SCHEME DESIGN Version 3

CONSULTATION WEBINAR

August 1st, 2019

Welcome & IntroductionsGerry Morvell, BSC Chair

Purpose of the webinar

▪ To work together to solve a real-world problem

▪ To update stakeholder about the proposed design

▪ To apprise new battery stewards about the

proposed design of the scheme

▪ To discuss key design issues/questions and explore

pros and cons

▪ To identify challenges and opportunities for

improvement

Recording

Meeting is being recorded for the purposes of notetaking and will

be deleted once notes are completed

Agenda

Time Topic Lead

10:00 – 10:15 Welcome, introductions, purpose,& agenda GM

10:15 – 10:20 Webinar process and ground rules LC

10:20 – 10:25 ACCC Authorisation process GM

10:25 – 10:30 Review of journey to date and the path forward LC

10:30-10:35 Discussion time: Questions about the journey / process LC & GM & All

10:35 –10:40 Review of research inputs LC

10:40 – 10:45 Discussion time: Questions about research inputs LC & GM & All

10:45 – 11:30

Review of proposed core elements of the scheme design including

structured question time

▪ Levy

▪ Membership fees

▪ Rebate

▪ Integration with other schemes and take bock programs

LC & GM & All

11:30 – 11:45 Discussion: Challenges and opportunities LC & GM & All

11:45 – 12:00 Next steps GM

ACCC: Australian Competition & Consumer Commission

Format

▪ Presentation – general introduction

▪ INPUT – General Discussion

▪ Presentation – specific topics

▪ Pose key questions & capture ideas & input

Slides will be distributed immediately after the webinar

Webinar controls

▪ Keep your self on mute unless speaking

▪ Please raise questions during question time only

▪ Microphone

Ground rules

▪ Stick to the agenda

▪ Be mindful of those new to the discussion

▪ Constructive contributions

▪ How do we make this better?

▪ Solutions orientation

▪ Practice generous listening

▪ Avoid us and them positions

▪ Think outside the box

▪ Imagine the possibilities

Ministers have decided scope

▪ All state and federal environment ministers have:

▪ Endorsed the approach

▪ Agreed that all batteries subject to market failure are in scope

▪ Used Lead Acid Batteries currently not subject

to market failure

▪ Those not covered by other schemes (NTCRS -

embedded batteries)

▪ Industry has identified the primary market failure is

the cost of collection and sorting

▪ Clean sorted material to recyclers gate will

facilitate success

What does ACCC authorisation enable?

▪ Levy on imports

▪ Authorisation allows a levy which would ordinarily

be considered anti-competitive behavior

▪ Member to member agreements

▪ A method of reducing the free rider issue

▪ Passing the levy on to consumers

▪ Importers

▪ Distributers

▪ Retailers

OPTIONS FOR ADDRESSING FREE RIDERS

▪ ACCC Authorised model

▪ Member to member agreements

▪ Regulated scheme

▪ Expensive and difficult to adapt to changing

market realities

▪ Light regulation – e.g. update of the product

stewardship act where industry would:

▪ Implement their own stewardship scheme

▪ Join the BSC scheme

▪ Pay a fee of 4x levy amount if a scheme

exists

Free riders - Key industry concern

ACCC Authorisation process

Consultation Phase1 Refine Design2

Initiators

Commitment3Application to

ACCC4

ACCC Public Consultation Phase5 ACCC

Determination6

ACCC: Australian Competition & Consumer Commission

Why is a scheme needed?

▪ Current recycling rates very low in Australia

▪ 97% of batteries hoarded, dumped or landfilled

▪ Relatively embarrassing level compared to other

OECD countries

OECD: Organisation of Economic Co-operation & Development

Why is a scheme needed?

