Rigid Plastic Packaging Container

Regulations Economic and Fiscal Impact

AnalysisPresented by: Neal Johnson

March 8, 2009

82 Product and Container Manufacturers and 10 Material Processors Submitted Responses

Only 30 Product and Container Manufacturers Submitted Responses with Cost Data◦11 manufacturers responded that there were

no operating cost impacts.◦18 manufacturers responded that there were

no capital cost impacts.◦8 California-based manufacturers responded.◦4 manufacturers claimed to be small

businesses.

Staff completed an Initial Economic Impact Analysis using the survey data, however the Economic Study Review Panel rejected the analysis as the survey data was not adequate to perform a representative analysis.

The Panel directed Staff to perform a more extensive analysis that is now being finalized.

RPPCsDisposed

(Millions of

Pounds)

Recycling Rate

(%)

RPPCs Recycled

(Millions of

Pounds)

RPPCs Used

(Millions of

Pounds)

PET Bottles

HDPE Nat’l Bottles

All RPPCs

‣Amount of regulated and exempt products/containers

‣Percentage of California-based manufacturers

‣Percentage of small business manufacturers

‣Average container weights‣Percentage of regulated containers by

compliance options

‣American Chemistry Council Resin Production and Sales Data

‣US Census Data‣US Dept of Commerce Data‣DOF Population Data‣Virgin and Recycled Resin Prices

‣Plastic News, Plastic Technology and IDES.com

‣Conversations with Survey Respondents

STEP 2-CALCULATION OF AMOUNT AND COST OF IMPACTED CONTAINERS

Weight of Regulated Containers

(Millions of Pounds)

Number of Regulated Containers

(Millions)

Postconsumer Material

Needed

(Millions of Pounds)

Clamshells

Buckets, Tubs, Pails, Etc

All Impacted RPPCs

STEP 2-CALCULATION OF AMOUNT AND COST OF IMPACTED CONTAINERS

Price Difference Between

Virgin and Postconsume

r ($)

Increased Cost of

Impacted Containers

(Millions of $)

Cost Impact

Per Impacted Container

($)

Clamshells

Buckets, Tubs, Pails, Etc

All Impacted RPPCs

STEP 2—CALCULATION OF AMOUNT AND COST OF IMPACTED CONTAINERSWeight of

Regulated Containers

(Millions of Pounds)

Number of Regulated Containers

(Millions)

Source Reduction Material

Decrease (Millions of

Pounds)

PET Containers

HDPE Containers

All Impacted RPPCs

STEP 2—CALCULATION OF AMOUNT AND COST OF IMPACTED CONTAINERSPrice

Difference Between

Resin Types($)

Increased Cost of

Impacted Containers (Millions of

$)

Cost Impact Per

Impacted Container

($)

PET Containers

HDPE Containers

All Impacted RPPCs

Used 25% postconsumer (PCM) content compliance method.

Determined how much PCM was needed to comply.

Multiplied PCM weight by “PCM to virgin price differential” to calculate the added cost for impacted containers.

STEP 3—CALCULATION OF PRODUCT MANUFACTURER COSTIncreased

Cost of Impacted Containers

(Millions of Dollars)

Total Product Manufacturer Cost

(Millions of Dollars)

California-based Product Manufacturer Cost(Millions of Dollars)

Clamshells

Buckets, Tubs, Pails, Etc

All Impacted RPPCs

Assumed added cost for impacted containers was fully borne by product manufacturer.

25% of product manufacturers are located in California.

STEP 4—COST IMPACTS ON RPPC END-USERS

Total Product Manufacturer Cost

(Millions of Dollars)

“Mark-Up”Factors

Total Statewide Cost to RPPC “End-Users”(Millions of Dollars)

Cost Impact on All Regulated Containers

($)

Clamshells

Buckets, Tubs, Pails, Etc.

RPPC Total

Total manufacturer costs multiplied by “mark-up” factors to calculate total statewide cost to end-users.

RPPC products are consumed by businesses (about 40 percent) and residents (60 percent).

Individual California Resident Cost:Total statewide cost divided by population.

All Regulated RPPC Cost Impact:Total statewide cost divided by 3.94 billion regulated RPPCs.

Small and Typical Manufacturer Costs

Cal Recycle product manufacturer certification data for amount of impacted containers

Used methodology to calculate cost impacts for each regulation amendments and manufacturer totals.

Environmental Benefits

Reduced Disposal of Plastic Materials

Reduced Greenhouse Gas Emissions

Reduced Litter Clean-Up

Alternatives Considered

Post-Industrial Material Could be Substituted For Postconsumer Material

Resin Switching to Achieve Source Reduction Compliance

RPPC Web Site:◦ http://www.calrecycle.ca.gov/Plastics/RPPC/

RPPC Regulations Web Site:◦ http://www.calrecycle.ca.gov/laws/rulemaking/rppc/