 2 and Table 23: Energy Savings from Waste Diversion Options Compared to Landfilling (GJ/tonne), Scenario 2 and Table 24: Human Health and Ecosystem impact by 5R activity [kg/ Tonne material] Table 25: Calculation of Incremental Economic Benefit (Cost) of Higher Waste Diversion Table 26: Economic Benefits (Costs) of Higher Waste Diversion Scenarios (Relative to BAU in 2025) ($ millions) Table 27: Summary of Expenditures and Revenues by Scenario (Relative to BAU in 2025) ($ millions) Table 28: Public Sector versus Private Sector Costs of Higher Waste Diversion Table 29: Sensitivity Analysis on Economic Benefit (Cost) Table 31: Scenario Two Job Creation and Economic Impacts in Material Collection and Processing Table 32: Scenario Three Job Creation and Economic Impacts in Material Collection and Processing Table 33: Full Time Equivalent Job Impacts on Downstream Reuse, Recycling and Recovery Sectors Table 34: GHG and Energy Impacts of Zero Waste Strategy in 2025 [GJ] Table 35: Zero Waste Business Case Summary Results (Relative to BAU, 2025) Table 36: Trends in Cost Shifting from Implementation of Zero Waste Strategies Compared to Landfilling

5 List of Figures Figure 1: Scope of Zero Waste Analysis Figure 2: Zero Waste Economic and Employment Impacts Process Map Figure 3: Solid Waste Process Map (Scenario 1)

6 Glossary Zero waste Reduce Reuse Recycle Recovery Residuals management Direct effects Indirect effects Induced effects A solid waste management policy framework that goes beyond recycling to focus first on reducing waste and reusing products and then recycling and composting/digesting the rest. The first priority within a 5Rs waste management hierarchy of reduce, reuse, recycle, plus recover and residual management. The objective of this strategy is to reduce by as much as possible the amount or toxicity of material that enters the solid waste stream and also the impact on the environment of producing it in the first place. The second waste management priority is to ensure that materials or products are reused as many times as possible before entering the solid waste stream. The third waste management priority is to recycle as much material as possible. The fourth waste management priority is to recover as much material and/or energy from the solid waste stream as possible through the application of technology. The fifth waste management priority is to provide safe and effective residual management. This activity takes place once the solid waste stream has been reduced by efforts under the first 4 Rs, through the application of technology primarily in the form of well-designed and secure landfills. Direct effects are the direct impact on wages, GDP and FTEs of increased industry output within that industry. For example, a waste hauler would experience directly the impact of increased output with the Waste Management industry. Indirect Effects measure the value of additional economic demands that the direct economic activity places on the supplying industries in the region. When firms produce goods or conduct business, they must make many purchases. Some of these are from suppliers in the area. Induced effects accrue when workers in the direct and indirect industries spend their earnings on goods and services in the region. Induced effects can also be called household effects. Downstream jobs Downstream sectors are those that experience an economic impact due to changes in the flow through of material inputs to their business. In this sense, the reuse, remanufacturing and recycling reliant industries are downstream of the collection, landfill and processing sectors. They see an economic impact due to changes in the availability of collected materials, which represent a throughput for their operations. An example of a downstream company is a glass bottle manufacturer that receives recycled glass to transform into a new product. Acronyms 5Rs Hierarchy of reduce, reuse, recycle, recovery and residuals management 6

7 BAU Business as Usual CR&D Construction, renovation and demolition EPR Extended producer responsibility FTE Full time equivalent GDP Gross domestic product GHG Greenhouse Gas GJ Giga Joule ICI Industrial Commercial and Institutional MRF Material recovery facilities WTE Waste to energy 7

8 Summary Context As British Columbians, we recycle more today than we ever have before. We are also throwing more into the landfill than we ever have before. Based on current trends, by 2025, British Columbians will generate approximately one million tonnes more landfill waste every year than we do today. That increase in garbage is expected to raise municipal waste management costs by $120 million per year. But increasingly, we are finding better ways to extract the value from materials in the waste stream, which creates new economic opportunities and jobs. Zero Waste is a solid waste management policy framework that goes beyond recycling to focus first on reducing waste and reusing products and then recycling and composting/digesting the rest. Many communities across Canada, the US and globally (including many in BC) have explored or adopted zero waste principles (including Metro Vancouver). This study seeks to answer the question, Is there a business case for a zero waste strategy in British Columbia? It examines the economic, jobs, energy, greenhouse gas emissions, and other environmental impacts for British Columbia of one business as usual and two alternative waste diversion scenarios in Scope and Methods Waste has five possible pathways, known as the waste prevention hierarchy, or the 5Rs : reduce, reuse, recycle, recover, residuals management. Residuals management is landfilling in most cases, so when we talk about waste diversion we mean directing waste down one of the other four pathways: reduce, reuse, recycle, or recover. This study compares estimated societal costs and benefits of two higher waste diversion scenarios compared to one business as usual scenario in The three waste scenarios used in this analysis were derived from the BC Stats report, Solid Waste Generation in British Columbia Forecast (2012). The business as usual scenario assumes a status quo approach to waste management in BC with diversion rates remaining constant at 43% over the study period from 2010 to 2025 and a focus on recycling as the primary diversion strategy. Scenarios Two and Three are based on diversion strategies that incorporate the 5Rs. Scenario Two assumes an increased diversion rate to 62% in 2025 while Scenario Three assumes an 81% diversion rate in For each scenario, materials were allocated proportionally across the 5Rs using professional judgment to arrive at the total target diversion rate. Costing by 5Rs activity and material was developed from primary research combined with available data sources. Material diversion forecasts were combined with 5R costs and benefits to estimate the net benefit of implementing the zero waste strategy. Results This study demonstrates that there is a positive business case for increasing waste diversion. This study also demonstrates that there are significant societal benefits as a result of increased diversion including new jobs, increased GDP, reduced GHG emissions, and reduced environmental and human health risks. 8