▪ Projected exponential rise in generation of waste batteries

Myriad of risks

Cost of collection outweighs

value of commodities

Exponential increases in generation of

waste batteries

Precarious nature of

export options

Risks to community health and safety, &

environmental impacts of emissions,

contamination, & loss of resources

Insurance industry increasingly

reluctant to cover recycling

Increasing incidents of fires in

waste disposal infrastructure

Local government not resourced to properly manage EOL batteries

Rapid onset of local and state

regulations will add to cost burden

Product Stewardship Act – current process

Priority Listing

Voluntary

schemes

Co-regulatory

schemes

Mandatory

schemes

Government identifies

problem wastes and adds

them to the priority list

Government sets minimum

outcomes, industry has

some discretion about

approach

Industry encouraged to

establish voluntary

product stewardship

scheme

Government establishes a

mandatory scheme

Government has identified

batteries as a problem waste by

listing it as a priority product

MEMs (all state & federal

environment ministers) have

called for fast-tracking of

battery stewardship

Current Options:

Industry led scheme such as

ACCC model or regulated

option such as NTCRS or similar

Increasing cost and complexity

20

14

–

20

15

Product Stewardship Act - Priority Listing

2014 – 2015 2016 – 2017

20

15

–

20

16

2013 – 2014 2015 – 2016

End of Life

Batteries < 2kgAdded to the priority list

End-of-life

batteries < 5kgAdded to the list

Large Storage

BatteriesAdded to the priority list

End-of-life

batteries < 5kgNo change

The journey to date

2016 - 2017

Financial options studyPacific Environment assessment

of market realities

Pilot projectsPower tool & handheld battery collection

pilots to investigate the feasibility of

collecting handheld/ power tool batteries

for recycling

Stewardship case studiesReview of international and Australian

stewardship approaches for batteries and

other products to identify options

Preliminary regulatory

assessmentTo identify, compare and

prioritise options for battery

stewardship schemes in

Australia

The journey to date

2018

Industry Briefing Agreed to pursue

ACCC model in first

instance or NTCRS as

a last resort

Meeting of Environment

Ministers Focus on batteriesAll state and Federal Environment

Ministers call for fast tracking of

battery stewardship

Battery Stewardship

Council (BSC)Established as an informal

consultation group

Proposed scheme design

Versions 1 & 2 ReleasedConsultation with BSC members

and feedback incorporated

BSC Consultation to understand drivers & identify options for scheme design

Meeting of Environment

Ministers All state and Federal Environment

Ministers endorse approach and a

scope of all batteries not covered

by other schemes, and provides

funding for consultation

The journey to date

Battery Stewardship

Council (BSC)Incorporated as a not for

profit

InitiatorsFormalize support for

ACCC application

Proposed scheme design

Version 3 releasedConsultation with

broader community initiated

Proposed scheme

design finalisedIncorporating

consultation outcomes

2019

We

are

here

BSC Consultation to understand industry reality & identify options for scheme design

Application for

authorisation

submitted to the ACCCACCC evaluation, public

consultation, &

determination

ACCC: Australian Competition & Consumer Commission

Moving from planning to action

2020

Battery Stewardship

Scheme launchManagement system

development & operational

design, accreditation process

established

Members formally

join the BSCAccreditation process

initiated

Collections take off!Member implementation

of collection and sorting

systems

Systems evolutionAdaptation & improvement

in response to on the

ground experience

DISCUSSION TIME:

KEY QUESTIONS

• Are there other people, similar companies to LG chem,

• Clean Energy Council

• Electric Vehicle Council

• Energy storage – will require different collection channels

• What is the intended timing for collections to begin?

• Second half of next year

5 minutes

▪ Questions about the journey to date

Key research inputs to the journey to date

Key outcomes

▪ Scheme Costings

▪ Operational (admin, marketing accreditation)

▪ Collection

▪ Sorting

▪ Identified costs of regulated vs non regulated

schemes

ScenarioNPV of cost to

govt * ($m)

NPV of cost to

industry ($m)

Total

($m)

Option 1.

Shared responsibility$2.7 $14.4 $17.1

Option 2.

Free rider regulation$6.4 $16.5 $22.9

Option 3.

