Alberta’s Used Oil Recycling Program – Improving Sustainability

Connector July 2020

Alberta’s Used Oil Recycling Program has been in place for 23 years, collecting used oil, oil filters and containers to ensure they are responsibly managed. In July of 2020 the Recycling Council of Alberta (RCA) sat down with stakeholders of the program (past and present) to discuss where the program is today and the challenges it needs to overcome to remain sustainable in the coming decades.

Many stakeholders who operate or participate in Alberta’s used oil materials recycling program in one capacity or another (e.g., processing or collecting materials) believe that changes need to be made. The program’s fee structure and material list haven’t changed since 1997. Prior to April 1, 2020, there was a 20% contamination rate from ineligible, but recyclable, used automotive fluid containers (such as antifreeze, diesel exhaust fluid, and windshield washer containers) that were returned into the program’s collection system. Based on 2018/19 numbers, those containers equate to half a million kilograms of plastic that once had a home and could end up in the landfill if other options are not found to collect and recycle this plastic.

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The history of the program is important to provide context for where it is today. The program was run by the Alberta Used Oil Management Authority (AUOMA) for its first 20 years and was transferred to management by the Alberta Recycling Management Authority (ARMA) in 2018. ARMA was granted authority to run the program by the provincial government under the Environmental Protection and Enhancement Act[1], the Designated Materials Recycling and Management Regulation[2] and the Lubricating Oil Material Designation Regulation[3]. ARMA operates at arm’s length from the government as a delegated administrative organization (DAO). The Designated Materials and Recycling Regulation requires ARMA to keep a separate fund to administer and support waste minimization and recycling programs. Until late 2019, the regulations stipulated the amount of the environmental handling charge (EHC) at the point of sale for each container, filter and litre of oil product sold into the marketplace. In the fall of 2019, the fee-setting mechanism was removed from regulation, granting ARMA the ability to ask for approval from the Minister to adjust the EHC as needed to ensure a financially sustainable system (note that the regulations use the term surcharge, which has the same meaning as what other associations call EHCs). At the time of publication of this article, July 2020, ARMA had not yet begun the process to implement changes to the fee structure for used oil containers.

Despite financial constraints, highlighted later in the article, the program has achieved a high capture rate over its lifecycle, as shown in the table below. In addition to official program materials, containers that are considered ineligible and not part of the regulation, such as diesel exhaust fluid (DEF), antifreeze and windshield washer fluid containers, have historically been returned and processed as part of the program.

Recent numbers for capture[4]

 2015201620172018/19 result
(Apr ’18 – Mar ’19)**
Used oil85.5%87%84.3%76.6%
Oil filters86.7%87.3%87%81%
Oil containers90.3%93.3%106.3%*94.1%

*The number for oil container collection is over 100% because of the processing of ineligible materials in the system (where DEF containers, antifreeze and windshield washer containers were collected, though numbers on EHCs were only captured by the system on oil containers at the point of sale)

**Due to the transition and reporting on program years (AUOMA fiscal year end to December 31 and ARMA’s at March 31)

“The past AUOMA Board, including a voting government member, consulted with the government and the public on the ineligible materials. Because they were high-value HDPE #2 plastic, the same material the oil containers are made of, the Board decided to continue to recycle this material and support the popular public opinion to do so instead of sending it to the landfill,” commented Jodi Tomchyshyn London, past executive director of AUOMA from 2016-2018 and current RCA president.

Other provinces have expanded their lists of eligible material to include DEF (Manitoba, Saskatchewan and Nova Scotia) and antifreeze containers (all provinces except AB). The table below highlights the differences in EHCs across Canada (excluding Ontario). The national average for the EHC per one litre container is $.11 and Alberta has the lowest EHC, at $.05 per one litre container.

(click on the table to view full-size) [5]

On April 1 this year, ARMA officially implemented the exclusion of ineligible materials in the program. During audits, ARMA found up to 50% ineligible materials. Processors were informed they would no longer be compensated for processing these containers. ARMA developed post cards for processors to share with their customers about the designated materials accepted as part of the program. Ed Gugenheimer is the CEO of ARMA and leading the charge on program changes.

“Our job is to ensure the financial viability of the program and we are looking to monitor and harmonize with other provinces,” remarked Ed. “Even though the regulation was updated at the end of last year to allow us to change the fees, we still have a number of steps to be able to accomplish this task.”

The Designated Material Recycling and Management Regulation outlines steps for ARMA to apply surcharges (EHCs) (Section 11.1)[6]. It states that the Authority shall notify the Minister of Environment no less than 30 days prior to the surcharges coming into effect. They would also have to share a budget with actual and projected costs and provide a report addressing any other factors specified by the Minister. The Minister may then provide feedback and request additional analysis.

Ed shares the elements of that process, as developed by ARMA, that he would need to take to update the surcharges, including six steps over a nine-month period. It would start with a cross-jurisdictional review of what is happening in other provinces, a sustainability review with processors, and a look at finances with the oil industry council that oversees the program to get approval to continue to advance the change. The next steps involve consultation, first with the Retail Council of Canada (RCC) that requested three months from the time of the decision to consult with their producers, and public consultation. Finally, the request would be sent for approval by the Minister of Environment.