9 The key findings of this study are summarised in Table 1 as follows: The costs to local governments/taxpayers for waste management are projected to increase from $377 million per year in 2010 to $450 million per year in 2025, should the waste diversion rate remain at the current 43%. There is a positive business case for implementing a Zero Waste Strategy for BC. Depending on how aggressively it is implemented (i.e., 62% vs 81% diversion), by 2025 a Zero Waste Strategy will produce between $56 million and $126 million of annual net economic benefit 1 ; will create between $27 million and $89 million in new annual GDP and generate between $755,000 and $2.5 million in new annual income tax revenue for BC. Reduce, reuse and recycling produces greater societal benefits than energy recovery or disposal. The business case for zero waste is strengthened if supporting policies are developed that encourage the creation and retention of remanufacturing facilities within BC, and prevent leakage to other jurisdictions. Table 1: Business Case for Zero Waste Summary Summary Projected Net Annual Benefits in 2025 Net Economic Benefit $56 to $126 million New GDP $27 to $89 million New Jobs 304 to 1,005 New Revenue to Province (Income tax) $756,000 to $2.5 million GHG reductions 1,047 to 2,277 kt/yr 1 The net economic benefit represents the net savings to the waste management system as a whole for scenarios two and three compared with the business as usual scenario. If the net economic benefit is positive, the overall economic cost of waste management has been reduced relative to BAU. If the net waste management benefit is negative, the overall economic cost of waste management has increased relative to BAU. See Economic Business Case, page 38 for a detailed explanation of the calculation of net economic benefit. 9

10 Introduction The BC Ministry of Environment retained Innes Hood Consulting Inc. to develop a business case for zero waste in British Columbia. One business as usual (BAU) and two alternative scenarios are developed. The business as usual scenario assumes a status quo approach to waste management in BC with diversion rates remaining constant at 43% over the study period from 2010 to Implementation of a 5Rs strategy is used to achieve increased diversion rates. Scenario Two assumes a diversion rate of 62% by 2025, while Scenario Three assumes an 81% diversion rate by Objectives The objective of this analysis is to provide an estimate of the costs and benefits of increasing waste diversion in BC. The analysis includes financial metrics, employment and environmental impacts, relative to the business as usual scenario. Specifically, the analysis includes: Assessment of potential diversion quantities by material and 5Rs strategy: o Reduction, o Reuse, o Recycling, o Recovery, and o Residuals management. Incremental direct solid waste management costs from 5Rs activities. Incremental direct solid waste management revenues and expenditures from: o Sale of recyclables, o Reduction and reuse, and, o Disposal cost reductions. Distributional implications of who pays, and commentary on how costs shift from public sector to private sector. Energy and GHG impacts for the waste management sector. Incremental government revenue resulting from waste and material management (personal, corporate). Incremental changes in the provincial gross domestic product (GDP). Employment impacts including changes to wages and full time employment equivalent numbers for: o Direct jobs, o Indirect jobs, and o Induced jobs. Scope of Analysis The scope of the analysis is presented in Figure 1. This analysis is bounded spatially within British Columbia and temporally by materials and financial transactions that occur after a product has been 10

11 consumed and before the material is re-manufactured. Waste streams include residential, ICI and CR&D sectors. On the downstream side, the analysis is bound once material is sold into secondary markets. Specifically, the analysis includes: Costs of waste collection and disposal to define the baseline or business as usual scenario, Effects on the generation of waste through implementation of reduction and reuse activities, Industry stewardship collection and processing costs, Costs and revenues from shifts from local government disposal or recycling of material to industry stewardship programs, and Costs and revenues from waste to energy processing of recovered material. The analysis excludes a number of items such as: Costs of consuming the original good; The economic activities arising from re-manufacturing activities that occur primarily outside British Columbia; Household time and other household costs for sorting, washing and cleaning diverted material; The externality cost of extracting and processing virgin material for the manufacturing of goods and services, however, the energy and GHG impacts of re-use versus virgin material is addressed; Wider economic effects, such as impacts of a zero waste strategy on the rate of inflation, effects on competitiveness and trade patterns; and Administrative and compliance costs required by the Provincial government to develop and enforce additional waste reduction and diversion strategies. 11