Government

Regulated Program

$17.0 $37.6 $54.6

NVP: Net Present Value

Pilot conclusions

▪ High level of consumer support for power tool recycling programs

▪ Design collection container to ensure weights are below 20kg

▪ Supervise collection bins

▪ Use reverse logistics where possible

▪ Provide an adequate budget for marketing and communications

▪ Education key to avoid contamination issues

▪ Design targeted communications for professional power tool users

Pilot conclusions

▪ Consumers willing to recycle if options are provided

▪ Marketing essential

▪ Consumers are unwilling to tape or bag batteries

prior to drop-off

▪ Importance of selecting collection sites to maximise

recovery rates

▪ Importance of streamlining collection and transport

logistics

▪ Also provided some indication of costings for

collection, sorting & recycling

Pollinate Planet Ark Recycling behaviour consumer survey ( 2016)

▪ “most Australians don’t mind paying a little more

for rechargeable batteries to cover recycling

▪ “Only about 10% of Australians wouldn’t pay

extra”

▪ While willingness to pay drops slightly when talking

about more expensive laptop batteries

▪ 63% of those that are extremely concerned

about the environment would be completely

willing to pay $0.50

Benchmarking

▪ Assessment of Stewardship Case Studies

▪ Preliminary assessment of regulatory options

▪ Industry Briefing with strong interest in ACCC model

▪ Recognition that if ACCC model not successful,

regulated approach using NTCRS would be Plan B

NTCRS: National Television & Computer Recycling SchemeACCC: Australian Competition & Consumer Commission

Channel Characterisation

Conducted by ISF, UTS

▪ Diverse collection points should be pursued

▪ Recommendations for dangerous goods

standards and training

▪ Processing capacity stronger than collection

capacity

▪ A wide range of cost estimates ($2 - $9/kg)

were offered by stakeholders

▪ Need to resolve inconsistent licencing

requirements limiting the use of existing

collection networks in some jurisdictions and

dangerous goods certification

Stocks & Flows - underwayEnvisageWorks in partnership with REC Randell Environmental Consulting, Sustainable Resource Use (SRU) & Marsden Jacob Associates

▪ Market data – projections and value

▪ Imports / usage / end-of-life

▪ Collection rate

▪ Characteristics of the battery recycling sector

▪ Number and location of recyclers by chemistry

▪ Number of employees

▪ Estimated income

▪ Other economic indicators as appropriate

▪ Cost estimate validation

▪ Evaluation of who bears the cost

▪ Current cost to state & local governments

▪ Environmental and health costs to community / government

Call2Recycle Container

▪ PET lined, nested set of 3

▪ Reusable - 3 uses at a minimum

▪ Demonstrated experience of managing risk

▪ BSC entered into a contract with Call2Recycle

▪ Redesign with BSC scheme branding

▪ Identification of Australian manufacturer

▪ Exclusivity agreement for use in Australia

DISCUSSION TIME:

Questions about research to date

5 minutes

Overview of the scheme design

Scheme principles

Circular Economy

Increased competition,

innovation, & efficiency

Transparency &

accountability

Shared responsibility Environmental benefit Fair & Equitable

Focus on

behavioural change

Battery Stewardship – A Shared Responsibility

▪ Support for scaling up e.g. infrastructure funding

▪ Support for research – stocks and flows, best practices

▪ Procurement policies to support scheme

▪ Provision of collection points (if appropriate)

▪ Government regulation, enforcement and harmonization for the recycling sector

▪ Permits & licensing

▪ Import & exports

▪ Health & safety regulations

GOVERNMENT

Essential foundations

BOARD / GOVERNANCE / MONITORING & REVIEW

ACCREDITATION/VERIFICATION

Member 2 Member

Agreements

Not for profit based

on cost recovery

Environmental

benefit

INCREASED COLLECTION & RECYCLING

Proposed initially as

4c/Equivalent Battery

Unit EBU (24 grams)

Proposed initially as $2.50/kg Metro collections

$3.50/kg regionalSORTING $2.00/kg

Leveraging Model

Levy on imports Rebate

The leveraging model is unique and a game changer

▪ Collection and sorting rebates accessible by accredited members

▪ Leverage existing networks

▪ Collectors and sorters self select by becoming accredited members

▪ Graphic provides examples

NTRCS

collections

ULAB

Collections

Local

government

collections

ULAB = Used Lead Acid Batteries (car batteries)

NTCRS = National Television & Computer Recycling Scheme

Mobile Muster

collections

Existing

take-back

programs Schools and

Institutions

Existing retailer

take back

programs

Scrap metal

collectionsProduct stewardship

collections e.g.

