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Responding to the Downturn in Recycling Markets Municipal Waste Association

Responding to the Downturn in Recycling Markets Municipal Waste Association. Guy Perry February 5, 2009. Topics. Blue Box funding implications of current markets Review calculation of stewards’ contribution Effect of current market conditions Update on market development activities

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Responding to the Downturn in Recycling Markets Municipal Waste Association

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  1. Responding to the Downturn in Recycling MarketsMunicipal Waste Association Guy Perry February 5, 2009

  2. Topics • Blue Box funding implications of current markets • Review calculation of stewards’ contribution • Effect of current market conditions • Update on market development activities • Update on Unical • RFP for plastics re-processing capacity • Data collection • Optical sort testing

  3. Stewards Financial Obligation • 50% of best practice net cost of municipal Blue Box recycling system • Gross cost less gross revenue • Revenue calculated as 3-year rolling average • To moderate changes in fees resulting from swings in commodity prices • Gross cost less 3-year average gross revenue

  4. 3-Year Average Revenue Calculation • Revenue reported for each material • WDO datacall • Account for revenue sharing • Determine average price for basket of goods across all municipalities • Determine average basket of goods price over previous 3 years • Multiply the 3-year average price by reported tonnes recovered

  5. Example3-Year Average Revenue Calculation

  6. Historic Revenue

  7. Implications for Funding • Funding for 2009 is already set • Based on 2005, 2006 & 2007 revenue • Posted on WDO website • Funding for 2010 to be determined mid-2009 • Based on 2006, 2007 and 2008 revenue • Captures drop in prices - last quarter of 2008 • Funding for 2011 • Will reflect 2008 and 2009 revenue

  8. Market Development Investments • Provision to include additional material-specific fees to overcome barriers • paid by stewards of affected materials • Focus on glass in first 2 years • $2.8M in additional fees paid by stewards of glass • New glass processing capacity => well over 100K TPA • significant savings • For 2008, $2.4M market development fees to increase plastics recycling - plastics stewards

  9. Unical Plant • Accepting MBG from all six original partners • Generally meeting specs, and some already achieving incentives • Expect to be @ full production in next couple of weeks • Inventory of ~10,000 tonnes • Once at full production and working down inventory, will be looking to secure additional municipal material

  10. Plastics RFP • Seeking proposals from re-processors • prepare plastics for direct use by end markets • not just prepare materials to broker to others • Ontario location • Joint initiative - CIF & Stewardship Ontario • $1.9M from Stewardship Ontario • $1.9M from CIF • address possible collection/processing impacts • support long-term municipal contractors • independent decisions whether to proceed with any proposal

  11. Successful Respondents • 2-step Process • Proposal evaluation • 1 or more preferred respondents • Municipal involvement • Due diligence & negotiations • 1 or more successful respondents • develop contracts with municipalities Funding provided only if contracts secured for municipal material

  12. Working with Municipalities • After selection of preferred respondent, Stewardship Ontario & CIF work with municipalities • identify available plastics meeting respondent’s specifications • provide data for respondent(s) to complete a business case • Assess most beneficial result for province of Ontario • based on business case for proposals & available material • To prepare for negotiations • Stewardship Ontario is compiling detailed data on quantities & composition of potentially available plastics

  13. Refining Plastics Generation • Prepared plastics generation estimates for 20 largest municipalities across province • Reviewed with municipalities • Estimated generation for each plastic material • Based on waste audit data gathered over past 3 years • Allows estimates of recovery by material using data reported to WDO • Operational data to be reviewed as well • contract periods, materials targeted, promotion and sorting capabilities

  14. Findings • Represents ~ 75 to 80% of plastics generated in Ontario • General municipal concurrence with approach & results • Some questions about: • Consistency of household figures • Allocation of marketed mixed plastics to specific material categories • To issue an addendum presenting these data for potential respondents to the RFP

  15. RFP Timeline Allow for possible ‘Round 2’ depending on quality of proposals

  16. Optical Sort of PET Thermoform • Test of recovery performance of PET thermoform sorting at Toronto’s Dufferin MRF • Jointly funded Stewardship Ontario & EPIC with cooperation of Toronto and Canada Fibres • ~ 80% positive sort of PET thermoform • ~ 11% of positive sort PET is thermoform • PS successfully rejected • Less than 4% contamination from PS thermoform • Report will be posted on Stewardship Ontario website • Further tests anticipated under different conditions: • where PET thermoform targeted • test market capabilities

  17. Thank You!

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