December 2008 - GOV.UK

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Review of Packaging Deposits System for the UK Final Report December 2008 www.erm.com

Defra

Review of Packaging Deposits System for the UK

December 2008

Reference 0088452

Prepared by: Simon Gandy, Jonna Fry and Jackie Downes

For and on behalf of Environmental Resources Management Approved by: Simon Aumonier Signed: Position: Partner Date: 11th December 2008

This report has been prepared by Environmental Resources Management the trading name of Environmental Resources Management Limited, with all reasonable skill, care and diligence within the terms of the Contract with the client, incorporating our General Terms and Conditions of Business and taking account of the resources devoted to it by agreement with the client. We disclaim any responsibility to the client and others in respect of any matters outside the scope of the above. This report is confidential to the client and we accept no responsibility of whatsoever nature to third parties to whom this report, or any part thereof, is made known. Any such party relies on the report at their own risk.

CONTENTS

EXECUTIVE SUMMARY I

1 INTRODUCTION 1

1.1 BACKGROUND TO THE PROJECT 1 1.2 OBJECTIVES OF THIS PROJECT 1 1.3 ERM’S APPROACH 2 1.4 STRUCTURE OF THIS REPORT 3

2 FEATURES OF BEVERAGE CONTAINER DEPOSIT SYSTEMS 4

2.1 INTRODUCTION 4 2.2 TYPICAL SCOPE OF A BEVERAGE DEPOSIT SYSTEM 5 2.3 PARTIES INVOLVED IN DEPOSIT SYSTEMS 6 2.4 MANDATORY VERSUS VOLUNTARY DEPOSIT SYSTEMS 8 2.5 LABELLING CONTAINERS 8 2.6 TYPICAL BEVERAGE CONTAINER COLLECTION MECHANISMS 9 2.7 SORTING, BULKING AND RECYCLING/RECOVERING OF CONTAINERS 10 2.8 ASSURING SECURITY AND PREVENTING FRAUD 11 2.9 POTENTIAL HEALTH AND SAFETY IMPLICATIONS OF DEPOSIT SYSTEMS 12 2.10 POTENTIAL CROSS BOUNDARY ISSUES AND SINGLE MARKET IMPLICATIONS 13 2.11 COSTS AND INCOME STREAMS 14 2.12 VALUE OF THE DEPOSIT 15 2.13 TYPICAL CONTAINER RETURN RATES IN DEPOSIT SYSTEMS 17 2.14 IMPACTS OF DEPOSIT SCHEMES 17 2.15 THE ROLE OF REVERSE VENDING MACHINES (RVMS) 18 2.16 THE ROLE OF THE CLEARING HOUSE 22 2.17 SUMMARY – ADVANTAGES AND DISADVANTAGES OF DEPOSITS SYSTEMS 22

3 THE CURRENT UK SYSTEM 24

3.1 INTRODUCTION 24 3.2 TYPES OF BEVERAGE PACKAGING IN THE UK 24 3.3 THE UK BEVERAGE SECTOR 25 3.4 SINGLE USE BEVERAGE CONTAINERS IN WASTE 27 3.5 THE UK PACKAGING SUPPLY CHAIN 30 3.6 RELEVANT LEGISLATIVE AND NATIONAL TARGETS 30 3.7 THE UK’S PACKAGING WASTE RECYCLING PERFORMANCE 36 3.8 VOLUNTARY SCHEMES IN THE UK 37 3.9 SCOTTISH PROPOSALS FOR A DEPOSIT SYSTEM 41 3.10 COSTS OF RUNNING CURRENT UK SYSTEM 42 3.11 SUMMARY – ADVANTAGES AND DISADVANTAGES OF CURRENT UK SYSTEM 42

4 HOW DEPOSIT SYSTEMS COULD WORK IN THE UK 45

4.1 SCOPE OF A POTENTIAL SYSTEM 45

4.2 HOW THE SYSTEM MIGHT WORK 49 4.3 IMPACT ON THE UK’S CURRENT PACKAGING WASTE SYSTEM 51 4.4 POSSIBLE ECONOMIC COSTS OF A DEPOSIT SYSTEM 55 4.5 LEGAL CONSIDERATIONS 55 4.6 ALTERNATIVE OPTIONS FOR INCREASING RECYCLING RATES 57

5 CONCLUSIONS AND RECOMMENDATIONS 63

5.1 ALTERNATIVE SUGGESTIONS TO ACHIEVE INCREASED RECYCLING 65 5.2 SUMMARY 67

ANNEXES

ANNEX A REVIEW OF MEMBER STATE EXPERIENCE

A1 DENMARK A2 GERMANY A3 SWEDEN A4 NETHERLANDS

ANNEX B LIST OF CONTRIBUTING STAKEHOLDER ORGANISATIONS

ENVIRONMENTAL RESOURCES MANAGEMENT DEFRA

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EXECUTIVE SUMMARY

Defra commissioned a report on deposit schemes in 2004, and its basic findings suggested that a deposit system would be problematic. However, there has recently been renewed interest in the possible use of deposit systems and the use of reverse vending as a collection method for beverage containers. In this report, again commissioned by Defra, Environmental Resources Management Limited (ERM) looks at features of packaging deposit systems and the role they might play in increasing recovery and recycling of single-use drink containers (plastic, aluminium and glass) in the UK. ERM’s method for this study involved extensive consultation with industry stakeholders in the UK, as well as reviewing deposit systems in four other EU Member States. Detailed tables reporting how those countries’ systems work are provided in Annex A, and a list of all stakeholders in provided in Annex B.

How Beverage Deposit Systems Work

Chapter 2 provides a description of the typical features of beverage deposit systems, based upon the findings from the review of circumstances in other EU Member States. The basic principle of deposit systems on beverage packaging is that supermarkets, kiosks, etc, on purchasing beverage products from a bottler or importer, pay an additional fee on the packaging in the form of a deposit. The fee is generally determined by the packaging material and the container size, and is indicated via a label on the packaging. On purchasing the beverage product in store, the consumer will pay the additional fee to the retailer and the fee is then reimbursed when the consumer returns the empty packaging. This encourages a high return rate and allows beverage packaging to be collected and returned for reuse or recycling. The chapter goes on to consider the range of decisions governing the deposit system that need to be made. These include deciding which materials and packs are covered, how labelling will be handled, how security can be assured and fraud prevented, how to deal with potential cross border issues, the value of the deposits and fees, and the role of the clearing house. Some general learnings from the other EU Member States are presented in Box 1.

The Current UK System

Chapter 3 describes the current UK system, in terms of the beverage packaging market, and arrangements for collecting and recycling single-use beverage containers. The UK Packaging Regulations place obligations on parties throughout the packaging production chain, starting with the manufacturers of the packaging materials, through to the pack/fillers and retailers. In addition, importers are made responsible for the packaging they bring into the country.


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Box 1 Some General Learnings from European Deposit Systems

• Implementation All national systems reviewed are mandatory rather than voluntary.

• Wide Ranging The deposit schemes in other EU Member States typically involve many parties along the packaging supply chain:

- producers/importers

- retailers

- consumers

- logistics/waste management companies

- centralised body

- monitoring/enforcement body

• Products None of the reviewed deposit schemes has milk in their scope.

• Collection Split between retailers and RVMs. Typically, split is initially 80:20, but reverses to 20:80 over a number of years, as RVMs are rolled out.

• Deposit Value Details vary, but the typical range of deposit values is 10p-30p.

• Container Return Rates The other EU Member States (that report figures) are seeing return rates of >80%.

• Labelling As the schemes are all mandatory, a labelling system is used to indicate on which containers a deposit is due. National barcodes reduce the chances of cross-border issues.

Each obligated company must acquire evidence (in the form of packaging recovery notes, PRNs) over the course of the year that their packaging recycling and recovery obligations have been fulfilled. PRNs are traded on an open market like shares, and are subject to the same rises and falls in value, depending on supply and demand. The revenue from PRNs is meant to be reinvested into the reprocessing industry, to fund the commissioning of further equipment, so that increasing targets can be met. If PRN targets fail to increase, many stakeholders believe their price will collapse. The majority of packaging waste from households is collected by local authorities as part of their regular collection rounds, either as source-separated dry recyclables or mixed up with the residual waste. The council arranges for the bulking of the recyclable materials, where possible, and onward supply to reprocessing companies. The current UK system is relatively efficient at collecting and recycling beverage packaging waste, inasmuch as it is handled together with other similar packaging and non-packaging (notably newspapers and magazines) recyclable waste. There are two distinct challenges that persist for the UK recycling infrastructure. The first is to increase the coverage (in terms of both geography and materials accepted) of the source-separated kerbside collections, so that all residents have the same opportunities to divert their waste from landfill. The second is to find a way to encourage all those who have the infrastructure to make full use of it. The UK has seen significant growth in the collection and recycling of packaging waste since the introduction of the Regulations in 1998. However, performance on the overall recovery rate continues to lag behind other EU


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countries, as shown in Figure 1, with the recycling rate alone significantly short of the highest achievers in Europe.

Figure 1 Packaging Waste Recovery in EU15 (2005)

Some voluntary schemes already operate in the UK. Recycling Zones are aimed at high-footfall locations ‘out of home’, with the intention of collecting more ‘on the go’ recyclates. Other schemes have introduced reverse vending machines that provide customers with various rewards for depositing target containers. Feedback on these systems is generally positive, although costs are very high.

How Deposits Would Work in the UK

Chapter 4 combines the gathered information to consider how a deposit system could work in the UK. The first consideration is again the breadth of packaging and products that would be covered by the scheme, as presented in Figure 2, and many questions arise. The range of packaging types and materials has grown substantially since deposit schemes were more widespread throughout the UK, over 20 years ago. Any future deposit system would need to take account of the range of packaging materials in the waste stream and the growth in products, such as on-the-go food and drink. Why should deposits only cover beverage containers (soft drinks, but not fabric softeners), if the goal is increased recycling? ERM believes steel should certainly be included, but why not cartons as well? Decisions would also have to be made concerning finances, including:

• the level at which to set the deposits on each packaging category;

• the basis for levying fees on the producers, and the level of the fees;

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• the level of penalties for non-compliance; and

• how non-refunded deposits should be used. Once various other considerations have been determined, such as labelling, collection routes and the operation of the clearing house, a public information campaign would be needed to explain the why and how of the new scheme, and to prepare all parties along the supply chain.

Figure 2 Venn Diagram of Scope of Deposit System

Alternatives to Packaging Deposits

Chapter 4 also presents seven alternatives to deposit schemes that might achieve the same goals. Firstly, it is suggested that the UK could simply continue with voluntary schemes and RVMs – business as usual. A simple step beyond this would be to try to recover materials from litter bins, sending their contents through dirty MRFs. This is relatively straightforward in concept, but might have some operational issues. The most popular alternative suggestion for boosting recycling is to invest money in expanding coverage of kerbside collection scheme. The infrastructure is already quite well developed, and the public are familiar with what is required of them. Figure 3 shows that plastic bottle recycling has grown in line with the growth in coverage of households served by kerbside plastic collection. Providing financial support for the expansion of council collection schemes offers a relatively cost effective means of continuing the trend of improving

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rates. Furthermore, the investment would cover a much wider range of materials – not only certain beverage containers, but other items of packaging, and non-packaging materials as well.

Figure 3 Correlation Between Plastic Bottle Recycling Levels and Households Served by Kerbside Plastic Collection (1995-2009)

Sources: Plastic Bottles Recycled: Recoup Households Served by Kerbside Plastic Collections: WRAP (1)

Possibly in combination with the above, a number of suggestions were made on how the PRN system could be adapted and improved, all of which involved setting more specific targets, splitting the current PRN targets according to:

• point of arising (household or commercial and industrial);

• packaging class (primary, secondary or tertiary packaging);

• material sub-type (plastic polymer, glass colour, etc); or

• package type (bottle, tub, etc). None of these suggestions is without difficulties, but all of them present Government with an opportunity to take a policy decision on which categories of packaging need improved recycling in the future. On the subject of PRNs, it was also suggested by Recoup that PRN income should not all go to the reprocessor, but be split between collection, sorting

(1) Figure 33 of Local Authorities Plastic Collection Survey 2008, WRAP, MDP008, May 2008. 2008 and 2009 are based on

local authority projections.

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and reprocessing, since, for plastics in particular, it is not the reprocessing capacity that is the bottle neck, but collection and sorting. The most radical alternative raised by stakeholders involved changing the metric by which the targets are set from weight, which is obvious and easy to measure, to carbon, which is arguably a much better indicator of environmental impact. The reasons behind this change are relatively clear, but the general opinion is that the science is not yet well enough developed.

Conclusions

In Chapter 5, ERM provides our conclusions. Defra originally presented a series of key questions that the study should address, and the results are as follows:

Would a deposit system lead to increased collection and/or improve the quality of the materials collected?

Yes. The general consensus is that a deposit system would increase the total tonnages of materials collected, although a significant amount of the deposited packaging would be cannibalised from existing collection schemes. However, a deposit scheme may also capture some of the hard to reach materials – particularly ‘on the go’ food and drink packaging. There was less agreement about whether or not there would be a concurrent improvement in the quality of materials collected.

What role might reverse-vending play in a deposit scheme or as an alternative? Could reverse vending alone provide a similar or better outcome?

Reverse Vending Machines (RVMs) would play an important role in any deposit scheme, freeing retailers, to some extent, from the burdens of redeeming deposits. RVM trials in the UK have proved popular with the public, and RVMs in shopping areas could divert recyclates from waste bins. Whether RVMs would reduce littering is disputed.

What would be the likely effect on local authority collections/existing collection mechanisms?

There was widespread agreement that the introduction of deposits would have a detrimental effect on existing collection mechanisms in general, and council kerbside collections in particular. Deposits on only a proportion of packaging materials may add to the householder confusion over the varying scope of local authority services, which has been widely reported by stakeholders, and this may be a disincentive to participation. The deposit scheme would divert a significant amount of packaging waste from the kerbside schemes, and that may have a knock-on effect on other materials currently collected at kerbside.

What are the pre-conditions for success of a deposit scheme? Box 2.2 provides details on some of the things that need to be in place before a deposit scheme can be launched. In brief: the centralised body would need to have been established; all the producers and importers must have registered and labelled their products, and paid the associated fees; the retailers must have some form of collection system in place;


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hauliers and reprocessors must be set to receive the returned packaging through the new channels; and consumers must be informed about the new system.

What are the likely costs (including administrative and operational costs)? Are there likely to be less costly alternatives to increasing recycling?

Although this question was included in the brief, it was also recognised by Defra that an economic study of deposits was outside the terms of reference. To give one general ballpark assessment of costs, the German deposit scheme acknowledged that compulsory deposits cost around three times as much per container as household-based collection systems.

What information is there on industry evidence on deposit schemes? To ERM’s knowledge, there are no deposit schemes in the UK currently handling single-trip packaging, with the exception of voluntary schemes run at events such as music festivals. Tesco reports that their voluntary RVMs, awarding loyalty points for returned packaging, have been well received by customers, but are very expensive.

What information - if any - is there on the effects of deposits schemes on littering? ERM has found little hard evidence that deposit schemes reduce littering. One exception is a recent nature clean-up lead by the Danish Society for Nature Conservation, which collected 154 389 cans, of which only 7989 (5%) were deposit-bearing cans. The rest were foreign cans that were not part of the Danish scheme.

Would certain drinks categories, producers or packaging systems be discriminated against or favoured by a deposit scheme?

Possibly to some extent. General stakeholder opinion was that, unless the deposit scheme is introduced uniformly over all packaging systems, manufacturers might change their choice of packaging to get around the rules. However, experience from other European countries is that this has rarely occurred. Opinion was that consumer preferences had a significantly higher influence on packaging material choice than whether the material was part of a deposit scheme or not.

Would this have any effect on the market for containers which can be refilled (or the likelihood of such a market taking off)?

ERM has found no evidence that introducing deposits for single-trip containers might increase the market for refillable containers. On the contrary, evidence from the other European countries shows that the use of refillable beverage packaging is in decline, for other reasons.

Are the conclusions on benefits and disadvantages different for each material? Might deposit schemes encourage packaging producers to substitute one material for another?

ERM considers that the benefits and disadvantages of a deposit scheme are the same for each material. However, as noted above, unless the scheme is introduced uniformly across all materials, some market distortion is likely.


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ERM would make the following closing comments on the study.

• It is not disputed that a deposit scheme would increase recycling, but alternative schemes could achieve the same or better results at a lower cost.

• Deposits could be seen to impose an additional cost to householders who are not easily able to participate.

• It is likely that the majority of materials collected through a deposit scheme would be diverted from the existing household collection schemes, rather than being new material that is not currently collected.

• Deposits would require the development of a new tranche of infrastructure to collect and store the packaging at retailers, while reducing the usage of the existing kerbside collection infrastructure.

• Deposits may make a contribution to reducing litter, but, for ‘on the go’ packaging, it is thought that the major impact would be to divert packaging from waste bins to recycling bins.

• A deposit scheme would have to be carefully designed, in order not to fall foul of legal requirements to be proportionate and non-discriminatory, and in order not to encourage producers to change their choice of packaging material.

