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Financial Impacts of Transition to Curbside Recycling EPR for producers

    What are the total costs of this financial transition?

    ÉEQ forecasts that the costs producers will have to pay are as follows:

    • • In 2024: $308 million
    • • In 2025: $667 million
    • • In 2026: $622 million

    The increase in these costs can be explained in particular by the following factors:

    • • Increased collection and transport costs;
    • • Increased investment to upgrade sorting centres (MRFs);
    • • Building up the reserve fund.
    How will this be staggered?

    The staggering planned by the Quebec government will be done through :

    • • The 2025 Schedule of Contribution, 60% of which will be due in 2025 (2 instalments) and 40% in 2026.
    What exactly will ÉEQ do with all this money?

    EPR brings new responsibilities for ÉEQ involving additional costs, including:

    • • Setting up a reserve fund;
    • • Gradually extending service to institutional, commercial and industrial sectors (IC&I) – a North American first;
    • • Setting up education and awareness campaigns to encourage citizens on source sorting. To this end, ÉEQ rolled out the Bin Impact campaign at the beginning of 2024.

    Between now and 1 January 2025, these responsibilities will be funded by :

    • • The 2023 Special Producer Financial Participation (Special PFP), which was due in January 2024;
    • • The 2024 Special PFP, which will be payable on October 31, 2024.
    How long will the two systems overlap?

    The financial transition between the Compensation Plan (CP) and EPR runs from 2024 to 2026.

    However, it is important to note that several new responsibilities and charges for ÉEQ, including the gradual extension of service to the IC&I, will be deployed between 2025 and 2030.

    Cost increases are to be expected until 2030, as regulatory responsibilities are added, after which we should see some stabilization and then maturity of the system.

    Why should producers finance this transition if it is the result of a regulatory decision?

    Since 2005 under the CP, and with the principle of EPR in place since 2022, businesses marketing packaged products, containers, and printed paper are responsible under the Act for ensuring the financing of the curbside recycling system, which includes the transition from the CP to EPR.

    What is ÉEQ doing to reduce the financial impact of this transition on producers?

    We know that producers are concerned about this financial transition. Although certain factors, such as inflation and the economic situation, are beyond our control, ÉEQ has several levers to mitigate the increase in curbside recycling costs and, ultimately, stabilize them:

    • • Staggering and moderating the investment needed to upgrade the curbside recycling system;
    • • Bundling contracts with municipalities in order to achieve economies of scale;
    • • Optimize the marketing of materials by centralising sorted volumes;
    • • Identify new obligated producers, particularly in connection with the forthcoming extension of the service to IC&I.

    This will mitigate the impact of increased costs per producer by sharing these costs with a larger pool of producers.

    In practical terms, how will invoicing work during this financial transition?

    Producers will receive 3 types of invoices during this period, namely:

    • • An invoice for the contribution provided for in the Schedule of Contribution, under the CP;
    • • A special PFP as per the ÉEQ policies, under EPR, only applicable for the 2023 and 2024 reports;
    • • A series of 4 annual PFP quarterly invoices: as per the ÉEQ policies, under EPR, from the 1st quarter of 2025.
    When will these invoices be issued?

    Special contribution and PFP invoices will be issued when your 2024 report is submitted.

    Invoices for the 2025 annual PFP will be issued in the autumn of 2024. These will be payable in 4 instalments from the beginning of 2025. Applicable rates will be based on actual reported quantities in this year’s report rather than projections.

    Which invoices will remain once the transition is complete?

    The contribution under the Schedule of Contribution will cease to exist with the end of the CP. The final payment for the 2025 Schedule of Contribution will be made in 2026.

    The Annual PFP will be the only invoice remaining once the transition is complete. It will be payable in 4 instalments (only 1 for producers eligible for a flat fee) each quarter.

    • • Thus, at the beginning of 2026, producers will report their data for the 2025 calendar year and, in autumn 2026, once the rates have been set, they will receive their annual PFP invoice itemized in 4 quarterly instalments, payable in 2027. The amounts paid will be used to fund the curbside recycling system in 2027.
    Is it possible to obtain a concrete estimate of the costs for my company in connection with this transition?

    At this time, ÉEQ has estimates for the overall costs of curbside recycling and is not in a position to provide a precise estimate of the impact of this transition for each producer, as the amount varies according to the type of material marketed by each producer. However, it is still possible to make some very high-level projections by comparing your annual contribution with ÉEQ’s estimate of the change in costs per year to be borne by producers, which is as follows:

    • • 2024 : $308 M
    • • 2025 : $667 M
    • • 2026 : $622 M.

    This would more or less double your costs between 2024 and 2025. However, it is very important to bear in mind that a quick pro rata can give an idea of how much you will have to pay, but is by no means a representative estimate of the final invoice.

    Once the transition is complete, when can my company expect a reduction in its invoices?

    Based on current projections, producers can expect to see a stabilization of curbside recycling in the early 2030s, once the roll-out of all our new responsibilities has been completed.

    One of the objectives of EPR is to optimize the system to, among other things, reduce costs for producers by relying on economies of scale. Isn’t it contradictory that these costs are increasing as we move into EPR?

    The increase in costs up to 2030 is due, among other things, to the transition period’s overlap and to the expansion of ÉEQ’s responsibilities.

    To achieve economies of scale, we must first have a solid system for curbside recycling: investments must be made to enable sorting centers to achieve the desired levels of performance in particular.

    Despite this, a period of stabilization is expected in the early 2030s and it is expected that reductions in costs per tonne will start to materialize from 2034 onwards.

    Will expanding the service to IC&I have an impact on the financial transition?

    Extending service to IC&I will have a significant financial impact on curbside recycling costs starting in 2027, when the IC&I will have to be covered.

    ÉEQ is currently working to quantify this impact and will share the results with producers once this exercise is completed. It should be noted that the costs currently estimated do not include the extension of service to IC&I. New producers will be obligated to and will share these costs with existing ÉEQ producers.

    What is your estimate of the impact of extending service to IC&I on system costs and producers’ bills?

    ÉEQ is well aware of the significant impact that extending service to IC&I will have on costs and, ultimately, on PFP. This is a new business model for ÉEQ. ÉEQ is currently working to quantify this impact and will communicate them with producers in 2025.

    Could ÉEQ not have spread the parallel funding of the two systems over a longer period to reduce the financial pressure on producers?

    This decision comes from the Quebec government, not our organization. The overlap in the funding of the two systems between 2024 and 2026 is set out in the text of the Regulation on the CP.

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