Re: EBR Registry Number (Draft Strategy for a Waste- Free Ontario: Building the Circular Economy) and (Waste Free Ontario Act)

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1 February 29, 2016 Shari Sookhoo Senior Policy Coordinator Ministry of the Environment and Climate Change Climate Change and Environmental Policy Division Resource Recovery Policy Branch 40 St. Clair Avenue West, Floor 8 Toronto, Ontario M4V1M2 Phone: (416) Re: EBR Registry Number (Draft Strategy for a Waste- Free Ontario: Building the Circular Economy) and (Waste Free Ontario Act) Dear Ms. Sookhoo, The Cement Association of Canada (CAC) appreciates the opportunity to provide input on Ontario s Draft Strategy for a Waste Free Ontario and the accompanying draft Waste Free Ontario Act (WFOA). The CAC is the voice of Canada s cement industry, and includes five (5) companies with major facilities in Ontario: CRH Canada Inc.; Essroc Italcementi; Lafarge Canada; St Marys Cement; and Federal White Cement. Ontario s cement producers are important participants in the national and global marketplace and provide a reliable supply of the cement required to build Ontario s transportation infrastructure, buildings and homes, waterworks and dams, and to remediate contaminated sites. The CAC applauds the Government of Ontario s commitment to modernizing the current Waste Diversion Act framework and working toward a Circular Economy in Ontario. We also strongly support the intention to link Ontario s waste management and climate change objectives. The Province of Ontario recently recognized the role of the cement sector in reducing greenhouse gases (GHGs) by providing a regulatory mechanism for the sector to divert certain waste streams from landfills and process them into alternative low carbon fuels that can replace traditional fossil fuel use in cement manufacturing. This is the most important tool for reducing GHGs in our sector and could be an important component of building a circular economy in Ontario. A robust market for alternative low carbon fuels could help keep some 2-3% of Ontario s non- recyclable waste from landfills while also contributing to several key principles outlined in the Strategy for a Waste Free Ontario, including investment in diversion infrastructure and support for sustainable end markets for recovered material. We look forward to being a constructive participant in supporting Ontario s efforts to build a world leading and progressive waste management regime. Please find our detailed comments attached. Sincerely, Michael McSweeney President & CEO Cement Association of Canada

2 The Role of Low Carbon Fuels in Building a Waste Free Circular Economy in Ontario About Low Carbon Fuels Globally, it is recognized that the most important near- and mid- term opportunity to reduce GHGs in the cement sector is by increasing the use of lower carbon fuels (LCF), including fuels derived from non- recyclable wastes, such as construction and demolition waste, agricultural waste and non- recyclable plastics. LCF reduces the combustion emissions associated with cement manufacturing by decreasing the carbon intensity of the fuels used to heat the cement kiln. LCF is some 20% (in the case of, for example, plastic waste, waste oil, etc.) and 100% (in the case of biomass) less carbon intense than the conventional solid fuels typically used to operate a cement facility (mainly coal and/or petcoke). In Europe, some facilities have been able to achieve carbon intensity reductions in excess of 50% across their fuel mix. Achieving this same level of intensity reduction in Ontario would reduce direct CO 2 emissions from cement facilities by 500,000 tonnes. LCF also has secondary environmental and economic benefits. In fact, cement kilns are among the best available solution for handling waste streams that cannot be recycled and is consistent with the development of the circular economy: compared to landfilling, using waste fuel feedstock in cement kilns saves land, avoids expensive landfill designs to address potential leakage problems, avoids the transformation of organic carbon into methane 1 (a greenhouse gas 25x more potent than CO 2 ), and fully recovers both the energy and recycles the material 2 in the wastes. Compared to combustion in a dedicated incinerator, the cement kiln allows for a much higher net substitution of fossil fuels (i.e. waste fuel feedstock displaces fossil fuels, unlike waste to energy facilities and incinerators which create a new point source of emissions) and a full recovery of the material at similar levels of non- Greenhouse Gas (GHG) emissions. Co- processing in cement kilns reduces CO 2 combustion- related emissions from cement plants and, simultaneously, reduces CO 2 and other pollutant emissions that would have been emitted from dedicated incinerators and landfills. 3 The Role of LCF in a Waste Free Circular Economy Fuel substitution in cement manufacturing supports the diversion of waste from landfills without compromising waste reduction and recycling goals. In fact, the sorting required for recovering suitable fuels from the waste stream is synergistic with the recovery of recyclable materials because a) it incents investment in diversion infrastructure by establishing a sustainable end market for recovered materials and; b) makes it more economical to recover marginal recyclables (e.g. roofing nails, aggregates from shingles, etc). In Europe, for example, those countries with the highest rates of energy recovery from 1 Recognizing that even when used in methane energy capture situations, capture is not 100% effective. 2 Cement kilns do not produce ash as a by- product but this material is recycled into the cement manufactured and so displaces other virgin raw materials. 3 Low Carbon Technology Partnership Report: content/uploads/2015/12/lctpi- Cement- Report.pdf

