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Benefits and pitfalls of a bottle deposit scheme

The UK’s recycling market potentially faces its biggest shake-up since councils were given the responsibility to collect recycling from households.

A deposit return scheme (DRS) could mean a radical change of direction in the flow of material – and therefore money – as it moves from manufactur­ers, retailers and consumers on to waste management companies and recyclers. If, for instance, a levy of 10p on a plastic bottle is set, where will that money finally end up and who will own the empty?

Environment secretary Michael Gove raised more than a few eyebrows when he announced that a consultation on DRS on all types of bottles would be held before the year is out. With no indications as to what type of system might be consulted on – apart from news that resources minister Therese Coffey visited Norway earlier this year to look at their DRS– every business and organisation with a stake in the outcome is gearing up to lobby ministers.

Two big players in the reverse vend­ing machine (RVM) industry, Tomra and Diebold Nixdorf, will surely be jostling for position in a potentially huge new market.

Waste management companies are clearly worried that the existing system will be disrupted and that they might see the flow of materials diverted from their grasp. For example, in its response to the announcement, Viridor said that the success of a DRS depends on the competitiveness of the chosen scheme and how material collected at retail points is then made available to the recycling and reprocessing markets.

In a statement, the company said: “Overlaying a DRS on to existing recy­cling collections and services will [affect] local authorities and their con­tracted service providers. This will need to be carefully considered to ensure that we build on, rather than detract from, the progress made in municipal recy­cling to date.”

Councils are also wary, with the Local Authority Recycling Advisory Commit­tee (Larac) fearing that a DRS would divert plastic bottles out of their collec­tions and damage the viability of exist­ing recycling services.

Chair Carole Taylor said: “Larac sup­ports full producer responsibility and a DRS could be a step in that direction. The evidence so far for the UK has not shown how a general scheme can be undertaken without cannibalising council kerbside material.”

Suez, the Recycling Association and many other industry bodies share these concerns. In an amazing feat of timing, Suez published research on DRS on the day that Gove said “yes” to implementing the scheme. The research claimed public support for DRSs but added that it should focus only on containers used on-the-go rather than include the larger bottles people would normally take home.

“It is important to understand that the material revenues alone will not, generally, cover the costs of the system.”

Dominic Hogg, Eunomia chairman

The company said the scheme should cover only plastic PET bottles and alu­minium cans smaller than 0.7 litres, with a refundable deposit of 10p per container. It called for a DRS to be owned by manufacturers, with councils being able to generate revenue by oper­ating redemption points and providing collection points to bolster RVMs on the high street.

Suez chief executive David Palmer- Jones said: “People struggle to recycle while on-the-go, and fewer than half of us are likely to hang on to bottles or cans long enough to recycle when we get home – instead opting to throw them in a public rubbish bin, or worse.”

Despite some trepidation, Gove’s announcement raised more than a few cheers within the sector. Consultancy Eunomia has long been lobbying for a DRS and has a clear idea how the UK’s system might work in practise. Euno­mia wants to see a ‘return to retail’ model, with RVMs installed in shops and a single not-for-profit organisation running the whole system, as happens in Scandinavia.

Eunomia chairman Dominic Hogg said RVMs could be purchased and installed by the retailers, with mainte­nance costs paid ad hoc, or they could be leased from the RVM manufacturer which could also offer service agree­ments.

“Alternatively, the central system operator could buy or lease the RVMs and provide these to retailers,” he added. “The question of ‘ownership’ tends to reflect how the scheme operates, and whether decisions regarding installa­tion are left down to the retailers or whether the scheme itself is involved in RVM financing and provision.

“We emphasise the need to pay retail­ers a fair handling fee for each container they take back. This usually means that a higher handling fee is paid to retailers with a compacting RVM because they incur somewhat higher costs. At the same time, compacting RVMs improve the efficiency of the logistics of the whole system, so the higher fees to retailers can be justified by lower costs of haulage of returned containers.”

Eunomia calls for material revenues to be retained by a central system oper­ator, whoever that turns out to be.

“It is important to understand that the material revenues alone will not, generally, cover the costs of the system,” Hogg said. “Hence, the revenue from selling material is part of the means through which the system is effectively funded.

“The other sources of funding in a sensibly managed scheme are un-claimed deposits and administrative fees paid by beverage companies/ importers.”

Ben Gale, vice-president and man-aging director for UK and Ireland at Diebold Nixdorf, has been a busy man recently. He is having meetings every week with retailers, Government officials and waste management com­panies in an attempt to influence the UK’s DRS.