12 Extract Virgin Material Primary Manufacture Distribution, Wholesale & Retail Scope of Analysis Reduce Consumption Reuse Collection EPR/Recycle Recover Residuals Sale of Material Waste to Energy Landfill/ Incineration Remanufacture into new products Figure 1: Scope of Zero Waste Analysis Zero Waste Approach to Increased Diversion A zero waste policy framework has been applied to structure the logic applied within this analysis. Zero waste is a solid waste management policy framework that goes beyond recycling to focus first on reducing waste and reusing products and then recycling and composting/digesting the rest. Many businesses now operate in a zero waste mode, and have found that the efficiencies realized by reducing waste to a minimum save money and increase efficiency, thereby increasing profitability. Many 12

13 communities across Canada, the US and globally (including many in BC) have explored or adopted zero waste principles (including Metro Vancouver) which generally include a combination of: Re-designing the way resources and materials flow through society; Eliminating subsidies for raw material extraction and waste disposal; Hold producers responsible for their products and packaging from cradle to cradle. Zero waste generally involves a commitment to three objectives: Maximizing upstream waste reduction through product re-design; Zero Waste or green purchasing and producer responsibility; Maximizing mid-stream longevity (through reuse, repair and durable design) and Maximizing downstream resource recovery (recycling and composting/digestion) keeping material out of landfill and EFW (which Zero Waste proponents oppose) These objectives are generally achieved through four broad policy instruments: Incentives and disincentives to encourage waste reduction; Extended producer responsibility and design for environment (DfE); Green Purchasing and Community building. Provincial Waste Management Hierarchy 2 The provincial waste management strategy is based on the 5Rs hierarchy of reduce, reuse, recycle, recovery and residuals management. This hierarchy has been used to allocate waste quantities into diversion streams for each of the zero waste scenarios, to enable estimates of expenditures or revenues. Consistent with the 5Rs hierarchy, the first priority is to reduce the amount or toxicity of material that enters the solid waste stream. The second priority is to ensure that materials or products are reused before entering the solid waste stream. The third priority is to recycle as much material as possible. In this analysis, recycling activities can occur either through municipal collection programs, financed by taxpayers, or through stewardship programs funded by industry and producers. The next priority effort within the hierarchy is to recover as much material and/or energy from the solid waste stream as possible through the application of technology. This element depends on the nature and size of the solid waste stream, the availability of technology, demand for its products, political acceptability and the environmental, social and economic impact of applying that technology. Waste-toenergy (WTE) facilities achieving greater than 60% energy efficiency are considered recovery. In the current analysis, for recovery, utilisation of waste-to-energy has been assumed. The final priority is to provide safe and effective residual management. This activity takes place once the solid waste stream has been reduced by efforts under the first 4Rs, through use of well-designed and secure landfills or through incineration (<60% energy efficiency). For certain classes of solid waste, thermal treatment may first be applied to change chemical properties, reduce volume and/or generate energy. 2 BC Ministry of Environment (1994). 13

14 Data limitations Results of this analysis are based on published data and surveys of a selection of waste management professionals. It was observed through the course of this study that there are limitations to the data consistency and quality that impact the accuracy of the results. These limitations are discussed throughout the report. To address the data limitations, a sensitivity analysis is applied to the results to assess the impact of data uncertainty on the robustness of the overall conclusions. Report Structure The remainder of this report is structured into the following sections: Methodology, Results, Discussion, and Conclusions. 14

15 Methodology This section presents the methodology, data sources and assumptions used to calculate the economic and employment impacts for each projected waste scenario. A process map to illustrate the tasks completed is presented in Figure 2. The process defined in this analysis was reviewed for consistency with the literature. 3 Figure 2: Zero Waste Economic and Employment Impacts Process Map Overview of Collection, Recycling and Disposal Process in BC The waste management sector in BC is complex with a large number of private and public sector players. The roles of public sector versus private sector players vary by location, making generalisations for the industry difficult. A high-level process map of the waste management system is presented in Figure 3 to illustrate the current approach to waste management practices in BC. The services provided by the waste management industry include: Collection and transportation of waste and materials; Operation of transfer stations, recycling facilities and landfills; 3 OECD, (2005). 15

16 Processing,including composting and anaerobic digestion for organics; and, cleaning, sorting, grading and baling for other materials; and, Sale of materials to secondary markets. There is significant diversity in the collection and diversion practices and responsibilities in different regional districts throughout the province. Most of the single-family (78%) and multi-family households (80%) in BC receive curbside collection of solid waste and recyclables from their municipal or regional government 4. The cost of this service is recovered either through property tax or on the basis of a user fee and may be provided by the local government or contracted out to private sector waste management firms. In contrast, industrial, commercial and institutional (ICI) and construction, renovation and demolition (CR&D) waste collection is handled primarily through private haulers who pick up waste and recycling on a fee for service basis. Waste that is collected by municipal collection or private haulers is taken to either landfills or to transfer stations where the material is compacted and sent to landfills. Landfill ownership may be either public (regional district or municipal) or private. While most landfills are regulated there are a number of private unregulated landfills in the province for which no data is available. Recycled materials collected from both the residential sector and the ICI sector are sent to material recovery facilities (MRFs) who clean, sort, grade and bale the materials. This material is then sold, either to markets within the Pacific Northwest or overseas, primarily to China. Figure 3: Solid Waste Process Map (Scenario 1) 4 Glenda Gies and Associates (2012). 16