If Defra decided against introducing a deposit scheme, there are alternatives that might achieve the same goal of increasing recycling and recovery of packaging waste. ERM makes two specific suggestions on this matter:

• Further funds could be invested in kerbside collection infrastructure. Households are increasingly familiar with these schemes, and much of the infrastructure required is already in place.

• Those funds could be provided, at least in part, by changes to the PRN system. Of the suggestions listed, splitting targets according to primary, secondary and tertiary packaging might be the least problematic.

Finally, voluntary schemes at large events have proved highly effective in combating littering of the cups on which deposits had been placed, and could be further encouraged. ERM December 2008


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1 INTRODUCTION

Environmental Resources Management Limited (ERM) was commissioned by Defra to carry out a desk-based study on deposit schemes and reverse vending machines for single-use beverage containers. This report looks at the features of packaging deposit systems and the role that they might play in increasing recovery and recycling of single-use drink containers (plastic, aluminium and glass) in the UK.

1.1 BACKGROUND TO THE PROJECT

Defra commissioned a report on deposit schemes in 2004. Its basic findings suggested that a deposit system would be problematic. However, there has been renewed interest in the possible use of deposit systems and the use of reverse vending as a collection method for beverage containers. In particular, the Campaign to Protect Rural England (CPRE) supports the introduction of a deposit system as a means to reduce litter. CPRE has recently launched a campaign with this aim in mind. At the same time, it is thought that a deposit system on one-way drinks packaging could improve the separate collection of the containers, making the waste material more attractive to recyclers and reprocessors. Reprocessors have voiced their concerns about the levels of material contamination in local authority kerbside-collected recyclables and reverse vending machines could help to address this problem.

1.2 OBJECTIVES OF THIS PROJECT

With this background in mind, this project aims to consider how a deposit system and reverse vending machines could work to increase the recycling and recovery of single use beverage containers (plastic, aluminium and glass). It also considers the impact such a system would have on litter arisings. The original scope of the project did not include:

• an evaluation of the use of deposits for returnable/refillable containers;

• single use beverage containers manufactured from materials other than plastic, aluminium and glass (eg cartons); or

• a detailed cost comparison of different options for increasing the collection and recycling of single use beverage containers.

However, in carrying out the work, these issues have arisen, and been addressed to a certain extent. They are commented upon where appropriate.


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An overall aim of the project was to address the key questions shown in Box 1.1 as posed by Defra’s project team.

Box 1.1 Key Questions to be Addressed in this Study

1.3 ERM’S APPROACH

In evaluating packaging deposit schemes and their possible introduction in the UK, ERM has consulted with a number of key stakeholders, including representatives of the:

• packaging manufacturing sector, including the Packaging Federation, Alupro, British Glass and Nampak;

• government organisations, including BERR, the Advisory Committee on Packaging (ACP) and the Environment Agency;

• the Waste & Resources Action Programme (WRAP);

• Non-Governmental Organisations (NGOs), including the Campaign for the Protection for Rural England (CPRE) and Friends of the Earth (FoE);

• packaging recycling or environmental organisations, including Incpen, Valpak, Recoup and Novelis;

• the Local Authority Recycling Advisory Committee (LARAC); and

• retail and beverage supply sector, including Tesco, M&S, the Association of Convenience Stores (ACS), the British Soft Drinks Association (BSDA) and the British Beer and Pub Association (BBPA).

• Would a deposit system lead to increased collection and/or improve the quality of the materials collected?

• What role might reverse-vending play in a deposit scheme or as an alternative? Could reverse vending alone provide a similar or better outcome?

• What would be the likely effect on local authority collections/existing collection mechanisms?

• What are the pre-conditions for success of a deposit scheme?

• What are the likely costs (including administrative and operational costs)? Are there likely to be less costly alternatives to increasing recycling?

• What information is there on industry evidence on deposit schemes?

• What information - if any - is there on the effects of deposits schemes on littering?

• Would certain drinks categories, producers or packaging systems be discriminated against or favoured by a deposit scheme?

• Would this have any effect on the market for containers which can be refilled (or the likelihood of such a market taking off)?

• Are the conclusions on benefits and disadvantages different for each material? Might deposit schemes encourage packaging producers to substitute one material for another?


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We have also reviewed the existing packaging deposit systems in Germany, the Netherlands, Sweden and Denmark. A full list of stakeholders consulted in provided in Annex B.

1.4 STRUCTURE OF THIS REPORT

This report contains the following chapters:

Chapter 2 provides a description of typical features of deposit systems;

Chapter 3 provides a description of the features of the UK’s existing systems for collecting and recycling single-use beverage containers;

Chapter 4 provides an assessment of how deposit systems could work in the UK;

Chapter 5 provides our conclusions in relation to the key questions in Box 1.1 This report also containers two annexes:

Annex A Country reports for Denmark, Germany, the Netherlands and Sweden.

Annex B List of Stakeholders Consulted.


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2 FEATURES OF BEVERAGE CONTAINER DEPOSIT SYSTEMS

2.1 INTRODUCTION

This section outlines the features of a deposit system, to allow comparison with the UK’s existing system for collecting and recycling single use beverage containers, reviewed in Chapter 3. In order to understand the features of packaging deposit systems, ERM has reviewed existing systems in Denmark, Germany, Sweden and the Netherlands. Additional information has been obtained through discussions with key stakeholders. The basic principle of deposit systems on beverage packaging is that supermarkets, kiosks, etc, on purchasing beverage products from a bottler or importer, pay an additional fee on the packaging in the form of a deposit. The fee is generally determined by the packaging material and the container size, and is indicated via a label on the packaging. On purchasing the beverage product in store, the consumer will pay the additional fee to the retailer and the fee is then reimbursed when the consumer returns the empty packaging. This encourages a high return rate and allows beverage packaging to be collected and returned for reuse or recycling. In developing a deposit system, a number of issues have to be considered and a range of decisions governing the system need to be made. The following sections address these issues. Section 2.2 Typical Scope of a Beverage Deposit System

Section 2.3 Parties Involved in Deposit Systems

Section 2.4 Mandatory versus Voluntary Deposit Systems

Section 2.5 Labelling Containers

Section 2.6 Typical Beverage Container Collection Mechanisms

Section 2.7 Sorting, Bulking and Recycling/Recovering of Containers

Section 2.8 Assuring Security and Preventing Fraud

Section 2.9 Potential Health and Safety Implications of Deposit Systems

Section 2.10 Potential Cross Boundary Issues and Single Market Implications

Section 2.11 Costs and Income Streams

Section 2.12 Value of the Deposit

Section 2.13 Typical Container Return Rates in Deposit Systems

Section 2.14 Impacts of Deposit Schemes

Section 2.15 The Role of Reverse Vending Machines

Section 2.16 The Role of the Clearing House

Section 2.17 Summary – Advantages and Disadvantages of Deposits Systems


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2.2 TYPICAL SCOPE OF A BEVERAGE DEPOSIT SYSTEM

The first consideration in developing a deposit system for beverage containers is to determine which containers will be included in the scope of the system. Typically, deposit schemes for single use packaging have evolved from pre-existing deposit schemes on refillable beverage packaging for beer and carbonated soft drinks (aimed at encouraging the return of the packaging for reuse). The initial focus for deposit schemes on non-refillable beverage containers has therefore often been beer and carbonated soft drinks. However, this has generally been expanded to include non-carbonated soft drinks, still and sparkling mineral water, and some alcoholic drinks beyond beer (eg alcopops), as well as additional beverage container materials. Table 2.1 provides an overview of the principal scope of deposit systems which have been evaluated in this project.

Table 2.1 Scope of Deposit Systems for Single-Use Beverage Containers

included within the deposit system excluded within the deposit system

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Product Milk Beer Wine Spirits Carbonated Water Non Carbonated Water Carbonated Soft Drinks Non-Carbonated Soft Drinks Vegetable/Fruit Juices Beverage Packaging Type Plastic bottles Aluminium cans Steel cans Cartons Glass bottles Notes: The Danish system also includes other drinks containing between 0.5% and 10% alcohol. It excludes fruit squash, cordials and cocoa. It also excludes beverage containers over 20 litres (eg plastic bottles used in water dispensers). The German system also includes mixed alcoholic drinks. It excludes drinks containing more than 50% milk, wine, spirits, and dietetic drinks, although the latter will be included in the deposit scheme as of April 2009. It also excludes packaging termed as ‘ecologically favourable’ such as pouches and stand-up bags. In addition, with effect from end 2008 until 2012, bioplastics will also be excluded. These are not excluded due to a claim of being ‘ecologically favourable’, but rather to encourage innovative packaging. The Swedish system applies to all consumer beverages in plastic bottles and cans. The regulations do not specify the content in the same details as other deposit schemes. The only exemptions are beverages containing 50% or more dairy products or juice (both fruit and vegetable). The Dutch system applies only to plastic bottles greater than 0.5 litres


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With regard to the scope of the packaging deposit systems in these countries, the main points are summarised below.

• None of the single-use deposit systems apply to milk (although there are still some non-deposit return schemes for reusable milk bottles in the UK). The main reason for excluding milk is that returned milk containers pose particular health and safety concerns. Other reasons for the exclusion of milk containers appear to be: - milk is considered to be a staple food in many countries, and

increasing the sale price of milk by applying a deposit is not considered acceptable;

- milk is not generally sold as a beverage to be consumed ‘on the go’, and milk containers are not generally littered; and

- in some countries, milk is generally sold in cartons which, due to their shape, pose specific problems in current reverse vending machines.

Similar arguments apply to vegetable or fruit juices.

• The scope of the current deposit system in Germany is based primarily on ‘ecologically unfavourable’ non-refillable containers. The term ‘ecologically unfavourable’ was defined in a life cycle assessment study commissioned by the Federal Environment Agency.

The legal framework for the current German deposit system was initially defined in 2003, but the system faced a number of legal difficulties and industry challenges, and changes were introduced in 2005 in response to rulings from the European Court of Justice. One impact of these was the removal of the legal basis for the individual solutions (also known as ‘island solutions’) where retailers took back only the containers sold in store, by specifying particular bottle shapes. Retailers operating these independent solutions avoided the cost of participating in clearing systems. An unfortunate consequence of this approach was that these retailers often stopped selling cans due to their generic shape.

• Single-use glass bottles account for a very small volume of the beverages sold in Sweden (~ 0.5%). As a consequence, the Swedish deposit system has not been expanded to include single-use glass packaging. However, deposits do apply to returnable glass bottles, which have a significant market share especially for beer.

2.3 PARTIES INVOLVED IN DEPOSIT SYSTEMS

Although the most visible parties in a packaging deposit system are retailers and consumers, a range of players have to be involved to ensure a deposit system works effectively. The exact roles of these players need to be clearly defined and agreed. The typical roles are summarised below.

• Companies which bottle beverage products and companies which import packaged products have to ensure that a deposit is applied to their products and that the beverage packaging is appropriately labelled. These companies are required to register and pay into a centralised fund


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to finance the running of the system. In some countries, such as Sweden, the companies are also responsible for the collection of the empty beverage packaging from the retailer and forwarding it to counting and sorting facilities.

• Retailers are required to pay the deposit on purchasing the beverage product from the producer or importer, and to charge the customers the deposit on the sale of the beverage products. This requires them to operate systems that allow them to track the value of deposit income.

The retailers are also expected to engage in the take-back of returned packaging and to refund deposits to customers. Examples from other European countries with deposit schemes in place show that the return of empty beverage containers to the shop is generally done using reverse vending machines (RVMs), especially in larger shops. Smaller shops may handle the returns manually. In addition, some kind of waste beverage packaging storage system needs to be in place at retail sites.

A possible option is that retailers are not involved in the take-back of empty beverage packaging, and that consumers deposit packaging at other separate collection points (eg using RVMs) and obtain their refund through some other mechanism. However, ERM has not identified any examples of deposit systems which do not include retailer involvement in the collection of empty beverage packaging in some way.

• Logistics or waste management companies are required to collect the waste beverage containers and transfer them for recycling. Where shops have collected the empty beverage containers manually, counting is required. Sometimes, further sorting of beverage containers also needs to take place prior to recycling. The counting and sorting is generally done at specific counting and sorting facilities operated by the clearing house (see below).

Any revenue from the material recycling process is usually fed back into financing the system.

• In most cases, a centralised body (a ‘clearing house’) is established to administer the funds required to operate the deposit and return system. However, this is not always the case. The German deposit system is more modular, with no centralised clearing house, but rather a number of service providers operating as clearing houses.

Importantly, a centralised body is required to balance out the deposit income that retailers receive from selling beverages against the refunds reimbursed to customers. Or, as is the case in Germany, the different clearing houses are required to balance out the deposits and refunds between each other and ensure that the deposits and refunds at the retailers balance.

The centralised body is usually responsible for registering and collecting fees from packer/fillers and importers of beverage products, and also for ensuring that income from material recycling is reinvested into the system. In Germany, the centralised body is not involved in the money


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flows. Instead, its main responsibilities include the management of the deposit label, the provision of the master database, and the IT interface.

• Consumer involvement is key and mandatory, inasmuch as consumers are required to pay the deposit value in addition to the product purchase price, and must return the empty beverage container in order to obtain the refund. If the deposit level is too low and the consumer is not sufficiently incentivised to return the empty beverage container, the return rate will be low and the deposit system has in effect failed.

• A monitoring or enforcement body is required to ensure that the system is not subject to fraudulent behaviour or claims by any player in the deposit system. In reality, this is done by various parties, including the organisation administering the system, the ‘inland revenue’, clearing houses, etc. Also, some government department generally is in charge of monitoring/auditing the organisation administering the system.

As empty beverage containers (new and waste) are effectively assigned a financial value over and above their inherent material value (eg scrap value for aluminium can), monitoring and enforcement procedures need to be in place to prevent fraudulent claims of deposit values.

It is important that the system also protects the full range of players including: - consumers, to ensure that deposits are repaid; - retailers, to ensure that they can reclaim any deposits repaid ‘over and

above’ the value of the deposits which they have collected; and - packer/fillers, to protect those who are legitimately funding the

systems against potential free-riders who may attempt to operate outside the system.

2.4 MANDATORY VERSUS VOLUNTARY DEPOSIT SYSTEMS

A further design consideration for deposit schemes for beverage containers is whether they are operated as mandatory or voluntary systems. The European schemes reviewed by ERM are all national schemes and are all mandatory. This is principally seen to be necessary to avoid market distortion towards those who might otherwise not voluntarily participate. If two soft drinks firms are competing for business, one selling products with deposits on their packaging, and the other deposit-free, the consumer will see the cheaper price for the latter and, other things being equal, choose their product in preference.

2.5 LABELLING CONTAINERS

Mandatory packaging deposit systems require all packaging within the scope of the system to be labelled. The label is required to meet two functions, as follows.

1. To provide the consumer with information that the beverage product is part of the deposit scheme and the value of the deposit required to be paid.


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2. To verify the packaging is part of the valid deposit system. The label needs to be designed or applied in such a manner as to limit fraud.

Labels are applied, in the case of cans, during the printing of the can or, if self-adhesive labels are used, during the filling process, and, in the case of bottles, during the filling process, when the label is applied. The packer/filler or importer is required to pay a charge to the centralised body or bodies when the product enters the market, and charge the deposit to the retailer purchasing the beverage product. The label is one means of indicating that the packaging is part of the official deposit system and the appropriate charge has been paid to the centralised body. In those countries operating deposit systems (and, in particular, those relying on RVMs as a collection method), part of the labelling information is generally a bar code specific to the country of sale and the product. This helps ensure a deposit is not refunded on a container which was purchased in another country where an initial deposit has not been paid. In Denmark and Germany, there are strict guidelines and procedures for those buying and applying the labelling ink. The countries have introduced security codes using a special ink combination in order to eliminate fraud from the copying of barcodes. The ability to use the ink and labels is only afforded to those parties which have paid the necessary fees into the central system.

2.6 TYPICAL BEVERAGE CONTAINER COLLECTION MECHANISMS

The initial collection of used single-use beverage containers is linked to the refund of the deposit. As a result, the mechanisms for returning containers are generally linked to retailers who are selling beverage products. Collection of single use beverage containers usually involves either:

• reverse vending machines (RVMs); and/or

• retailers manually collecting and storing containers. RVMs accept waste beverage containers and provide a means of deposit refund (generally in the form of a refund ticket to be redeemed in store; no purchase is generally required). Their use reduces the need for manual handling of returned beverage containers, and the technology is available in a range of different styles and levels of sophistication. Because the use of RVMs has implications for this and several subsequent sections of this chapter, they are dealt with separately in Section 2.15. Even if RVMs are employed in the deposit systems, manual collection systems are typically also required, if only to offer a ‘back up’ when the RVMs are not functioning, or are not equipped to take the full range of containers covered by the system.


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For beverage containers accepted manually, retail staff need to be able to recognise deposit labels, inspect the packaging to ensure it is still intact, and refund the value of the deposit. The deposit is refunded directly at the store. The initial point of collection triggers the repayment of the deposit to the consumer. In many RVMs, in order to avoid duplicate fraudulent claims for the deposit value, beverage container such as cans and plastic bottles are punctured or crushed, or subsequently crushed in a compactor. If manually collected, the waste beverage containers are generally counted at a counting facility. Prior to transport of the containers to that facility, the storage of returned containers needs to ensure that the containers are not damaged and must be secure, to avoid theft and subsequent duplicate claims of the refund value.