“Trying to get in front of the Govern­ment at this stage is probably top of the list,” he said.

The company is better known in the ATM and point-of-sale market, but it also has around 14,000 RVMs, mostly in Germany and France but as far afield as Azerbaijan. The company provides the technology, repayment systems and works with waste management companies.

Its RVMs scan the bar code and the type of bottle, then shreds and compacts the material to a 4:1 ratio. Gale says waste management firms therefore get supplied with a pure stream of material which will have more value than from other recycling methods.

“The consultation will be critical,” said Gale. “You either have one com­pany trying to do everything, which is a little bit more like the Norwegian model, covering the collecting, com­pacting, sorting and then looking to reuse and recycle.

“But I think that when you look at the UK market, there is already such a sophisticated ecosystem. The Gov-ernment should be listening not just to the large grocery retail chains but local convenience stores too. These may well be of a size where put-ting the technology in may not be the way to go.

“Councils will need to be part of the discussion – everyone needs a seat at the table.”

In Germany, around 25 cents is the deposit on each bottle. The country has around a 98% plastic bottle recycling rate compared with not much above 50% in the UK.

“When the bottle is taken back, it doesn’t have to be to the same shop,” said Gale. “All bottles are covered, which is why it has been so effective. There is an interchange fee that sits between the various suppliers and therefore will make sure that everyone gets their amount of money back – the consumer, retailer or council.

“And because they have set the [deposit] amount quite high, discarded bottles are being picked up by people looking to make money.”

Gale is very aware of the potential conflict between local authority house­hold collections and a DRS. Being rewarded for recycling on-the-go but not for putting recycling out at home would be a strange state of affairs.

He is also keen for the UK to be sub­ject to a unified system. With Scotland having announced a DRS inde­pendently last year (see box left), there could be a danger of having different systems north and south of the border. Having deposits at different levels would make no sense.

But, in concordance with Viridor’s concerns, Gale does not want to see one collection company clean up on the RVM collection contracts.

“Would you then make a total monopoly which provides all for one organisation and nothing for everyone else?” he asked. “If you look at the Veolias of this world, they are already doing waste collection in the high street. It would seem foolish to proliferate RCVs on the road when there is the opportunity to work with the experts who already have systems in place.”

The key to success, according to Gale, is having an easy-to-understand and generic system: “For me, this is all about the consumer journey. If we can improve our environmental perfor­mance but don’t make it difficult for consumers, then I think people will vote with their feet.”

Richard McKinlay, head of circular economy, Axion: “A DRS will generate very high-quality material for recycling because, unlike kerbside collections, you can control exactly what is collected. This is especially important when producing food-grade rPET.”

Colin Church, chief executive, Chartered Institution of Wastes Management: “In scoping the reach of any DRS system, it will be important to ensure there are no unintended consequences, such as the potential for a threshold effect which might see the size of beverage containers adjusted in future to fall outside the DRS criteria, for example. There also continues to be concern about the impact on local authority collections which must be explored more fully.”

Simon Ellin, chief executive, Recycling Association: “Normally, we would welcome any proposal that in principle would lead to an improvement in quality. Clearly, a DRS for plastic bottles, glass bottles and cans is likely to lead to a purer stream of recyclable material.

“However, we need to understand what this will mean for the entire domestic recycling system. For example, how will councils replace what is a valuable revenue stream for them, and could a DRS make the collection of other material such as cardboard and paper uneconomic for local authorities?”

Jacob Hayler, executive director, Environmental Services Association: “A DRS will need to be considered in the context of the upcoming resources and waste strategy to ensure a package of measures that helps the UK to achieve its stated aim of becoming a world leader in resource productivity, while also tackling littering.

“The biggest priority for the recycling industry remains greater support for end markets for recycled materials. There is no point recovering all this material if there is nowhere for it to go, and particular consideration is needed for material left to be collected at the kerbside if a DRS system is introduced.”

James Piper, managing director, Ecosurety: “We welcome in principle any initiative aimed at improving UK recycling. But the question now is whether the UK has the correct infrastructure – capacity inside its recycling plants – to deal with the increase in glass, plastic and steel and aluminium cans that will be generated from such a scheme.”

David Wilson, managing director, Vanden Recycling: “We currently have good recycling collections for bottles from the home, and a DRS should help to improve the ability of consumers to recycle their drinks bottles when out and about.

“It should also help to control litter and aid an increase in recycling rates of bottles. We also applaud anything that should lead to a higher quality stream of material, and DRSs have been proven to do this.”

 

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