Comments on ERO Registry…

Comments on ERO Registry Number: 019-0048

Regulations for Recycling of Electrical and Electronic Equipment (EEE) and Batteries under the Resource Recovery and Circular Economy Act, 2016

June 23, 2019

Krista Friesen
Resource Recovery Policy Branch
40 St. Clair Avenue West, 8th floor
Toronto, ON M4V 1M2

The Ontario Automotive Recyclers Association (OARA) is a voluntary industry association representing 115 professional automotive recyclers across the province. Formed in 1992, OARA Members have been at the forefront of the industry, working with governments, manufacturers, repairers, vendors and allied industries to bring responsible progress to the industry. Our Members are all audited to the Canadian Auto Recyclers Environmental Code (CAREC), developed for Environment Canada for the National Vehicle Scrappage Program. They are also all registered as End-of-Life Vehicle Waste Disposal Sites on the Ministry’s Environmental Activity and Sector Registry (EASR).

OARA Members process end-of-life vehicles (ELVs) for parts reuse and materials recycling, managing the waste byproducts from the collection of these resources in an environmentally responsible manner.

One of the items managed that exists within every vehicle is a large motive battery – almost always a lead acid battery (LAB), and increasingly commonly an advanced technology battery for energy storage in a hybrid or electric vehicle (EV). It is from the perspective of these two items that we have expertise and will provide comments.

We believe that both LABs and hybrid/EV batteries should be exempted from the definition of batteries as a designated class of material within this Regulation.

Our recommendation for exemption is due to the stage in the marketplace development for the responsible management of these resources.

LABs have generally been acknowledged worldwide, and Ontario is certainly no exception, as the most recycled consumer product. They have an extremely high rate of recovery, re-use and recycling, so much so that LABs have value at their end of life and are much sought after by all segments of the automotive and recycling market.

Hybrid/EV batteries are at the other end of the marketplace development spectrum – they are emerging as a significant segment of the automotive market, but the changing technology and chemistry make predictions on where a steady state will finalize are years away. They are entering the ELV marketplace, our industry is beginning to deal with them, but we are far from understanding completely which have positive value and which have negative value. Placing regulations on them that force the marketplace in one direction or another with one measurement tool will stifle innovation and take Ontario out of contention as a place where businesses and technologies can develop. It is too early in the development of the product(s) to define what the post-use marketplace and economies will look like.

Lead Acid Batteries
The current research shared by the Canadian Battery Association (CBA) indicate that LABs are very well managed with 2018 Ontario statistics for LABs at:

Sales: 67,600,000kg
Recovery Rate: 103.5%;
Diversion Rate: 99.97%;
Remanufacturing Cycle: approximately 60 days
Recyclability: 99% lead and plastic casing recycled;
100% Plastic Separators used for energy recovery;
100% Acid recycled or reused (fertilizer)

Our Members, across the Province, are recovering for re-use approximately 50% of the LABs they encounter in ELVs. They generally sell these to the public and repairers at 50% of the price of a new battery. The remaining batteries are all sent for recycling. They receive compensation from the recycler of $10-$15, with the price fluctuating based on the commodity value of lead. For every new battery they sell

The draft Regulations for battery stewardship are modelled on the regulations for scrap tires in the Province. Taking a similar regulatory approach makes sense and is efficient from the perspective of drafting of regulations. However, the products that the regulations are stewarding are completely different. Tires, after reuse options are utilized, have insufficient value to sustain their collection, transportation, processing and re-marketing as crumb. Hence the need for external money to enter the system to reward positive behavior. Pre-OTS, tires were dumped, collectors were faced with the cost to proper manage a waste, and the system benefited from intervention. LABs do not suffer from the same conditions – they have value.

Standards regarding collection, storage, transportation, processing are required, but they are already in place. The EASR standards for the oversight of all ELV processors in Ontario exist and they require proper battering handling and management. Introducing another set of standards, even if by reference to EASR, has the potential to undermine the management of the entire ELV, which has infinitely larger consequences for environmental harm.

Waste Diversion Ontario (WDO) undertook a comprehensive study of LABs in 2009 entitled Management of Vehicle Lead Acid Batteries in Ontario. This study concluded LABs should be excluded from the Municipal Hazardous or Special Waste Program at that time. We are unaware of any studies, changes in the product or industry infrastructure that would change that recommendation for today’s realities.

