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`O-I Glass, Inc.
`Exhibit 1037
`Page 001
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`294 J.E. McCARTHY EXECUTIVE SUMMARY This report summarizes current developments in the United States and 18 other industrial countries regarding packaging waste. It presents available data concerning the types, amounts, and methods of managing such waste and pro- vides information concerning the policies established or under consideration to reduce the amount of such waste being disposed. The countries discussed are all members of the Organisation for Economic Co-operation and Development (OECD). OECD serves as a forum for the collection and exchange of information and the harmonization of policies af- fecting the economies and environment of industrial countries. This report is the result of a project jointly funded by the Congressional Research Service and OECD. In recent years, waste disposal capacity has become more scarce in most OECD countries. As a result, waste management policies have focused on efforts to reduce and recycle major components of the waste stream. Packag- ing represents about one-third of municipal solid waste in many countries. Because of this, measures to reduce the amount and toxicity of packaging and to encourage its recycling are currently being considered in at least 18 OECD countries: Austria, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Swe- den, Switzerland, Turkey, and the United States. In addition, two groups of countries, the EC and the Nordic Council, are developing programs to ad- dress packaging on a regional basis. The report is divided into four main sections. Section I summarizes avail- able information for the OECD countries. The section proceeds by consider- ing the countries in alphabetic order, following which the EC and the Nordic Council are discussed. The second section discusses six types of packaging material: paper, glass, metal, plastic, wood, and composites. For several of these materials, industry data summarizing waste generation and recycling rates are presented. While these data often do not agree with the data presented in Section I, they have the advantage of coming largely from a single source for each material, facil- itating inter-country comparisons. The third section discusses key questions raised by the information pre- sented in the report. The fourth briefly discusses packaging waste issues fac- ing the Congress. OECD countries generate an estimated 140 million tons of packaging waste annually. This is an approximate number, because 1 ) data for individual countries or groups of countries are developed using different methodologies, and 2) in many cases, there are no estimates for individual countries. Never- theless, estimates were available for the United States, Canada, Japan, Aus- tralia, and the 12 nations of the EC as a group; together, these countries con-
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`O-I Glass, Inc.
`Exhibit 1037
`Page 002
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`RECYCLING AND REDUCING PACKAGING WASTE: HOW THE UNITES STATES COMPARES 295 tain 89% of the OECD's total population and represent an even higher percentage of its production and consumption of goods. These estimates were aggregated with minor adjustments to provide the OECD total. As noted, packaging represents about one-third of municipal solid waste (MSW) by weight, in many OECD countries. It is also a significant contrib- utor to industrial waste streams. Because of public pressure to reduce land disposal and incineration of MSW, reduction of packaging waste has become a major goal of the environmental policies of many countries. Restrictions on packaging considered or implemented by the OECD coun- tries include: a mandatory deposit/refund requirements for beverage containers (in all or parts of 11 countries); b negotiated agreements with industry to reduce packaging (under consider- ation or in use in at least 7 countries) c bans on certain packaging materials or additives - generally PVC plastic and/or heavy metals (in 5 countries); d taxes on packaging (in 4 countries); and e requirements to use refillable beverage containers (in 4 countries). Of these, the most widely documented successes* have come from manda- tory deposit/refund requirements, although they have been applied only to packages for liquids. Increasingly, the measures described are being com- bined to provide a variety of incentives to reach a set of goals. How the United States compares to other industrial countries In general, other countries use less packaging than the United States, recy- cle more of it, and are considering policy measures stronger than the measures generally being considered in America. Americans generated 56.8 million tons of packaging waste in 1988, 463 pounds per capita [ 1 ]. While data are difficult to compare, both Japan and the EC appear to generate at least one-fourth less on a per capita basis. Once generated, European and Japanese packaging is far more likely to be recycled. Of 18 countries for which glass recycling data were available, for example, the United States ranked last, at a 13% rate. (Five European coun- tries, including Germany, exceeded 50%. ) The U.S. rate of paper recycling *Success is defined here as recovering large percentages of the target package for recycling or reuse, and thus reducing the quantity of waste to be disposed. Some of the measures, such as bans on the use of certain materials or additives, are more properly judged by other criteria, including their impact on the quality of the waste stream. In any event, most bans are too recent for one to judge their impact.
