Scottish Government Consultation: A Deposit Return Scheme for Scotland

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1 In September 2017 Scottish Government published A Nation with Ambition: the Government s Programme for Scotland which confirmed that Scotland would implement a deposit return scheme (DRS) for beverage containers. Following the announcement, Zero Waste Scotland (ZWS) has been engaging with stakeholders to assess the key principles required for a DRS and the possible impacts of different criteria for the scheme. Scottish Government has now released a consultation on A Deposit Return Scheme and is asking for stakeholder feedback on the parameters of the scheme and how it should be implemented. ZWS also intend to have a number of further stakeholder engagement events whilst the consultation is open. The deadline for consultation responses is 25 September Valpak will be preparing a draft response to the consultation which we will share with our members, however we would also encourage any companies which may be affected to respond directly to the consultation. Please send any comments you would like incorporated in our draft response to Hannah Woodrose at Hannah.woodrose@valpak.co.uk or by telephone on by 31 July Introduction A Deposit Return Scheme is a system whereby the consumer pays a small amount extra for a product, on top of the sales price: the deposit. The deposit is fully refundable if the consumer returns the beverage container to a designated collection place for recycling. This consultation is for a DRS on beverage containers; in most countries that have a DRS for beverage containers the deposit is often around per container. The diagram below shows how a DRS system could work: 1

2 Scottish Government is now consulting on a DRS for beverage containers. Whilst this consultation focuses on Scotland, it is acknowledged that in March 2018 England confirmed they will implement a DRS, subject to consultation. Scottish Government recognise the benefits of a UK system and intend to work with the other devolved administrations to attempt to design a coherent system whilst still achieving Scotland s aims and ambitions. It is also noted that the DRS system would need to be compatible with other Producer Responsibility regimes* and also with the Recycling Charter for kerbside collections in Scotland. *NB: The current Producer Responsibility regime for packaging in the UK is the PRN system. Reform of the PRN system is currently under discussion both to include requirements for the recent Circular Economy Package amendments to the European Waste Directives and to meet Government policy strategy. The consultation outlines four aims of the DRS: Increase the quantity of beverage containers returned for recycling Improve the quality of the material by removing contamination associated with mixed collections Changing consumer behavior to encourage recycling Ensuring Scotland gain the full economic and societal benefits In conjunction with the work on DRS, an Expert Panel has also been convened to assess other materials to help reduce litter and to assess if Producer Responsibility can also be used to influence better product design for recycling, for example by varying fees based on recyclability or recycled content, or excluding certain materials from the system. Details DRS systems are complex, with a number of different aspects interacting together. The consultation questions are split between eleven of these aspects, or key principles (there are twelve key principles, eleven listed below plus how to measure success). The principles also interact; for example fraud prevention is linked to system operation and regulation and is also linked to the level of levy (a higher levy might encourage fraud). Key principle What materials will be collected? What types of products will have a deposit on Details 1. PET plastic 2. PET plastic and cans 3. PET plastic, cans and glass 4. PET plastic, cans, glass and HDPE 5. PET plastic, cans, glass, HDPE and cartons and cups This section also outlines possible impacts to Local Authority collections, and notes that the DRS could be designed so that Local Authorities, or the Material Recovery Facilities that material is sent to, could claim the deposits for any material where the deposit had not been claimed by the consumer. It would be possible to cover different types of products, as opposed to the material the beverage container is made of. The categories provided are: 2

