An update on results for Q3 2019 for California Carpet Stewardship Program: Grants, Subsidies, Industry Developments

1. CARE Sustainable Funding
Oversight Committee
Q3 2019 California Summary &
Recommendations for Approval
Updated 11/26/19

2. 2
Agenda
 Quarterly Overview of Results
 Manufacturers Report
 Quarterly Subsidy and Expense Payouts
 Drop-off Program Update
 Approval Requests
 Other Information (as required)

3. 3
CARE’s Executive Director’s Message
The 3rd quarter has proven to be a big one for CARE in several ways. First, it was a record quarter in terms of
recycled output and recycling rate. The recycling rate for Q3 was 19.9% vs. 18.4% in Q2! Carpet sales increased
slightly (ca. 100,000 yd2) in Q3. PC4 volume continues to grow at a slow, steady pace. N6 shipments continue to
climb as a result of expanding market demand. Finally, almost $750,000 in grants were paid out in Q3. Second, Q4
is setting up nicely for new capacity to come on line.
CalRecycle has elected to continue to work with CARE on carpet recycling in CA by signing the RFA for Chapter 0
on November 20th after the public hearing. While this is not a Q3 event, the significance is important and is
included here for timely communications. CalRecycle found CARE met 2 of the 5 objectives completely and only
partially met 3 others. CARE has until January 13th to reach agreement on timelines and plans to finalize the
partially completed objectives. In addition, CalRecycle has indicated CARE must develop a plan to comply with the
recently signed AB 729 law which includes: a transition plan in the event CARE is decertified, creation of a trust
fund or escrow account for transfer of fund balance in the event of a transition, and implementation of differential
assessments tied to the costs to recycle different materials.
In early November Eastman Chemical Company made a major announcement regarding the use of PET as a
feedstock component for its Carbon Renewal platform for the synthesis of chemical building blocks. Circular
Polymers, a grant recipient, will be the key supplier to Eastman. The expansion by CP to meet this demand will
enable further growth in collections which will facilitate the availability of more nylon 6 and 66 as well.
One final note: We have learned that Director Smithline will be resigning his position by the end of December. A
replacement has not been named at this time.
All stakeholders are encouraged to go to the CARE website, click on the CA tab and sign up for the monthly
newsletter to stay abreast of the latest developments. www.carpetrecovery.org
Bob Peoples, Ph.D., Executive Director, December 5, 2019

4. 4
AB 2398 Summary Results

5. 5
AB 2398 Performance Trends (millions of pounds)
*Average: 2011 is average of Q3 & Q4; 2012-2015 is 4 quarter average

6. 6
AB 2398 Performance Trends (percentage)
*Average: 2011 is average of Q3 & Q4; 2012-2015 is 4 quarter average

7. 7
Gross Collected PCC Sent Back to Landfill**
*Average: 2011 is average of Q3 & Q4; 2012-2015 is 4 quarter average
**Percentages shown is % of Gross Collected PCC actually sent to landfill as PCC or process waste.
Data above includes CSE and Processor landfilled pounds beginning in Q2 2014.
Q3-2019 Gross Collected: 22.5M pounds – 3.4M sent to landfill
Cumulative to landfill: 169.0M lbs.

8. 8
Disposal
% Change in Disposal: -1.3%

9. 9
Calcium Carbonate (PC4) by Quarter

10. 10
AB 2398 Manufacturers/Mills
Quarterly Summary Report

11. 11
AB 2398 Mills’ Summary
Cumulative SQYD sold: 777.7M
Cumulative Remittances: $108.5M

12. 12
Sales by Quarter

13. 13
AB 2398
Quarterly Subsidy and Expense
Payouts

14. 14
Summary of Payouts Q3 2019
1
2
3
4
* All CSE pounds are now consolidated directly in CSE section.
Previously Processors who also collected were reported separately.

15. 15
Summary of Expenses
All data from Melanie confirmed 11/5/19

16. 16
Payouts Over Time
Adjusted
Target
Q3 2014
Launch Tier
2 Growth
Bonus
Q2 2015
Launch
Retroactive
subsidy in
Q3 2015
Growth
Bonuses
Eliminated
Q1 2017
*Average: 2014-2017 is 4 quarter average
NOTE: All REUSE payouts are counted under the CSE category.
Tier 2 N6
Subsidy
Q4 2017
Tier 2
N6,6
Subsidy
Q1 2019

17. 17
Fund Balance Trends
All data from Melanie 11/12/19
Reserve = 2 month average of the last quarter total expenses (effective Q1-2019)
ACCRUAL BASIS
Based on unaudited numbers – adjustments may be made after audit closes
SPC: Note reserve change consistent with approved Plan

18. 18
CA Employees (FTEs*)
* Fulltime equivalent employees

19. 19
Drop-Off Site Program Update
Q3 2019

20. 20
Total Drop-off Sites

21. 21
Drop-Off Site Total Program Costs

22. 22
Annual Cost Comparison
 Hauling: 48% of Q3 2019 Total Program Cost
 Storage: 15% of Q3 2019 Total Program Cost
 Recycling Fees*: 37% of Q3 2019 Total Program Cost
*”Recycling Fees” was referred to as “Tipping Fees” in previous slide decks

23. 23
Material Collected by CARE Drop-Off Sites (Annual)
 2019 lbs collected YTD: 92% of total 2018 lbs collected
 Q3 2019 lbs collected: 53% increase over Q3 2018 lbs collected;
54% increase over Q3 2017 lbs collected

24. 24
Drop-Off Site Program Summary
 72 operational CARE Drop-Off Sites in 51 CA counties by end of Q3
 158 operational private sites reported at the end of Q3
*Cost/Capita uses updated Census information as available

25. 25
Recommendations to SFOC

26. 26
Recommendations for SFOC Approval

27. End of Review