Beer can battle: Inside a war over recycling in B.C.

Open this photo in gallery:

A battle over the collection of beer cans is building in B.C., spurring altercations at depots as consumers are caught in the middle of a dispute that exposes the underbelly of the recycling industry.

Two B.C. stewardship organizations are fighting over who gets to manage beer cans and count them toward their recycling targets. The Brewers' Recycled Container Collection Council (BRCCC) is accusing another not-for-profit, Encorp Pacific, of “anti-competitive” and “predatory” behaviour that is redirecting beer cans from the council’s recycling program into Encorp’s. The BRCCC claims that Encorp is trying to destroy its program and force beer companies to come under Encorp’s tent.

Encorp, in turn, says it had no choice but to launch a six-month pilot project in July and start collecting aluminum beer cans. The organization says consumers regularly combine their beer cans with other aluminum empties when they drop off their recyclables to depots that have contracts with Encorp and not with the BRCCC. To fund the handling of alcoholic beverage cans for which they are not paid handling fees, some of those depots are withholding a portion of the 10-cent deposit that consumers are supposed to get for each returned can.

Encorp says this so-called deposit discounting is widespread and has led to a rash of consumer complaints. The organization told The Globe that clashes over shortchanged refunds at B.C. depots have in some instances become violent, with one customer brandishing a pellet gun in Terrace and another wielding a knife in Burnaby. The dispute between the two industry organizations has become so heated that Encorp at one point threatened to crush refillable glass beer bottles left at its contracted depots and then send the BRCCC a bill for the cost of destruction.

B.C. is home to a world-renowned extended producer responsibility (EPR) system, which requires companies to fund and manage the collection and recycling of their own waste. EPR is the way of the future for recycling, with a commitment from Ottawa just last week that it will work with the provinces and territories toward a national EPR framework aimed at reducing the amount of plastic waste that ends up in Canadian landfills and waterways.

The conflict over beer cans in a province with a model EPR approach illustrates the challenges that may lie ahead for other jurisdictions as they create or expand stewardship recycling programs. B.C. is in the midst of reviewing its recycling regulations, with an eye to expanding products captured under EPR and exploring other waste-reduction initiatives.

Depending on the EPR program and stewardship plan, producers typically pay fees based on the weight or unit count and on the type of material they put into the market. Some stewardship programs are also funded by unredeemed deposits and container recycling fees charged to consumers at the point of sale. The total amount of packaging that a stewardship organization creates and sells is compared to the total amount that it collects.

Under B.C.'s current regulations, producer-responsibility organizations must submit stewardship plans for government approval. The Ministry of Environment and Climate Change must be satisfied that the plan can achieve a 75-per-cent recovery rate per material category (paper, plastic, aluminum, etc.) over a reasonable period of time. Stewardship organizations are required to report these recovery rates to the province annually.

The brewers' council has asked the provincial environment ministry to step in and end Encorp’s beer-can pilot program, but says its complaints have so far gone unaddressed. The council has also registered its concerns regarding Encorp’s proposed stewardship plan for 2020-2024, which seeks to formalize its management of beer cans.

Encorp’s president and chief executive officer, Allen Langdon, said the organization is not asking the depots in its pilot to distinguish between alcoholic beverage cans and non-alcoholic beverage cans. This means that Encorp will count beer cans toward its recovery rate, even though the beer cans were not sold by any of its stewards. By collecting cans that its members did not produce, Encorp will at least temporarily inflate its recovery rate for aluminum and, in turn, its overall recovery rate. Mr. Langdon said this is only true for the pilot period, and that Encorp has long met its 75-per-cent recovery target for aluminum cans, without any help from beer empties.

Chris Busuttil, who spent nearly three decades at Canada’s Competition Bureau and has advised provinces and stewardship agencies on matters of competition under EPR, said the B.C. government could seek the advice of the federal bureau on whether any anti-competitive behaviour is taking place. “They’re slinging these accusations at each other, but at a 30,000-foot level, they’re competing for a commodity, which is aluminum cans,” Mr. Busuttil said. “This will have to be sorted out at the provincial government level, and they’ll need to go through the smoke and mirrors to see if there is actual predation going on here.”

The BRCCC represents more than 200 brewers, including craft breweries and major corporations like Molson Coors Canada Inc. and Labatt Brewing Company Ltd. It manages the collection of aluminum alcohol cans through a network of contracted depots and retail sites, and runs a refillable glass bottle program. Each can and bottle carries a 10-cent deposit that consumers can recoup when they return the containers for recycling or reuse. The council recovers 91 per cent of the packaging that its producers put into the marketplace – one of the highest recovery rates of any stewardship program in North America.

Encorp, which is better known in B.C. under the banner Return-It, represents over 350 brands such as Coca-Cola Canada Bottling Ltd. and Walmart Canada Corp. Its core business is beverage-container management. As of earlier this month, all ready-to-drink beverage containers, no matter the size, carry a 10-cent deposit. The corporation has an overall recovery rate of 78 per cent, with aluminum performing far better than materials such as polycoated cartons and stand-up pouches.

Like the BRCCC, Encorp has a network of contracted depots that collect beverage containers and return deposits to consumers. Some Encorp depots also have commercial agreements with the brewers' council and collect beer cans as well. In those instances, the depots separate the beer cans from the other returned materials. The empties are counted toward the BRCCC’s recovery rate. But in cases where the depot only has a contract with Encorp, depot staff can either turn away the beer cans or accept them even though they’re not being paid to handle the beer cans. Typically, a BRCCC-contracted logistics agent will then pick up the empties.

Encorp estimates that approximately 150 million alcoholic beverage cans are subject to discounted deposits across nearly 100 of its 168 contracted depots. Since launching the pilot program at 70 depots, discounting at participating locations has been eliminated, Mr. Langdon said. The council describes Encorp’s claims of widespread discounting as “specious and unsubstantiated" – a convenient excuse to justify its actions and gain public support.

“They’re attacking us and trying to undermine our system in order to mask their own shortcomings," said Rachel Morier, chair and secretary of the BRCCC. “We believe that Encorp is essentially using beer cans to buffer their recovery rates for non-beer containers.” She also expressed concern that consumer deposits for non-beer containers are being used to fund the pilot collection of beer cans. That money, she said, should instead go toward improving the recovery rate for containers already in the Encorp program.

In a July 2 letter to B.C. Environment Minister George Heyman, obtained by The Globe, the brewers' council made the case that the pilot program runs contrary to the province’s recycling regulations. In a subsequent letter to the environment ministry’s director of EPR, dated Sept. 4, the council said the pilot program changed depot practices overnight. Encorp, it said, appears to be “consolidating its position to become the sole buyer of depots services" and is attempting to edge the council out of the depot network altogether.

Mr. Langdon said Encorp’s approved stewardship plan specifically references aluminum cans as a material for collection, and the province’s recycling regulation makes no distinction between alcohol and non-alcohol aluminum cans. He added that implementing an operational pilot program doesn’t require ministry approval.

“The BRCCC is trying to come across as the victim, but to us, the victim is the consumer,” he said. “We’ve been trying to get the council to address the issue of deposit discounting for several years, but they’ve basically ignored us.” He said that by Encorp collecting beer cans, its depots that don’t have contracts with the brewers' council will get fairly paid.

Due to the upcoming provincial election on Oct. 24 and the rules limiting media communications to matters of health and public safety, Mr. Heyman’s office said it couldn’t comment on the matter. In an e-mail, the B.C. NDP campaign office noted the government is reviewing recycling regulations. Consultations on the review close next month.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.