3 them? Soft drinks Mixers Where will you be able to get the deposit back? How the scheme will be paid for How the scheme is Bottled water Fruit or vegetable drinks Dairy (including milk-based products, e.g. milkshakes, and milk alternatives) Sprits (over 30% alcohol by volume) Beer, wine and cider Other alcohol not covered in two categories above Other (e.g. tea and coffee) It is most likely the deposit will apply to containers of up to 3ltr capacity. It is concluded that targeting on-the-go material (i.e. containers where the products are consumed outside the home environment) would be difficult to define. There are three options proposed under this section: 1. Return containers anywhere beverages can be purchased. This could be completed manually (i.e. over the counter) or alternatively through Reverse Vending Machines (RVMs) 2. At centralised locations e.g. a bring site or drop-off point 3. A mix of the two above, which may allow smaller retailers with less space to opt out of providing a takeback option if there is a collection point within a reasonable distance The consultation also notes that a way for online grocery shoppers to takeback their containers would be required. The consultation requests stakeholder views on how this may operate. Again the consultation notes that the DRS should work coherently with the producer responsibility system and that costs do not put unfair burden on producers. It also notes that a European Commission communication states that producers should not be charged twice for the same service. Costs of the system include: Refund of deposits Infrastructure Handling fees and providing return locations Logistics (to return containers to sorting facilities) System administrations costs Revenues would be Value of the material (if the material is owned by the system) Unredeemed deposits (paradox: the lower the recycling rate the higher the value of unredeemed deposits) Producer fees Generally agreed that best to be clear labelling at purchase that a deposit is applied to the 3

4 communicated so everyone understands it How should we stop fraud? How much the deposit should be What infrastructure to put in place, and the logistics involved How to create additional benefits from the scheme Who owns the system container. This is for individually sold products and multi-packs. Likely to be a clearly identifiable label on the product to assist consumers and retailers manually taking back containers. Will also need to be national communication, possibly assisted by Scottish Government pre-launch and then by system administer thereafter. Fraud is present in other countries with DRS systems. For modelling purposes, ZWS have assumed a fraud level of 1.5%. Noted that fraud is less-likely in UK-wide system. There are three scenarios presented: 1. No change to labelling of products: would require higher producer fee to compensate for loss from fraud 2. Specific SKU barcode: producers would pay more -specific labelling / distribution 3. High-security labels / inks: producers would pay more for specialised labelling Could be fixed for all containers or varied for size, material or product (although this adds complexity and could be applied by varying producer fees instead). Interacts with other aspects; must be set at high enough level to incentivise return, but not too high to encourage fraud. Takeback options: 1. Reverse Vending Machines (RVMs): clear symbols should be used to show how to operate. May allow small amount of compaction 2. Manual take back: would require a central counting house to verify number collected. 3. Online shopping option required Counting, sorting and baling: Central counting house required for where manual takeback has taken place. Consider whether better to sort material during or after collection. Logistics: Could be completed directly by the scheme administrator, via a contractor or by multiple contractors, or alternatively via current retailer network (backhauling). The consultation also notes that the system will generate employment opportunities. There are two additional benefits identified: 1. Donation to charitable causes: this could be via an option on the RVM, by schools etc. running projects or by adding receptacles to bins to allow others to reclaim the deposit 2. By improving container design: by only allowing certain materials into the scheme or varying fees for recyclability or recycled content 3 options provided, but could also apply a combination of the below 1. Industry owned not-for-profit: Industry (producers and retailers) are board members and run the scheme 2. Privately owned: could be tendered out to one company to administer, or the RVM owners could run the scheme 4

5 How the system is regulated 3. Public ownership: Scottish Government or a public body own and run scheme Regulatory enforcement is required for: Ensuring producers report correctly Ensuring correct labelling Ensuring return points are working correctly and no fraud is taking place Waste management controls are being adhered to (e.g. duty of care, storage and transportation requirements, permitting etc.) The Regulation could be provided by: An existing body e.g. SEPA or Trading Standards New body The system administrator (who would also then be subject to regulation) Examples The consultation provides four example DRS models, however these are not intended to be DRS options, rather they are intended to illustrate how different aspects of the system interact and the expected return rates of similar schemes in other countries. There is no preferred option. The four example systems were measured against 4 criteria: 1. Fairness for all demographic groups 2. Maximizing accessibility 3. Employment opportunities 4. Raising funds for charitable causes A Net Present Value calculation was completed for a 25 year for each of the examples provided. The four examples are not the final options, but the consultation does ask which stakeholders think best fits Scotland s ambitions. The example diagrams and NPV for producers and the total NPV over 25 years is provided on the following pages. Examples diagrams are from the consultation document which contains public sector information licensed under the Open Government License v3.0 details of which can be found here: The consultation is available here: 5

6 Example 1 Example 2 year 668 million year 844 million 494 million 352 million 6

7 Example 3 Example 4 year 236 million year 519 million 745 million 990 million 7