About the Four-Step Fee Methodology

The Four-Step Fee Methodology was approved in 2016 by the program boards of Recycle BC, MMSW and MMSM following extensive steward consultation. Stewardship Ontario adopted the Four-Step Fee Methodology for calculating 2021 material fee rates, replacing the Three-Factor Formula.

Today the Four Step method is use across PPP programs in Canada except for CMO and EEQ.

Fee methodologies are intended to be an allocation tool used to determine each material’s share of fees payable to fund recycling programs for packaging and paper product. Each year, material fee rates (expressed in cents per kilogram) are determined by dividing the allocated dollar amount for a material by the number of supplied tonnes of that material.

Here’s how the Four-Step Fee Methodology works:

Step 1 allocates the Gross Cost of the recycling system – the collection & processing activities.

Step 2 allocates the commodity revenue to those materials that have earned the revenue.

Step 3 allocates the program management cost of the stewardship program.

Step 4 will add material specific Promotion & Education and/or Market Development.

The SCC established the following guiding principles for a new fee methodology:

• All obligated materials should bear a fair share of the costs to manage the packaging and printed paper program, irrespective of whether a material is collected, because all obligated stewards who put obligated materials into the marketplace should contribute to the recycling system.
• The material management costs allocated to each material should reflect the material’s impact on the cost to collect and manage it in the recycling system because a material’s unique characteristics can drive costs in distinctive ways.
• The commodity revenue should be attributed only to the materials that earn that revenue because materials that are marketed have value and should benefit from their earned revenue.

Background and consultation materials for the Four-Step Fee Methodology are available here.

The methodology continues to be refined through the Material Cost Differentiation Project.

CMO Fee-Setting Principles established with producers at the Reporting and Fee-setting group in 2022.

Background and consultation materials for the Four-Step Fee Methodology are available here.

1. Based on the ‘polluter pays’ principle, all producers that supply packaging and paper products shall pay their share of costs without preferential treatment. 
2. Fees shall reflect material-differentiated costs required to collect, sort, process and market each material, while ensuring no arbitrary cross-subsidization between materials. 
3. Material revenues shall be assigned to materials that specifically earned that revenue.
4. Fees need to be fair, easy to understand and to update, and be reflective of operational realities.
5. Program reserves shall be funded through fees and allocated to materials based on their share of costs.
6. Start-up costs shall be recovered through fees and allocated to materials based on the same method that these funds were initially raised.

The methodology continues to be refined through the Material Cost Differentiation Project.