17 While this process map covers the majority of material, it is not exhaustive. For example, scrap cars or heavy duty equipment have not been included within the scope of the current assignment. Leakage from the system is discussed in later sections of the report. Reduction in consumption and re-use is not captured within this process map since these activities reduce the material input. Analytic Framework Recent studies 5 identify the value chain for materials diverted from the landfill by three component industries: recycling industries; recycling reliant industries; and the reuse and remanufacturing industries (Table 2). Using this value chain, materials flow first through recycling industries (which collect, process and recover materials); then downstream through either a corresponding recycling reliant industry (focused on primary production, processing the material into a new form); or through the reuse and remanufacturing industries. Materials not diverted flow to the landfill, and for the purposes of this study, recovered materials flow to waste to energy facilities. Based on this model: Materials that are reduced and no longer flow into the economy represent a reduction in economic activity and reduce the overall volume in the value chain. This is most immediately seen in a reduction in collection activities and associated output for this sector; Materials reused are assumed to flow into reuse and remanufacturing industries; Materials recycled are assumed to flow into recycling-reliant industries; Recovered materials flow into waste to energy facilities; Residual volumes are zero in this analysis since it analyzes the impact of the incremental change in landfill diversion between the business as usual scenario one and the two zero waste diversion scenarios, which have higher diversion rates and hence zero incremental residual volumes. 5 DSM Environmental (2009). 17

18 Table 2: Recycling, Reuse and Remanufacturing Sector Categories 6 Recycling Industries Government Staffed Residential Collection Private Staffed Recycling Collection Compost/Organics Processor Materials Recovery Facilities Recyclables Material Wholesalers Plastics Reclaimers Recycling Reliant Industries (Demand Side) Glass Container Manufacturing Plants Glass Product Producers Nonferrous Secondary Smelting and Refining Mills Nonferrous Product Producers Nonferrous Foundries Paper and Paperboard Mills/Deinked Market Pulp Producers Paper-based Product Manufacturers Pavement Mix Producers (asphalt and aggregate) Plastics Product Manufacturers Rubber Product Manufacturers Steel Mills Iron and Steel Foundries Other Recycling Processors/Manufacturers Reuse & Remanufacturing Industries Computer and Electronic Appliance Remanufacturers Retail Used Merchandise Sales Wood Reuse Materials Exchange Services 6 Ibid. 18

19 Materials Quantification Methodology The tasks to develop the materials forecast are summarised below (Table 3). The results of this analysis are used as input to the financial analysis and business case preparation. Table 3: Materials Quantification Task List Task Compile quantities forecast by segment and material Forecast disposal and diversion by scenario Allocate diversion by 5Rs strategy Description BC Stats developed a forecast of quantities that includes an estimate of material by sector. The analysis evaluates three diversion scenarios including the business as usual 43% diversion scenario and 2 alternative scenarios (62% and 81% diversion). The information above is disaggregated to estimate materials generated, diverted and disposed by Segment, Milestone year, Waste diversion scenario (business as usual - 43%, 62%, 81% diversion), and Material category. Allocation of diverted tonnages by 5Rs strategy is provided using available data from the literature on reduction and reuse, recycling, recovery and residuals management, and available program performance information for recycling, organics diversion and disposal. A description of these tasks is presented below. Material Forecast Material quantities by segment, milestone year and diversion scenario have been developed as part of the BC Waste forecast 7. These estimates provide the basis of the current analysis and are presented in Table 4 to Table 6. 7 BC Stats (a) (2012). 19