2.7 SORTING, BULKING AND RECYCLING/RECOVERING OF CONTAINERS

Once collected by the retailer or the RVM, the containers must be sorted, bulked and sent for reprocessing. Box 2.1 summarises the beverage container collection method for plastic bottles in the Netherlands. Similar collection methods apply in the other countries assessed.

Box 2.1 Plastic Bottle Collection Methods in the Netherlands

The requirements at the sorting facilities determine the initial sorting required at the retailers. Most sorting facilities use automated high speed sorting machines handling up to 500 containers per minute and able to sort co-mingled plastic bottles, cans and glass (although generally no more than 20% glass, to avoid breakage). Glass bottles may be sorted separately at the retailers due to the specific requirements for their storage (glass bottles are generally stored in rigid containers (eg pallet boxes) whereas plastic bottles and cans are stored in plastic bags). Some collection and storage methods at retailers will result in a little additional sorting. For example, in Denmark and Sweden, the material fractions (plastic, cans, glass) are generally sorted in the RVM or manually, and arrive at the sorting facility in separate bags. In addition, in Sweden a number of retailers have separate RVMs for plastic bottles and cans, as combi-RVMs are significantly more expensive. In Germany, the empty beverage containers generally arrive at the sorting and counting facility as co-mingled containers. Manual sorting of containers can result in single stream materials ready for counting. However, if the retailer

In the Netherlands, waste plastic bottles are bulked up following initial collection. Each retailer is provided with plastic bags and security tags/closures for the bags. The full and sealed bags are subsequently transported to one of three centralised sorting and checking facilities. At these facilities, further checks are made to confirm the returned containers are valid (ie the container is part of the deposit scheme) and retailers are provided with a confirmation report on the exact value of the deposits for which they receive reimbursement from the centralised body.


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has little storage space, or the RVM is small, different containers may be collected together, and require sorting downstream, before they can be sent to reprocessing. To optimise the recycling of containers (and therefore their value), the sorting process needs to make distinctions:

1. between the three main types of containers listed; and

2. between additional sorting characteristics outlined in Table 2.2. In some cases, this may not be easily achieved (eg glass containers which are covered with complete labels/sleeves).

Table 2.2 Optimal Sorting Requirements

Main Types of Containers Additional Individual Characteristics Polymer bottles Polymer type Colour (clear, white, green, etc) Glass bottles Colour (clear, green, brown) Cans Metal type

2.8 ASSURING SECURITY AND PREVENTING FRAUD

The packaging label provides some security against any initial fraud, but additional procedures need to be in place to prevent fraudulent deposit claims, both before and after the packaging item is used. Once the packaging has been produced and the deposit label has been applied, the packaging assumes a value equal to that deposit (and the value of the deposit might well exceed the value of the packaging itself). If the deposit label is applied prior to the packing/filling operation, the deposit value will effectively be assumed by the empty packaging. Any logistics operation may need tighter security arrangements to prevent theft of empty packaging (eg warehousing), as deposit refunds could potentially be ‘reclaimed’ without having been paid in the first place. At the other end of the packaging life cycle, it is necessary to ensure that the deposit on the packaging is only claimed once. As previously mentioned, retailers and RVMs are the main routes to obtain a deposit refund, and they store collected containers prior to movement to either sorting or recycling facilities. As a result, procedures need to be in place to prevent these containers being subject to duplicate fraudulent refunds. An intact container can potentially be stolen and have its deposit claimed again at any point after its initial collection, until it is recycled/reprocessed, so secure arrangements have to be made along the waste supply chain. Duplicate claims on containers returned via RVMs can be prevented by crushing returned containers. For glass bottles or manual take-back, retailers need to keep the waste beverage containers secured until they reach the counting facility.


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As the UK is an island, the potential for fraud is less than many other countries, as, with the exception of the Irish border, cross-border movement of containers is less straightforward and much more costly. If a system were to operate in the UK, RVM manufacturers have suggested that a system using the existing barcode to identify a product manufactured or imported into the UK would suffice. Potential fraud in the UK would most likely be confined to small scale photocopying or production of fake barcodes, labels and deposit vouchers (Consumer Fraud). It is far less likely that large scale fake container manufacture (Industrial Fraud) would be an issue; it would need to be on a large scale, and would require bulk loads of containers to be deposited and placed into the RVMs, which would be relatively easy to detect in most locations. The RVMs can also include security systems to identify repeat containers and bar codes of the same type, with automatic alerts to the retail outlet. Direct discussions with representatives of the organisations administering the deposit schemes in Denmark and Sweden suggest that fraud is not a major issue in these countries. It is generally detected and dealt with swiftly through improvements to the RVMs or the system itself. Examples of fraud include:

• copying of the barcode and applying to non-deposit bearing containers;

• purchase of beverage products abroad and selling in shops (eg corner shops); and

• customers or shop staff feeding containers through twice.

2.9 POTENTIAL HEALTH AND SAFETY IMPLICATIONS OF DEPOSIT SYSTEMS

There is a range of anecdotal information regarding the H&S implications of accepting waste beverage containers at retail sites. This includes concerns regarding the safe storage of glass containers, the return of containers containing residual beverages and odour issues associated with empty packaging. On a more practical note, retailers need to implement appropriate and safe storage to minimise any risk of material spillage. Furthermore, for glass bottles in particular, moving large numbers of the containers around the store could give rise to a manual handling risk to the retailer, although no more of a risk than the receipt and movement of products for sale. While all of these points seem reasonable, the different national deposit systems have generally addressed these and ERM has been unable to find any statistical data that lends support to health and safety concerns over and above the general handling of beverage containers. It should be possible to


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mitigate all of the identified concerns by undertaking an appropriate risk assessment. Health and safety is the main reason for milk and juice not generally being part of the deposit schemes, due to concerns over odours and potential health issues with any remaining beverage in returned containers. Depending on the frequency of collection, the waste beverage containers may be stored at the retailers for some time, potentially in the vicinity of food products sold in store.

2.10 POTENTIAL CROSS BOUNDARY ISSUES AND SINGLE MARKET IMPLICATIONS

Deposit systems in Germany, Sweden, the Netherlands and Denmark have all had to consider how to handle consumer imports of packaged beverages and also the implications of beverage containers being returned into the deposit system from outside the national boundaries. The deposit systems are national systems and therefore beverages sold within the respective countries are required to bear a deposit and the consumer is entitled to a refund. Beverages purchased by the consumer in other countries do not form part of the deposit schemes. To align with the emphasis of increasing recycling rates, some of the deposit schemes allow for the RVMs to accept non-deposit bearing beverage containers, but, of course, no deposit is returned. A specific issue of the cross-border sales between Germany and Denmark is that German retailers near the Danish border are authorised through an exemption by the local government in Schleswig Holstein to sell drinks to Scandinavian consumers without charging the German deposit. This is not the case for other border areas in Germany. The Scandinavian consumers must complete an export declaration confirming their intention to export the beverages purchased to their home countries on the same day. The declaration does not contain a statement preventing these customers from returning empty beverage containers to the border shops. German retailers have suggested that the Danish deposit is applied to beverages sold to Danish consumers in German border shops, but this involves a number of practical issues (eg control of the Danish deposit label in Germany, what shops should be included, collection in Germany) that are considered unworkable by the Danish deposit system. ERM was unable to determine any particular barrier of deposits systems that would be worse for foreign suppliers compared with new national suppliers. There does not seem to be any difference in joining a scheme whether you are a national brewery, a foreign brewery, an importer or whatever. The only possible barrier would be that new companies have to learn about the system, and that might be easier if you are national, owing to personal experience and language issues.


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2.11 COSTS AND INCOME STREAMS

The main activities associated with running a packaging deposit and collection system that incur costs are listed below.

• administrative and data functions;

• administration of money flow;

• labelling procedures;

• security and fraud prevention;

• public awareness raising;

• packaging collection systems (eg RVMs);

• movement of waste packaging; and

• reprocessing of waste packaging (although this is not peculiar to deposit systems).

There are also additional costs associated with the time and resources spent:

• monitoring and regulating the system;

• reviewing the effectiveness of the system, and

• agreeing the scope and value of deposits paid. In order to meet these costs, income is generated from three principal routes, as follows.

1. Fees charged to industry – typically on packer/fillers and importers who place beverage containers on the market. Charges are usually made in proportion to the number of beverage products placed on the market.

2. Deposits which are charged but not redeemed, because the packaging is not returned by the consumer.

3. Value of the waste material collected. In running a successful deposit system, it is important that the income generated ‘matches’ the costs incurred as closely as possible, as most deposit systems run as ‘not for profit’ systems. However, determining the costs and revenues of operating a ‘cost neutral’ deposit system are challenging for a number of reasons, including:

• the number of packer/fillers and importers of beverages is subject to change and hence the income received from these parties will fluctuate;

• the volumes and types of containers placed on the market are subject to market fluctuations (eg seasonal variations, market trends, general economic influences) and hence the income received from packer/fillers and un-redeemed deposits will also fluctuate;

• the value of the deposit will influence container return rates and therefore the total value of unredeemed deposits (see below);


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• return rates have a direct effect on the costs associated with collecting, movement and recycling of containers, but the return rate is difficult to predict, particularly during the initial operation of a deposit system; and

• the value of collected materials will fluctuate according to recycling markets.

For these reasons, the centralised body is usually responsible for ensuring the fair allocation of costs between industry players and the monitoring of system costs. This has resulted in changes to the deposit value in some systems. The deposit systems reviewed in this project have all been in existence for some time. In particular, those in Sweden and Denmark are well-established systems that have evolved from existing deposit systems for refillable containers. Box 2.2 provides some thoughts on the aspects associated with establishing a new deposit system in a country where no existing system is in operation.

Box 2.2 What Needs to be In Place Before Launching a Deposit System?

2.12 VALUE OF THE DEPOSIT

In most countries, the value of the deposit varies according to the type and/or size of container. Table 2.3 provides an overview of the deposits charged according to the different container types in the countries reviewed in this project. The figures show the value both in national currency but also an indication of the value in UK sterling.

Introducing a deposit system from ‘scratch’ requires careful planning. Some of the main implications of establishing a new system are summarised below.

• All producers and importers will need to label their products and pay into the centralised fund and the centralised body would need to have been established. Otherwise safeguards would need to be put in place to: - avoid producers operating outside the system having an unfair market advantage (the purchase price of their goods would be lower than those within the system). - reduce consumer confusion (eg some drinks would include a deposit; others would not).

• Labelling procedures and associated security arrangements would need to be in place.

• The beverage container collection infrastructure would need to be in place to allow consumers to return beverage containers following product purchase. Once a deposit is charged, the return mechanism needs to be available. This would require up front investment in collection infrastructure (eg RVMs or collection sites) and prior notification of retailers.

• The deposit refund system would need to be clearly established, to ensure all retailers understand the procedures for charging and reimbursing deposits.

• A consumer education campaign would be required to ensure they understand the system.

• Arrangements for sorting and recycling of containers would need to be in place.


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Table 2.3 Value of Deposits on Beverage Containers (†)

Country Plastic Bottles Aluminium Cans Glass Bottles Denmark < 1 litre DKK 1.00

(~11 pence) 0.5 litre DKK 1.50 (~16 pence) ≥ 1 litre DKK 3.00 (~32 pence)

< 1 litre DKK 1.00 (~11 pence) ≥ 1 litre DKK 3.00 (~32 pence)

< 1 litre DKK 1.00 (~11 pence) ≥ 1 litre DKK 3.00 (~32 pence)

Germany* 0.1 to 3.0 litres 25 Euro cents (~20 pence)

0.1 to 3.0 litres 25 Euro cents (~20 pence)

0.1 to 3.0 litres 25 Euro cents (~20 pence)

Sweden ≤ 1 litre SEK 1.00 (~ 12 pence) > 1 litre SEK 2.00 (~ 25 pence)

All sizes SEK 0.50 (~ 6 pence)

N/A

Netherlands ≥ 0.5 litre 25 Euro cents (~20 pence)

N/A Specific sizes 25 Euro cents (~20 pence)

(*) The German deposit system originally distinguished between sizes of container. In 2005, the deposit value was standardised to 25 Euro cents for all container sizes.

(†) Exchange rates used: £1 = DKK 9.4249 = SEK 8.0487 = €1.2631 A number of issues need to be considered when setting the value of the deposit for beverage containers.

• The value of the deposit has to provide a sufficient incentive to encourage consumers to return containers. Higher deposit values generally result in higher collection rates for beverage containers.

• However, a deposit which is higher than the cost of manufacturing empty packaging may encourage fraud by encouraging production of new containers simply to attempt to obtain a deposit refund.

• The value of the deposit relative to the value of the product may have unexpected consequences. For example, the retail value of some low cost soft drinks may be lower than the value of the deposit, which may discourage consumers from purchasing the product. Conversely, the relatively high value of some products (eg champagne) to their deposit may mean that the consumers of such products are unlikely to be incentivised into returning the container.

• The value of deposits needs to be set such that it is not seen as artificially increasing the cost of beverages, or hiding a product price increase. This could impact on general inflation figures and have wider economic consequences.


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2.13 TYPICAL CONTAINER RETURN RATES IN DEPOSIT SYSTEMS

The container return rates in European deposit systems are generally very high, and collection rates of up to 90-95% of containers can be achieved. Table 2.4 and Table 2.5 show the beverage container return rates achieved in Denmark and Sweden in recent years. Return rates for the German deposit system are not made publicly available.

Table 2.4 Single Use Beverage Container Return Rates in Denmark

2005 2006 2007 Metal 83% 84% 84% Plastic 88% 88% 93% Glass 83% 87% 91% Average 84% 86% 87%

Table 2.5 Single Use Beverage Container Return Rates in Sweden

2002 2003 2004 2005 2006 Metal 86% 85% 85% 86% 85% Plastic 77% 79% 80% 86% 82%

2.14 IMPACTS OF DEPOSIT SCHEMES

2.14.1 Impacts on Litter Arisings and Composition

Various studies have been conducted on litter composition and arisings. In general, beverage containers constitute a small proportion of litter and this is also reflected in some studies assessed. For example, some studies suggest that the introduction of deposit schemes has had little impact on the cost of street cleaning and litter reduction in larger cities. However, examples do also exist which suggest that deposit schemes may have a positive effect on litter arisings. One such example is a recent nature clean-up lead by the Danish Society for Nature Conservation, which collected 154 389 cans, of which only 7989 (5%) were deposit-bearing cans; the rest were foreign cans not part of the Danish scheme.

2.14.2 Impacts on Packaging Material Selection by Producers

Some deposit schemes on single-use beverage containers have been introduced partly to try to ensure that the market share of refillable beverage containers remains high. Such deposit schemes have generally been less successful in this goal, due to a switch in the beverage industry from refillable to single-use beverage containers. However, the reason for the switch does not seem to be anything to do with the deposit schemes (both refillables and non-refillables are generally part of a deposit scheme), but rather an effect of general market conditions. Reasons include the following.


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• Practicality and cost: refillables, although also part of the deposit and refund scheme, are generally collected by the breweries themselves. By switching to non-refillables, the task of collection and sorting is taken over by the deposit scheme.

• Space saving at the production location: washing facilities are not required in a bottling plant for single-use beverage containers.

• Hygiene issues: with reference to the above, these are eliminated.

• Marketing: a refillable bottle looks less attractive in the eyes of the consumer with its scuffs and marks.

With regard to the selection of beverage container materials, and, more specifically, the substitution of beverage containers that are not part of a deposit scheme, the overriding issue seems to be consumer acceptance rather than avoiding the deposit. However, such examples do exist; one producer in Sweden switched to a bottle made from a plastic that was not part of the deposit scheme. This was addressed in a later amendment to the legislation, with the expansion of the plastics covered. In Denmark, the scheme has been expanded recently to include non-carbonated drinks. This could potentially lead to some substitution of packaging for such beverages (eg still water) into other containers that are not part of the deposit scheme (eg pouches, cartons) in order to avoid the imposition of a deposit on the product. However, no examples of this have yet been seen.

2.15 THE ROLE OF REVERSE VENDING MACHINES (RVMS)

2.15.1 Introduction

The majority of RVMs are similar in both design and function. Machines will accept an identified range of containers (limited only by the demand for the material, the size and capacity of the machine and the aperture shape and size). Containers which have been deposited will then either be stored, or compacted and shredded within the machine before collection. Storage capacities are dependant on the overall size of machine (or, in the case of ‘hole in the wall’ machines, the size of the room behind). As an example, a 2.6m2 footprint unit for up to two waste streams (based on a Tomra T-83 HCp Dual Cabinet RVM) has a capacity of up to 7000 cans (0.35 litre), or 11 000 PET bottles (0.5 litre), or 300 glass bottles (crushed). RVMs vary in size, from small units for just one material type to banks of several machines capable of accepting a wide range of materials. RVMs are generally located either within a store (often in the front foyer), or at the front entrance to a supermarket (in similar locations to cash dispenser machines). The retailer will chose a location which is intended to draw the


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consumer into the store to make a purchase. Facilities are also in place in smaller shopping areas (eg district centres, service stations / garages, 24-hour shops, etc). Ideally, consumers should be able to return participating containers to all established points of purchase and be reimbursed the deposit value.

