3. Proposed Approach - EPR Regulations

• 3.1 Risk Management Objective
• 3.2 Scope of the Regulations
  • 3.2.1 Designated Substances
  • 3.2.2 Designated Equipment
    • 3.2.2.1 Rationale
    • 3.2.2.2 Equipment Types
• 3.3 Regulated Community
• 3.4 Administration of EPR Programs
  • 3.4.1 Producer Responsibility Organization
  • 3.4.2 Fees and Levies
  • 3.4.3 Collection
• 3.5 Elements of the Plan Required for a Stewardship Program
• 3.6 Declarations
• 3.7 Reporting
• 3.8 Performance Indicators and Targets

The likelihood that ODP also affect the climate system was first identified in the 1970s, and the global warming effectiveness of halocarbons, including HFC, has been further elucidated over the past three decades. Recently, both the Environmental Assessment Panel for the Montreal Protocol and the Intergovernmental Panel on Climate Change stated that there is conclusive scientific evidence that ozone depletion and climate change are linked.

Some ozone-depleting chemicals, for example CFC, and their replacements such as HCFC and HFC ^[1] (which are not ODP) are powerful greenhouse gases. The accumulation of greenhouse gases, including ODP, increases warming of the lower atmosphere, which leads, in turn, to the cooling of the stratosphere. Stratospheric cooling hampers the formation of ozone and favours the development of polar ozone holes. Studies suggest that within two decades climate change may exceed CFC as the principal cause of overall ozone loss.

By prescribing stewardship requirements for producers to manage the end-of-life of designated substances, the proposed Regulations aim to reduce or prevent emissions of ODP and their halocarbon alternatives from designated equipment. These measures would ultimately minimize the immediate or long-term harmful effects of these substances on the environment.

The proposed Regulations would apply to refrigerants that contain CFC, HCFC, HFC and PFC ^[2] (hereinafter referred to as designated refrigerants). The use of CFC, HCFC, HFC and PFC in other sectors--such as pesticide, solvent, fire extinguishing--would not be covered by the proposed Regulations. It is not expected that an EPR program will be developed for halons. Industry has indicated that Canada has enough halon to meet its own critical needs; under current regulations, no halon is being imported into Canada.

3.2.2.1 Rationale

The easiest targets are applications where most ODP/halocarbons can be recovered with maximum convenience and a relatively low level of effort. This is particularly the case with stationary and mobile refrigeration and air conditioning where an established and mature installation and maintenance system can help maximize collection and proper disposal. Consequently, the proposed Regulations would apply to stationary and mobile refrigeration and air-conditioning systems that use designated refrigerants, for program longevity and maximum environmental benefit.

At this time, the proposed Regulations would not target ODP/halocarbons used as blowing agents in insulating foams, used in domestic refrigeration appliances (refrigerators and freezers), or used in room air conditioners (window-mounted, portable and through-the-wall units) and domestic heat-pump dehumidifiers. Currently, appliance recycling efforts are mainly run by municipalities, with the process for appliance collection and recycling/disposal varying significantly from one to the other. The CCME Canada-Wide Action Plan for EPR does, however, identify the management of used appliances and their associated ODP through EPR programs; therefore, the addition of this sector in the EPR Regulations may be considered in the longer term. When such programs are established, consideration should be given to managing the foams as well as the ODP refrigerant. Environment Canada will continue its work with provinces/municipalities to explore ways to improve on the collection, use transport and destruction of refrigerants. In addition, the environmental benefits will be greater with the recovery of foam blowing agents--there may be two to five times more ODP in foam blowing agents than in the refrigerant charge.

3.2.2.2 Equipment Types

The Regulations would include the following equipment (hereinafter referred to as designated equipment), including those put onto the market prior to the implementation of the stewardship program:

a) Stationary air conditioning equipment (residential, commercial and institutional)

For the purpose of the Regulations, this would include equipment that uses vapour-compressor cycle technology with a designated refrigerant, other than a mobile air conditioner, to change humidity levels, temperature or quality of air. This equipment is meant to provide comfort for occupants in a building (residential, commercial or institutional) by changing the indoor air temperature and/or the humidity. The various applications, equipment and products included in residential and commercial/institutional air conditioning and heating can be classified in three groups: air conditioners/heat pumps ^[3], chillers and water-heating heat pumps.