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`O-I Glass, Inc.
`Exhibit 1037
`Page 003
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`296 J.E. McCARTHY also lags most of Europe and Japan: of 18 countries, the United States ranked 15th**. Despite, or perhaps because of their leadership in packaging reduction and recycling, other countries have proposed new legislation and regulations that far exceed most U.S. proposals. This paper provides detailed information concerning such measures. Of particular importance are the efforts in Ger- many, the Netherlands, the EC, and the Nordic countries. In addition, Can- ada has set ambitious targets for packaging waste reduction, although the spe- cific measures to be used to reach the targets are still being debated. KEY QUESTIONS The third section of this report identifies four key questions suggested by the experiences of the 19 countries. They are: I. Who will pay the additional costs of collecting recyclables? Collecting and processing packaging materials for recycling often costs more than collection and disposal. Thus, the question arises, who will pay the ad- ditional costs? Will it be industry, which makes, distributes, and sells pack- aging? Or the public at large, through local governments, which have generally borne, until now, the costs of handling municipal waste? While this question is far from being answered with finality, it appears that industry (including producers, distributors, and retailers of packaging and packaged goods) will pay the additional costs in much of Europe, Canada, and perhaps Australia. These costs will, of course, be passed on to consumers in many cases, but the cost of recycling will be incorporated in product and packaging prices, and actually funded by industry. In much of the United States, the UK, New Zealand, and perhaps Japan, on the other hand, it ap- pears that the public at large will pay the additional costs through local governments. A related question is who will bear responsibility for collecting and market- ing used packaging material. Again, there is a division into roffghly the same groups of countries, the former group holding industry responsible, the latter assigning the role to local governments. This report notes that, whether one looks at financing, collection, market- ing, or other criteria, there appear to be some clear advantages to holding **See Sections II. A. and B. for further information. The United States does rank high in alu- minum can and PET plastic recycling. (PET is the common abbreviation for polyethylene ter- ephthalate, the plastic used in soft drink bottles. ) The U.S. aluminum can recycling rate (64%) was third among 19 countries. Its PET bottle recycling rate (28%) is far higher than the Euro- pean average (less than 2%). Aluminum cans and PET bottles together comprise only 1.1% of total U.S. municipal solid waste by weight, however, compared to 18.3 for paper and paper- board packaging and 6.3% for glass packaging.
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`O-I Glass, Inc.
`Exhibit 1037
`Page 004
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`RECYCLING AND REDUCING PACKAGING WASTE: HOW THE UNITES STATES COMPARES 297 industry responsible for as much as possible of the recycling process. These points are further discussed in the concluding sections of the report. 2. Do policy makers have adequate data? Industry and government data on recycling differ in many countries, with industry estimates of recycling rates virtually always higher than those of gov- ernment. Within the US, State and Federal estimates of recycling rates also differ substantially. Recycling rates vary for at least seven reasons, which are discussed in section III of this report. Given the widespread interest in inter- country, inter-State, and inter-industry comparisons of recycling rates, im- proving the data on recycling is regarded as particularly important. 3. What arc the targets of opportunity? While packaging contains hundreds of different items, the data suggest some key targets of opportunity for waste reduction and recycling. The first of these would be corrugated containers, which are the largest single manufactured item in the municipal waste stream in most countries. In the US, they account for 41% of all packaging used, and 13% of municipal solid waste as a whole.* A second target, more widely recognized, would be glass packaging, because of its heavy weight, ease of recycling, and interference with the operation of incineration facilities. While the use of glass packaging is declining relative to other materials, glass still accounts for 20-25% of packaging discards, by weight, in many countries, including the US. A third target might be wooden pallets, consumption of which has in- creased ninefold in the US since 1960. While data are uncertain, pallets ap- pear to account for about 10% of all packaging waste in the US. A high per- centage of pallets are used once and discarded. In Germany, pallets and other packaging materials used for transportation are now required to be taken back for reuse or recycling by shippers; other European countries are considered likely to follow Germany's example. In the US, however, there has been little discussion of pallets or other shipping waste. For corrugated containers, glass, and pallets, there appear to be few tech- nical obstacles to increased reuse and recycling. Rather, the key questions are how to improve collection and, in some cases, markets for the material. 4. Should the choice of packaging be restricted? As information concerning the environmental impacts of packaging choices becomes more widespread, a fourth policy question is whether governments should use such information to limit consumer and producer choice on envi- ronmental grounds; and, if so, how. Again there is a division among OECD countries in this regard: Germany, the Netherlands, Scandinavia, Switzer- *While large percentages of the containers are collected for recycling, there remains so much that is not collected that corrugated containers (at 8% of MSW discarded) account for a larger share of the U.S. municipal waste disposal than any other item.