20 Table 4: Waste Forecast by Sector ( ); Business as Usual Scenario 8 Table 1 - Scenario One: Status Quo Tonnes Disposal 2,911,510 2,943,938 2,995,723 3,041,572 3,091,659 3,134,815 3,180,175 3,218,388 3,243,954 3,263,630 3,288,795 3,312,212 3,337,599 3,366,728 3,395,050 3,422,322 Residential 1,274,971 1,288,622 1,304,672 1,321,830 1,340,199 1,358,868 1,377,723 1,396,868 1,415,952 1,435,143 1,454,270 1,472,889 1,491,322 1,509,552 1,527,561 1,545,330 ICI 1,141,990 1,158,994 1,179,840 1,198,845 1,220,700 1,238,466 1,257,402 1,272,076 1,282,042 1,288,985 1,297,778 1,304,855 1,313,054 1,322,638 1,332,601 1,343,098 CR&D 494, , , , , , , , , , , , , , , ,893 Diversion 1,934,910 1,954,541 1,991,441 2,023,522 1,775,605 1,512,590 1,533,232 1,546,484 1,553,534 1,556,437 1,563,426 1,570,745 1,580,355 1,592,982 1,605,511 1,617,546 Residential 771, , , , , , , , , , , , , , , ,770 ICI 992,807 1,002,879 1,021,813 1,038, , , , , , , , , , , , ,938 CR&D 170, , , , , , , , , , , , , , , ,837 Product Stewardship 242, , , , , , , , , , , , , , , ,861 Total Generated 5,088,819 5,143,719 5,235,373 5,316,621 5,406,388 5,482,241 5,559,948 5,623,127 5,667,491 5,701,864 5,745,811 5,788,271 5,834,850 5,888,074 5,940,254 5,990,728 Diversion Rate 43% 43% 43% 43% 43% 43% 43% 43% 43% 43% 43% 43% 43% 43% 43% 43% Table 5: Waste Forecast by Sector ( ); 62% Diversion Scenario Disposal 2,911,510 2,869,146 2,826,781 2,784,417 2,742,052 2,699,688 2,657,323 2,614,959 2,572,595 2,530,230 2,487,866 2,445,501 2,403,137 2,360,772 2,318,408 2,276,043 Residential 1,274,971 1,255,907 1,236,843 1,217,779 1,198,715 1,179,651 1,160,587 1,141,523 1,122,459 1,103,395 1,084,331 1,065,267 1,046,203 1,027,139 1,008, ,011 ICI 1,141,990 1,126,744 1,111,498 1,096,253 1,081,007 1,065,762 1,050,516 1,035,271 1,020,025 1,004, , , , , , ,306 CR&D 494, , , , , , , , , , , , , , , ,725 Diversion 1,934,910 2,028,324 2,156,054 2,272,557 2,115,317 1,879,809 1,928,546 1,902,227 1,975,536 2,039,337 2,112,061 2,183,297 2,258,614 2,340,254 2,421,162 2,500,770 Residential 771, , , , , , , , , , , , ,041 1,026,353 1,067,447 1,108,165 ICI 992,807 1,034,574 1,087,773 1,136,400 1,020, , , , , , , ,485 1,001,055 1,030,449 1,060,232 1,090,378 CR&D 170, , , , , , , , , , , , , , , ,227 Product Stewardship 242, , , , , , ,079 1,046,872 1,060,464 1,073,838 1,087,539 1,101,201 1,114,803 1,128,501 1,141,966 1,155,137 Total Generated 5,088,819 5,143,719 5,235,373 5,316,621 5,406,388 5,482,241 5,559,948 5,623,127 5,667,491 5,701,864 5,745,811 5,788,271 5,834,850 5,888,074 5,940,254 5,990,728 Diversion Rate 43% 44% 46% 48% 49% 51% 52% 53% 55% 56% 57% 58% 59% 60% 61% 62% 8 Spreadsheet provided by Dan Schrier, BC Stats, November 15,

21 Table 6: Waste Forecast by Sector ( ); 81% Diversion Scenario Disposal 2,911,510 2,791,967 2,672,423 2,552,879 2,433,336 2,313,792 2,194,249 2,074,705 1,955,162 1,835,618 1,716,074 1,596,531 1,476,987 1,357,444 1,237,900 1,118,356 Residential 1,274,971 1,219,849 1,164,728 1,109,606 1,054, , , , , , , , , , , ,146 ICI 1,141,990 1,096,300 1,050,611 1,004, , , , , , , , , , , , ,653 CR&D 494, , , , , , , , , , , , , , , ,557 Diversion 1,934,910 2,105,399 2,309,720 2,502,765 2,422,268 2,206,020 2,330,829 2,144,140 2,233,176 2,372,730 2,520,232 2,666,140 2,815,864 2,971,258 3,126,184 3,280,180 Residential 771, , ,417 1,014, , , , , ,432 1,066,242 1,141,249 1,215,845 1,291,079 1,367,076 1,442,921 1,518,481 ICI 992,807 1,064,960 1,148,280 1,226,999 1,141, ,789 1,021, , ,459 1,047,858 1,102,755 1,156,068 1,211,577 1,269,738 1,328,367 1,387,471 CR&D 170, , , , , , , , , , , , , , , ,227 Product Stewardship 242, , , , , ,428 1,034,871 1,256,610 1,331,911 1,347,370 1,363,642 1,379,921 1,396,258 1,413,006 1,429,373 1,445,246 Total Generated 5,088,819 5,143,719 5,235,373 5,316,621 5,406,388 5,482,241 5,559,948 5,623,127 5,667,491 5,701,864 5,745,811 5,788,271 5,834,850 5,888,074 5,940,254 5,990,728 Diversion Rate 43% 46% 49% 52% 55% 58% 61% 63% 66% 68% 70% 72% 75% 77% 79% 81% 21

