There’s a battle brewing in the province’s recycling industry.
In one corner of the ring is eTracks Tire Management Systems, a non-profit organization created by the rubber and tire industry in Canada to manage recycling for companies that make or sell tires, which it does by contracting out the work for 70 to 80 per cent of the Ontario market.
In the other corner is a competitor, Environmental 360 Solutions, also known as E360, which not only manages recycling — albeit for a smaller number of tire makers — but has a transportation company that has haulers and recycling facilities and believes it can offer a more streamlined recycling service than an administrative “middleman,” as Donato Ardellini, the founder and president of E360, calls eTracks.
But the fight between the two Producer Responsibility Organizations, which is what eTracks and E360 are referred to formally in the recycling industry, doesn’t end there.
A second bout has been triggered by a notice of fines issued last month by the Resource Productivity and Recovery Authority, or RPRA, the provincial agency that enforces Ontario’s recycling rules.
Forty-five tire companies that supply products to the Ontario market could face fines from $70,000 to $1 million if they don’t provide new information to RPRA within 21 days to show that they have met recycling targets for 2023.
RPRA issued the notices of potential fines after finalizing reports from 2023 showing that only 79 per cent of all used tires in the province were collected, short of the 85 per cent collection target.
To meet 2023 targets, tire companies are allowed to buy credits for tonnage held by a Producer Responsibility Organization that has collected more tires in 2023 than they need to meet their own recycling targets.
And the company that holds all available tire credits — $50 million of them in total for extra tonnage collected in 2023, 2024 and 2025 — is E360.
Etracks, or the tire producers it works for, could buy the credits from E360 to avoid fines, but eTracks says the credits are going for double the market price.
“This whole issue is predicated on one aggressive competitor attempting to overtake another competitor by any means necessary, and to date, they have failed,” said Melissa Carlaw, the vice-president of communications and sustainability for eTracks, which is based in Oakville.
“This is creating an escalation of aggressive posturing in the tire recycling industry that does not benefit consumers, producers, environmental outcomes or Ontarians,” said Carlaw.
E360 refutes those allegations and said it was business as usual.
“We did not pursue new customers or chase additional volumes,” said Ardellini in an email. “What we did do was respond to requests for help from collectors in our network (who we had a regulatory obligation to service) and other service providers that could not get tires picked up or move tires under eTracks due to the lack of available delivery destinations.”
How the battle plays out will be a test of provincial regulations introduced seven years ago to make recycling in the province a competitive market, where players can fight for their share, thereby creating a more cost-effective and efficient system, after decades of a monopoly held by Ontario Tire Stewardship.
Environmental consultant Peter Hargreave said the move by RPRA — which issued the notice of fines for the first time since it came into being in 2019 — will ensure producers understand that they have to meet recycling targets or face penalties.
“For (recycling) markets to be healthy,” said Hargreave, “for them to be stable and predictable and for people to make investments and hire people within the economy, you need to make sure that the rule of law is actually going to be enforced.”
Ontario Tire Stewardship, which was funded by consumer eco-fees, was dismantled in 2018, two years after the agency came under fire in a Star investigation for lavish spending and a $50-million surplus. Andrew Horsman, the tire stewardship’s former executive director, is now vice-president of the sustainability division at E360.
But Ardellini argues the recycling industry hasn’t progressed since the regulatory changes and there is still one PRO with a monopoly — meaning eTracks — that is bypassing Ontario recyclers by sending large volumes of tires to the U.S. to be processed.
“We believe the other PRO, who has no investment in infrastructure, equipment or employees providing the needed services in Ontario, is acting as a predatory buyer,” said Ardellini, “using their market size, and up to now lack of accountability for failing to meet the regulatory obligations, to force service providers to accept their terms.”
RPRA knew that producers weren’t meeting their obligations in the years before, but 2023 was the first year the agency was allowed to issue notices of administrative penalties under provincial legislation. Producers had until April and May of last year to report data on recycling for batteries and tires respectively.
“RPRA has taken care to thoroughly review and analyze … tires reports and engage with producers to obtain and confirm accurate data,” said the agency in an email.
Whether the PROs, or the producers themselves, buy the credits for tonnage from E360, or instead risk fines as well as their company name publicized on the RPRA website, remains to be seen.
Producers now “have to consider purchasing credits at any price, to avoid regulatory enforcement action,” said Carlaw of eTracks, or face fines.
There is no suggestion that E360 has done anything illegal.
In fact, provincial regulations require tire companies to continue to collect materials for recycling even after they have reached their requirements, which is why E360 said it continued to pick up tires at collection sites.
PROs send haulers to one of 6,200 collection sites across the province where used tires are dropped off by consumers or garages.
But haulers don’t necessarily collect the tires for the companies that a PRO has a contract with, because sorting tires by brand would be impossible. Instead, any tire they pick up is in lieu of the one that a producer has put on the market.
E360 said in an email that if it hadn’t continued to pick up tires, especially in the peak late-fall and early-winter season when volumes were at their highest, tires would have piled up, bringing the flow of scrap tires to a standstill.
ETracks believes that one PRO — the company didn’t name E360 specifically — began aggressively over-collecting tires beginning in 2023, “working to undermine the current system in order to increase their own profit margins,” said Carlaw.
Ardellini of E360 said the credits he has for extra tonnage collected in 2023 are fairly priced because he’s held the debt for two years.
A similar situation could play out for 2024 and 2025 because E360 said it also holds credits for extra tonnage collected for those years, credits that tire companies will need to meet their collection targets.
“Every other PRO has brought credits off us for $620 (and up per ton) because they understand the cost of doing business,” said Ardellini, “but eTracks is a monopolist PRO. So they’re trying to flex their muscle on us. Well, sorry, we’re stronger than what you think we are,” he said.
“Who determines the price of credits? Why should eTracks determine the price of credits?” said Ardellini.
The answer could be RPRA, which typically does not “interfere in commercial transactions,” according to the agency.
“However, several producers and waste management services companies have requested RPRA provide guidance around buying and selling recycled tonnage and RPRA has engaged an expert consultant to engage market participants to support their request.” The agency is also working on developing guidance for sharing collection sites.
Tire producers who didn’t meet recycling targets were notified on March 21 and have 21 days to meet their recycling targets by providing new data, new information or by purchasing credits. Producers may also choose to appeal the notice of fines.
If they don’t take some sort of action, RPRA could issue a fine, or an order for an administrative penalty as they are called, but that won’t be the end of the story.
A company can still be prosecuted for not meeting collection targets under the provincial Resource Recovery and Circular Economy Act of 2016, and if found guilty, face fines of up to $250,000 for each day the offence occurs or continues.
Going forward, the province has changed the targets that tire producers have to meet, which Carlaw said will make it easier for producers to meet their obligations.
Instead of a collection target that Carlaw said was unattainable, tire producers will now have to meet a recovery target that ensures 65 per cent of all tires are processed, retreaded or reused.
“These changes were not retroactive and went into effect on Jan. 1, 2025,” said eTracks’ Carlaw. “For 2023 and 2024, the regulator is faced with the job of being seen to bring the system into compliance according to the previous targets.
“Until the unintended marketplace behaviours are addressed,” she said, “it appears that one PRO will be able to set pricing and hold others for ransom in the industry for the coming years.”