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`O-I Glass, Inc.
`Exhibit 1037
`Page 005
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`298 J.E. McCARTHY land, and some parts of the US and Canada lean toward limits; the rest of the OECD countries, so far, lean against. The most commonly targeted packages have been PVC plastic, polystyrene plastic, composite packages made of lay- ers of more than one material, and packages using heavy metals. The case for and against each of these materials is beyond the scope of this report, but a summary of the measures taken in various countries to limit or ban certain materials and packages is offered. Given the variety of ap- proaches taken, questions arise as to the criteria to be used in deciding upon limits or product bans, the degree of confidence that can be placed in current techniques of environmental assessment, and the extent to which other con-. siderations (such as protection of markets) may have masqueraded as a con- tern for protection of the environment. Certainly, there is much work to be done in the development of unbiased methodologies for weighing the environmental impacts of packaging. A num- ber of countries and many private interests have identified this area as a ma- jor focus of research. Whether the U.S. Government should undertake such research, and if so, what agency would be responsible, are questions the Con- gress may wish to consider. The role of distribution systems Changes in packaging often imply a change in systems of distribution, be- cause they make possible or eliminate the possibility of certain types of trans- portation, storage, and sale. As a result, industry views packaging restrictions not as peripheral to their business, but as central to the structure and opera- tion of markets. Thus, changes in packaging (especially those mandated by government) are not easily made unless they fit into existing systems of distributing prod- ucts. Costs of conversion will be higher and resistance to change greater where entirely new systems of distribution are required by mandated reductions in packaging waste. Issues facing the Congress For the most part, the approaches to packaging waste discussed in other industrial countries have not been major issues in the Congress. As noted in detail in this report, other countries have adopted or are developing require- ments that: • set mandatory requirements for packaging waste reduction; • require reusable or refillable packaging; • impose taxes to discourage single-use packages; • prohibit the use of non-recyclable packaging, or packages that interfere with recycling; • prohibit or limit disposal of packaging; and
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`O-I Glass, Inc.
`Exhibit 1037
`Page 006
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`RECYCLING AND REDUCING PACKAGING WASTE: HOW THE UNITES STATES COMPARES 299 • require manufacturers of packaging materials to collect and recycle post- consumer waste. Perhaps the most fundamental issue raised by these approaches is whether local governments will continue to bear responsibility for funding and oper- ating recycling programs or whether all or some of this responsibility should be shifted to industry. To date, this issue has not been joined in the Congress directly; however, there is a growing consensus in other countries concerning the advantages of industry responsibility. A further discussion of this issue is provided in Sections III and IV of this report. INTRODUCTION The OECD countries produced 420 million tons of municipal waste an- nually in the late 1980s. The composition of this waste varied substantially from one country to the next, but in most countries packaging occupies a sig- nificant place. OECD does not regularly collect data concerning the amount of packaging in the waste stream, but in those countries that have estimated the amounts, packaging generally comprises one-quarter to one-half of the municipal waste. There are also significant amounts of packaging in industrial and commercial waste streams. Data concerning packaging are summarized in Table 1. The total amount generated in OECD countries is on the order of 140 million tons annually. The US alone generates about 40% of the total. Measures to reduce the amount or toxicity of packaging and to encourage its recycling are currently being considered or implemented in at least 18 OECD countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, Turkey, and the US. In addition, two groups of coun- tries, the EC and the Nordic Council, are developing programs to address packaging on a regional basis. The role of packaging Packaging occupies a significant place in the economies of developed coun- tries. It permits easier, more automated methods of handling products, through standardization of container size. It protects products from tampering, theft, adverse weather, and rough conditions, whether in transit, in storage, or at point of sale. In the case of hazardous products, it protects consumers and handlers from the contents of the package. It serves a communication and advertising function, often carrying required information concerning the con- tents or characteristics of the product and instructions for use. In the case of
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`O-I Glass, Inc.