22 Disposal by Material (2010) Disposal by material was estimated using Provincial waste estimates (Table 7). These estimates have been updated to a 2010 baseline based on the change in material disposed between 2006 and Table 7: Disposal Tonnage by Material 9, (2010) Material Res [Tonnes] ICI [Tonnes] CR&D [Tonnes] Total, 2010 [Tonnes] Organics 509, , ,841 Paper 215, ,682 6, ,275 Plastics 172, , ,296 Multi-material 103,889 73, ,224 Textiles & rubber 71,249 48, ,562 Other 67,955 28, , ,474 Wood 33, , , ,652 Ferrous 33,137 39,536 3,853 76,526 Glass 29,544 35,062 64,606 Renovation 24,830 51,489 76,319 Non-Ferrous 12,513 8,817 12,899 34,229 Haz-waste 7,949 15,547 23,496 Concrete 83,897 83,897 Drywall 53,264 53,264 Asphalt 39,481 39,481 Total 1,282,336 1,133, ,033 2,910,142 Diversion by Material (2010) An estimate of diversion by material was developed for 2010 using diversion estimates published by BC Stats (Table 8). 9 BC Stats,

23 Table 8: Diversion by Material (2010) 10, [tonnes] Material Diversion Rate [%] Quantity [Tonnes] Organics 21% 457,235 Paper 11 41% 892,696 Plastics 3% 67,497 Multimaterial 0% 0 Textiles & rubber 3% 67,497 Other 4% 78,383 Wood 11% 241,681 Ferrous 7% 148,057 Glass 3% 63,142 Renovation 0% 0 Non-Ferrous 7% 161,121 Haz-waste 0% 0 Concrete 0% 0 Drywall 0% 0 Asphalt 0% 0 Total 100% 2,177,308 Disposal and Diversion Forecast by Scenario The Provincial Waste Forecast (Table 4 to Table 6) provides an estimate of increased diversion and extended producer responsibility by scenario (Table 9). This estimate was used to forecast quantities of waste diverted by scenario and category. 10 BC Stats, Paper is further broken down into newsprint (10.7%, mixed paper (15%), Cardboard & boxboard (15.3%). 23

24 Table 9: Percent of 2010 Disposed Tonnes Which Will Be Diverted by 2025 Material Res Diversion (%) Scenario Two ICI Diversion (%) CR&D Diversion (%) Res Diversion (%) Scenario Three ICI Diversion (%) CR&D Diversion (%) Organics Paper Plastics Multi-material Textiles & rubber Other Wood Ferrous Glass Renovation Non-Ferrous Haz-waste Concrete Drywall Asphalt Total For some materials (specifically paper grades) the percentage of diversion by material shown for the base case and Scenario Two has already been exceeded in Greater Vancouver 12. Alignment of the provincial diversion estimates with data available at the regional district is recommended to enhance the accuracy of subsequent analysis. Incremental Diversion by Material and Scenario (2025) The incremental material diverted from landfill was estimated by combining the disposal tonnage by material (Table 8) with the diversion scenarios provided by the Province (Table 9). The results are summarised in Table 10 and Table 11. These estimates are within 12% of the diversion scenarios developed by the Province in its Waste Forecast Study. 12 Metro Vancouver,

25 Table 10: Scenario Two Incremental Diversion by Category and Segment, 2025 (Tonnes) Material Res [Tonnes] ICI [Tonnes] CR&D [Tonnes] Incremental Diversion, 2025 [Tonnes] Organics 254, , ,921 Paper 75,451 90,539 1, ,494 Plastics 51,732 47, ,789 Multi-material 31,167 22, ,167 Textiles & rubber 14,250 9, ,912 Other 20,387 8,563 36,244 65,193 Wood 3,392 10,309 37,411 51,112 Ferrous 3,314 3, ,231 Glass 2,954 3, ,461 Renovation 3,725 7, ,448 Non-Ferrous 1, ,225 5,358 Haz-waste 2,782 5, ,224 Concrete ,974 20,974 Drywall ,316 13,316 Asphalt 0 0 9,870 9,870 Total 465, , , ,470 Provincial Estimate of Scenario Two 1,087,000 25

26 Table 11: Scenario Three Incremental Diversion by Category and Segment, 2025 (Tonnes) Material Res [Tonnes] ICI [Tonnes] CR&D [Tonnes] Incremental Diversion, 2025 [Tonnes] Organics 432, , ,265 Paper 150, ,077 3, ,590 Plastics 137, , ,437 Multi-material 57,139 40,334 97,473 Textiles & rubber 28,500 19,325 47,825 Other 44,171 18,553 86, ,709 Wood 10,176 30,926 89, ,889 Ferrous 14,912 17,791 2,312 35,015 Glass 8,863 10,518 19,382 Renovation 8,691 18,021 26,712 Non-Ferrous 5,631 3,968 7,740 17,338 Haz-waste 5,962 11,660 17,622 Concrete 50,338 50,338 Drywall 31,958 31,958 Asphalt 23,689 23,689 Total 905, , ,420 1,947,242 Provincial Estimate of Scenario Three 2,157,000 Incremental Diversion by Milestone Period A linear extrapolation is assumed for achieving the increased diversion from 2011 through 2025 by scenario, (Table 12 and Table 13). This represents the incremental diversion relative to business as usual. Three materials forecasts are used for conducting the economic analysis by combining unit costs with the incremental diversion estimates summarised in the tables below. 26

