Ontario’s plan to transfer recycling costs to companies could raise prices for consumers, experts say

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Ontario consumers can expect to pay more for packaged products as the province moves to pass recycling costs from cities to companies that produce waste, industry experts say.

Canada’s largest province on Friday named a special adviser on plastic waste and recycling to determine how quickly it can fully transfer recycling costs from municipalities to companies that generate plastic- and paper-based packaging and containers. It would join British Columbia as the only other province where large food retailers and consumer packaged-goods companies fully cover recycling costs, a system known as extended producer responsibility, or EPR.

Recycling experts and some retailers hailed the announcement as a progressive move for the environment. But even though consumers would no longer be paying to recycle plastics and disposable packaging through their municipal taxes, analysts said they could see those costs show up at the point of purchase.

“If choosing other materials requires more expensive packaging, eventually that’s going to find its way into your grocery bill,” said Jeff Doucette, a Calgary-based sales consultant who works with packaged-goods companies. “Nothing’s free. There will always be that trade-off.”

Currently in Ontario, a non-profit organization called Stewardship Ontario pays half the cost of blue-box programs and municipalities pay the other half. Stewardship Ontario is composed of Canadian Tire Corp. Ltd., Unilever Canada Inc., Maple Leaf Foods Inc. and other large companies, and it collects fees from plastic-producing businesses. It pegs annual costs to companies at about $100-million.

Stewardship Ontario did not return a request for more details about how an EPR program in Ontario might be financed.

But in B.C., whose EPR program began in 1994, consumers often pay higher costs, according to Harvinder Aujala, director of policy and communications with the Recycling Council of British Columbia.

Return-It B.C., a product-stewardship non-profit, charges manufacturers to sell their products in the province, and those costs are often passed on to distributors and retailers, and finally trickle down to consumers, Ms. Aujala said.

Retailers can embed the recycling cost in the price of the product, or display it on the receipt under a name such as an eco-fee or an environmental handling fee. “It educates the consumer around the costs of recycling that particular item,” Ms. Aujala said.

Since recycling agencies know exactly what kind of packaging is sold in B.C., they’re able to plan for the items that will eventually make their way back to recycling facilities. The result is recycled materials are primarily sold locally, rather than shipped to be processed overseas, Ms. Aujala said.

“I think when you have an EPR program, it offers more stability and more consistent markets for your materials,” she said.

Large-scale retailers Walmart Canada, Sobeys Inc., Metro Inc., Maple Leaf Foods, Unilever Canada and Canadian Tire either declined to comment or did not return requests for comment on Ontario’s plan. Loblaw Cos. Ltd. and IKEA Canada both said they support Ontario’s initiative and told The Globe and Mail it would not affect their prices.

“This kind of system has been shown to drive innovation, help consumers recycle, keep packaging out of the environment and support a circular economy,” Kevin Groh, Loblaw’s senior vice-president of corporate affairs, said in a statement.

Melissa Mirowski, sustainability leader with IKEA Canada, said the EPR encourages “circular” business models, where materials are designed to last longer.

Ontario Environment Minister Rod Phillips and other advocates say EPR creates incentives for companies to design packaging that is easier to recycle and would also allow for a common list of acceptable materials for blue boxes across the province.

But Sylvain Charlebois, a professor in food distribution and policy and scientific director of Dalhousie University’s Agri-Food Analytics Lab, said major transitions in product design often come at a cost to consumers.

“Plastics are there for a reason. They have kept food safe and kept prices lower,” he said. “Everyone wants governments and the industry to solve this issue, but no one wants to pay for it,” he said, referencing a recent study he was involved in that suggested shoppers prefer green alternatives to single-use packaging, but don’t want to pay a premium for it.

Mr. Charlebois added that if Ontario shifts to EPR, more companies might come up with their own packaging reuse systems and avoid municipal recycling programs, and associated fees, altogether.

One example is Loblaw’s Loop program being tested in the Toronto area. The store will deliver food in branded packaging, and, when customers make a request online, workers will return to pick it up, wash it and reuse it. Loblaw is billing it as the milk-man model adapted for the 21st century.

As Canada’s largest province, Ontario’s move to join B.C. in implementing EPR could have ripple effects across the country. Mr. Doucette says he thinks that if large retailers find more ecofriendly packaging options to sell in Ontario, it would be easy for them to use those in other Canadian markets.

“A lot of brands want to be seen as doing the right thing now,” Mr. Doucette said. “I don’t think you’re going to see anyone jump up and say ‘I’m against this.’”