Material Cost Differentiation (MCD) Project

The MCD Project is developing the methodology to measure consistently the impacts that material characteristics have on the cost of recycling system activities. The MCD methodology will produce the material specific cost input required to calculate the material specific fee rates for the Four Step Fee Methodology used by Packaging and Paper Stewardship programs.

In late 2017, CSSA assembled an MCD Steward Consultation Committee (MCD SCC) consisting of 13 stewards with sector and regional representation. The role of the MCD SCC is to provide feedback and input on the information and recommendations being provided by the project team and external experts, Resource Recycling Systems (RRS), to ensure that the MCD Methodology reflects the priorities and input of the steward community.

The MCD SCC has met twice this year – on February 15th and March 1st.  The objective of the first workshop was to provide all members with a common understanding of the project’s background, guiding principles, scope and objectives.   During the second workshop, Resource Recycling Systems (RRS) reviewed its initial recommendations with the MCD SCC regarding:

The group also spent considerable time discussing the notion of “repurpose” because, as a key component of Principle 4 (see below), it is critical to setting system boundaries.

The launch of the MCD Project was announced at the 2016 Annual Steward Meeting in October due largely to the decision made during the Fee Methodology Project that each material’s specific cost impact would continue to be a key input to calculating fees.  The primary objective of the MCD Project is to develop a methodology that can differentiate the cost to manage each material in the recycling system in a way that satisfies the project’s eight guiding principles and that will work equally well for all four programs.

MCD Project Guiding Principles

1. Relativity counts.  The methodology must produce results that inform stewards about the relative cost impacts of the materials they supply into the marketplace.
2. All designated materials count. All designated materials of the packaging and printed paper programs should be considered when measuring cost impacts even when those materials are supplied and/or managed in small quantities because all materials are constituents of the recycling system.
3.  All material characteristics count. When differentiating the cost impacts of one material as compared to another, all of a material’s characteristics that can reasonably be measured, should be measured because each material’s characteristics can impact costs in different ways
4.  All activities count.  All activities necessary to prepare the material to be repurposed should be considered because the intention is that all materials supplied into the market should be repurposed.
5.  Value counts.  Commodity value attributed to a material must be consistent with the decisions applied when differentiating cost impacts.
6.  System design and operations count. The Material Cost Differentiation Methodology should be rooted in measurable recycling system activities, resource usage and cost drivers
7.  Emerging trends count. The Material Cost Differentiation Methodology will consider evolving recycling technologies and practices to ensure that the most current material management techniques inform measurements of cost impacts.
8The material mix counts.  The composition within material categories may differ according to the scope of each program and needs to be considered because such differences may result in different impacts on cost.

Next Steps

With the context of the project having been established, the project will enter a Pilot phase where new measurement procedures will be developed, tested and refined before being used to produce the material specific input needed for setting material fees.  A third workshop with the MCD SCC will be scheduled to review the results of the Pilot phase.  Following this workshop, a larger meeting with the steward community and other stakeholders will be convened to share the project results.

Project Updates

Material Cost Differentiation Matters Video