Estonia has been operating its deposit return scheme (DRS) since May 2005. Since then, the country, which has a population of 1.3 million, has collected 3.75 billion items of packaging. The scheme includes PET, steel and aluminium cans, as well as one-way and refillable glass, and its return rates for each material are 80% or above. Fellow Baltic state Lithuania introduced its DRS in 2016.
Lithuania’s container deposit return system
In February 2016, the Lithuanian government implemented a DRS for used beverage containers for recycling. To combat litter and increase collection and recycling rates, consumers would pay a deposit of 10¢ (8p) when purchasing eligible drinks containers. This would be refunded when the empty container is returned. Tomra secured the contract to supply reverse vending machines.
The environment ministry initiated the deposit process in April 2013, passing amendments to the packaging law through parliament a year later. The legislation would apply to glass, non-refillable plastic and metal beverage containers, 0.1-3 litres in size.
In March 2015, the ministry named non-profit organisation Užstato Sistemos Administratorius as the DRS operator. It was established by the Lithuanian Association of Brewers, Association of Lithuanian Trade Enterprises and Lithuanian Natural Mineral Water Manufacturers’ Association.
The system operator is responsible for transparent data management, deposit clearing, reporting, logistics, marketing collected materials and educating stakeholders and consumers. Its sources of income include unredeemed deposits, sale of collected materials and administration fees paid by beverage producers.
The government chose a ‘return-to-retail’ collection model, meaning that shops selling beverage containers must also take back used containers for recycling. In Lithuania, this applied to stores larger than 300sq m and all stores over 60sq m in rural areas. Retailers were provided with RVMs either inside the shop or as outdoor kiosk installations, depending on the retailer’s size.
Consumers are refunded their deposit via vouchers that can be redeemed in-store as cash or credit toward their shopping bill.
By the end of 2016, 99.8% of the Lithuanian public were aware of the DRS, with 89% having used it at least once, and 58% of consumers reported recycling more.
Prior to the scheme, only one-third of all beverage containers in Lithuania were returned. USAD had a goal of a 55% return rate in 2016. The return rate reached 91.9% by the end of 2017.
The Campaign to Protect Rural England (CPRE) recently hosted Saulius Galadauskas, chair of Lithuania’s DRS Uzstato Sistemos Administratorius (USAD) and head of the Lithuanian Brewers Association, as well as Rauno Raal, former chief executive of the Estonian Deposit Packages Organization and now managing partner at consultancy Earth Care. Both shared their insights into how the DRSs in their countries worked, the barriers they overcame and the factors to be mindful of.
Setting the correct parameters
In Estonia, containers can be between 150ml and 3 litres, and diameters and shapes are specified. Raal says these decisions were informed by littering surveys, waste composition surveys and research into countries with DRSs in operation, such as Norway, Finland and Sweden.
Lithuania has set in law what types of product, materials and sizes are included. Galadauskas explains that when the country’s system was set up, glass wine and spirit bottles were excluded from the scheme but this has now become an issue. Consumers have been putting pressure on politicians to include such glass containers in the DRS, but any such expansion will involve cost in upgrading reverse-vending machines (RVMs) and creating additional space in retailers.
He says: “It is better to start [a DRS] with the full range of materials.” He adds that waste management firms in Lithuania are also against any such expansion of the DRS because they want to keep this glass.
“But there are efficiencies to including more glass in the DRS, which is already collected by colour, meaning that it produces a cleaner material stream that does not require separation down the line and it can use trucks that are already collecting material.
Ahead of Lithuania introducing its DRS, there were objections from waste management companies. But packaging producers took the stance that they would take responsibility for recovering the packaging they produced in the way they thought was best: via a DRS.
Galadauskas adds that there has been no negative impact on the country’s industry-funded Green Dot household packaging recycling system since the introduction of the DRS, but there was a revision of charges. The Green Dot system had to readdress the loss of high-value beverage containers through introducing higher charges to its system.
“You need to establish a cost structure where you are charging the real price of collection and recovery per package without cross-subsidies,” Galadauskas explains.
He adds that an argument against a DRS was that it was taking the ‘cream’ of the container materials – the high-value PET, aluminium and, to a degree, glass. “One would say, yes, we are taking that cream and then that cream is not subsidising, let’s say, cartons and other packages that are theoretically recyclable but in practise incinerated.
