AUOMA Program Review July 21, 2004

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AUOMA Program ReviewJuly 21, 2004
Alberta Used Oil Management Association
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Presentation Outline

• History of development of program
• Regulatory framework
• Program administration
• Recovery results
• Highlights and benefits

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Historical Background

• 1988 CPPI commissioned task force at request of
  CCME
• 1991 CPPI presented position paper to national
  workshop in Montreal
• 1992 Alberta began a multi-stakeholder,
  consultative process to develop provincial
  program
• 1993 The AUOMA incorporated on April 23, to
  facilitate management of Pilot Project
  recommended by stakeholders
• 1995 Alberta stakeholders approve a
  comprehensive program recommendation
• 1997 Alberta Government approves Lubricating
  Oil Materials Recycling and Management Regulation

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Programs in Operation (4)
Return to Retail Programs in Operation
EPR Programs in operation
EPR Programs under development
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Program Development

• Formed task force of oil and filter manufacturers
  and sellers
• Consulted with broad stakeholder group
• Worked closely with provincial governments
• Piloted program at six locations in Alberta
• Refined concepts using pilot learnings
• Assisted in drafting of regulation(s)

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Program Design Principles

• Improve collections by paying Return Incentives
  (RI) to Collectors
• Fund through Environmental Handling Charge (EHC)
• Cost borne by product users
• Fair distribution of costs based on sales
• Funds managed by industry
• Minimal market intervention
• Require minimal regulatory support

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Funding Design Principles

• Consistent in all three provinces
• Self financing - not for profit
• No financial penalty to those currently managing
  these products appropriately
• No cross subsidization between products
• i.e. filter used only for filters etc.
• Funds available for special programs if
  collection rates are low
• Cash surplus/shortage to be managed by adjusting
  EHC and RI rates

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Provincial Regulation

• Oil filter first sellers must have a
  stewardship program to sell in province
• Allows option of individual company or
  association to manage program
• Alberta requires all first sellers to register
  with Association Program
• Permits Association to collect and disburse funds
  to support program
• Requires annual plan and report to Government

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Additional Features

• Required to establish a network of collection
  depots
• 53 Eco-Centres in Alberta
• 587 other municipal and commercial collection
  depots
• Depots ultimately self financing
• Collector/Transporters free to establish market
  price for materials
• Designed program with ability to withdraw when no
  longer needed

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Recycling Incentives (RI)

• Designed to provide an incentive to increase
  recycling in all geographic areas of the Province
• Paid to Collector/Transporter
• Oil based on actual volume collected
• Filters based on weight collected
• number estimated using mix of sizes by drum
• Containers based on weight collected

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Environmental Handling Charge (EHC)

• Designed to fund the RI and Public Awareness
  Programs
• Paid by the first seller in province to
  management association
• Can be absorbed in price or added on at retail
  sale
• Not paid on supply sales transactions between
  registered members
• Paid only once on first sale to non-registered
  buyer

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Pre-Program Schematic
DIY End Consumers Farm/Commercial
Industrial
flow
Municipal Recycling Facilities
Municipal Recycling Facilities
Service Stations, Quick Lubes, Mass
Merch.
Farm Agents
Material(s) flow
Resellers
Collectors / Transporters
Collector(s) / Transporter(s)
Approved
First Sellers of Materials
Processors
End uses
End uses
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Program Schematic
DIY End Consumers Farm/Commercial
Industrial
flow
Municipal Recycling Facilities
Eco-Centers and/or MRFs
Service Stations, Quick Lubes, Mass
Merch.
Farm Agents
Material(s) flow
Resellers
Collectors / Transporters
Collector(s) /
Transporter(s)
Approved
Management Association
Government Approved End uses
First Sellers of Materials
Processors
End uses
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Return Incentive (RI) Program
Zone Boundaries
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(RI) Payment System

• Collector/Transporters provided Return Incentives
  (RIs) for used oil materials returned to
  Registered Processors
• (Base Case - Zone 1)
• Lubricating Oil 0.08/L
• Oil Containers 1.09/kg
• Oil Filters 0.68/kg

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(RI) Payment Schedule
Note Used Oil Container Processor RI 0.30/kg
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(EHC) Funding Schedule

• Program funded through Environmental Handling
  Charge (EHC) remitted by Wholesale Suppliers
• Current Rates
• Lubricating Oil 0.05/L
• Oil Containers 0.05/L
• Oil Filters
• lt203 mm 0.50
• gt203 mm 1.00