`Exhibit 1037
`Page 007
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`300 TABLE 1 Packaging waste in OECD countries, late 1980s J.E. McCARTHY Region/Country Total Packaging Amount per Capita (million tons) (pounds) European Community 50.5 340 Belgium 1 1.7 595 Denmark France 10 399 Germany 10 276 Greece Ireland Italy 6.9 242 Luxembourg Netherlands 2.3 344 Portugal Spain United Kingdom 7.7 295 Other OECD Europe Austria 1.0 291 Finland 0.7 289 Iceland Norway Sweden Switzerland Yugoslavia North America Canada 6.3 485 United States 56.8 463 Asia Pacific Australia 1.7 2202 Japan 20 3593 New Zealand OECD Total 140 ~Flemish region only. 2Domestic waste only. Total packaging may be double this amount. 3Data for Japan represent consumption of packaging, not waste. Waste data would likely be substan- tially lower. food and beverages, it extends product life. Finally, by simplifying handling and transportation and by preserving product life, it permits the processing of foods and beverages and the manufacturing of products in larger facilities at a smaller number of locations. In many respects, such large scale production is an environmental and eco- nomic blessing: it reduces the amount of food spoilage and raw material waste, facilitates the increased use of byproducts, and gives consumers a wider va- riety of products from which to choose. Thus, regulation of packaging is a
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`O-I Glass, Inc.
`Exhibit 1037
`Page 008
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`RECYCLING AND REDUCING PACKAGING WASTE: HOW THE UNITES STATES COMPARES 301 complex issue: it requires that one seek to preserve the many advantages that packaging offers, as well as to control its excesses. Packaging waste While there are many advantages of packaging, at the same time, there is no doubt that the amount of packaging in the waste stream has grown dra- matically. To give just two examples, since 1948, paper, glass, metal, and plas- tic have increased their combined share of the municipal waste of Paris from 13.5% to 61.8% [2] In the United States, since 1960, packaging and con- tainers have increased by nearly 30 million tons (108%). [ 3 ] As noted, pack- aging now accounts for about one-third to one-half of the municipal waste stream in the United States, France, and most other OECD countries. An increasing number of OECD countries appear to be in the process of deciding that it need not be so. That is, while increased use of packaging may correlate with the degree of economic development, the presence of packag- ing in the waste stream need not. Policies that might succeed in reducing packaging waste are still being sought, but among the measures being tried, there are at least three common principles. First, there is an effort (through a wide range of measures) to shift the responsibility for managing packaging waste away from government and onto the shoulders of those who produce and use it. Second, there is broad interest in measures to stimulate reuse and recycling of packaging materials. And third, there is broad agreement that the use of toxic substances (partic- ularly heavy metals) must be phased out of packaging. I. PACKAGING WASTE DATA AND POLICIES IN OECD COUNTRIES This section provides information concerning packaging waste and the pol- icies adopted or under consideration to reduce or recycle it in the OECD countries. The countries are considered in alphabetic order, followed by the EC and the Nordic Council. A. Australia Australia has the second highest per capita generation rate for municipal solid waste among OECD Member countries. [4] Among the nearly 1500 pounds per capita of waste generated, packaging accounts for a significant, but unknown, percentage: Australians dispose of an estimated 220 pounds per capita of packaging from domestic sources, and an undetermined amount from industrial sources. [ 5 ] While the precise amounts are unknown, the Packaging Council of Aus- tralia estimates that 'packaging represents about a third of domestic urban waste.., by weight.' [ 6 ] Of this total, glass and plastic represent nearly a third
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`O-I Glass, Inc.