Agsafe

Sorting

facility

Schematic – players in the collection process

Collection

point

Logistics

providerProcessorImporter

▪ Power Tools

▪ Handheld batteries

▪ Products with

batteries not

covered by other

schemes

▪ Energy storage

▪ NGOs

▪ Retailers

▪ Government

▪ Schools

▪ Installers

▪ Brands

▪ Institutions

▪ Retailers

▪ Logistics operators

▪ Take back

programs

▪ Partner schemes

▪ Local councils

▪ Retailer depots

▪ Community groups

▪ Private companies

(recyclers)

▪ Onshore processors

Levy Membership fee Membership fee Membership fee

Implement general member & importer specific obligations

Rebate Rebate Infrastructure grantsPotentially rebate via

downstream

Potentially rebate via

downstream

Implement general member & retailer

&/or drop-off facility obligations

Implement general member & logistics provider obligations

Implement general member & sorting

provider obligations

Implement general member & recycler

obligations

Summary Schematic – Battery collection process

Online training

Records of shipments

Health Check

QEH&S control

Collection

pointsImporters

Report imports to independent agency*

Implement import standards (TBD)

Pay levy based on imports

Use scheme branding or co-branding

Provide drop-off service

Audit of import data/obligations

QEH&S: quality, environmental, health, and safety* Sales data / market intel protection

Use scheme branding or co-branding

Pass levy on to the consumer

Use accredited service providersUse accredited service providers

Use approved containers

Summary Schematic – Battery collection process

Deliver to approved downstream

Shipment records/tracking system

Participate in audits

Mass balance

Use approved containers

Participate in audits Participate in audits

Mass balance

Report recovery ratesReport collection rates Report collection rates

Sorting

facility

Logistics

providerProcessor

Provide collection/pick-up service Sort/aggregate batteries Process batteries onshore