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Used Oil Material Depots
For location nearest you - www.usedoilrecycling.co
m - 1-888-922-2298
Total Used Oil Material Depots - 640
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Registered Collectors/Transporters/Processors
Note Example only, for complete listing contact
AUOMA at [phone]
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Administration

• Managed by industry elected board
• 6 from industry,
• one provincial government,
• one municipal government,
• one consumer advocate
• One full time Executive Director
• Staff provided by accounting firm
• Accounting firm collects all money (company data
  is secure)

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Oil - very good recovery
Used Oil Program Continues to Grow Steadily as it
Approaches Maturity
Oil Recycled millions of litres
Recovery Rates 96/97 - 56 02/03 - 73
2002/03 Maintain steady growth in collections
through enhanced public education and outreach
programs.
98/99
99/00
00/01
01/02
96/97 EST
02/03 PLAN
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Filters - a solid success
Oil Filter Program Has Reached Maturity (80
recovery)
Filters Recycled millions
Recovery Rates 96/97 - 17 02/03 - 89
2002/03 Fine tune new weight based collection
reconciliation system while maintaining recovery
rate in 80 range.
98/99
99/00
00/01
01/02
02/03 PLAN
96/97 EST
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Containers - growing rapidly
Oil Container Program is our Major Challenge and
Our Primary Focus
Containers Recycled thousands of kilograms
Recovery Rates 96/97 - 7 02/03 - 45
2002/03 Increase recovery rates through
innovative programs resulting from a
comprehensive field study of key industry sectors.
98/99
99/00
00/01
01/02
96/97 EST
02/03 PLAN
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Program Highlights

• Developed and managed by Industry
• All consumers participate equally
• Maintains free market principles
• Comprehensive coverage of products and geographic
  areas
• Backed by government regulation
• Administratively simple
• Designed for easy withdrawal

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Program Benefits

• Converts waste to products with value
• Fosters development of recycling industry
  including new technology
• Improves management of three waste streams
• Promotes landfill diversion
• Integrated across provincial boarders (in
  prairies)
• No government funding
• user pay system

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Recycling Investment Analysis

• If you purchased 1,000.00 of the following
  stocks one year ago, todays value would be
• Nortel - 49.00
• Enron - 16.50
• Worldcom - 5.00 (or less)
• If you purchased 1,000.00 of Molsons (the beer
  not the stock) one year ago, drank all the beer
  and recycled the cans for the 10 cent deposit
• You would have - 214.00
• Investment Advice Drink heavily and Recycle

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Challenges in development

• Potential resistance to EHC fees
• Can look like a tax
• Careful to communicate as industry charge
• Large recyclers were concerned
• Can create new competition
• Need to keep them involved
• Retailers needed system changes
• Allow flexibility to include in price or show
  separate line on cash tape
• Provide adequate lead time to implement

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Challenges in operation

• Locating new large collection facilities
• Benefit vs risk unknown
• High urban land values
• Managing contamination of products
• Contaminated products of reduced value
• Fees paid out based on quantity
• Needed to institute disincentives
• Increasing collection of oil bottles
• Infrastructure for recycling is limited but
  growing

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Keys to success

• Inclusion of three waste streams
• Regulation to level playing field
• Management by industry
• Incentives/disincentives set to drive program in
  right direction
• Right to audit all participants
• Harmonization with adjacent provinces
• Strong public education required

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Top 5 Used Oil Collectors Performance

• For the Period January 1 to March 31, 2003
• Change in Volume Collections

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Used Oil Collectors Performance
Growth in Collections 1998 Top Ten Companies
Growth 1998 2002

• Status of Missing Three
• One Burned Down
• One Sold (Still in Top Ten)
• One Sold (No Longer in Business)
• Note Seven Still in Top Ten

Company 3
Company 5
Company 2
Company 6
Company 1
Company 7
Company 4
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Filter Collectors Performance
Growth in Collections 1998 Top Ten Companies
Growth 1998 2002

• Status of Missing Two
• One Burned Down
• One Sold (No Longer in Business)
• Note Eight Still in Top Ten

Company 3
Company 2
Company 1
Company 6
Company 7
Company 5
Company 8
Company 4
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Container Collectors Performance
Growth in Collections 1998 Top Ten Companies
Growth 1998 2002

• Status of Missing Four
• One US Parent Bankruptcy
• Two Moved Out of Top Ten
• One Sold
• Note Six Still in Top Ten

Company 3
Company 2
Company 6
Company 1
Company 5
Company 4