Figure 2.1 Examples of Reverse Vending Machines

In some cases, RVMs are integrated into a larger recycling facility, which also is used for containers and materials without a deposit. The RVMs themselves may also be configured to accept items which are not part of the deposit scheme. The most common materials accepted by RVMs are aluminium and steel cans, plastic bottles (in the main PET) and glass bottles. Cardboard containers and beverage cartons are also accepted in some cases, but this is not widespread, as there are more potential hygiene/odour concerns with these materials (such as milk packaging), and it is harder to handle cartons so that the barcode can be read. Plastic vending cups and even crisp packets (1) are collected in some locations (the latter being driven by litter problems rather than any value in the material). Containers can be returned to both automated (eg an RVM) and manual (eg a simple identified container) collection points. Once a deposit scheme has been in operation for some time, most containers are taken by consumers to automated collection points. In Germany, when the deposit system was first introduced, the majority of containers (roughly 80%) were returned to retailers, with only 20% via RVMs. After 5-6 years of operation, this pattern has switched, with approximately 80% of the containers now being returned to RVMs and 20% to retail outlets. A similar pattern is noted in other countries with well developed deposit systems.

(1) Sawtry Community College, Peterborough as reported by Peterborough Today, accessed from

http://www.peterboroughtoday.co.uk/news/RECYCLING-The-vending-machine-that.998768.jp, October 2008.


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Where manual systems are used, an additional counting stage is required. This is usually reflected by a lower deposit value for containers.

2.15.2 Identifying Containers

The vast majority of RVMs will identify a container by reading its barcode. This will either be the existing barcode on the packaging, or an additional ‘national’ barcode which has been added where there is a high potential for cross border movement of products from one country to another. The RVM will identify the barcode on a database before accepting the container. Using a barcode technology means that additional containers can easily be added to the deposit scheme and the barcode database updated. Most systems use a database in excess of 100 000 barcodes. Some machines will include additional technologies to identify the container; most comprising of a camera system which will recognise the shape and/or an additional identification marking on the container. This is particularly the case where the potential for fraud and cross border movement of containers is a major concern (such as the schemes in Denmark and Germany). These systems are more complex and expensive. Any rejected materials will be ejected from the machine unless the machine has been programmed to accept the container but not issue any refund. The deposit is refunded once the container has been successfully identified.

2.15.3 Refund of Deposits

Most machines refund a voucher or ticket deposit, which is then taken to the store checkout to be redeemed for cash or used as part payment for purchases. This encourages the consumer to enter the store and spend, which is cited as one of the benefits of a RVM system to the retail industry (though see also Section 3.8.3). Some machines refund cash directly, although this is generally recognised as a more expensive method (this is because the machines require more maintenance and there are inherent security risks associated with handling, loading and storing cash). Some systems offer alternative rewards (such as loyalty card points). These are not strictly ‘deposit’ schemes, as no initial charge was made. Such schemes generally accept a wider range of recyclable materials including paper, cardboard and plastic bags.

2.15.4 Performance and Key Facts - RVM Deposit Schemes

Sweden - Returpack

The Swedish system is currently in operation for aluminium cans, small and large PET bottles. Containers can be returned to both manual and automated locations in retail centres. Across the country there are:

• 10 000 points of return, of which 6500 are RVMs.


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This is a mandatory system; all containers sold in the sizes specified by the legislation are part of the deposit scheme. Return rates of 85% for metal cans and 82% for plastic bottles were reported for 2006. Denmark – Dansk Retursystem

The Danish system covers glass bottles, plastic bottles and drinks cans, both single use and refillable, and is a mandatory system. There are more than 7000 sales locations (supermarkets, grocery shops, kiosks, restaurants, cafes, hotels, catering, and other outlets) registered with Dansk Retursystem as sellers of beverages in deposit-bearing containers. There are in the region of 2500 RVMs located within these outlets. Return rates of 84% for cans, 93% for plastic bottles, and 91% for glass bottles were reported for 2007. Germany – Deutsche Pfandsystem

The German system covers glass bottles, plastic bottles and drinks cans, both single use and refillable, and is a mandatory system. There are near to 100 000 points of sale selling beverages in single use packaging and in the region of 21 000 RVMs supporting the deposit system. Return rates for the German system are not made publicly available. The Netherlands – Stichtling Verpakkingen Nederland

The Dutch system covers plastic bottles and refillable glass bottles, and is a mandatory system.

2.15.5 Cost and funding of RVMs

In Europe, RVMs are generally purchased by the retailer (whereas, in the US, retailers mostly lease machines). Financial support is provided to the shops in several of the countries assessed, in the form of a handling allowance/subsidy. The allowance is paid per container and varies according to container type, in-store equipment (ie whether the shop has RVMs, compactors). These subsidies are provided to stores in order to optimise the ‘bottle room’ with regard to equipment and lay-out and to further the efficiency of the whole collection chain. In Sweden, the allowance being paid to shops with RVMs is higher than that paid to shops without, in order to encourage shops to install RVMs. In Denmark, it is the opposite, with shops with RVMs and compactors receiving the smallest allowance, and shops without the largest allowance, in order to reflect the actual cost to the retailer more accurately. The fees paid by producers and importers cover the handling allowance. The handling fee is administered by the central organisation.


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Other financial support may also be available. For example, in Denmark, part of the logistics fee paid by producers and importers is used to improve efficiency in shops through financial support to optimise ‘bottle room’ layout, equipment, etc. The outright purchase cost of RVMs ranges from just a few thousand GBP for a small machine, suitable for a service station or convenience shop, through to £20 000 and above for high volume machines which can accept in the region of 3000 containers per day (1). A premium is paid for machines which can separate fractions of clear and coloured materials (eg coloured PET and glass bottles). In Germany for example, the 21 000 RVMs have been installed at an average cost of about £11 000 each. Additional costs may be incurred by the retailer, particularly where larger machines are installed and some building work is required to fix equipment to the wall, or alter the entrance or other designated area of the store to take account of the deposit location.

2.16 THE ROLE OF THE CLEARING HOUSE

The role of the clearing house is to administer the deposit and control the flow of refund money within the deposit system. Importantly, the clearing house is required to balance out the deposit income that retailers receive from selling beverages against the refunds reimbursed to customers. This involves managing the IT systems linked to the RVMs in the stores and the counting machines at counting and sorting facilities. In some countries (eg Sweden and Denmark), the role of the clearing house is held by the organisation administering the national system. This means that acting as a clearing house is only one of the roles held by the organisation. Other roles may include: registering and collecting fees from producers and importers; registering retailers; administering fees; management of the deposit label; monitoring fraud; collection of empty beverage containers from stores; operating the counting and sorting facilities; and running public awareness campaigns. In Germany, the centralised body is not involved in the flow of money. Instead, its main responsibilities include the management of the deposit label, the provision of the master database, and the IT interface.

2.17 SUMMARY – ADVANTAGES AND DISADVANTAGES OF DEPOSITS SYSTEMS

Table 2.6 summarises the advantages and disadvantages of deposit systems.

(1) This information, which applies to RVMs in general, was provided during an interview with Wolfgang Ringel, Vice

President TOMRA Systems, October 2008


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Table 2.6 Advantages and Disadvantages of Deposit Systems

Advantages Disadvantages Increased return rates Most countries without deposit schemes do not reach the same return rates for single use beverage containers as those achieved in countries with deposit schemes. The countries that are covered in this study (and that report their figures) all exceed 80% return rates, and a number of material return rates exceed 90%.

Costs Evidence from the national deposit schemes in other European countries show that introducing a deposit scheme has cost implications to producers and importers, and retailers. A presentation (1) from Deutsche Pfandsystem GmbH (the German deposit system for disposal drinks packaging) concluded that compulsory deposits cost around three times as much per container as household-based collections.

Litter Reduction Various studies suggest that beverage packaging makes up a relatively small proportion of litter, so any impacts will be limited. However, a Danish litter survey collected 154 389 cans, of which only 7989 (5%) were deposit-bearing cans; the rest were foreign cans not part of the Danish scheme.

Labelling Mandatory packaging deposit systems require all packaging within the scope of the system to be labelled, so that the consumer knows the package is in the scheme, and the deposit due. Schemes that use RVMs also benefit from national barcodes, to prevent cross-border fraud.

Cleaner waste stream The facts that the deposit-bearing packaging is separately collected, and that a financial reward is given for its return, mean that the quality of recyclates arising from deposit schemes is generally very good indeed, and can therefore command high prices at the reprocessors.

Duplication of Effort If alternative waste collection systems are already in place, there is a significant possibility that the introduction of a deposits scheme will create some duplication of effort, with the two schemes acting in parallel to collect the same waste. This is inefficient, costly and environmentally damaging.

Job creation The costs and complexity of deposit schemes also give rise to some benefits, one of which is job creation. It is anticipated that there will be some degree of job creation at varying points in the supply chain, but notably the clearing house, whose entire existence is down to the deposits scheme.

Legal Issues The original introduction of the German deposit scheme suffered a number of legal challenges, which ultimately led to changes being made in the legislation. This process is costly and leads to potentially damaging market uncertainty.

Impact on Retailers Deposit schemes bring new responsibilities on retailers, to add deposits to certain products, and to refund those deposits at a later date on presentation of empty packaging. The retailers also need to set aside valuable store space to collect the returned containers.

(1) http://www.proeurope-congress.com/ws1/Bernd%20Sieberger%20DPG.pdf [23Oct08 @ 11:49]


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3 THE CURRENT UK SYSTEM

3.1 INTRODUCTION

This chapter outlines the features of the UK’s existing systems for the collection and recycling of single use beverage containers. In order to understand the background to the UK situation, this chapter includes information on the types of single use beverage containers sold and disposed of in the UK and current legislative drivers which encourage the collection and recycling of waste containers. This chapter is split into the following sections:

Section 3.2 Types of Beverage Packaging in the UK

Section 3.3 The UK Beverage Sector

Section 3.4 Single Use Beverage Containers in Waste

Section 3.5 The UK Packaging Supply Chain

Section 3.6 Relevant Legislative and National Targets

Section 3.7 The UK’s Packaging Waste Recycling Performance

Section 3.8 Voluntary Schemes in the UK

Section 3.9 Scottish Proposals for a Deposit System

Section 3.10 Costs of Running Current UK System

Section 3.11 Summary – Advantages and Disadvantages of Current UK System

3.2 TYPES OF BEVERAGE PACKAGING IN THE UK

Nearly 24 billion beverage packaging units were sold in the UK in 2007 (1), excluding HDPE bottles. HDPE is the main material used to package milk in the UK (around 80% of all milk sales in the UK are sold in HDPE bottles). ERM has not been able to establish reliably the number of HDPE bottles sold in the UK, but one estimate is that around 40% of the 540 000 tonnes of UK bottles are HDPE. If a typical HDPE bottle weighs 30 grams, this would amount to 7200 million HDPE bottles, which seems to be of the right order, and would increase the total to over 31 billion packaging units. These data are presented in Table 3.1.

(1) Rexam Beverage Radar Statistics 2007.


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Table 3.1 Packaging Types in the UK

Packaging Type Number of Units (Millions) Percentage Cans 7514 24% Refillable Glass 423 1% Non Returnable Glass 6685 21% Refillable PET 0 0% Non Refillable PET 6770 22% Pouch 348 1% Cartons 1856 6% Other Packaging 376 1% HDPE Bottles (ERM estimation) 7200 23%

3.3 THE UK BEVERAGE SECTOR

Soft Drinks

The UK consumed around 14 billion litres of soft drinks in 2007, which is equivalent to around 234 litres per person. This is split between carbonated drinks (41%), dilutables (24%), bottled water (15%), fruit juice (10%) and still and juice drinks (10%) (1). The UK’s overall soft drink consumption is slightly less than the West European average, although we consume significantly more dilutables and significantly less bottled water than the average.

Figure 3.1 Soft Drinks Sold in the UK by Type – 2007

(1) The 2008 UK Soft Drinks Report: British Soft Drinks Association

BottledWater

Carbonated Dilutables Fruit Juice Still0

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The total number of soft drink packaging units sold in 2007 is approximately 16 billion (1) (excluding cartons, pouches and other containers such as vending cups). Of this, by far the greatest proportion is made up of PET bottles of 500ml and above, accounting for approximately 10 billion units. Cans (330ml) account for approximately 3.5 billion units.

Figure 3.2 Approximate Number of Soft Drink Packaging Units Sold in the UK – 2007

Beer Products

Deposit systems in Germany and Denmark both include beer within the scope of their system. In the UK, beer and related products are purchased predominately in pubs and clubs, but also through retailers and off-licences. The vast majority of beer in pubs and clubs is sold on draft and therefore the product sale is made without primary packaging. The majority of the market share (in litres) is currently ‘on trade’ (ie licensed premises), which accounts for 55.9%, with the remaining 44.1% market share being ‘off trade’ (ie supermarkets, smaller shops and off licences), which is ‘packaged’ beer rather than draft beer (2). Of the ‘off trade’ market share, 65% is purchased as part of a ‘multiple purchase’ (the majority of which is thought to be from a supermarket), and 35% is a single ‘impulse’ purchase. In terms of container type, the vast majority (by market share in litres) is sold in cans (67%), which equates to approximately 37.4 million packaged units per

(1) Derived from data supplied by the British Soft Drinks Association, email contact October 2008. (2) British Beer and Pub Association, email contact, October 2008.

500mlGlass

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year, and a lesser volume in glass bottles (32%), which is equivalent to approximately 25.5 million packaged units per year. The remainder is made up of plastic PET bottles and a small number of returnable glass bottles, each accounting for in the region of 150 000 packaged units each per year (1).

Figure 3.3 Off Trade Beer Sales (Estimation of Packaged Units) (2)

Around 100 litres of beer per person per year are consumed in the UK, compared to around 20 litres per head per year of wine (3). Beer consumption is considerably lower than that of some European countries. Wine Products

In 2007, 1360 million 75cl bottles of wine were consumed in the UK. This generated almost 40% (by weight) of all household beverage packaging, contributing around half a million tonnes of packaging to the household waste stream (4).

3.4 SINGLE USE BEVERAGE CONTAINERS IN WASTE

In the UK, waste single use beverage containers predominately arise in household waste, commercial waste and litter streams, but ERM has been unable to establish national accurate data on:

(1) British Beer and Pub Association, email contact October 2008. (2) Based on an average container size for Cans of 460ml and bottles 330ml - provided by the British Beer and Pub

Association, email contact October 2008. (3) British Beer and Pub Association website.http://www.beerandpub.com/beer_facts.aspx (4) WRAP case study; Lightweight wine bottles: less is more, accessed from www.wrap.org.uk, October 2008

Cans Single UseGlass Bottles

ReturnableGlass Bottles

Single UsePET Bottles

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• the number or weight of single use beverage containers in each stream; or

• the beverage container composition of each stream in relation to size of container.

However, discussions with stakeholders and material-specific data suggest it is reasonable to make a number of assumptions, as detailed below. Size of Beverage Containers

• Large volume soft drink and beer containers are most likely to arise in the household and commercial waste streams, and less likely to arise in the litter stream.

• Small volume soft drinks containers are likely to arise in household, commercial and litter streams.

Material Types of Containers

• Glass bottles are predominately found in the household waste stream. The amount of glass packaging in the UK waste stream is around 2.7 million tonnes per annum. Only around 600 000 tonnes are found in the commercial and industrial waste streams. (1)

• Aluminium cans are predominately found in the household waste stream. 62 300 tonnes of aluminium cans are consumed in the home, with a further 26 600 tonnes of aluminium cans consumed away from the home. (2)

• Research on the recycling of plastic beverage containers in the UK has been led by Recoup, in conjunction with WRAP. Their work has focused on plastic containers in the household waste stream. It is estimated that 109 000 tonnes (equivalent to 2700 million plastic bottles) were collected through household waste steams in 2006. Recoup estimates that the majority of bottles are made from either PET or HDPE material, with a ratio of 55-60% PET to 40-45% HDPE. (3)

ERM has been unable to identify any comparable data on the types and volumes of single use beverage containers used/disposed of by the commercial sector.

3.4.2 Single Use Beverage Containers in Litter

A number of stakeholders raised concerns about the presence of single use beverage containers in litter, and supported the introduction of deposits on containers to reduce this problem.

(1) Source: Discussions with British Glass. (2) 2006 Defra Statistics. Source Alupro website.http://www.alupro.org.uk/facts%20and%20figures.htm (3) WRAP/Recoup Annual Local Authorities Plastics Collection Survey 2007


29

The most relevant information on the composition of litter in the UK is the national survey undertaken by ENCAMS, entitled Local Environmental Quality Survey of England (LEQSE). In the 2004/05 LEQSE, ENCAMS undertook additional subsidiary research on behalf of INCPEN. The survey focuses on the occurrence of litter items, rather than measuring the volume or weight of litter by type. The top ten most commonly found litter items from this research are shown in Table 3.2.

