CHARTERED INSTITUTION OF WASTES MANAGEMENT
POSITION STATEMENT – AUGUST 2023
Deposit Return Scheme (DRS) for drinks containers
CIWM view
The CIWM position on Deposit Return Schemes for drinks containers across the UK nations is that whilst globally they have shown to reduce litter and improve the quality of recycling, the implementation at the same time as consistency reforms in England and Extended Producer Responsibility for packaging (p-EPR) could mean DRS may ultimately be unnecessary.
Of the proposed measures in the triumvirate of ‘collection and packaging reforms’ from the government’s Resources and Waste strategy, CIWM believes that p-EPR and consistency of collections in England will make a greater contribution to improving recycling and achieving a circular economy than DRS, and DRS should therefore wait until both of these have been fully implemented, and their impacts assessed.
If and when DRS is introduced, CIWM believes the scope should be for an ‘on-the-go’ scheme (drinks containers under 750ml in size), as opposed to an all-in-scheme (drinks containers up to 3L in size). This would be a lower cost solution and simplify the collection infrastructure / logistics arrangements for capturing those containers currently most likely to be lost to the system, i.e., consumed away from home or places of work. CIWM further believes the scope of DRS should cover steel, aluminium, and polyethylene terephthalate (PET) drinks containers, but for the reasons listed in ‘The Issues’ in this position statement, should exclude all glass containers.
Whilst respecting that waste policy is a devolved issue, with regards to scope, fees and labelling CIWM believes there should be no divergences between any implemented national DRS. Any inconsistencies would create inefficiencies for the wider resources and waste sector, producers, manufacturers, brands, as well as potential problems for citizens.
CIWM believes the hybrid concept of a digital DRS system could potentially embrace the positives of DRS, whilst addressing some of its negatives, but that larger scale trials are needed to prove the efficacy of such a system.
What is it?
Deposit return schemes are programs that provide financial incentives for consumers to return used items for recycling or reuse. The consumer pays an up-front monetary deposit on any in-scope item at the point of purchase. This deposit is then redeemed on return of the used item to a designated return point.
The theory is the financial incentive of getting the deposit back will encourage ‘desired’ consumer behaviour – essentially reducing littering and collecting high quality materials in greater quantities, thus conserving resources, and reducing greenhouse gas (GHG) emissions. It is also claimed that DRS can encourage consumers to think more about the environmental impacts of their consumption and disposal habits, thus encouraging more sustainable behaviour in the longer-term.
DRS programmes in various forms are currently in operation in many European countries; Sweden, Iceland, Finland, Norway, Denmark, Germany, the Netherlands, Estonia, Croatia, Lithuania, Slovakia, and Latvia. Norway’s scheme has been in place since the 1970s with Denmark and Sweden introducing theirs in the 1980s. Elsewhere, schemes are also in place in many Australian states and territories, several Canadian provinces, Ecuador, and numerous states in the USA (including Hawaii and Oregon).
Proponents of DRS point to higher performing schemes, particularly in Europe, which achieve 90%+ redemption rates for in-scope packaging placed on the market.
DRS is generally considered to be popular with consumers. In their 2021 consultation, the government claimed the appetite for introducing a DRS remained strong, with 83% of respondents to the 2019 consultation expressing support for the introduction of a scheme. In their January 2023 response to the 2021 consultation, government referred to Defra consumer research carried out in 2019 where 74% of survey participants supported a DRS.
Trials of a digital DRS system, where citizens can use existing kerbside waste and recycling collection services and redeem their deposits with QR codes via their smartphones, have been undertaken in Wales and Northern Ireland, with encouraging results, and larger scaled trials are planned.
The issues
Across the UK, consumers consume an estimated 14 billion plastic drinks bottles, 9 billion drinks cans, and 5 billion glass bottles a year. The government claims that a UK DRS will reduce subsequent litter and improve recycling quality are largely reliant on the experiences of from other parts of the world, who by-and-large, established their Deposit Return Schemes in the absence of established kerbside collection schemes. The government’s case for a UK DRS also lacks the thorough research needed to assess the potential carbon impacts of reverse vending machines (RVMs) and citizens travelling by car to return points.
With consumer participation being a critical factor for a scheme’s success, there is some uncertainty about how UK consumers will react to the loss of convenience of being able to place used drinks packaging containers in their kerbside bin, versus the inconvenience of having to visit a return point to reclaim their deposit under DRS.
Purchasing habits and behaviour have also changed considerably in the years since the DRS scheme was first proposed (e.g. on-line purchasing during covid-19), and the impacts upon the way in which citizen might engage with schemes and take back in-scope drinks containers to return points, are now uncertain.
DRS schemes can also have a detrimental impact on the poorest citizens, in particular those who cannot easily access return points, and those with limited capacity in flats, high-rise, and multi-occupancy buildings to store used packaging.
Concerns have also been expressed regarding the negative impacts that a DRS will have on the value of other recyclates that will remain in the household waste collected by local authorities at the kerbside, and the reimbursement arrangements for local authorities, who will inevitably end up handling some residual DRS materials, for which they will receive no p-EPR payments.
There are practical problems associated with the collection of glass within a DRS such as the high carbon impacts from the transportation glass to and from collection points, the cost of glass capable RVMs, the H&S risks associated with broken glass; noise, and difficulties counting broken glass bottles at collection centres.