“We established a fairness between packages – expensive materials stopped subsidising the hardly recyclable materials.”
Raal says that all packaging collection systems need to – and do – work in parallel. On the fear of a DRS plundering kerbside collections, he says: “This is a fight about interests and money. All the systems have their pluses and minuses – there is no ideal system in this world.
“The fear that kerbside [collections] will be non-existent after a DRS – that is just nonsense. In Estonia, we have three container systems out there and we have one deposit [system] and they work in parallel. We look at each other as partners rather than competitors.”
He adds that in Estonia, the DRS and the Green Dot packaging recycling system have worked together on occasions. For example, with a shared a retail client, bins for Green Dot packaging recycling were placed close to where consumers would return their deposit containers, making it easier for the householder to deal with their recyclables in one go.
Raal adds that DRSs are sometimes attacked for targeting only a proportion of the packaging waste stream, but surveys show that beverage containers are the type of packaging most likely to be littered: “That is why the DRS is important; the other systems are also important and should be developed in parallel.”
Consumer acceptance and behaviour change
Raal says the effect of a DRS is “very fast” on tackling beverage container litter in cities and the countryside because of the monetary incentive. Galadauskas agrees, adding that any beverage containers that are littered are generally collected by others fairly quickly to be cashed in, with children particularly engaged.
Consumer surveys in Lithuania have shown great consumer acceptance of the DRS. A study run by the environment ministry almost 10 years ago found that 70% of consumers thought the DRS was a good idea. Two years into the scheme, 97% have said it is ‘necessary’ and 93% say it works ‘well or very well’. Consumers also say the DRS has encouraged them to start sorting packaging for recycling that they previously had not done.
“If you keep milk out of the DRS, you don’t not have too many problems – DRS and milk, I can’t recommend in any way.”
In Estonia, although it will vary by city and region, householders usually take their containers back once or twice a month rather than every time they shop. Typically, they will take two bags or about 50-60 items of packaging at a time. Those with larger houses and garage space may store packaging for longer and return it every quarter or six months, using 150- litre bags.
Raal says: “Estonia’s economy is now doing quite well, but in the olden days it was quite simple. Even if you had just 30 packages you wanted to get your money back quite quickly – and if we looked at the returns it was clear that within five days before salaries were paid for the month there were heavy returns.”
He adds that surveys show the biggest motivation for people to recycle their packaging using the DRS is money (more than 50%).
Advice and ideas
Galadauskas believes that political will is the most important factor needed to set up a DRS.
“If you start asking retailers, there is inertia – on their costs – for producers, anybody, packaging recovery is very small thin line…there are so many fears. Waste management companies are constantly shouting because you are taking business from them and eliminating them. If you start asking for everybody’s opinion you will never get the conclusion you need.”
His advice is to use independent studies, free from vested interests, and to visit and learn from countries that have run successful schemes. He suggests Norway would be a good example for the UK to learn from.
Raal adds: “It doesn’t matter if it is a 60 million or a six million population, the core of the DRS is always the same: take that, learn from the mistakes made, use it, but never forget that 30% of the scheme is country-specific. When you make your plan, this 30% has to be taken into account – and you have to plan more carefully, so take a little more time.”
Galadauskas warns that limiting the DRS to only plastics and cans “would be a mistake”, based on the experience Lithuania is having of consumers wanting to recycle all their glass bottles through the system.
Raal suggests that small shops in the UK could collaborate regarding a DRS and offer shared collection points which either they or an operator manages. He suggests a solution for councils, especially those in rural areas, is to put RVMs in their household waste recycling centres and be treated as a retailer, so that they are compensated on a cost per package basis.
Both Raal and Galadauskas dismiss the idea of trying to limit a DRS to on-the-go material as being unworkable. “It is impos-sible to have separate coding for on-the-go. It is not possible to do practically,” says Raal. He explains that if retailers are investing €20,000-€25,000 (£17,500-£22,000) in an RVM, then limiting collections to on-the-go material does not make financial sense.
Galadauskas adds that suggestions for the DRS to target on-the-go are simply a way of buying time by those who do not want to oppose the DRS directly.