QEH&S systems/control

Maintain chain of custody

Use scheme branding / co-branding

Quarterly invoicesQuarterly invoices

GOVERNANCE

Board Inhouse activities

Battery Stewardship – A Shared Responsibility

Branding & marketing

Education & incentives

Accreditation & Audit process

Monitoring & review of performance

Industry Development

Levy, fee, & rebate management

Outsourced activities

Annual Independent Import Reporting

Container design & distribution

Annual Independent Financial audit

Standards development

Research: e.g stocks & flows

BATTERY

STEWARDSHIP COUNCIL

✓ OPERATION OF THE BATTERY

STEWARDSHIP SCHEME

2

Importer

directors

Independent

Chair2

Retail

directors

2

Recycling

chain

directors

2

Emerging

markets

directors

2

independent

directors

BSC members1. ACT Government

2. Adeal

3. Advanced Resources Recycling

4. Australia Post

5. Aust. Battery Recycling Initiative

6. Aust. Industry Group

7. Aust. Information Industry Ass. (Mobile Muster)

8. Aust. Mobile Telecommunications Ass.

9. Aust. Toy Association

10. Aust. NZ Recycling Program (ANZRP)

11. ALDI

12. BatteryRescue

13. BatteryWorld

14. Bicycle Industries Australia

15. Bosch

16. Bunnings

17. Call2Recycle

18. Canon

19. CISCO

20. CESA

21. Clean Energy Council

22. Close the Loop

23. CMA Ecocycle

24. CO2 View

25. Energizer

26. Dodd & Dodd Group

27. Department of Energy & Environment

28. QLD Dept of Environment & Science

29. Enirgi

30. Envirostream

31. Equilibrium

32. Global Renewables

33. Infoactiv

34. Institute for Sustainable Futures

35. Kidsafe

36. Lex Enviro Services

37. Makita

38. MRI

39. MRI E-Cycle Solutions

40. National Retailers Association

41. National Waste and Recycling Industry Council

42. NSW EPA

43. Ocean Batteries

44. Panasonic

45. Officeworks

46. Outdoor Power Equipment Association

47. R&J Batteries

48. RF Industries

49. Positec (Rockwell, Worx)

50. Resourc

51. Stanley Black & Decker (Dewalt)

52. Sims E-Recycling

53. SA EPA

54. Sustainability Victoria

55. Super Retail Group (BCF, Supercheap …)

56. Supercharge Batteries

57. Sydney Harbours Federation Trust

58. Techtronic Industries (Ryobi, Milwaukee, …)

59. Tes-amm

60. TradeTools

61. Visy

62. Western Australian Local Government Association (WALGA)

63. Woolworths

64. Electric Vehicle Council

Integration with other schemes

▪ No double charging of batteries covered by other schemes

▪ Process may vary by scheme

▪ Procedures for the PSO would be negotiated with each PSO

▪ Report of imports – could be reported by importer or PSO

▪ Obligation for imports not covered by the PSO could be

payed by importer or possibly through a PSO

▪ Schemes could be eligible for rebate for batteries not in their

scheme scope

Integration with existing take-back programs

▪ Intent is to recognise not penalize importers who are showing leadership through existing collection programs

▪ Procedures would be negotiated for reporting:

▪ Imports / Collections / Paying levy on the difference

▪ Eligible for rebate via their downstream

▪ For batteries not in their scheme scope

▪ To maintain the integrity of the program and avoid an perception of greenwashing, BSC will still verify

▪ Reported imports

▪ Scheme obligations are consistent

▪ Environment, health and safety▪ Downstream▪ Collection and recovery rates

Costs

55%

23%

2%

3%

3%

2%

6%

7%

Proposed levy

▪ Levy in imports

▪ 4 cents / Equivalent battery Unit (EBU)

▪ EBU - 24 grams

▪ Need to confirm application of the EBU

concept to Energy Storage and EV

▪ Initial discussions indicate it can work well

▪ Question remains as to how to integrate

repurposing in an equitable manner

DISCUSSION TIME:

KEY QUESTIONS

15 minutes

▪ Is the proposed initial rate of the levy of 4c / Equivalent Battery Unit appropriate?

▪ Would there be any advantages or disadvantages to the BSC Board considering a move to two classes of levy based on chemistry type, for example a lower levy for alkaline batteries?

Proposed membership fees

▪ Based on the principle of shared responsibility

▪ Membership fees for non importers

DISCUSSION TIME:

KEY QUESTIONS

10 minutes

▪ Is the proposed membership structure appropriate?

▪ Are the proposed fee levels appropriate?

Proposed rebate▪ Rate of the rebate based on

▪ Financial Options Study

▪ BSC Consultation

▪ Channel Characterisation

▪ Stocks & Flows

▪ BSC cost recovery modeling

▪ Recognition of economies of scale

▪ Subject to annual adjustment by the board

▪ Designed to encourage regional collections

▪ Proposed initial rebate

▪ Collection

▪ Metropolitan - $2.50/kg

▪ Regional - $3.50/kg

▪ Sorting

▪ $2.00/kg

DISCUSSION TIME:

KEY QUESTIONS

15 minutes

▪ Are the initial rebate amounts appropriate?

DISCUSSION TIME:

KEY QUESTIONS

5 minutes

▪ How could the BSC manage the $/kg cap to ensure competition

and innovation? ($2.50 metro and $3.50 regional)

DISCUSSION TIME:

KEY QUESTIONS

5 minutes

▪ How should the BSC respond if collection rates exceed initial

projections?

DISCUSSION TIME:

KEY QUESTIONS

10 minutes

▪ Is metro/ regional rebate differential on target and adequate for

addressing regional divide?

DISCUSSION TIME:

KEY QUESTIONS

5 minutes

▪ Does the proposed funding model provide a good starting point?

DISCUSSION TIME:

KEY QUESTIONS

5 minutes

▪ Have questions about the integration process been resolved?

DISCUSSION TIME:

KEY QUESTIONS

15 minutes

▪ What opportunities & challenges does the scheme present to the

your sector?

Melbourne

▪ August 14th

Upcoming state forums

Sydney

▪ August 15th

Become an initiator

▪ Initiators will become part of the

ACCC application

▪ Demonstrate support for the

proposed scheme design

▪ Initiator form can be

downloaded from the BSC

website resources pageBe part of the solution

Take a deeper dive - resources are available online

▪ Give us a call or provide written feedback

Thank you for your time and generous contributions

Contacts

▪ Libby Chaplin

▪ 0467 515 260

▪ libby.chaplin@bsc.org.au

▪ Gerry Morvell

▪ 0408 990 825

▪ gerry.morvell@bsc.org.au