There are still some concerns, despite recent government announcements, about the VAT treatment of deposits, as well as the treatment of in-scope containers sold in multi-packs.
The delays to the governments response to the 2021 DRS consultation, and the deferment of p-EPR, combined with the Scottish DRS going live in 2025, make the timetable for ensuring that the Deposit Management Organisations (DMOs) have sufficient time to be established and the required operating systems implemented challenging.
The background
Of the four UK nations, Scotland was due be the first to go live with a DRS in August 2023. However, amidst much political wrangling and arguments with industry and retail stakeholders, the scheme was formally delayed until at least October 2025, bringing Scotland into line with the planned start date for the schemes in England, Northern Ireland, and Wales.
Scotland had already indicated that in terms of DRS scope and deposits their scheme would:
- Include glass and PET bottles, aluminium, and steel cans
- Be an ‘all in’ rather than an ‘on the go’ scheme with containers between 100ml and 3 litres in scope
- Charge a flat 20p deposit for each individual container
Joint English, Welsh and Northern Irish consultations on DRS proposals were held in 2019 and again 2021. Defra (on behalf of the English government) have stated they hope the implementation of DRS will ensure 85% fewer containers are littered within three years of launch.
In January 2023, Defra published the joint government’s response to the 2021 consultation, with the following stand-out points:
- England, Northern Ireland, and Wales opted for an ‘all-in’ DRS with containers between the sizes of 50ml and 3 litres in-scope.
- England and Northern Ireland opted for containers made of steel, aluminium, and polyethylene terephthalate (PET) to be in-scope.
- Wales opted for containers made of steel, aluminium, polyethylene terephthalate (PET), and glass to be in-scope, consistent with Scotland.
- The DMO will set the deposit level, which could be fixed or variable, but the maximum will be set out in the regulations.
Indication from government that DRS would be rolled out in three phases:
Phase 1: government activity up to the appointment of a Deposit Management Organisation (DMO), including laying the regulations, which will come into force by the end of 2023.
Phase 2: The appointment of the DMO by the summer of 2024.
Phase 3: DRS rollout, with the scheme launch planned for 1st October 2025.
There are still many issues yet to be resolved and clarified, including the full carbon impact of the entire system rather than the aspects covered in the consultation, and further work is needed on the littering impacts, VAT implications for deposits, and local authority payments.
Other areas of ‘clarification’ addressed in the 2023 government consultation response were:
- Labelling of in-scope containers, which will be a key aspect of a successful DRS and the government has said container labels could (but not should) contain a logo to identify whether it is part of the scheme, a QR/ barcode marker that can be recognised by an RVM, but not necessarily the amount of the deposit. Some of this marking will be mandatory, but it will be the DMO who will decide the details.
- A DMO will be appointed to run the DRS, who will be part-funded by producer registration fees (which it will set), the revenue from collected and reprocessed materials, and any unclaimed deposits. However, because regulations will need to be made separately for England/Northern Ireland and Wales, two applications may have to be made by DMO applicants leaving the door open to having two separate DMOs, as well as a separate DMO in Scotland. This process will be set out in the regulations rather than by the competitive tender process.
- A [phased] collection target of 70% in year one, 80% in year two, and 90% thereafter must be met by the producers three years after the DRS comes into operation (currently October 2028), will be set out in the regulations. However, this obligation passes onto the DMO once a Producer registers with it and it will be the DMO’s responsibility to fulfil that obligation on their behalf.
- VAT treatment of deposits needs to be fully clarified, despite a government letter to the Scottish government in 2023 stating VAT will not be due on reclaimed deposits. All 4 nations are still in dialogue with HM Treasury about the practicalities of this issue.
- Return points at retailers selling in-scope containers will be mandatory, although regulations will be flexible and exemptions will be possible in certain circumstances, but retailers seeking exemptions will have to apply to the DMO. Retailers will be entitled to receive a “handling fee” that compensates them for the inconvenience of hosting a return point, and this will be set by the DMO and funded out of the revenue it receives. Retailers will also have the right to refuse a return when certain conditions are not met, and these will be set out in the regulations, but could include the container not being identifiable as a DRS container, soiled/ not empty or on religious/ ethical grounds (e.g. where alcoholic drink containers are being returned).
The DMO may also permit voluntary return points at locations such as bus or train station to ensure that there is an accessible and comprehensive network of return points. Online retailers, especially large grocery retailers, must offer a ‘takeback’ service from the start of the DRS. The government is also proposing to introduce a new permitted development rights regime for RVMs to ensure the smooth implementation of the DRS, but this is the province of another government department, as well as a devolved matter, so the situation is unclear.
- Local authorities and waste operators may be able to separate out containers and redeeming the deposit on them, but local authorities have expressed concern about the feasibility this arrangement and have indicated it might not be economically viable.
- Compliance and enforcement will in the first instance the responsibility of the DMO, who will be expected to undertake initial monitoring and compliance to check on whether businesses (producers and retailers) are complying with the regulations, before escalating any serious non-conformance to the environmental regulator (e.g. EA, NRW). There will also be a role for local authority trading standards officers (probably through the Primary Authority Scheme) for the monitoring and enforcement of certain retailer obligations.
CIWM Position Statements represent the Institution’s views at a particular point in time. They remain under constant review, in the light of new experience and research.