It is a complex program and multiple stakeholders contribute to its operation. The whole program is enabled by government regulation that sets out what materials are eligible. In order to include additional containers as designated materials, the regulation would have to be changed, which requires government intervention.

On the other end, the collection process starts with the consumer who returns their oil, filters, and containers to one of the 210 collection sites across the province. These are municipal sites (such as transfer stations or eco depots) as well as businesses (such as automotive shops). These collection sites do not receive any funding to collect the material, and until recently it did not cost them to dispose of the materials.

Rocky View County is one municipality that was operating on a cost-neutral basis to collect program materials at their transfer sites and round-up collection events. In the spring, they were told by their used oil processor that in response to a decline in demand for oil on global markets and as a result of the costs to store used oil they would be charged a $200 flat rate or each pickup. The County’s Lead Solid Waste Advisor, Jennifer Koole, has not had any communication directly from ARMA, only through the service providers and contractors who just recently received notification about the changes regarding the ineligible material collection.

“We want to divert materials and provide these programs to our residents,” remarked Jennifer. “I have an issue with the costs being passed down to the collection sites when it’s a provincial program; collection should be subsidized or at least cost-neutral for us to participate. We are all in this together – I want to work with ARMA directly to make the program sustainable.”

Anne Auriat, the manager at the Edson Recycling Depot, lists similar challenges they face to pay for additional insurance (because oil is a hazardous material) and staff to monitor customers and ensure they return eligible material. The budget for the used oil program is getting tighter since they no longer make any money on what is collected and have to build the containment for the oil and pay staff.

There are also a number of processors in the province who have supported the program and in turn counted on the income to make a living over the past twenty years. Collectors pick up the material and either process it themselves or deliver the materials to processors who are then paid by ARMA. These groups are becoming more vocal because they are impacted by the lack of movement on the fee structure and the overall rigidity of the program to adapt to market changes.

Pnewko in Lacombe is one of the processors of the plastic containers. Travis Overacker is an owner and has been with the program since the pilot collection launched at bottle depots 27 years ago.

“We used to employ 20 people and would process 20 tonnes of material a day on the same equipment we have today,” commented Travis. “Because of inflation, the increased cost in the price of fuel and power and the fact that the incentives haven’t changed to account for these increased costs throughout the life of the program, we’re now running two employees four days a week and processing 20 tonnes of plastic a week.”

Travis will be the first to tell you that he understands that the program needs to meet the regulatory requirements and not allow for free riders (containers such as DEF and antifreeze that don’t have an EHC applied at the point of sale). He also believes in the importance of a level playing field across processors, but the fact that the fee structure has remained stagnant means that he is facing losses. Adding the challenges of a declining market price for plastic and operating through COVID to the difficulties the program already faced, means some processors may be forced to close their doors.

To help illustrate the situation, Travis shared an example of a nurturing business environment in another province. He runs a facility in Ontario that processes the same plastic with the same equipment. Because of the model for the used oil program in that province, he can hire 30 staff with seven trucks on the road and process 300 tonnes a month. They also get a fuel surcharge on the cost of diesel, as administered by Stewardship Ontario.  He would have the capacity to do the same throughput in Alberta, though with his financial limitations on what he makes from the program, he can only process about 120 tonnes a month.

“It’s crazy that for 20 tonnes of the same plastic between here and Ontario, I make $7,000 more in Ontario,” Travis stated. “I’m bleeding money in Alberta.”

Other processors also see challenges. Merlin Plastics is diversified and recycles a variety of plastics across Western Canada – one of the larger processors in the province.  Despite its size, the company still sees the challenges the program faces in terms of increased costs to all parties including the download of costs onto collection sites as processing and marketing costs continue to increase.

Travis Overacker at Pnewko in Lacombe, AB

“This is dirty and difficult plastic to manage. We keep thousands of kilograms of it out of the landfill every year and find markets and homes for it, but we know there are challenges with the financial sustainability of the program,” shared Darryl Wolski of Merlin Plastics. “We also worry about what will happen to all the ineligible material – we want to see it recycled, not landfilled.”

Ed and the team at ARMA are aware of these challenges. They have strived to reach out and communicate with the processors and the collection sites since they took over the program in 2018. But with ARMA no longer accepting ineligible material, where should it go or who should deal with it so it can be collected and recycled?  

“We know the program needs to change and we’re trying to make those changes now through education and engagement with stakeholders. We started the process to adjust the paint program and we’re working our way through the other materials,” shared Ed. “We can’t flip a switch and make these changes overnight; we do want to see this material recycled.”

Alberta was a leader in initiating these programs that were some of the first of their kind in Canada. There is a lot of catching up to do to harmonize with other provinces and make the programs sustainable. Tackling all of this during a pandemic and economic crisis will not be easy, but the future of the program depends on the ability to change and adapt to survive.




[4] ARMA 2018/19 Annual Report