Proposing to include LABs in a stewardship regulation will only add cost to a system that is already function. These costs will be passed on to consumers or will be forced to be internalized by small business. The environmental improvements will be administrative in nature.

The 2009 WDO study could be replicated to verify that the marketplace is still functioning. As well, the CBA has demonstrated its desire and ability to work with government and all aspects of the producer, collector, hauling, recycling and processing sectors to ensure LABs continue to earn their moniker as the #1 product demonstrating a functioning Circular Economy in Ontario.

Hybrid/EV Batteries
As stated previously, the advanced technology batteries from ELVs are at the other end of the spectrum of market development. While virtually everything is known about LABs such that they trade as a commodity within the scrap world, there is infinitely less known about hybrid/EV batteries.

As the chemistry of these batteries evolve, so do the potential recycling streams and economics. Many of the batteries our sector are seeing now are the original technology and platforms and the batteries have positive value. These ELVs are 8-10 years old and have reached their natural end of life. We also encounter total loss vehicles from the insurance sector, and these vehicles have reached a premature end of life as they have been in an accident. Therefore we are encountering these new technology/new chemistry batteries in higher numbers.

The number of batteries we encounter are not overwhelming at this point. Our Members collaborate to share information on how to store, re-use, and who is buying for recycling. Although data is very thin and hard to come by, it seems that 10-15% if the hybrid/EV batteries can be re-used (that number could technically be higher, but most are still under warranty and the recycled parts market has not developed) with the balance sent to core buyers to try to market across North America. Generally we provide these batteries at no charge – we know there are financial winners and losers in there, but no one has the time to develop markets and these core buyers are facing all of the risk.

There are huge information gaps for dismantlers and recyclers. We do not know which vehicle has which chemistry and therefore what the economics of recovery are. We are not connected to the researchers, startups, and organizations working to plug the gaps (both physical and informational) between the supply of batteries and the collection, re-use, re-purposing, logistics and final recycling. There are truly so much unknowns that it is difficult to even see a coherent sector at this time. It will develop, and there is a role for all stakeholders to play, but at this time there is much more that we don't know about the proper recycling of these batteries under the principles of the Circular Economy. That will come, but with open collaboration – not enforced development.

We have opened discussions with both auto manufacturer associations - Canadian Vehicle Manufacturers Association (CVMA) and the Global Automakers of Canada (GAC) to discuss collaboration and sharing of information. We have a history of working with both the CVMA and GAC in the project to bring ELV processing standards to the Province. They have re-iterated their desire to take back these batteries so that our industry is not burdened financially.

We are still in the safety training stages with Members, making them aware of the risks involved with dismantling these high voltage vehicle, and how to safely handle these vehicles.

In summary, the marketplace for hybrid/EV batteries is evolving rapidly, but the recycling of these advanced technologies is in its pre-infancy. By placing regulations on this emerging market the marketplace will become distorted, possibly truncated, and innovation will cease within the Province.

Even the proposed recovery calculation metrics works against an industry that is growing dramatically – the 3-year rolling average of weight of batteries brought in to the marketplace will be hard to recover when the product lasts 8-10 years. Producers will not be able to reach the proposed metrics until a steady state of batteries entering and exiting the market are close to balanced. Another example of regulations that just don't work in such an emerging sector. Previous sales of tires is a good starting calculation for recovery rates, but not in a sector that is growing so rapidly.

Therefore, we request that both LABs and hybrid/EV batteries should be exempted from the definition of batteries as a designated class of material within this Regulation.

There needs to be more study of these batteries – to confirm the robust and working Circular Economy is function for LABs; and to document and bring together the relevant stakeholders to determine the future of the hybrid/EV battery recycling sector in Ontario.

But including them in these regulations will interfere in one highly functional marketplace with very limited environmental benefit; and will stifle the natural development of the more complex advanced technology marketplace that will need government encouragement and involvement – just not at this time when so much is unknown.

Should you have any questions on this submission or desire any further industry information, including site visits to continue your understanding of the impact of the proposed regulations on industry, please do not hesitate to call.

Regards,

Ontario Automotive Recyclers Association (OARA)