DRS operations and set up
Lithuania has 2,500 shops, and 1,000 of them use RVMs and 1,500 collect DRS containers manually. According to Galadauskas, 90% of all its collected packages is through RVMs. An exemption from having to take back deposit returns is included in Lithuanian law for shops smaller than 300sq m in cities and 60sq m in villages and rural areas. But exempt shops often do take back because otherwise they find themselves at a competitive disadvantage because consumers tend to stay and buy from the shops where they make their returns.
In Lithuania, kiosk-type storage huts are provided free of charge for small rural shops which have no space. Galadauskas explains that the logistics for collections is organised “not by cost efficiency but convenience for retailers”. If they have more than two bags of material, the DRS has an obligation to collect. Sealed bags are provided to retailers to minimise leakage.
Raal says that logistics “has to be a totally different model; it has to be much faster, with more pick-ups in summertime”. He says that smaller format RVMs, the size of one or two refrigerators, are now available and these are a good solution where space is tight.
In Estonia, outsourced operators will collect the DRS containers. These companies may service collection points that are used by more than one retailer. Retailers are compensated on cost. They receive a retail handling fee per package, which is calculated using a formula based on averages and covering the real costs. Raal explains that this is not a profit-based activity for retailers and usually the fee, or part of it, is paid to the third-party operator.
Galadauskas explains that Lithuania took a year of negotiation between retailers and the DRS to agree on the level of compensation because retailers were concerned about lost profit on the floor space needed for DRS collections. It put out a tender for a ‘global, neutral’ auditing firm to carry out a study to definitively measure the costs and space needed to put in place the DRS. “We made a model of retail compensation by material and size; now we have that fixed and agreed, and how it is adjusted according to inflation and other factors.” It is reviewed each year.
In Estonia, 70% of the system is under the control of producers and 25% by retailers. Raal says: “It is always about quality. It is very important to give a high-quality service to the retailers because if you don’t you will have problems – they make a lot of noise.”
The RVMs themselves have not posed problems for either country. Raal explains that they have security controls which read barcodes on containers and will reject items that do not conform to the correct weight or shape. He concedes that the residual liquid in containers does mean there is “always a bit of smell” but that can be addressed simply with “ventilation in the client area which is always there when the system is put in place”.
But he warns: “If you keep milk out of the DRS, you don’t not have too many problems – DRS and milk, I can’t recommend in any way.”
In Estonia the RVMs are connected to a central server under control of the DRS, and a monthly report is sent to each retailer on how much it has collected. Transportation of the collected material is usually put out to tender, and these are often won by retailers using reverse logistics and back-hauling.
Samantha Harding, litter programme director at the Campaign to Protect Rural England
systems for drinks cans and bottles operate in many countries around the world and have done for decades, pushing collection rates as high as 98%; reducing litter; improving the quality of used packaging and therefore increasing its value; creating jobs; and saving local councils tens of millions of pounds a year, by making those who create the packaging and waste financially responsible for dealing with it.
With England now set to have its own DRS, we can benefit from learning what has and hasn’t worked in other countries.
Crucially, for England’s DRS to be economically viable and easy for consumers to use, it has to be fully inclusive in what it accepts. So that is every type of drinks container – whether it is made from glass, plastic, aluminium or Tetra Pak, of every shape and size.
Other systems have shown us that glass, in particular, can be a difficult material to collect and it isn’t as high in value as other materials, such as plastic. But people know that it’s not viable to leave broken glass in the countryside or local parks and streets, so it has to be included. In Lithuania, where they tried to exclude it, they are now having to ‘retrofit’ the system expensively to include glass following pressure from consumers.
We have also seen in other systems that if an arbitrary limit is set on the size of drinks packaging that is accepted, such as ‘only bottles over 500ml’, drinks and packaging companies started to produce 499ml bottles to avoid the system. This exempts them from the system and allows them to dodge the financial responsibility of dealing with the waste they create.
The UK has a golden opportunity to introduce a world-leading DRS, but it is important that we get this right first time. We need a simple system that collects every single type of can and bottle. The system must be compatible with the one that will be introduced in Scotland, and there must be as many return points as possible – making the system effective and simple for the consumer.”