`Exhibit 1037
`Page 009
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`302 J.E. McCARTHY each. Further information concerning packaging use and recycling in Aus- tralia is provided in Fig. 1 and Table 2. Efforts to control packaging waste in Australia date from the 1970s, when there was substantial debate over mandatory beverage container deposits. In 1977, the State of South Australia (which includes about 8 % of the country's 17 million people) enacted a compulsory deposit-refund scheme. While other States did not follow suit, South Australia has retained its system, which has resulted in the recycling or reuse of 80-95% of the State's beverage con- tainers. By contrast, the State of Victoria (which includes 25% of Australia's population) has recently established a comprehensive curbside recycling scheme. The scheme aims to recycle 60°/0 of glass and aluminum packaging, but also collects other materials (see Fig. 1 ). Plastic 32 Aluminum 3 tool 13 Paper 23 Fig. 1. Packaging in Australian domestic waste (% of total). TABLE 2 Rate of recovery for types of packaging in Australia Material % Recovered Refillable glass bottles 65% Aluminum beverage cans 62 Packaging and industrial papers 51 Non-refillable glass bottles 26 PET plastic bottles 3 HDPE plastic milk bottles 3 Steel cans < 1 Paperboard for primary packaging 0 of food and beverages Source: Industry Commission Report on Recycling, 1991. Data are for an unspecified year.
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`O-I Glass, Inc.
`Exhibit 1037
`Page 010
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`RECYCLING AND REDUCING PACKAGING WASTE: HOW THE UNITES STATES COMPARES 303 As in other countries, the debate over packaging waste in Australia has now moved beyond beverage containers to some extent. The driving force has been the Australia and New Zealand Environment Council (ANZEC), an organi- zation that includes the Environment Ministers from Australia, New Zea- land, each of Australia's six States, and two Australian territories. ANZEC's Packaging Task Force, composed of representatives from government, indus- try, consumer, and conservation groups, has developed a set of National Packaging Guidelines for Australia, which were approved by ANZEC in July 1991. The guidelines are similar in many respects to the Canadian National Pack- aging Protocol. They establish a voluntary program to reduce packaging 50% by the year 2000, through reduction, reuse, and recycling. While the guide- lines are voluntary, a data collection system will be established to monitor progress and 'a regulatory framework will need to be developed in the event that targets and goals are not met.' [7 ] In addition, government policies and practices affecting the use of packaging, including government procurement policies, will be reviewed and changed, where possible, to support the achievement of the goals. B. Austria Austria consumed about one million tons of packaging in 1989, 291 pounds per capita. As shown in Table 3, paper and cardboard accounted for 40% of the total, glass 21%, and plastics 18%. A recent report concluded that 'approx- imately 30% by weight and 60% by volume of household waste are due to packaging.' [ 8 ] Beverage packaging (Fig. 2) accounts for relatively small percentages of TABLE 3 Consumption of packaging in Austria, by type of material Type of material Consumption (tons) % of total 1989 1988 1989 Paper, cardboard 338 863 399 195 40.3% Glass 194 095 212 149 21.4 Plastics 168 244 180 211 18.2 Metals 89 717 100 446 10.1 Wood 84 318 93 204 9.4 Textile 2124 5925 0.6 Total 877 361 991 130 100.0% Source: Mayr, packaging and environment in Austria, p. 54.
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`O-I Glass, Inc.
