Financing Workgroup

1
Financing Workgroup

• Scott Cassel, Facilitator, PSI
• Heidi Sanborn, R3 Consulting Group/PSI
• Dave Darling and Alison Keane, NPCA
• Lesli Daniel, Sonoma County CA
• Shirley Willd-Wagner, CIWMB
• Leslie Wilson, SWMCB, MN
• Victoria Reinhardt, Ramsey Co. Commissioner, MN
• Barry Elman, EPA
• Robert Wendoll, Dunn-Edwards Corporation

2
The MOU States.

• This project will prepare PPSI participants
  for future discussions on financing related to
  the development of a nationally coordinated paint
  management system. The PSI team, with support
  from PPSI participants, will research
  transitional and long-term financing models and
  evaluate their potential application in the
  financing discussions that will resume October 1,
  2006.

3
Workgroup Goal

• Prepare for a discussion on how to finance
  projects by
• Conducting research on financing options.
• Prepare a list of options and a recommendation
  for a fair funding scenario for a future
  nationally coordinated paint management system.

4
Basic Financing Models

• Existing financing mechanisms
• Government mandates
• Voluntary industry programs

5
Existing financing mechanisms

• General fund revenue (property taxes)
• Solid waste bonds
• Solid waste tipping fees/surcharges
• End of life charges to consumer
• Garbage bag fees (Pay-as-you-throw)

6
Government Mandates

• Producer Pays for Product Management (producer
  internalizes cost)
• Producer Pays for Product Management (producer
  externalizes cost via fees)
• Split Payment for Product Management
• Advanced Recycling Fee
• Financial Incentive

7
Voluntary Systems

• Financial Incentive
• Voluntary Product Management Programs

8
Producer Pays for Product Management
(internalizes cost)

• Requires manufacturers to finance and organize
  the collection, transportation, and recycling of
  their equivalent share of covered products
  (including their equivalent share of orphan
  products)
• Program invisible (free) to consumers.
• Intended to drive design for the environment.
• Includes payments by manufacturers into fund on
  first time sale or distribution into jurisdiction
  if no visible fee is charged.
• Example WA State Electronics

9
Producer Pays for Product Management
(externalizes cost)

• Requires manufacturers to finance and organize
  the collection, transportation, and recycling of
  their equivalent share of covered products
  (including their equivalent share of orphan
  products).
• Manufacturers pass on a visible fee through the
  supply chaincharged to consumer at point of
  purchase.
• Includes payments by manufacturers into fund on
  first time sale or distribution into jurisdiction
  if visible fee is charged.
• Example British Columbia, Canada

10
Split Payment for Product Management

• Various parties pay for collection and processing
  of covered products.
• Example municipalities and/or consumers pay for
  collection of covered products and delivery to
  points of consolidation, while manufacturers pay
  to transport and recycle their branded products
  (and a pro-rata share of orphan products) from
  the point of consolidation.
• Example Maine Electronics Law

11
Advanced Recycling Fee

• Government sets a specific visible fee on a
  product that is paid at retail.
• Might allow varying fees to be placed on products
  depending on size or weight.
• Funds may go to a government controlled fund or a
  TPO.
• Covers costs of collection, transportation, and
  processing.
• Examples
• California Electronics Law
• Used Oil laws

12
Government MandateFinancial Incentive

• Requires the manufacturer to provide a financial
  incentive to encourage the return of the used
  product or package, which might include a
  deposit/refund.
• Often called bounties
• Includes Free Market System
• Example Maine Thermostat Law

13
VoluntaryFinancial Incentive

• Manufacturers or retailers set up a voluntary
  system to provide a financial incentive for the
  return of the product.
• Includes free computer company take-back if
  purchase of new computer
• Examples
• National Auto Switch Agreement
• MA Auto Battery Core Charge

14
Voluntary Product Management Programs

• Manufacturers voluntarily set up a system for
  collection, transportation, and recycling of
  their own products.
• Examples
• Thermostat Recycling Corporation
• Rechargeable Battery Recycling Corporation

15
Work Completed To Date

• Formed Workgroup
• Established expectations for workgroup
• Identified financing categories draft
• Identified financing systems that are examples
  under each category.
• Developed 6 fact sheets

16
Next Steps Research on Financing Options

• Add Steering Committee members
• Raise money to complete project
• Research the possible options for a national
  financing strategy should it be needed
• Revise financing system categories ? revised
  chart

17
Next Steps Research on Financing Options

• Finish all fact sheets
• Develop pros and cons for options
• Develop criteria to evaluate systems
• Narrow systems of interest
• Develop recommendations on model financing
  strategies that may be starting point for
  discussions to resume October 1, 2006.