Table 3.2 Most Common Litter Items 2004

Litter Item % of Items Counted Chewing Gum 61.2 Cigarette Ends 33.3 Sweet Wrapper 1.6 Cigarette Related 0.4 Soft Plastic Bottles 0.4 Gum Wrapper 0.3 Soft Drinks Cans 0.3 Snack Packaging 0.3 Fast Food Packaging 0.3 Post Office Elastic Bands 0.2

ENCAMS point out a number of issues relating to beverage containers, including the following.

• Soft plastic bottles and soft drinks cans featured in the ‘top ten’ in 2004, but did not feature in the same survey undertaken in 1996. They relate this to the increase in the ‘food on the go’ culture.

• In relation to the most widespread items (in terms of percentage of sites where particular litter items were identified): - soft drinks cans were ranked the 5th most widespread, occurring in

22% of survey sites; and - soft plastic bottles were ranked the 9th most widespread, occurring in

8% of sites. Two international studies provide further insight into the possible levels of beverage containers in litter. A study on litter in Germany in 1998 (1) concluded that drinks packaging made up 6% (by volume) of litter, while a study in Georgia, USA, in 2006 (2) concluded that drinks packaging represented 7.2% (by volume) of litter. In ERM’s view, single use containers in litter, although relatively small in terms of number of items, may be considered to have a greater visual impact. Beverage containers are larger (and arguably persist longer in the environment) than some of the other common litter items.

(1) "Littering in Germany - RW TÜV study of improperly discarded waste in public spaces in Germany in 1998", RW TÜV (2) "Georgia 2006 Visible Litter Survey - A Baseline Survey of Roadside Litter", Keep America Beautiful, RW Beck, 2007


30

3.5 THE UK PACKAGING SUPPLY CHAIN

The UK Packaging Regulations (see Section 3.6.3) place obligations on parties throughout the packaging production chain, starting with the manufacturers of the packaging materials, through to the pack/fillers and retailers. In addition, importers are made responsible for the packaging they bring into the country. Packaging waste arises at two main points – in the household, and at commercial facilities. The packaging waste in the household tends to be the ‘primary packaging’ – around the product itself that the customer has bought. While commercial facilities can also accumulate some primary packaging, if they are the final customers of goods, they tend to accumulate much larger quantities of ‘secondary’ (display) and, in particular, transit packaging. The vast majority of packaging waste from households is collected by local authorities as part of their regular collection rounds, either as source-separated dry recyclables or mixed up with the residual waste. Some household packaging waste is taken by the householder to bring banks or household waste recycling centres (HWRCs). In both scenarios, the council arranges for the bulking of the recyclable materials, where possible, and onward supply to reprocessing companies. Good quality recyclable material has a market value, and reprocessors pay the councils for the materials provided. Packaging waste arising at commercial facilities can be collected by local authorities, but is typically collected under contract by a waste management company, who will supply recyclables materials on to reprocessing companies.

3.6 RELEVANT LEGISLATIVE AND NATIONAL TARGETS

3.6.1 Relevant Targets for Local Authorities

There are two main types of national target that impact on local authorities’ collection and recycling of household and municipal waste, as described below.

1. The Landfill Directive sets targets to reduce the amount of biodegradable municipal waste (BMW) sent to landfill in relation to baseline 1995 levels. The UK is required to reduce BMW landfilled to 75% of 1995 levels by 2010, to 50% by 2013 and to 35% by 2020.

2. Targets for recycling and composting, and for energy recovery, vary between UK regions, as shown in Table 3.3.


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Table 3.3 Variations in Targets Across the UK

Target England Wales Scotland (1) Northern Ireland

Waste to be Recycled

and Composted

[Household] 2010: 40% 2015: 45% 2020: 50%

[Municipal] 2006/07: 25% 2009/10: 40%

[Municipal] 2010: 40% 2013: 50% 2020: 60% 2025: 70%

[Household] 2010: 35% 2015: 40% 2020: 45%

Municipal Waste to be Recovered

2010: 53% 2015: 67% 2020: 75%

All of these sets of targets are effectively passed down to local authorities, who are responsible for the collection and management of household and municipal wastes. None of these sets of targets set specific requirements to collect or recycle beverage containers, but any beverage containers which are recycled can contribute to meeting the household waste recycling targets, and any biodegradable beverage containers (eg cartons) diverted from landfill can contribute to the Landfill Directive targets. In addition, since 2003, the Household Waste Recycling Act has placed a requirement on all local authorities in England to provide kerbside collections for at least two recyclable materials by 2010.

3.6.2 The Waste Framework Directive

The revised Waste Framework Directive sets additional targets in relation to household waste, requiring EU Member States to establish separate collections of paper, metal, plastic and glass (as a minimum) by 2015, and to achieve 50% reuse and recycling and 70% including the recovery of materials by 2020.

3.6.3 The Packaging Waste Regulations

In 1994, the European Union passed the Packaging and Packaging Waste Directive 94/62/EC (2), designed to harmonise packaging laws, enforce a degree of recovery and recycling, and control the amounts and types of substances used for packaging. This was implemented in the UK by two statutory instruments, the Packaging Essential Requirements Regulations (3) – covering the amounts and types of materials used – and the Producer Responsibility Obligations (Packaging Waste) Regulations. All three pieces of legislation have been amended or updated since their original inception, with

(1) In Scotland, an additional cap on treatment of municipal waste by Energy from Waste applies; set at 25% by 2025 (2) http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31994L0062:EN:HTML [08Jun07 @ 14:52] (3) SI 2003 No. 1941, http://www.opsi.gov.uk/si/si2003/20031941.htm [14Mar08 @ 17:20]


32

the aim of increasing their environmental benefit. Unlike some other European countries, the UK has no separate legislation concerning beverage packaging. Under the UK’s Producer Responsibility Regulations (henceforth simply the Regulations), every company that both handles over 50 tonnes of packaging waste and turns over in excess of £2M per year (the ‘threshold criteria’) has to recycle and recover a proportion of its packaging waste. These companies must determine the total amount of packaging they handle each calendar year within the scope of the regulations, and then apply two percentages, to arrive at target recovery and recycling rates. The process is shown in Figure 3.4, and has been more complicated since 2003/04, with the introduction of material-specific targets.

Figure 3.4 Packaging Calculations

Packaging x Activity Percentage x UK National Targets (2007)

Total Weight of Obligated Packaging

x

Pkg Material Production (6%) Converting (9%) Pack/Filling (37%) Retail (48%)

x

Recovery 72.0% (at least 92% of which by Recycling)

Recycling (Material-Specific Targets): Paper 67.5% Glass 78.0% Aluminium 35.0% Steel 58.0% Plastic 24.0% Wood 20.5%

The Activity Percentage splits the total responsibility for the packaging between the four activities involved in its production:

• packaging raw material manufacture (6%);

• converting the raw material into a packaging item (9%);

• pack/filling the item (37%); and

• selling the item (48%). If the packaging is imported, the responsibility for the activities already completed falls to the importer (the ‘rolled-up’ responsibility). Conversely, packaging that is exported accrues no responsibility, because it does not end up in the UK waste stream. The second percentage is the UK National Target, which sets what percentage of the total packaging arising in the UK waste stream must be recovered and recycled. The European Directive sets national targets for total recycling and recovery. Because small companies that do not handle much packaging are exempted from the UK system, the targets for other companies within the system must be higher than the overall EU targets. The targets for obligated companies in the UK are presented in Table 3.4.


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Table 3.4 UK National Recovery and Recycling Targets 2005-2010

Operation Material 2005 2006 2007 2008 2009 2010 Recovery Total 65.0% 66.0% 67.0% 72.0% 73.0% 74.0% Of Which, Recycling 94.0% 92.0% 92.0% 92.0% 92.0% 92.0% Recycling Paper & Board 66.0% 66.5% 67.0% 67.5% 68.5% 69.5% Glass 55.0% 65.0% 69.5% 78.0% 80.0% 81.0% Aluminium 28.0% 29.0% 31.0% 35.0% 38.0% 40.0% Steel 55.0% 56.0% 57.5% 68.0% 68.5% 69.0% Plastics 22.0% 23.0% 24.0% 26.0% 27.0% 29.0% Wood 19.0% 19.5% 20.0% 20.5% 21.0% 22.0%

Complying with the Regulations

The four central obligations imposed by the Regulations are:

• a Registration Obligation, including a related packaging data requirement;

• a Recovery and Recycling Obligation;

• a Certifying Obligation; and

• a Consumer Information Obligation for companies whose main activity is selling.

Producers have the choice of complying with these requirements individually, or joining a compliance scheme. If the latter route is chosen (as it is by over 95% of producers), the producer is simply required to register with the scheme and annually provide it with data on the packaging handled. A fee is paid to the scheme, to cover its costs of meeting the other requirements on the producer’s behalf. The Annual Timeline

The annual timeline for compliance with the Regulations is presented schematically in Figure 3.5. Having performed activities in year 0 that accrue packaging obligations, the company has until the beginning of April to register with its environment agency, report what packaging it has handled, and its associated packaging recovery and recycling targets.

Figure 3.5 The Annual Timeline

1. Year 0 Packaging Activities

J F M A M J J A S O N D J F M A M J J A S O N D J F M A MYear 0 Year 1 Year 2

2. Register with EA for Year 0. Report packaging handled, and recovery and recycling targets.

4. Certify to EA that the appropriate recovery and

recycling for Year 0 was done.

3. Year 0 Recycling & Recovery Activities1. Year 0 Packaging Activities

J F M A M J J A S O N D J F M A M J J A S O N D J F M A MYear 0 Year 1 Year 2

2. Register with EA for Year 0. Report packaging handled, and recovery and recycling targets.

4. Certify to EA that the appropriate recovery and

recycling for Year 0 was done.

3. Year 0 Recycling & Recovery Activities


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Over the course of the following year, the relevant recovery and recycling must take place (see below), and the company has until the end of January in year 2 to demonstrate to its agency that it has fulfilled its obligations. Providing Proof of Recycling – Packaging Recovery Notes (PRNs)

Companies that reprocess packaging materials are audited by the national environment agencies, after which they may issue Packaging Recovery Notes (PRNs) for each tonne of packaging material that they reprocess. Accredited foreign companies that reprocess UK packaging issue packaging export recovery notes (PERNs); these are entirely equivalent to PRNs, so only the term PRN is used hereafter. Each compliance scheme and obligated company must acquire sufficient PRNs over the course of the year to meet the target levels of recovery and recycling that they reported to their agency in April, based on their activities in the previous year. PRNs are traded on an open market like shares, and are subject to the same rises and falls in value, depending on supply and demand. The revenue from PRNs is meant to be reinvested into the reprocessing industry, to fund the commissioning of further equipment, so that increasing targets can be met. Recycling Infrastructure

The current UK system is relatively efficient at collecting and recycling beverage packaging waste, inasmuch as it is handled together with other similar packaging and non-packaging (notably newspapers and magazines) recyclable waste. Local authorities across the country have introduced dedicated collection schemes for dry recyclable materials, but the geographic coverage and types of materials collected vary significantly between councils. Although most councils have some form of glass collection – either at kerbside or by bottle banks – the coverage of plastic collection schemes is much less advanced. That said, the growth in source-separated collection of plastic from households has been significant in recent years, and there is a clear correlation between households served with kerbside plastic collections and the tonnes of plastic bottles recycled, as shown in Figure 3.6. There are two distinct challenges that persist for the UK recycling infrastructure. The first is to increase the coverage (in terms of both geography and materials accepted) of the source-separated kerbside collections, so that all residents have the same opportunities to divert their waste from landfill. The second is to find a way to encourage all those who have the infrastructure to make full use of it.


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Figure 3.6 Correlation Between Plastic Bottle Recycling Levels and Households Served by Kerbside Plastic Collection (1995-2009)


Comments on the PRN System

When the Regulations were first introduced, the lower national targets allowed the reprocessors to collect the bulk of their packaging waste from retail establishments (eg cardboard from the back of supermarkets), rather than trying to recover packaging from individual households. This allowed the Regulations to be met at comparatively low cost. As the national targets have increased, the easily accessed packaging waste from commercial sources has to a large extent been captured, leading to the need for more packaging waste to be recovered from households. Fortuitously, this requirement has coincided with pressure on local authorities to increase their recycling (and composting) of household waste, so additional infrastructure (notably kerbside collections) has been introduced just at the time it has been needed to support national packaging targets. However, it is important to note that the driver for this is the council’s municipal waste recycling targets, not the Regulations. There is no requirement under the Regulations for local authorities to collect packaging, although their involvement is critical to industry’s ability to meet its targets. It is also important to note the Regulations do not set any specific requirements for the collection or recycling of single use beverage containers.



0

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The Regulations allow the recycling of any packaging waste to meet these targets, and, moreover, were originally designed to make the achievement of the recycling and recovery targets as easy as possible.

3.7 THE UK’S PACKAGING WASTE RECYCLING PERFORMANCE

The introduction of the Regulations in 1997 coincided with the introduction of a new and more accurate method of recording packaging waste recycling rates by packaging type. Table 3.5 provides UK packaging waste recycling data for 1998 and 2006, with data for glass, aluminium and plastic packaging shown in bold italic text (note, however, that this is not just beverage packaging).

Table 3.5 UK Packaging Waste Recycling and Recovery Rates: 1998 and 2006

1998 (1) 2006 (2) Packaging Material Tonnage of

Materials accepted for Recycling / Recovery

% Recycled/ Recovered

Tonnage of Materials

accepted for Recycling / Recovery

% Recycled/ Recovered

Paper 1 894 086 47 2 933 900 78 Glass 503 800 23 1 335 950 51 Aluminium 14 517 13 45 781 32 Steel 182 409 25 392 537 58 Metals 196 926 not calculated 438 308 53 Plastics 125 539 8 457 864 22 Wood 170 000 858 523 73 Total Recycling 2 890 351 29 6 024 545 58 Energy from Waste 448,354 474 705 Total Recovery 3 338 705 33 6 499 250 63

The UK has seen significant growth in the collection and recycling of packaging waste over this eight year period. However, performance continues to lag behind other EU countries, as shown in Figure 3.7.

(1) Source www.defra.gov.uk/environment/statistics/waste/alltables.htm (2) Source: www.defra.gov.uk/corporate/consult/packaging-reg07/consultation.pdf


37

Figure 3.7 Packaging Waste Recovery in EU15 (2005)

Source: http://ec.europa.eu/environment/waste/packaging/data.htm

3.8 VOLUNTARY SCHEMES IN THE UK

At present, there are a number of voluntary schemes in operation in the UK that are relevant to this project. The following sections discuss initiatives associated with Recycling Zones, AG Barr’s deposit scheme for Irn Bru, Tesco’s RVMs and RVM trials run by Recoup. For a period of time, The Body Shop offered its customers a 10% price reduction if they returned containers to the shop for refilling. It discontinued this scheme in 2002, because only 1% of its customers used the service.

3.8.1 Recycling Zones

One initiative aimed at increasing the recycling of waste packaging associated with goods consumed ‘on the go’ is the Recycling Zones program, sponsored by Coca-Cola, WRAP and Recoup. This initiative is aimed at high-footfall locations ‘out of home’, such as shopping centres, transport hubs and theme parks. Among the locations already running the scheme are Thorpe Park (the first to open, in June this year), Legoland, Chessington World of Adventures, Warwick University and Festival Place shopping centre in Basingstoke.

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Figure 3.8 Recycling Zones

These photos, courtesy of Recoup, show the openings of the Thorpe Park (top left) and Festival Place (top right) Recycling Zones, and the recycling point at Festival Place. For the last of these, it was decided that, rather than provide a series of individual recycling receptacles located around the centre, there would be a focal point of presence which would encourage the shoppers who use the centre to make a specific visit to the recycling zone. Feedback from Recoup suggests that the schemes are working quite well, with a decent capture of materials. If recycling bins are provided alongside waste bins, most people seem to be willing to use the recycling bins. To that end, there should be as little restriction as possible on what may be deposited in the bins. In addition, there is some sign that the main outcome is to divert packaging from the waste bins to the recycling bins, rather than reduce the amount of littering.

3.8.2 AG Barr’s Reusable Bottle Deposit Scheme for Irn Bru

One of the only examples of container deposit and reuse scheme in operation in the UK is Irn Bru, which is still available in refundable glass bottles in


39

Scotland (along with, to a lesser extent, a number other AG Barr brands, including Tizer, Red Kola, Barr Cola, and Limeade). Irn Bru is mainly sold in cans and PET bottles, but the traditional method of sale, in a returnable 750ml glass bottle and plastic crate system, is still used for many local retailers. Many consumers maintain that the taste is better when supplied in a glass bottle, which is an important factor in maintaining the use of glass bottles. Bottles are returned by consumers to the local retailers, who either provide a cash refund or shop credit voucher. Bottles are then collected from the shops and taken to one of a number of distribution centres, before being retuned to the factory in Cumbernauld for cleaning and refilling. As well as individuals being incentivised to return bottles for the deposit, many Scottish charities use the deposit scheme on Barr’s glass bottles to raise funds. In 2003, when a deposit value of 20p was in place, the system delivered an impressive return rate of approximately 85%, and it was reported that Barrs sold approximately four million 750ml glass bottles of Irn Bru (1). The current deposit value is 30p, and 70% of bottles are returned for cleaning and reuse. The AG Barr Annual Report in 2007 comments that each reusable glass bottle returned is cleaned, refilled and sold around five times during its full life (2). It is thought that the popularity of the 750ml bottle is in decline, in part as a result of an increased demand for 2l and 500ml plastic bottles, which favoured by the large retailers and supermarkets.