3 waste also have the highest rates of recycling. Data from the U.S. experience shows a similar trend. The European experience also shows that inclusion of energy recovery in the waste hierarchy is associated with higher participation rates, improved sorting, and new market opportunities that reduce the flow of waste to landfill. Some stakeholders have in the past mischaracterised waste derived low carbon fuels with incineration. Ontario has a difficult history with incineration and many if not most environmental and health groups in the province remain strongly opposed to incineration or waste- to- energy disposal technologies. While the use of waste- derived fuels in cement kilns is a form of energy recovery, it is significantly different from incineration in a number of important respects. Indeed, where fuel substitution is deployed as a diversion strategy for specific waste streams, it is generally distinguished from waste- to- energy incineration plants and is placed higher on the waste management hierarchy. Cement plants use fuel to produce a product, whereas thermal disposal sites are built to manage waste while producing electricity. We would note this approach has been supported in a judgement from the Ontario Court of Appeal 4 While this may appear to some as a subtle difference, in practice fuel substitution in cement kilns is unique in very important ways because it: does not create a fixed market for waste that could otherwise (or may through the emergence of new technologies) be eliminated or diverted to a more environmental or economic use, since traditional fuels are always available. This flexibility also means that cement manufacturers can play a transition role for certain waste streams while new reduction / diversion measures take effect or are phased in over time; recovers energy and recycles some of the raw materials from waste, thereby displacing traditional fuels as well as other virgin resources (such as sand) used in the manufacturing process; leads to significant reductions in CO 2 through displacement of high- carbon fuels with low- carbon and/or carbon- neutral fuel substitutes in the manufacturing process as well as through avoided landfill gases (i.e. it does not create a new point source of emissions as a waste- to- energy facility does); protects air quality by not introducing a new point source of emissions. In addition, lower carbon fuels generally either maintain the same level of air emissions, or in the case of CO 2 (and sometimes other emissions such as SOx and NOx) have lower emissions in comparison to traditional fuels. does not produce fly ash or other residual waste, in part because the extremely high temperature of the kiln offers more complete combustion than waste- to- energy facilities and because any non- combustible residues are incorporated into the crystal matrix of the final cement product. The Role of LCF in Meeting Ontario s GHG Targets Fuel substitution diverts significant sources of waste, such as waste- wood from construction and demolition activity, to displace virgin fossil fuels. All of these fuel substitutes have lower carbon content 4 Justice Winkler wrote, "SMC s use of the alternative fuel would not be considered destruction of waste, just as the use of petcoke fuel would not be characterized as the destruction of petcoke. In both cases, fuel is being used productively as part of the permitted use the manufacturing of cement." St. Mary's Cement Inc. (Canada) v. Clarington (Municipality), 2012 ONCA 884