27 Table 12: Scenario Two Incremental Diversion by Milestone Year and Material Material 2011 [Tonnes] 2015 [Tonnes] 2020 [Tonnes] 2025 [Tonnes] Organics 27, , , ,921 Paper 11,166 55, , ,494 Plastics 6,586 32,930 65,859 98,789 Multi-material 3,544 17,722 35,445 53,167 Textiles & rubber 1,594 7,971 15,942 23,912 Other 4,346 21,731 43,462 65,193 Wood 3,407 17,037 34,075 51,112 Ferrous 549 2,744 5,487 8,231 Glass 431 2,154 4,307 6,461 Renovation 763 3,816 7,632 11,448 Non-Ferrous 357 1,786 3,572 5,358 Haz-waste 548 2,741 5,482 8,224 Concrete 1,398 6,991 13,983 20,974 Drywall 888 4,439 8,877 13,316 Asphalt 658 3,290 6,580 9,870 Total 63, , , ,470 Table 13: Scenario Three Incremental Diversion by Milestone Year and Material Material 2011 [Tonnes] 2015 [Tonnes] 2020 [Tonnes] 2025 [Tonnes] Organics 46, , , ,265 Paper 22, , , ,590 Plastics 17,562 87, , ,437 Multi-material 6,498 32,491 64,982 97,473 Textiles & rubber 3,188 15,942 31,883 47,825 Other 9,981 49,903 99, ,709 Wood 8,726 43,630 87, ,889 Ferrous 2,334 11,672 23,343 35,015 Glass 1,292 6,461 12,921 19,382 Renovation 1,781 8,904 17,808 26,712 Non-Ferrous 1,156 5,779 11,559 17,338 Haz-waste 1,175 5,874 11,748 17,622 Concrete 3,356 16,779 33,559 50,338 Drywall 2,131 10,653 21,306 31,958 Asphalt 1,579 7,896 15,793 23,689 Total 129, ,081 1,298,161 1,947,242 27

28 Economic Analysis Methodology The tasks used to develop the cost and revenue analysis are summarised in Table 14. Table 14: Economic Impact Analysis Task List Task Compile unit costs and revenue by activity and material Forecast province-wide costs and revenues Sensitivity analysis Assess distributional impacts Estimate energy impacts Estimate incremental tax revenues Forecast changes in the Provincial GDP Description A spreadsheet capturing unit cost estimates for the materials identified in the materials quantification forecast was developed. Unit costs are estimated for 5Rs activities. The analysis applies an incremental cost approach to capture the difference in costs between the BAU scenario (assumed to be disposal or recycling) and the zero waste diversion scenarios (assumed to have higher diversion rates and moving up the waste management hierarchy). The unit costs and revenues are applied to the materials forecast at the provincial level to provide an estimate of incremental waste management costs and revenues by waste management activity and material. Sensitivity analysis is completed on a range of data inputs such as costs as well as commodity values to assess the robustness of the results. The trends regarding costs on 5Rs are identified within the zero waste scenarios at a qualitative level. Energy impacts include changes in trucking, as well as opportunities for waste to energy in the zero waste scenarios. Incremental provincial government tax revenues, personal and corporate, resulting from waste and material management under diversion scenarios two and three are estimated based on estimates of employment impact and changes to private sector activity using input-output results. The incremental changes to provincial GDP under diversion scenarios two and three are estimated using Provincial input-output multipliers. Assumptions Assumptions have been applied to simplify the analysis as necessary. Where assumptions are made, they are generally conservative in nature to limit perceived bias of the results. Sensitivity analysis is completed to assess the impact of these assumptions on the results. Simplifying assumptions made in completion of the economic analysis are summarised below: Unit costs and revenues are assumed to be constant across the period Available unit cost and revenue figures were gathered from a wide variety of sources as explained above; as far as reasonably possible they were obtained for 2011, but some are for 2010 and others for As a result the cost and revenue estimates over the period are approximately equivalent to being calculated in real 2011 dollars; there is no discounting. Transportation costs are assumed to be included in collection costs. Depot and transfer costs are assumed to be included in processing costs. Promotion and education costs are assumed to be included in EPR collection and processing costs. Administrative costs are assumed to be included in collection, landfilling and processing costs. 28

29 Reduction and reuse related costs are reflected as cost savings from avoidance of the need to manage materials within traditional waste management systems. Avoided costs are a combination of collection, landfilling, processing and waste-to-energy costs depending on the waste diversion strategy assumed adopted for a given material type. Recovered materials flow to waste-to-energy facilities which provide a revenue source from the sale of thermal energy. Municipal and private sector costs associated with collection, landfill, and processing are used as proxies for industry revenues. However, due to confidentiality, it was not possible to fully define costs by actor. Revenue from the sale of recyclables is typically shared between the client (local government or a private sector company in the case of the ICI or CRD sectors) and the waste management company collecting the recyclables. However, due to confidentiality, it was not possible to obtain accurate data on the average revenue split. For the purposes of this study, it has been assumed that the waste management company retains 50% of the proceeds from the sale of recyclables which increases its revenues. The other 50% is returned to the client thereby reducing its costs. Industrial structure and linkages are based on 2004 and 2008 data respectively (the most recent data available). This assumes that the technology of producing goods and services, input patterns and relative prices of goods and services remain unchanged, and that there are no new products that might require a different production technology or input mix. Data Sources for Costs and Revenue Estimates of waste management costs by material and activity were developed from publicly available reports supplemented by data gathered from a representative sample of regional districts and municipalities across BC and commercial commodity value research. The data sources reviewed to develop the cost analysis are summarised in the references. In addition to the literature review, waste management experts and service providers were contacted to provide pricing and market insights, and are footnoted throughout the document. Municipal Costs Local governments representing approximately 70% of the province s population were surveyed to provide costs and insights regarding collection, processing and recycling costs and practices. The survey tool used to interview local government staff is presented in the Appendix. Responses were obtained from the following jurisdictions representing approximately 45% of the province s population: Abbotsford Capital Regional District Kamloops Surrey City of North Vancouver District of North Vancouver West Vancouver 29