3.8.3 Tesco RVMs Trials

Tesco has been trialling RVMs at their stores for over three years, and should have around 85 operational by the end of the financial year. The Tomra machines have been well received by customers, but are reported by Tesco not to pay their way, in that the large initial outlay and operating costs are not balanced by the revenue from the materials collected. Nor, Tesco report, do the RVMs bring in many new customers (though we do not know whether the RVMs increase existing customers’ loyalty). The main incentive to Tesco to provide the RVMs, therefore, is the good publicity and staff satisfaction that arises from trying to promote recycling, and, perhaps, the recycling revenues achieved (though these will have fallen off recently). The RVMs are typically large units located outside the front of the stores and capable of accepting a range of materials (aluminium, steel and PET). The systems now identify packaging by its barcode, and it is directed to a dedicated storage receptacle, having first been shredded or otherwise reduced

(1) WASTE PLANS Report on Categorisation and Pilot Studies, Scottish Institute of Sustainable Technology, May 2003. (2) AG Barr Annual Report 2007


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in size. The customer is rewarded for recycling their materials, being given Clubcard (loyalty) points that can be redeemed for groceries or other rewards. An item on BBC Breakfast (7th October 2008) reported that a couple had financed business class flights home from honeymoon by collecting packaging litter and returning it to their local Tesco, where the RVM awarded them Clubcard points which they exchanged for air miles (1). They amassed 36 000 air miles, at a rate of 600 miles per 250 Clubcard points, and one point per four items recycled. This suggests they deposited 60 000 items. This case demonstrates that a reward scheme can act as an incentive to reduce litter. Tesco is now planning to introduce 10 RVMs on high streets around the country, as a new trial. Once again, the machines are not expected to make any money, but it is hoped that they will contribute to collecting some of the ‘on-the-go’ packaging waste. The RVMs will also reward participants with Clubcard points.

3.8.4 Recoup’s RVM Trials

Recoup has been involved in a number of trials of RVMs recently, at Lakeside shopping centre, Queensgate in Peterborough, and Milton Keynes. The details of the trials have varied between sites. The trials were designed to investigate a number of questions, including are the RVMs robust, how well do they separate materials, what is the quality of the collected material, what is the public response, and are the incentives taken up? It should be noted that these RVMs are designed to capture packaging waste ‘on the go’, and are different in that sense from the Tesco RVMs (see Section 3.8.3), which are, in effect, a bring system. It is not expected that customers would bring packaging from home to the RVMs in these trials. The RVMs had three holes: the first for the customer to deposit the bottle; the second returns the bottle if it is not accepted; and the third to act as a normal waste bin. The technology used to assess and to sort the bottles is the same sort of technologies as is used in Material Recycling Facilities (eg optical devices using infrared), and, as in MRF applications, this has not been 100% accurate. Feedback on the RVMs themselves has been mixed; the units are quite bulky, and some felt that a lower-tech unit without the refund would be better. The RVM trials have only been for PET bottles, and the capture rate achieved has been modest (the final report is not yet available, so statistics cannot be provided). Recoup commented that a better performance might be achieved with a wider material target – all plastic bottles and cans – even if the sorting has to take place elsewhere.

(1) http://news.bbc.co.uk/1/hi/uk/7654254.stm


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At Milton Keynes, no incentive was originally offered to encourage the public to recycle, but then an incentive was introduced, to gauge the effect. The incentives at the locations varied: a free muffin with a cup of coffee; 50p off a meal deal at Boots; and a coupon for a curry house. Whether it was the choice of incentives is not known, but none of these were thought to increase the use of the RVMs; members of the public who were minded to recycle did so anyway, and those who weren’t were not (for the most part) persuaded by the incentives. However, there was very little or no promotion, as the schemes were so local, and a more coordinated program might have different results.

3.9 SCOTTISH PROPOSALS FOR A DEPOSIT SYSTEM

The Scottish Government has recently conducted a consultation on deposits (1). The consultation paper suggested that a statutory deposit and return scheme could help reduce litter, as there would be a financial incentive to return the container to the retailer. It mentioned that the use of reverse vending technology would be important, and stated that it may also be sensible to extend the scheme to other forms of packaging, such as food tins, plastic tubs and aluminium trays for take-away food. In terms of enforcement, the consultation suggested that, ideally, responsibility for the scheme and enforcement would fall to an existing body, such as SEPA. It was also expected that criminal offences would be introduced in relation to matters such as not charging a deposit, should a scheme go ahead. Under the plans outlined in the consultation, there would be a responsibility on those receiving drinks containers to ensure that they are recycled or re-used. It is mentioned that the specific use of funds arising from deposits that are not reclaimed should be laid out in the provisions. These moneys might be available to local authorities, who, in practice, have to meet the costs associated with collection and treatment of unreturned containers. Based on financial data from Danish and Norwegian scheme, the consultation paper estimates that a deposit and return scheme in Scotland would cost around £17 million a year. In consulting with Friends of the Earth (FoE) on this project, they referred us to their response to the Scottish consultation (2), supporting the proposals. FoE believes that a single centralised agency, as in Denmark, would ensure efficient administration. It has run a community-based study on the reuse of milk bottles with local retailers, and found that there was significant support, but that there were obstacles to sourcing suppliers of both glass bottles and milk bottling facilities to retailers. These supply chain issues would need to be addressed for successful schemes.

(1) The Scottish Government (2008) The Consultation Paper on Potential Legislative Measures to Implement Zero Waste,

http://www.scotland.gov.uk/Resource/Doc/1056/0063943.pdf [17Oct08 @ 09:52] (2) FoE (2008) Consultation Paper on Potential Legislative Measures to Implement Zero Waste, A Response from Friends of

the Earth, Scotland.


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3.10 COSTS OF RUNNING CURRENT UK SYSTEM

The costs of running the current UK system are relatively low. Collection costs are covered by local authorities, for the packaging collected from households as part of the usual waste collection service, or retailers, for commercial packaging waste. Packaging producers must buy or otherwise obtain PRNs, which are bought and sold on the open market, and fluctuate according to opinion on likely supply and demand levels. Let’s Recycle quoted the prices presented in Table 3.6.

Table 3.6 Current PRN Prices (£/te)

August September Glass 19 - 23 19 - 23 Paper 2 – 2½ 2 – 2½ Aluminium 65 - 75 55 – 65 Steel 10 - 14 9 – 12 Plastics 21 - 24 21 – 24 Mixed — energy recovery 2 - 2½ 2 - 2½ Wood 2 - 2½ 2 - 2½ Source: http://www.letsrecycle.com/prices/prnPrices.jsp [09Oct08 @ 16:08] Some stakeholders have raised a question about the likely effect on PRN prices, if UK targets do not continue to rise in the future. With the necessary infrastructure in place to achieve the required recycling and recovery, it is argued that PRN prices will collapse, unless targets continue to rise. Since the PRN revenue is intended to be invested in further infrastructure for recovery and recycling of packaging, it is possible that that revenue will not be required if the recovery targets do not increase, and the required level of infrastructure is already in place and the targets continue to be met. Beyond PRNs, producers must pay a fee annually to register with their local environment agency, and will incur further costs if employing a compliance scheme. The other significant sum of money in the packaging chain is the value of the reprocessed material. Let’s Recycle quotes prices for aluminium used beverage cans in the region of £750-£800 per tonne (1), and, to some extent, this value tends to flow back up the supply chain.

3.11 SUMMARY – ADVANTAGES AND DISADVANTAGES OF CURRENT UK SYSTEM

The chief advantages and disadvantages of the current UK system for handling single-trip beverage packaging are outlined in Table 3.7.

(1): http://www.letsrecycle.com/prices/metalsPrices.jsp [09Oct08 @ 16:21]


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Table 3.7 Advantages and Disadvantages of the Current UK System

Advantages Disadvantages Equitable System So far, it does not seem that the PRN system has particularly favoured one material over another. Although the recycling targets are different for different materials, to some extent the targets reflect the ability of the materials to be recycled. Cost and Efficiency The UK system was original designed to meet the requirements of the EU Packaging Directive at minimum cost, and it is generally agreed that this has been achieved. By stimulating an efficient system for collecting packaging waste from the most convenient locations (originally at back of retail stores), the overall costs of the collection process were kept relatively low. As the targets have grown, first bring banks and then kerbside collection schemes have bolstered the rates of collection, so that the supply of recyclate has kept pace with demand. There is no need for a separate collection of beverage packaging materials, which can therefore be comingled with newspapers and other recyclates. Labelling The UK system introduces no additional requirement for labelling. All packaged products are already included, so no differentiation is necessary. Voluntary RVMs Tesco, Coca Cola, Recoup and WRAP (among others) have all trialled RVMs, as a means of further increasing recycling rates and reducing litter.

Moderate Recycling Performance Figure 3.7 shows that the UK’s packaging recycling performance is far from exemplary in comparison with other European countries. However, this might be quite different if national spend on the systems is taken into consideration. Litter It is hard to deny that there is too much litter in the UK and there seems to be political appetite for measures to be taken to reduce littering. Complexity and Confusion The UK system is by no means unique in its complexity, but the PRN system does leave many businesses perplexed – particularly because of the disjuncture between the packaging waste that is generated and the targets for recovery and recycling which are set for each organisation. Confusion on the part of the general public is more directed at the variety of collection schemes offered by local authorities. While this is not a result of PRN system, the confusion caused does jeopardise the potential success of kerbside collection schemes. Limited Material Collection Coverage A significant barrier to recycling some materials (and plastics in particular), is the limited coverage of collection schemes. The majority of households in the UK are not offered kerbside plastic collection, and, although bring banks and other facilities may exist, this is a genuine barrier to recycling. Single Target for Household and Commercial Packaging The PRN system has single targets for each material (eg 78% of glass to be recycled). Collection efforts have therefore focused first on the easiest materials to collect, which is business waste from the back of stores. This has been to the detriment of household recycling, which has therefore been a lower priority until more recently.


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Advantages Disadvantages Role of Local Authorities

Local authorities are playing an increasingly important part in meeting national packaging waste targets, as the amount of packaging recyclates separately collected from households increases. These materials are needed to ‘top up’ the bulk collections from businesses, in order for the national packaging recovery targets to be met. However, there is no compulsion under the Packaging Regulations for local authorities to collect and recycle these materials. Their drivers are the recycling and composting targets set on councils. The contribution of local authorities to national targets may therefore be holding businesses back from achieving greater recovery of packaging waste and prevention through improved design.


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4 HOW DEPOSIT SYSTEMS COULD WORK IN THE UK

The previous chapters have reviewed the typical features of beverage deposit systems, and the current packaging arrangements in the UK. This chapter combines the two sets of findings, by assessing how a deposit system could work in the UK, and any barriers that could arise in implementing it.

4.1 SCOPE OF A POTENTIAL SYSTEM

The scope of work defined in this project was to examine the potential for a deposit scheme on plastic, aluminium and glass single-use beverage containers. Simplistically, the options can be represented by a Venn diagram, as shown in Figure 4.1, which assumes as a starting point that all pack sizes would be included in the system, but that certain products would be excluded. Each of the four categories is discussed below.

Figure 4.1 Venn Diagram of Scope of Deposit System

4.1.1 Product

The initial premise of the project was to investigate options for deposits on beverage containers, but differentiating between packaging based on its contents seems at first to be illogical – if there is a deposit on beer bottles, why not jam jars? If the fundamental goal is to increase recycling and recovery,

PackagingMaterials

Format

Product

PackSize

Cartons

Steel

Aluminium

Glass

DisposalCups

Plastic

SingleTrip

Reusable

AllSizes

AlcoholicProducts

Soft Drinks

Water

Milk

Fruitand

VegetableJuices

DepositSystem

PackagingMaterials

Format

Product

PackSize

Cartons

Steel

Aluminium

Glass

DisposalCups

Plastic

SingleTrip

Reusable

AllSizes

AlcoholicProducts

Soft Drinks

Water

Milk

Fruitand

VegetableJuices

DepositSystem


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surely the products deserve equal consideration? After all, it is the packaging material itself, not the contents, that will be recycled. We are not aware of any very firm counter to this argument, beyond one of product stability, which is why milk and fruit & vegetable drinks are kept outside the system in Figure 4.1 – the remains of perishable products may certainly degrade while still being stored at the retailer or in the RVM, and cause odour (and perhaps health) issues. It was also argued for milk in particular that the product is a staple food and therefore should not be ‘taxed’ by the imposition of a deposit. Perishables to one side, though, it is not really clear why there should be a deposit on, for example, canned soft drinks, but not canned snack nuts; on soft drinks, but not fabric softeners. The only other reasons ERM can imagine are that keeping the scope to beverage containers makes things easier to understand for all involved, that the increase in ‘on the go’ consumption and its impact on littering requires particular focus, and that, if too many products had a deposit on their packaging, quite a sizeable amount of alternative infrastructure would be needed to collect it – whether it be RVMs or retailer collection areas.

4.1.2 Packaging Material

The original scope of the project included glass, plastics and aluminium containers in the deposits scheme, but excluded cartons, steel containers and other materials. ERM believes that these choices were largely driven by the current situation in other European countries that have already implemented deposits. The stakeholders’ responses to ERM’s enquiries were clear that any deposit system would have to avoid any distinctions that might distort trade or competition between materials. This would suggest that cartons and steel containers ought be included in the scope of the deposits system. Cartons are currently not widely recycled, so the introduction of a deposit on them might well have a favourable effort on their recycling rate. However, the previous section noted that degradable products such as milk and juices should probably be excluded from the scope of the scheme, for reasons of hygiene. In this sense, the Venn diagram is stylised, since it does not indicate the considerable overlap between the four categories. One option might be to include all packaging materials in the scheme, with exemptions for certain products, in whatever packaging they might be sold. This would at least avoid bias in favour of one material over another. There is another issue with cartons – and, indeed, any other non-cylindrical packaging containers – and that is that the RVMs read barcodes by putting the packages on their side and rotating them about their longitudinal axis. This works with cylindrical bottles and cans, but will fail for cartons. ERM anticipates that RVM manufacturers could certainly overcome this issue, but it


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is a further step that would need to be taken in advance of introducing deposits on cartons. The inclusion of disposal cups as a separate material type highlights that these containers can be a particular issue for littering, and might otherwise be excluded from the scope of a deposits scheme. One can imagine a deposit scheme that is solely concerned with this type of packaging, where the cups can be returned to the shops that sell them, or dedicated RVMs. However, ERM questions the amount of packaging that could be diverted from landfill and littering in this way, compared with the level of resources required to establish and then operate the system. The money involved might be more efficiently invested in alternative schemes.

4.1.3 Format

By format, ERM means whether the container is intended for a single-trip, or to be returned and reused (after suitable washing) a number of times. As is noted elsewhere, the deposit schemes on single-trip containers in other European countries have typically evolved from systems that originally just concerned returnable containers. The restriction of a potential deposits scheme to only cover single trip – as suggested by the scope of this study – seems to be policy decision, and ERM does not foresee any undesirable effects arising from it.

4.1.4 Pack Size

Should the size of the pack have any influence on whether that pack is included in the system? Table 2.3 indicated that the deposits in the studied European countries vary by material and by pack size. The German deposit system originally distinguished between sizes of container, but subsequently changed so that all materials and pack sizes attract the same deposit, for reasons of simplicity. Several stakeholders thought that setting different deposits for different pack sizes might lead to some perverse outcomes. For example, if packs less than a litre attract a deposit of (say) 20p, and those that are one litre or more have a deposit of 50p, they imagined that companies might start selling 950ml packs, to fall under the threshold. However, this has not happened in EU Member States where deposits currently exist. One factor that might encourage the imposition of a ceiling on which pack sizes incur a deposit is that, for RVMs at least, the packaging cannot be crushed until the deposit has been collected, as the barcode could not be read. This has impacts on the space requirements for collection (see also Section 4.3.4) and on transport to the return site.


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4.1.5 Varying Scales of Deposits

Just as different deposits could be charged on the same product in the same packaging material but different sized packs, so could changes in the product or the packaging material lead to different deposits. Stakeholders thought that differences in deposits between materials could lead to market distortion, though this does not seem to be an issue in Europe. A scheme could be imagined where different deposits are placed on drinks sold in glass containers, perhaps based on their alcoholic content (or just alcoholic/non-alcoholic). However, this is at odds with the wider point raised in Section 4.1.1 above, that setting a deposit should not depend on the container’s contents.