Air conditioners and air-heating heat pumps generally fall into four distinct categories:

• Window-mounted, portable and through-the-wall;
• Non-ducted split ^[4] residential and commercial;
• Ducted residential split and single packaged ^[5];
• Ducted commercial split and packaged.

The first category can be referred to as room air conditioners that are used to cool up to three rooms. The remaining three categories can be referred to as central air conditioners that are used to cool an entire living area. The Regulations would only capture stationary air conditioning equipment that is serviced by a technician at end-of-life and would exclude equipment that can be removed and disposed of by the owner, such as room air conditioners (window-mounted, portable and through-the-wall domestic units) and domestic heat-pump dehumidifiers ^[6].

Chillers combined with air handling and distribution systems frequently provide comfort air conditioning in large commercial/institutional buildings (e.g., hotels, offices, hospitals and universities) and to a lesser extent in large multi-family residential buildings.

Water-heating heat pumps are heat pumps for heating water, such as for swimming pools.

b) Mobile air conditioning equipment

For the purpose of the Regulations, this would be any mechanical vapour compression device driven by an engine that provides cooling principally for the operator or passengers of the vehicle and that contains a designated refrigerant. The vehicles, whether civil or military, that would be captured by the Regulations include, but are not limited to, automobiles, subway trains, buses, trucks, rail cars, airplanes, agricultural equipment, underground mining equipment, large overhead cranes and centrifugal chillers on ocean-going ships.

c) Stationary refrigeration equipment (commercial, institutional and industrial)

For the purpose of the Regulations, this would be any device that uses vapour-compressor cycle technology with a designated refrigerant, other than mobile refrigeration equipment or residential refrigeration (refrigerators and freezers). This would include, but not necessarily be limited to:

• Industrial process refrigeration systems to cool process streams in the chemical, food processing, pharmaceutical, petrochemical and manufacturing industries. It also includes industrial ice machines, equipment used directly in the generation of electricity, and ice rinks.
• Commercial refrigeration, which includes (i) cold storage warehouses to store meat, produce, dairy products and other perishable goods before and after food processing; (ii) retail food systems to refrigerate food in commercial retail establishments; and (iii) ice makers, which are used in commercial establishments to produce ice for consumer use (in hotels, restaurants and convenience stores).

d) Mobile refrigeration equipment

For the purpose of the Regulations, this would be any device that uses vapour-compressor cycle technology with a designated refrigerant and that is installed in, normally operates in, on or in conjunction with, or is attached to, a means of transportation. This would include, but not necessarily be limited to, refrigerated ship holds, truck trailers, railway freight cars and other shipping containers, and air transport.

The proposed Regulations would require manufacturers, importers, distributors and reclaimers of virgin, used, reclaimed, recycled or recovered designated refrigerants to:

• Prepare and implement a plan for a stewardship program designed to collect, transport and dispose of designated refrigerant that meets standards specified in the Regulations, including the establishment of a Producer Responsibility Organizations (PRO) or Producer Responsibility Organizations (PRO) to fund and manage the program and set performance targets; or
• Join and participate in an existing stewardship program for which such a plan was prepared.

It is proposed that industry would take the lead on setting up and administering programs, with third party auditing. A PRO or PRO would be established and be responsible for funding and managing the stewardship program, including reporting to Environment Canada. Producers could establish their own stewardship program, but they would be subject to the same program requirements as others in the industry that might have chosen to join an established PRO.

The proposed Regulations would not prescribe requirements concerning levies or fees as part of the program. Any monies raised by an EPR program would be collected and managed by the regulated community, not by government, and would be directly linked to and reflect actual costs associated with the program objectives and mandate, including the sound collection and disposal of designated refrigerants. Industry would have the option of making fees and levies visible to the consumer or incorporating them into the overall price and not having them explicitly visible at the point of purchase.