4 than coal. In fact, a significant proportion of fuel substitutes are biomass- based and consequently considered carbon neutral. In addition, extracting energy from these wastes avoids the significant GHG (methane) emissions that would have arisen from their decomposition in landfills. In Ontario, fuel substitution would also offer double- dividend reductions in transportation related emissions as lower carbon fuels would displace imported fossil fuels with locally produced low- carbon substitutes that would normally be shipped to landfills in the United States. Ontario currently has a very low LCF substitution rate compared to other competing North American jurisdictions, meaning there is tremendous GHG reduction potential available by scaling up LCF use in the province. The cement sector estimates that, with a concerted effort to align Ontario s waste management and climate change policies and related regulations and incentive programs, Ontario facilities could scale relatively quickly (within the first compliance period) to substitution rates over 20% with and estimated immediate and direct GHG reduction potential in Ontario of over 200,000 tonnes annually. In addition, once an effective baseline of infrastructure is in place, more advanced market development could be pursued; specifically the development of advanced LCF products and processing systems (e.g. advanced gasification processes) that would support higher substitution rates into the second compliance period. As noted above, carbon intensity reductions of over 50% are achieved commonly in some foreign jurisdictions. These rates in Ontario would yield over a half megaton of annual reductions. The Province has already begun to take steps to facilitate increased use of LCF in Ontario cement facilities by streamlining its regulatory approach to fuel substitution in the cement, lime and steel sectors. The proposed Waste Free Ontario Act, if well designed, could play a significant role in removing remaining regulatory and policy barriers. In addition, the cap and trade system, by putting a price on carbon, will start (assuming the policy and regulatory environment is right) to make market conditions more favourable for attracting the significant capital investment required (likely over $100 million) to build the facility- level and market- wide LCF infrastructure needed in Ontario. The Role of the Waste Free Ontario Act in Accelerating LCF Leadership in Ontario While efficient administration of O. Reg 79/15 and 80/15 will play a crucial role in the speed at which Ontario cement facilities are able to increase their use of LCF, the recently introduced Waste Free Ontario Act (WFOA) is by far the most important opportunity to set Ontario on course for leadership in reducing GHGs through LCF. Conversely, if the WFOA isn t structured properly, it could effectively halt further investment in LCF in Ontario. To foster investment and innovation in LCF in Ontario, the WFOA must ensure that LCF is formally recognized as a beneficial end use for many types of materials that would otherwise be bound for landfills or an incinerator. High substitution rates in other jurisdictions have been achieved to a large degree by strong waste management hierarchies that make land- filling or incineration of most waste streams prohibitively expensive or illegal and by providing other incentives for more environmentally friendly uses of waste, including as LCF. We have been working hard with key environmental organizations in Ontario to broaden their understanding and acceptance of LCF and we now have a strong base of support. Ontarians are ready

5 for a science based approach to waste- management that recognizes and incents a robust approach to LCF. Our recommendations to the Ontario government on increasing the use of LCF in Ontario include the following: 1. Establish a service standard for LCF permits While it is too early to assess how efficiently LCF permits will be delivered under Ontario s new low carbon fuels regulations, historically the permitting process has been prohibitively slow (on the order of several years simply to obtain demonstration permits). We believe a service standard of six months from the point of application for a new LCF to its final approval for full- production use is reasonable and in line with the aggressive GHG reduction targets Ontario has set for 2020 and 2030 and with the Province s ambitions to build a circular economy within 10 years. 2. Diversion credits / incentives The Strategy for a Waste Free Ontario specifically rules out diversion credits for alternative fuels. We believe the Province should reconsider this principle for alternative fuels used in the cement sector. As outlined above, fuel substitution recovers not only energy from non- recyclable waste, but also raw materials; it is a form of recycling that has measurable impacts on the need for virgin materials in cement manufacturing and should be recognised as such. We believe the Province is inappropriately conflating traditional energy from waste incineration with the substantively different LCF process and technology. In any case, the Province should provide a clear path and incentives in the WFOA for the diversion of suitable and eligible materials to LCF streams. Eligibility should be based on criteria that prioritize waste reduction and recycling, but in principle any suitable (i.e. compatible with the cement making process and chemistry) material otherwise bound for landfill or incineration should be considered an eligible LCF. While we recognize Ontario s commitment not to include Energy from Waste as a 4th R in the waste hierarchy, we propose that Fuel Replacement or Fuel Recycling could offer a variant on the 4th R that would maintain the integrity of Ontario s waste management principles while also supporting its climate change ambitions. Another approach could be a site specific / material specific diversion credit system that would license cement facilities as diversion sites for specific streams of materials. We would be happy to work with MOECC officials to design such a system. 3. Landfill and incineration surcharges or bans for specific materials The Cement sector strongly supports tools in the WFOA to institute surcharges or bans for certain materials known to be good LCF alternatives (e.g. any and all construction and demolition waste, non- recyclable plastics, etc.) and other mechanisms to make landfilling of these materials financially unattractive. This would increase the overall recovery of materials, boosting both recycling and the availability of LCF. 4. Funding support for market development and capital infrastructure The Province should invest in helping to develop the market conditions and infrastructure required to increase the availability of LCF. Such facilities would also help meet the Province s goal of maximizing recovery and recycling of valuable materials. For example, advanced sorting facilities could help increase recycling rates for certain materials while also establishing a reliable stream of potential LCF. Large scale

6 drying facilities could make materials like sewage sludge (an suitable and renewable fuel source) economically viable as an LCF for cement and other facilities. Similarly, capital investment funds for facility level infrastructure should be considered. 5. Government Procurement Policies Procurement policies that include robust carbon accounting could play a role in driving increased use of LCF, as long as the market and regulatory conditions required to obtain permits and access LCF are in place.