4.1.6 Other Considerations of Scope

Pubs, Clubs and Restaurants

Going beyond the four categories in our Venn diagram, there are other questions of scope that need to be considered. For example, if there is a deposit on alcoholic drinks sold in glass containers, such as alcopops, would pubs, clubs and restaurants have to charge that deposit on drinks sold to customers on their premises, for consumption (and, ultimately, deposit redemption) on their premises? In other countries, there is no such differentiation between packaging for on-sales and off-sales, which could theoretically lead to customers in pubs buying the products and subsequently taking them elsewhere to claim the deposit. However, ERM considers that the effort involved in this activity would barely be worth the reward, and this seems to be the experience from abroad. Mandatory or Voluntary?

The stakeholders mostly agreed that, if a national deposit scheme were to be introduced, it would need to be mandatory – a voluntary system would not work. The anticipated costs of a deposit scheme are high (see Section 4.4 below), so it was felt that the costs should be shared across the whole business, rather than volunteers. Some stakeholders thought there might be scope for voluntary systems run on a more local basis, as long as they do not raise any trade barriers (see Annex A for details of the so-called “island solutions” that arose in Germany). Examples quoted included AG Barr’s scheme for Irn Bru in Scotland, though that is for reusable packaging. Another voluntary initiative has been trialled by Tesco, who are offering loyalty points for materials returned to RVMs at selected stores (see Section 3.8.3). While this is not a deposit scheme, since no initial charge is levied, it is a voluntary scheme that is encouraging the recycling of packaging. Another suggestion was that mandatory deposit schemes might be imposed at large events, such as sporting occasions, carnivals and music festivals.


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Stakeholders cited various events already held (including the beer concession run by the Workers’ Beer Company at the ‘WOMAD’ festival, T in the Park (where a 10p deposit applied to drink cups sold by ‘Tennents Lager’ ‘throughout the site), and at least one of the ‘Party in the Park’ events) where the organisers had voluntarily imposed packaging deposits on drinks cups (and possibly other products). The deposits could be redeemed at the original retailers on site. Stakeholders noted that these schemes appeared to be highly effective in combating littering of the cups on which deposits had been placed. This is a good closed system, since the point of sale, point of consumption and point of redemption are all in the same location, and it is almost inevitable that littering would be reduced by such a scheme. Anecdotal evidence suggested that children were proactively asking participants if they could have their used packaging, for the value of the deposits. This is potentially of some concern, particularly if they might be given packaging containing unfinished alcoholic drinks. Such unplanned results would have to be carefully considered before the Government could take the step to make such deposit systems mandatory.

4.2 HOW THE SYSTEM MIGHT WORK

If the UK Government were minded to introduce a deposits scheme, this section explains briefly the main steps that would need to be taken. Scope

First of all, the Government would need to decide the scope of the deposits system, taking into consideration the questions raised above. In particular, the boundaries must be set so that the system does not distort the market, nor create artificial trade barriers. That the systems have been launched in other EU Member States suggests that this would be possible, if difficult, and more information on legal implications and considerations is provided in Section 4.5. Financials

Secondly, the Government would need to sort out the financial considerations, which are many and diverse, but include:

• the level at which to set the deposits on each packaging category;

• the basis for levying fees on the producers, and the level of the fees;

• the level of penalties for non-compliance; and

• how non-refunded deposits should be used. Operation

Some further operational decisions that have to be made in advance of starting the scheme are discussed in Table 4.1.


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Table 4.1 Operational Considerations

Aspect Discussion

How will deposit-containing packaging be labelled?

A unique barcode for the UK might help prevent cross-border issues, but it is expected that an additional label would be required, simply to inform the consumer of the presence of a deposit on the item of packaging.

What points of return will be made available to consumers?

Consumers will expect to be able to redeem their deposits at any retailer selling deposit-containing packaging, while retailers may prefer to make RVMs available rather than have staff deal with returns. Will consumers also be able to redeem deposits at HWRCs, and, if so, will councils wish to man the collection service, or install RVMs themselves?

How will the clearing house operate?

The detailed operation of the clearing house (if required – the German system does not have one) would need to be decided and agreed with the relevant stakeholders. For example, would the clearing house have to approve all products that incur a deposit before those products can be placed on the market?

The clearing house would have to be able to reconcile all deposits collected by retailers, and all the deposits they redeem, and make adjustments according to the total number of deposits redeemed nationally.

The annual costs of operating the clearing house would need to be reclaimed from the producers.

The Government must decide in the first place how the clearing house will be established. If not a Government-run enterprise, some form of tendering process would presumably be required.

Information

Once this is done, the producers would need to be informed of the planned system, and given adequate time to prepare for the change (again, see Section 4.5). At the same time, an education program ought be run, so that all parties, including consumers, understand why the new system is being introduced, and how to participate. Having decided on all of the above factors (and probably many other considerations), the Government will need to enact legislation to lay down the new deposit scheme. There will then be a transition period, allowing the stakeholders time to prepare for the changes. Start-Up

The question of how exactly to start-up the system is rather complex. Until the day the scheme goes live, no deposit-containing packaging will be on the shelves. However, it is unrealistic to expect retailers on the night of day zero to clear all non-deposit-containing products from their shelves and replace them with deposit-containing products. What will happen instead is that retailers will begin introducing the deposit-containing packaging as and when they need to replenish their stocks. It seems reasonable to impose a long-stop date, after which retailers may only sell deposit-containing products within the target product ranges.


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Over the period leading up to day zero, and thereafter, those retailers that wish to use them will be getting RVMs installed at their premises. They will also need to set up contracts for hauliers to collect their returned packaging. Through collective bargaining, it may be possible for retailers to negotiate a better price for the collection charges, and for hauliers to negotiate a better price for their materials with the reprocessors. With the help of the central clearing house, it might also be possible to plan and improve collection rounds.

4.3 IMPACT ON THE UK’S CURRENT PACKAGING WASTE SYSTEM

4.3.1 Parties Involved

Stakeholders were broadly in agreement that the introduction of deposits would require the involvement of parties all along the packaging supply chain, starting with the packaging manufacturers, whose designs might be impacted by the system, and who would need to label their packaging correctly. The pack/fillers would need to be involved as well, as their choice of packaging might be affected by the details of the deposit scheme. Arguably, the retailers have the most pivotal role in making a deposit scheme successful. From day 1, they must be well informed about the system, and be able to inform their customers on how it works. The retailers would be responsible for collecting the deposits, and reporting to the centralised body how much deposit money they have collected. This would not be too difficult for large retailers, but we foresee difficulties with small retailers (corner shops, for example), who might need to improve their stock control significantly. The retailers, together with RVMs that may be located on their premises, are also likely to bear the brunt of the responsibilities for collecting returned containers and providing refunds. If done manually, the retailers will need to understand the system fully, in order to know which containers are covered and what deposit refund is due. They will also need to collect the containers and arrange for their onward transportation, as required, and report to the centralised body how many deposits they have refunded. If deposits are to be refundable at household waste recycling centres (HWRCs), the local authorities will need to understand the rules as well, for the same reasons. Furthermore, they will want to know what the deposit systems plans are going to be, because of the likely impact on their waste collection services. In addition to the above consideration, one or more parties along the supply chain will have to pay a levy to fund the centralised body and the administration of the deposit scheme. This cost could be shared between producers, in the same way as the packaging regulations shares the producer responsibility between activities. Alternatively, the cost could be levied at one point in the chain, such as at the point of sale, in the knowledge that the


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retailers would pass the additional cost along the supply chain. In the European systems reviewed, the usual point of levy for the fees is with the fillers and importers. The question of costs is covered in more detail in Section 4.4. Finally, Government might choose to get involved in the deposit system at various points in the supply chain. ERM anticipates that, at the least, Government would want to coordinate public education about the deposit system, so that a consistent line is presented to consumers about why the system is being introduced, its scope, and how they should comply.

4.3.2 Impact on Local Authority Collections

Nearly all the stakeholders thought that the deposit scheme will cannibalise some of the packaging materials that are currently collected by local authorities in source-separated kerbside collections, bring banks and HWRCs. Dual collection rounds are expensive, but as mentioned earlier, current legislation means that all local authorities in England must provide kerbside collections for at least two recyclable materials by 2010 (1). The value of the recyclates does not go very far (perhaps around 10%) towards supporting the costs of collection, and, in the current economic climate, income is falling; however, it does help. If the tonnages and income decrease, it will become harder to justify the separate collection rounds. However, it is unlikely that these rounds could be dropped entirely, because the deposit system would not divert all packaging items (the scope as defined does not include jam jars, shampoo bottles or cat food tins, for example), and, moreover, there will still be a need to collect non-packaging recyclables. One possibility to limit the loss of revenue to local authorities would be for them to collect the returned containers from the retailers. LARAC suggested that RVMs could be located at HWRCs, to further facilitate their involvement. This would seem to work on first inspection, but the former would require a whole-scale redesign of collection rounds, while, for collection authorities, the latter could impact on recycling credits. Another concern for LARAC was that the removal of a sizable amount of packaging materials from their recycling stream would make it much harder to meet their household waste recycling and composting targets, which might therefore have to be adjusted.

4.3.3 Impact on Retailers

As already noted, the retailers have a pivotal role in making a deposit scheme successful. The majority of retailers (even small shops) use barcode scanners

(1) The Act gives the National Assembly for Wales the right to pass equivalent regulations for Wales, but (to date) this

has not yet been done.


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to charge customers, so the cost of the deposits could be coded into this system and charged to customers relatively easily. However, many retailers do not collect or use their till data for reporting purposes, so it may be more difficult for retailers to log how many deposits they have collected. At the other end of the scheme, retailers will need to record the deposits they redeem to customers. If this is done by RVMs, the process can be automated, but manually returned deposits will need to be logged and independently verified by the logistics/waste management companies. These factors impinge on the financial operation of the shops, and may slow down customer service, while deposits are being redeemed. In addition, retailers will also have to find some storage space for the returned containers. In comparison with the deposits schemes of old, where a retailer would have to accept and to store crates of large fizzy drink bottles, today’s beverages are sold in a very wide range of packaging designs and sizes. The retailer would need to examine or to scan the packs individually to determine if they qualify, and, perhaps, the deposit due. The numbers of packages involved now would be significantly higher than the old system, and, although much would go back to supermarkets, local shops would at least in theory have to accept and store a large range of packaging items.

4.3.4 Impact on Consumers

Whilst no consumer surveys were undertaken as part of this study, stakeholders were consulted regarding the potential impact of introducing deposits on consumers. Opinions varied on how consumers would view the introduction of deposits. Several stakeholders thought there would be some initial enthusiasm for the system, fed in part by nostalgia for the old deposit system on fizzy drinks bottles, but also by the sense of doing something good for the environment. This may have been a function of the age of some of those stakeholders. Another possible positive foreseen was that, while the cost of the deposits might be lost in the overall cost of a shopping trip, the separate step of taking the container to collect a deposit, and the receipt of a voucher or cash to spend, might be perceived as receiving a gift, even though the deposit was paid in the first instance. This might leave the consumer with a good feeling about deposits and recycling more widely, and creates a notional link in the consumer’s mind between the packaging and its value. Less optimistic opinions included comments that the system might be perceived as imposing additional cost on poorer families, and those with accessibility issues (such as the elderly) who may find it more difficult to take their containers to a return location in order to redeem their deposit. This is on the basis that those with a smaller living space (such as in flats) might not have the physical space necessary to separate their deposit containers from their non-deposit recyclables and from their residual waste. The space issue is exacerbated because crushing the packaging may invalidate the deposit – at


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least from RVMs. To a lesser extent, they are also less likely to have access to private transport, to get the containers to a refund point (with the alternative of public transport being much less convenient for the return of any significant number of containers), and are more likely to reside in areas with less convenient access to such points. If they are unable to collect the refund, they are effectively being charged extra money for their products – money which would be directed back into the system. Whilst some households would find it relatively easy to participate in a deposit scheme (eg taking containers back to a supermarket in their own vehicle as part of a regular shopping trip), ERM considers this generally less convenient than alternatives such as a regular kerbside collection of the same materials. A frequently voiced concern was that the introduction of a deposit system on anything less than all packaging items of a certain kind would lead to further confusion among householders. There is already much confusion about why kerbside collection schemes vary in their scope so much between local authorities. The introduction on top of that of deposits on these products but not those will only add to consumers’ confusion and general frustration with the recycling industry.

4.3.5 Impacts on Litter Arisings and Composition

It is of course difficult to predict how the deposit scheme would affect litter arisings. We can imagine that there will be a net decrease in litter arisings, not necessarily so much because the introduction of deposits will persuade those who drop litter to change this habit; rather, the deposits will encourage others to go around collecting people’s litter and redeeming the deposits themselves. If this incentive should provoke those same people to up-end litter bins in their search for deposit-containing packages, littering may actually get worse. Then again, if the deposit scheme is working well, consumers would not be leaving their containers in litter bins, so this would not be an issue. Overall, ERM suspects that emptying litter bins is likely to be a very small although admittedly visible side effect. The litter statistics presented in this report are by count rather than weight, and therefore swamped by cigarette butts and chewing gum. These items will continue to dominate litter statistics, until effective measures can be introduced to stop them being discarded. Whatever the success of deposits might be in reducing packaging litter, ERM expects that beverage containers will continue to be a significant part of the remaining litter fraction.

4.3.6 Impacts on Overall Waste Collection and Recycling Rates

All the stakeholders consulted thought that a deposit scheme would achieve the goal of increasing waste collection and recycling rates. Some thought that the added complexity would have detrimental effects on other parts of the recycling system – in particular, kerbside systems – but the general opinion


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was that recycling would see a net increase. ERM considers that deposit schemes also have the potential to capture new waste streams for recycling, including some harder to reach packaging materials which are not currently collected for recycling on a widespread basis. One example is on-the-go food and drink packaging, the majority of which is currently disposed of in litter bins, or on the premises of retail outlets. The big concern raised was whether an increase in collection and recycling rates via a packaging deposit scheme could be achieved at a reasonable cost. Several stakeholders proposed alternative systems and claimed they would meet the same goals at a lower cost. These alternatives are discussed in Section 4.6.

4.4 POSSIBLE ECONOMIC COSTS OF A DEPOSIT SYSTEM

A full analysis of the possible economic costs of a deposit system was outside the scope of this study, but ERM inevitably picked up some evidence of possible costs during the course of the research. For example, the Scottish Government consultation estimated that a deposit and return scheme in Scotland would cost around £17 million a year (1). A presentation (2) by Bernd Sieberger of DPG (Deutsche Pfandsystem GmbH – the German deposit system for disposal drinks packaging) concluded that compulsory deposits cost around three times as much per container as household-based collections. Furthermore, it states that operating a nationwide deposit system for disposable containers alongside a household-based collection incurs unnecessarily high development and operating costs, and reports that (up to May 2008) retailers had invested more than €700M (~£550M), mostly to install RVMs at point of sale.

4.5 LEGAL CONSIDERATIONS

There are a number of legal aspects that need to be considered in order to ensure that the deposit system does not suffer a series of challenges in court. The UK can learn from the rulings that have already been made in the European Court of Justice (ECJ). Before summarising what has been found in this light, a general point can be made about the coexistence of deposits and the current PRN system. Any packaging covered under a deposit scheme might have to be excluded from the existing PRN system. If this is not done, it could be argued that the measures in total are not proportionate, since producers would be paying twice for each item of packaging; once for the current compliance costs (costs of compliance scheme membership, PRNs, etc), and once for the administration and registration charges associated with the deposit scheme. A standard defence against this argument is when the change affords

(1) The Scottish Government (2008) The Consultation Paper on Potential Legislative Measures to Implement Zero Waste,

http://www.scotland.gov.uk/Resource/Doc/1056/0063943.pdf [17Oct08 @ 09:52] (2) http://www.proeurope-congress.com/ws1/Bernd%20Sieberger%20DPG.pdf [23Oct08 @ 11:49]


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additional protection of the environment, but this may be hard to demonstrate in this instance. A number of stakeholders pointed out that the scheme would need to avoid the introduction of any barriers to trade. Some more precise pointers were provided with reference to specific ECJ cases, as described below. Because the text is taken from the rulings themselves, which are written in rather turgid legal language, a summary is provided at the end of how ERM interprets the rulings. In an ECJ case in 2004, (C-309/02) (1), an Austrian company challenged the German packaging deposits scheme. The ruling concluded that Article 7 of the Packaging and Packaging Waste Directive 94/62/EC (hereafter the Directive) precludes the replacement of a global system for the collection of packaging waste with a deposit and return system under three scenarios. The first is where the new system is not equally appropriate for the purpose of attaining the objectives of the Directive (in other words, the new deposit scheme must be as appropriate as the old system for achieving the Directive objectives). Part of the judgement (points 78-79) insists on the principle of proportionality, not only as to whether the means employed by the scheme are suitable for attaining the desired objectives, but also so that those means do not go beyond what is necessary for that purpose. The second scenario is where the changeover to the new system does not take place without a break (ie the change cannot be made if there is a break between the operation of the two schemes). The third is where the changeover jeopardises the ability of parties actually to participate in the new system as soon as it enters into force (all parties must be able to participate fully from day one). The ruling also insists that there must be a reasonable transition period, for the participants to be able to adapt to the new system. This was further elucidated under ECJ case C-463/01 (2), concerning mineral water. It was concluded (points 79-81) that a period of six months (between the announcement that a deposit and return system would be established and its entry into force) is not sufficient to enable producers of natural mineral water to adapt their production and their management of non-reusable packaging waste to the new system, given that the system must be set up at the outset. In case C-217/99 (3), the obligation to re-label goods as a result of a national change in legislation was judged to be a barrier to trade because, although it applies without distinction to domestic and imported products, it makes it necessary to alter the packaging or labelling of the products for the purpose of marketing them in the EU Member State concerned. It continued that, even

(1) See http://curia.europa.eu/jurisp/cgi-bin/form.pl?lang=en&numaff=C-309%2F02&Submit=Submit (2) See http://curia.europa.eu/jurisp/cgi-bin/form.pl?lang=en&numaff=C-463%2F01&Submit=Submit (3) See http://curia.europa.eu/jurisp/cgi-bin/form.pl?lang=en&numaff=C-217%2F99&Submit=Submit


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supposing that the extra costs are ultimately borne by consumers, the mere prospect of having to lay out those costs constitutes a barrier for traders, since it is capable of acting as a disincentive to those who are contemplating marketing the products in the EU Member State concerned. In this light, it is discussed in Section 2.10 that national barcodes might have to be employed, to limit possible cross-boundary issues. This may force the importer to alter the packaging of his products on the basis of the place where they are marketed, and therefore to incur additional packaging and labelling costs. Summary of Legal Requirements

• The new deposit scheme must be as appropriate as the old system for achieving the Directive objectives, and, thereby, proportionate.