The Regulations will include seller take-back provisions for bulk designated refrigerants. The Regulations may include some general provisions related to collection of designated refrigerants and equipment, including ensuring that remote locations are covered by the EPR programs.

The Regulations would require that a plan for a stewardship program be prepared and would specify the elements of the plan, including:

1. The scope of the EPR program, including equipment, substance(s), geographical area (including any special provisions for remote or rural areas included in the scope of the program), etc.;
2. The governance of the program, including membership of the PRO;
3. Identification of the program partners and their responsibilities (e.g., dissemination of information, collection of refrigerant or equipment, transportation);
4. The operational aspects of the EPR program, including the collection, storage, transport, reuse, recycling or recovery and destruction of the substances listed. The information to be provided includes:
   1. number and location of the facilities and/or intermediaries that will be used in the implementation of the program, including drop-off depots, collection and destruction facilities;
   2. container systems to be used, including testing of containers to verify content;
   3. system to track quantities of refrigerant through all steps of the program up to destruction; and
   4. standards to be followed;
5. A description of the framework of the system that will be used for raising funds to underwrite the EPR program, including identification of any levies;
6. Identification of partnerships with other initiatives, whether stewardship or public engagement programs, where applicable;
7. Any incentives to be used to increase the performance of the program, including procurement policies, agreements with specific stakeholders, etc.;
8. Identification of the third party auditor(s) that will perform the annual operational, financial and environmental audits;
9. The methodology that will be used to measure, monitor and report on program performance, including identification of performance indicators and targets;
10. The communications strategy to increase consumer education on and awareness of the stewardship program;
11. The rationale for choosing to reuse, recycle, recover, reclaim or destroy the designated refrigerant in order to achieve environmentally sound management; and
12. Timelines for the planning and implementation of the stewardship program.

The Regulations would not require Environment Canada to approve the stewardship plan; however, they will stipulate that the plan for a stewardship program be made available to Environment Canada upon request.

The Regulations would require the submittal by each PRO of a declaration of preparation to the effect that a plan has been prepared. This declaration would need to be submitted within specified timelines using the appropriate form, and would need to contain the specified information. The Regulations would also require the submittal of a declaration of implementation within specified timelines. These declarations will contain the information necessary to allow Environment Canada to monitor compliance with the Regulations.

Every PRO will be required to prepare an annual public report containing information set out in the Regulations with respect to the operation and performance of the stewardship program. This could include:

• Data on the volume of each bulk substance collected, reused, recycled, recovered or destroyed in the previous calendar year;
• The number and location of collection facilities, and any changes in the number and location of collection facilities from the previous report;
• A description of communication/education materials and strategies;
• Independently audited financial statements;
• Results of the operational audit, including a comparison of the plan's performance for the year with the performance requirements and targets in the Regulations;
• Results of the environmental audit of collection and destruction facilities; and
• If the program does not meet the target for one or more indicators, measures to be taken to improve the performance of the program to meet the targets.

Stewardship programs should include measurable and quantifiable targets established at the program outset. Performance targets and schedules will be determined during the development of the EPR Regulations. Indicators that could be used to measure performance are:

1. Awareness: An EPR program can only be effective if the program's target community is aware of and actively participates in it. The proposed indicator would be the percentage of the population in a targeted community of participants aware of the program. This indicator requires the use of a survey tool to collect adequate information. Statistical methods can be applied to reduce the number of completed surveys needed for representative results.
2. Participation and accessibility: Participation and accessibility have strong direct impacts on the collection and recovery rates. The participation rate is expressed as the number of program participants relative to the target community that the EPR program serves. Prior to determining the participation rate, the program's target community must be defined and quantified. Programs that operate drop-off depots may have difficulty determining the number of program participants. In such cases it is possible to use accessibility indicators instead, although these are not as informative as the participation rate. There are two ways in which the accessibility of drop-off depots can be measured:
   1. By identifying the population within a certain proximity to the drop-off depot. As a first step, the acceptable travel distance to the drop-off location must be determined. Then it is possible to determine the population within that distance.
   2. By identifying the average travel distance to a drop-off depot.
3. Product collection: This is one of the principal objectives for all PRO and is a key performance indicator. There are three product collection indicators that can be used, namely absolute collection, collection rate and absolute collection per capita. In some cases, it may be difficult to determine how much of the equipment is eligible for collection, particularly for products with a long life expectancy (e.g., automobiles) or products that are no longer sold (e.g., CFC). In that case, absolute collection and/or absolute collection per capita could be used as the indicators. Absolute collection refers to the total amount of refrigerant collected presented in terms of mass or volume. Absolute collection per capita is the percentage of product collected relative to the size of the target community.
4. Post-collection management: This describes how PRO manage products in the post-consumer phase of the product cycle and where the products eventually end up. Data and information should include how a program manages collected product, and product fate in terms of recycling, reclamation or destruction. This indicator can be expressed in absolute quantities (mass or volume) and/or percentage of collected refrigerant directed to each of the streams.
5. Operational efficiency: The indicators in this category often draw upon internal financial indicators that are used to benchmark performance and to identify areas for improvement. There are two possible indicators for operational efficiency: distribution of expenses and cost per unit of collected material. The distribution of expenses indicator requires reporting on the relative allocation of funds to the different functions of the organization. It can be expressed in terms of absolute dollar values or a percentage of overall expense. Although it provides a degree of transparency that helps to demonstrate the program's accountability to stakeholders, it is of limited use when reported for a single year only, or when it is used to compare different programs. A program with a geographically dispersed target community may incur higher costs for product collection than one operating in a big city.
6. Quality of service: The indicators in this category provide a measure of how well programs are serving their intended target communities and program partners. Most PRO act as intermediaries in the end-of-life management of products. In fulfilling this role, they have two kinds of clients: the target community they serve through material collection, and program partners for post-collection activities. The usual indicator is target community and program partner satisfaction. One approach to measure this satisfaction is to get a one-time snapshot of target community and program partner satisfaction rates--this requires a survey. The other approach is to develop an ongoing measurement program. This can be achieved by combining routine program activities (e.g., invoicing for customers, regular meetings with program partners) with level of satisfaction questions. In the event that a true measure of satisfaction is not possible, the number and nature of complaints can be used--it simply requires counting and documenting the number and nature of complaints.
7. Management performance: A broad range of management performance indicators exist, especially for financial performance management. The usual indicators are progress against business plan goals and/or targets and regulatory non-compliance.

^[1] It should be noted that HFC, contrary to CFC and HCFC, are not ODS controlled by the Montreal Protocol. However, they are greenhouse gases covered under the Kyoto Protocol. The Montreal Protocol and Kyoto Protocol are separate treaties that deal with interlinked issues, therefore providing opportunities to address climate change issues in a global integrated manner and achieve dual benefits.

^[2] All these substances are listed in Schedule 1 of CEPA 1999.

^[3] A heat pump is an electrical device similar to an air conditioner--it extracts heat from one place and transfers it to another. The main difference with air conditioners is that the heat pump cycle is fully reversible, and heat pumps can provide year-round climate control for a building--heating in winter, and cooling and dehumidifying in summer.

^[4] A split system consists of indoor and outdoor sections. The indoor heat exchanger, or coil, mounts above the furnace, inside the ducting. The outdoor section contains the remaining components, and the two sections are joined by refrigerant lines connecting the indoor coil to the refrigeration components in the outdoor section.

^[5] A single-package central air conditioner contains all the components and generally mounts through the wall or on the roof.

^[6] Heat-pump dehumidifiers work in the same manner as air conditioners/heat pumps, but they reheat the air before returning it to the room. They remove humidity, or moisture, from the air using vapour-compressor cycle technology. Heat-pump dehumidifiers blow warm air onto cold metal coils, and the resulting water drips into a bucket. The resulting cold air is then passed over warm coils to bring it back to room temperature.