`Exhibit 1037
`Page 011
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`304 J.E. McCARTHY the total, [ 9 ] but has been the focus of most attention. Beverage industries in Austria still rely to a large extent on refillable glass bottles. In 1987, 64% of beverages were delivered in refillable glass (Fig. 2). Of the remaining 36%, two-thirds consisted of composite aseptic packages (largely paperboard with thin layers of aluminum and plastic). Unlike the situation in some other countries, in Austria, the market share of refillable containers is not markedly declining. In fact, because of con- sumer pressure, returnable glass containers for milk and yoghurt were reintro- duced in 1987, and now account for an estimated 20-50% of the market for milk. [ 10 ] In 1990, Austria enacted a new federal waste management law. Under this law, the Minister for Environment, Youth, and Family, in accordance with the Minister for Economic Affairs may issue decrees in the areas of waste minimization and recycling. As of the end of 1990, six decrees had been is- sued under the new law, two of which (both dated August 7, 1990) affected packaging. The first establishes a deposit system for refillable plastic bottles. Refillable plastic bottles must carry a deposit of 4 schillings (US $0.37 ). However, non- refillable plastic bottles can continue to be used in Austria without a deposit. The second decree sets goals for reuse and recycling of beverage containers. The term used to describe the desired activity includes energy recovery, in addition to reuse and material recycling. The goals, to be achieved by Decem- ber 31 1993, are 90% for beer and mineral water, 80% for non-alcoholic bev- % 70 r 60 50 40 30 20 10 0 refill, glass one-way glass stool cans alum. cans plastic Type of Package % of all beverages I~ % ol beverage waste Fig. 2. Beverage Packaging in Austria. cartons
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`O-I Glass, Inc.
`Exhibit 1037
`Page 012
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`RECYCLING AND REDUCING PACKAGING WASTE: HOW THE UNITES STATES COMPARES 305 erages, and 40% for fruit juice and fruit drinks. If these targets are not met, the Ministries will consider further measures. C. Belgium In Belgium, a Basic Agreement Concerning Prevention and Recycling of Packaging Waste was signed on June 26, 1990, by the Flemish executive and 17 private sector associations representing producers, distributors, users, and recyclers of packaging. The Flemish region occupies roughly the northern half of the country, with a population of 5.5 million (55% of Belgium's total). The region disposes or incinerates approximately 1.7 million tons of packaging waste per year, [ 11 ] 595 pounds per person. Only one-third of total packaging is disposed in household waste. Never- theless, packaging waste is estimated to represent 25% of domestic waste, by weight, and a higher percentage by volume. Less than 10% of the packaging material in household waste is currently recycled. Under the agreement reached in 1990, the industries agreed to develop and finance an action program to reduce and recycle packaging waste. Specific objectives were not established in the agreement but were to be specified in the action program, along with binding commitments on the part of the in- dustry federations concerned. The action program was signed on March 26 1991, but it delayed most of the major decisions to future dates: for example, a waste reduction strategy is to be developed within six months of signing, and a further action plan incor- porating both reduction and recycling is to be developed by the end of 1995. In the meantime, industry will 1 ) remove hazardous materials and toxic chemicals from packaging, 2) finance the construction and operation of an experimental sorting center for packaging materials collected from domestic waste, 3) take unspecified steps to make packaging easier to recycle and to make both packaging and its production more environmentally friendly, and 4) cooperate with government in the development of a data base capable of measuring progress toward waste reduction and recycling. [ 12 ] D. Canada Canada used an estimated 6.3 million tons of packaging in 1988 [ 13] 485 pounds per person. Packaging comprises an estimated one-third of municipal solid waste in Canada, by weight. [ 14 ] Because of the significance of packaging in the waste stream, in April 1989, the Canadian Council of Ministers of the Environment, instructed its Waste Management Committee to develop a policy that would reduce packaging waste 50% by the year 2000. The result was a National Packaging Protocol, adopted in March 1990. Under the Protocol, packaging in the waste stream is to be reduced 20%
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`O-I Glass, Inc.
`Exhibit 1037
`Page 013
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`306 J.E. McCARTHY from 1988 levels by December 1992, 35% by December 1996, and 50% by December 2000. Half of the reduction is to come through new source reduc- tion and reuse measures, the other half through recycling. Manufacturers are asked to voluntarily reduce packaging by these amounts, with specific annual targets to be set for each industry sector. If the targets are not met, a regulatory framework will be implemented. All levels of govern- ment are committed to specific actions in support of the goals, including min- imum recycled