30 Vancouver Regional District of Nanaimo It is recognised that these jurisdictions represent urbanised areas of the province, and that more remote locations may have different cost structures. This uncertainty is reflected in the sensitivity analysis completed in subsequent sections of the report. Notwithstanding these limitations, utilisation of data obtained directly from municipalities ensures a robust data set. As part of this survey, it was confirmed that landfill post closure and siting costs are incorporated into tippage fees provided. Commodity Revenue Commodity revenues are volatile as they are dependent on global markets which fluctuate for unpredictable reasons over time. For example, by mid-summer of 2012, prices for paper in particular had dropped by 50% from the values reported in the winter of This rapid and substantial change illustrates the volatility of materials markets which must be taken into consideration in the long term projection of impacts of different diversion scenarios. Interviews with stakeholders in the preparation of this document further emphasized the need to use a standardized commodity revenue source based within the Pacific Northwest. As such, a combination of pricing sources has been used to address price volatility, including: Estimates of commodity prices for recyclables, 13 Data from a recent Recycling Marketing Study carried out for Metro Vancouver, 14 Ontario metal prices (given that metal prices are reasonably consistent across Canada), Ontario Blue Box program costs (because per material costs are broken out by activity based costing research, and will not be substantially different to BC, even though BC has a deposit return system for beverage containers and Ontario does not) 15, and Encorp Pacific program costs 16. To capture the volatility experienced from late 2008 to summer 2011, data from the years was used (where available) to identify average unit commodity revenues. As noted previously, these are assumed to be constant throughout the period In addition, sensitivity analysis has been performed on commodity values. Industry Stewardship Costs & Revenues EPR collection and processing costs for printed paper and packaging were based on the estimates used in setting the 2012 fees for the Ontario residential printed paper and packaging Blue Box program which are based on 2010 cost inputs 17. The rationale for using this information is it provides accurate and comprehensive data split out by material from an ongoing residential printed paper and packaging EPR program. The per material costs are allocated through activity based costing studies carried out at a 13 recyclingnetworks.net 14 Metro Vancouver, (2012). 15 Stewardship Ontario. (2012). 16 Encorp Pacific. (2012) 17 Stewardship Ontario. (2012). 30

31 number of single stream and multi stream residential recycling programs throughout the province of Ontario and show that costs for collecting and recycling some residential plastic packaging materials are substantially more than the costs of managing paper and metals. Collecting and recycling PET and HDPE is economically attractive, as solid, high value markets are available for both these materials. A major new EPR program for residential printed paper and packaging is being launched in BC in May, 2014, whereby producers will finance the full cost of the residential printed paper and packaging collection and recycling system, thereby taking the costs away from taxpayers and municipal budgets. Material Diversion in the Zero Waste Scenarios Incremental diversion activity by material for the zero waste scenarios is presented in Table 15. Incremental diversion assumes that in the business as usual scenario, the material would have gone to landfill, whereas, within the zero waste scenarios, that material is being diverted into a 5Rs stream. Increased diversion is achieved through reducing and reusing organics and other materials, combined with increased industry stewardship for printed paper and packaging (residential and ICI) and any other materials. The allocation of material by 5Rs stream is based on an assessment of material and diversion strategy. This diversion strategy was reviewed and updated by the Client to ensure consistency with waste management objectives. Changes to the diversion strategy have a significant impact on the zero waste business case. Further analysis to optimise the zero waste business case is recommended. Table 15: Material Allocation by 5Rs Activity Reduce Reuse Recycle Recover Residuals management % Organics 25% 75% Paper 10% 90% Plastics 10% 90% Multi-material 10% 20% 70% Textiles & 10% 10% 80% rubber Other 100% Wood 20% 60% 20% Ferrous 10% 90% Glass 10% 10% 80% Renovation 10% 40% 50% Non-ferrous 10% 90% Haz-waste 30% 20% 50% Concrete 10% 90% Drywall 10% 90% Asphalt 10% 90% Costs and Revenue by Material and 5Rs Activity Table 16 shows the unit costs and revenues derived from the above sources and used in the financial model. The sensitivity analysis assesses the impacts of variations in these costs. The table shows that 31