• To that end, it may be concluded that an imposition of deposits on certain types of packaging may necessitate their exclusion from the existing system, unless a clear environmental benefit can be demonstrated.

• The change cannot be made if there is a break between the operation of the two schemes.

• All parties must be able to participate fully from day one.

• There must be a transition period (and six months may not be long enough) to allow parties to prepare for the change.

• Any requirement for re-labelling can be conceived to be a barrier to trade. Some of these requirements appear to be fairly difficult to overcome. A reasonable counter-argument is that the deposit schemes continue to exist in other EU Member States, so it must be possible to introduce a system that is legally compliant.

4.6 ALTERNATIVE OPTIONS FOR INCREASING RECYCLING RATES

Stakeholders suggested a number of alternative options that might achieve the same desired result of increasing recycling rates. These are discussed in turn below.

4.6.1 Continue with Voluntary Schemes and RVMs

The first suggestion amounts to a business as usual proposition. The UK is seeing increasing amounts of waste being recycled from kerbside, as councils increase the scope of their collection schemes (see also below). Meanwhile, retailers are introducing RVMs to their stores on a voluntary basis, so that they are seen as being environmentally responsible. With things moving in the right direction, is there a need to invest all the money and effort developing a deposit scheme?


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4.6.2 Invest in Improving Kerbside Recycling

The principal counter to the above is that things may be moving in the right direction, but not quickly enough. Several stakeholders reasoned that the best means of investing to improve matters would be to spend the money improving kerbside collection routines, so that more residents are offered the opportunity to recycle more materials. An article on the website of Highland Council (1) reports that the quantity of plastic bottles collected for recycling has more than doubled since 2004, and that 13.9 million households can now participate in kerbside recycling collections that include plastic bottles. Figure 3.6 presented a compelling correlation between households served by plastic kerbside collection schemes and the tonnage of plastic bottles recycled. These statistics are supported by data from Defra, which show a rapid increase in plastic and co-mingled tonnages collected over the past seven years (see Figure 4.2).

Figure 4.2 The Rates of Plastic and Co-Mingled Recycling in the UK

Source: http://www.defra.gov.uk/environment/statistics/wastats/archive/mwb200607b.xls Providing financial support for the expansion of council collection schemes offers a relatively cost-effective means of continuing the trend of improving rates. Furthermore, the investment would cover a much wider range of materials – not only certain beverage containers, but other items of packaging, and non-packaging materials as well.

(1) http://www.highland.gov.uk/yourcouncil/news/newsreleases/2008/July/2008-07-09-01.htm [17Oct08 @ 12:57]

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4.6.3 Separate Targets for Household and Commercial Waste

The next three alternatives build on the existing PRN system. As noted in Section 3.10, a few stakeholders observed that, if the recycling and recovery targets do not continue to rise year on year, a point will come where all the necessary infrastructure is in place, and the recycling and recovery required to hit national targets will occur without any push from the producers. At this point, the value of PRNs will collapse. One way to keep demand for PRNs ahead of supply, and therefore to continue to stimulate investment in infrastructure, would be to set separate targets for household and commercial packaging waste. Instead of just having steel PRNs, there would be household steel PRNs and commercial steel PRNs. In the first instance, Government would need to determine the current split of PRNs (by material) between household and commercial packaging waste, and this would set the baseline for the new system. Government would then need to look at what levels of recycling and recovery it wanted to see going forward in household and commercial packaging (by material), and these would become the PRN targets for future years. In order to comply with the new targets, producers would need to split their data returns by household/business customer, as would the reprocessors. A number of advantages and disadvantages have been determined for this proposal, as detailed in Table 4.2. In summary, a number of the required goals would be achieved through this proposal, but there would be significant difficulties in correctly accounting for household versus commercial packaging, for producers, for reprocessors, and for Regulators.

Table 4.2 Assessment of Separate Household and Commercial Waste Targets

Advantages Disadvantages • Would stimulate increased demand for

household packaging collections • Would keep local authorities in control

of collections • Enables local authorities to benefit from

increased PRN funding through higher household material values

• Schemes/producers incentivised to

work more closely with local authorities • Would encourage economies and

increased efficiencies in household collections because of market forces

• Increased demand may encourage local

authorities to increase materials collected

• Very difficult for producers to quantify household and commercial end use separately

• Very difficult for reprocessor to identify

correctly material from household and commercial sources, to issue correct type of PRN

• May require a more unified collection

infrastructure to deliver required tonnages (and economies of scale)

• System open to misreporting or fraud • Not all local authorities would benefit if

increased PRN funding came through material value, depending on contractual arrangements with service providers

• Difficult for Regulators to enforce/police

provenance of material


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4.6.4 Separate Targets for Primary versus Secondary/Tertiary Packaging

A variation on the above proposal splits the packaging waste streams not by point of arising (household versus business) but by packaging class – primary packaging versus secondary/tertiary packaging, as follows.

• Primary packaging surrounds the product and is usually taken home by the consumer (eg toothpaste tube).

• Secondary packaging is display packaging (also called grouped packaging) usually left at the store (eg tray in which the tubes sit).

• Tertiary packaging is the transit packaging used to protect the product during delivery to the shop (eg cartons, pallets and pallet wrap).

Most of the time, it is relatively easy to determine into which category each item of packaging falls, so it is possible for producers to quantify their packaging use, and for reprocessors to estimate the packaging they handle, according to these categories. The Regulator’s job is also simplified, by the same means. Some difficulties remain with this classification, however. Most notably, whether an item of packaging is actually primary packaging or secondary/tertiary packaging can depend on the supply chain involved. To give a simple example, wine from corner shops is sold by the bottle, while wine from some merchants is only sold by the case – meaning the transit packaging is primary packaging. Between those two extremes, supermarkets usually sell wine by the bottle, but run promotions encouraging customers to buy cases. Although the intended use of the packaging might be clear (eg the carton for wine is tertiary packaging), the way it is sold may vary.

4.6.5 Separate Targets for Specific Material Types

The second variation on this theme separates the targets by sub-classifications of material or packaging type, with the categories chosen to allow the Government to increase focus on the items of interest in the packaging waste stream. Likely choices for separate targets could include:

• bottle polymers for plastics eg PET, HDPE;

• drinks cans for aluminium;

• food and drink cans for steel;

• flat carton board for paper; and

• multi-layer cartons. Glass is unlikely to need separate targets, as it arises mainly in household waste anyway, and increases in overall targets would have the same effect.


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As with the previous systems, producers would need to report their packaging producer responsibilities in the same categories, as would the reprocessors, and a number of advantages and disadvantages have been determined, as detailed in Table 4.3. In summary, this system would also achieve the required goals of deposits, while significantly reducing the difficulties highlighted with the household/business differentiation. However, targets for different polymers may cause producers to change their material choice.

Table 4.3 Assessment of Separate Targets for Specific Material Types

Advantages Disadvantages • Similar benefits to household/commercial

and industrial differentiation (see Table 4.2) but without the disadvantages of data complexity

• Much more straightforward for producers to

classify by material than destination • Easier for reprocessors to identify material

types • Less open to mis-reporting and fraud • Able to set defined, tight targets • Could be a mechanism to start the market

for ‘difficult’ materials

• Does not focus exclusively on household collections

• Further work required to identify funding

passing to local authorities, but improved reporting requirements may help with this

• May require a more unified collection

infrastructure to deliver required tonnages (and economies of scale)

• Not all local authorities would benefit if

increased PRN funding came through material value, depending on contractual arrangements with service providers

• Difficult for Regulators to enforce/police

provenance of material • Possible perverse outcomes, whereby

certain types are discontinued

Additional PRN Considerations

Recoup provided some further thoughts on the current PRN system. As things stand, the money raised through PRNs goes to the reprocessors, and should be used to invest in new reprocessing technology. A number of such companies are currently investing in new equipment, so it could be argued that this process is working (although some would question whether the revenue raised matches the sums spent). However, at least for the recycling of plastic packaging, it is not the reprocessing capacity that is the bottle neck, but collection and sorting. Recoup agrees that PRN targets should continue to grow, and is interested in the idea of changing the form of the targets in some way, as outlined above (with certain reservations already included in the text). However, it suggests that the revenue from PRNs should be distributed across the waste management chain, with (for instance) 40% of revenue going to collection, 20% to sorting and 40% to reprocessing.


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A few stakeholders raised concerns about the current system of protocols, which allow certain reprocessors to issue PRNs calculated as a percentage of their throughput, without the need to demonstrate the actual level of packaging handled. It is understood that the reprocessors may not be able to measure the amount of packaging in every delivery of waste materials that they receive, but it is also thought that the percentages set in the protocols may not reflect current practice.

4.6.6 Targets Based on Carbon

A more radical option raised by stakeholders involved changing the metric by which the targets are set from weight, which is obvious and easy to measure, to carbon, which is arguably a much better indicator of environmental impact. At first glance, this sounds like it would improve the legislation, by relating the targets to a proxy (carbon) for a known environmental issue – global warming potential (GWP). However, further investigation reveals a number of difficulties, set out below.

• The science underpinning this metric is still very much in development. The carbon impact from producing a steel can in one factory could be quite different to that from another factory.

• Changing from weight-based targets to carbon-based targets could cause a step change in the levels of the targets, if the materials are to be equally targeted based upon their carbon impacts. For instance, the target for plastic recycling is currently much lower than many of the other materials, but its carbon impacts may be significant.

• If it were decided to set the carbon targets by material and start them from their current levels (which would be a means to avoid the above issue), there would need to be a fairly quick ramping of targets to a more consistent carbon target, otherwise there would be no point in using carbon as the indicator.

• Setting targets based on carbon, a proxy for GWP, ignores the other environmental impacts of materials. Global warming is the current hot topic, but other issues (such as resource depletion) may become as significant in years to come.

4.6.7 Recovery of Recyclates from Litter Bins

A final suggestion to increase recycling and recovery rates concerns the fate of waste in litter bins. This waste is currently collected and sent straight to landfill, but it could equally be sent to a ‘dirty MRF’ (a MRF designed not to receive just source-separate recyclates) and sorted, to remove recyclates. The MRF would need to be able to deal with recyclates that are mixed with food and other waste typically deposited in litter bins, but it was suggested that there might be quite a large fraction of recyclable material in the bins.


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5 CONCLUSIONS AND RECOMMENDATIONS

This report seeks to examine the features of packaging deposit systems and the role they might play in increasing recovery and recycling of single-use drink containers (plastic, aluminium and glass) in the UK. Box 1.1 introduced the key questions that the study should attempt to address, and ERM’s conclusions on those questions are as follows:

Would a deposit system lead to increased collection and/or improve the quality of the materials collected?

Yes. The general consensus is that a deposit system would increase the total tonnages of materials collected, although a significant amount of the deposited packaging would be cannibalised from existing collection schemes. However, a deposit scheme may also capture some of the hard to reach materials – particularly ‘on the go’ food and drink packaging. There was less agreement about whether or not there would be a concurrent improvement in the quality of materials collected.

What role might reverse-vending play in a deposit scheme or as an alternative? Could reverse vending alone provide a similar or better outcome?

Reverse Vending Machines (RVMs) would play an important role in any deposit scheme, freeing retailers, to some extent, from the burdens of redeeming deposits. RVM trials in the UK have proved popular with the public, and RVMs in shopping areas could divert recyclates from waste bins. Whether RVMs would reduce littering is disputed.

What would be the likely effect on local authority collections/existing collection mechanisms?

There was widespread agreement that the introduction of deposits would have a detrimental effect on existing collection mechanisms in general, and council kerbside collections in particular. Deposits on only a proportion of packaging materials may add to the householder confusion over the varying scope of local authority services, which has been widely reported by stakeholders, this may be a disincentive to participation. The deposit scheme would also divert a significant amount of packaging waste from the kerbside schemes, and that may have a knock-on effect on other materials currently collected at kerbside.

What are the pre-conditions for success of a deposit scheme? Box 2.2 provides details on some of the things that need to be in place before a deposit scheme can be launched. In brief: the centralised body would need to have been established; all the producers and importers must have registered and labelled their products, and paid the associated fees; the retailers must have some form of collection system in place; hauliers and reprocessors must be set to receive the returned packaging through the new channels; and consumers must be informed about the new system.


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What are the likely costs (including administrative and operational costs)? Are there likely to be less costly alternatives to increasing recycling?

Although this question was included in the brief, it was also recognised by Defra that an economic study of deposits was outside the terms of reference. To give one general ballpark assessment of costs, the German deposit scheme acknowledged that compulsory deposits cost around three times as much per container as household-based collection systems.

A number of alternative means of increasing recycling were put forward, and are summarised below.

What information is there on industry evidence on deposit schemes? To ERM’s knowledge, there are no deposit schemes in the UK currently handling single-trip packaging, with the exception of voluntary schemes run at events such as music festivals. The ring-fenced nature of these occasions makes it more simple for the organisers to impose the deposits and to redeem them. Testimonials on such systems suggest that they work very well, and help to reduce littering – though often the collection and return is done by entrepreneurial members of the public.

Tesco reports that their voluntary RVMs, awarding loyalty points for returned packaging, have been well received by customers, but are very expensive.

What information - if any - is there on the effects of deposits schemes on littering?

ERM has found little hard evidence that deposit schemes reduce littering. One exception is a recent nature clean-up lead by the Danish Society for Nature Conservation, which collected 154 389 cans, of which only 7989 (5%) were deposit-bearing cans. The rest were foreign cans that were not part of the Danish scheme.

The Tesco RVM scheme did prompt one couple to trawl their neighbourhood for litter, earning them enough air miles to fly business class home from America. However, other stakeholders suggested a national scheme might prompt people to up-end litter bins in their search for deposit-containing packaging. If the deposit scheme is working, though, that packaging will not be there.

Would certain drinks categories, producers or packaging systems be discriminated against or favoured by a deposit scheme?

Possibly to some extent. General stakeholder opinion was that, unless the deposit scheme is introduced uniformly over all packaging systems, manufacturers might change their choice of packaging to get around the rules. As a simple example, if the scheme covered glass, aluminium and plastic (as suggested in the scope of this project), PepsiCo, who use (predominantly) steel cans, might be said to have an advantage over Coca Cola, who use (predominantly) aluminium cans.

However, representatives of national deposit schemes in some of the other European countries were only aware of few examples where this had obviously been the reason for the substitution of one packaging material


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with another. Their opinion was that consumer preferences had a significantly higher influence on packaging material choice than whether the material was part of a deposit scheme or not.

Would this have any effect on the market for containers which can be refilled (or the likelihood of such a market taking off)?

ERM has found no evidence that introducing deposits for single-trip containers might increase the market for refillable containers. On the contrary, evidence from the other European countries shows that the use of refillable beverage packaging is in decline. However, representatives of European deposit schemes suggested that this fall is due to costs and practicalities (eg the need for bottle cleaning facilities at the bottler is eliminated, and the need for collecting the empty bottles is in most cases no longer the responsibility of the brewery) and consumer preferences (consumers prefer single use bottles rather than scuffed refillable bottles). The fact that deposits on single-use beverage packaging had been introduced had, in their opinion, had little or no influence on this trend.

Are the conclusions on benefits and disadvantages different for each material? Might deposit schemes encourage packaging producers to substitute one material for another?

ERM considers that the benefits and disadvantages of a deposit scheme are the same for each material. However, as noted above, unless the scheme is introduced uniformly across all materials, some market distortion is likely.

5.1 ALTERNATIVE SUGGESTIONS TO ACHIEVE INCREASED RECYCLING

Seven alternative suggestions that could achieve increased recycling are discussed in the report, and the ideas range in complexity. At one end, it is suggested that the UK could simply continue with voluntary schemes and RVMs – business as usual. With things moving in the right direction, is there a need to invest all the money and effort developing a deposit scheme? A simple step beyond this would be to try to recover materials from litter bins, sending their contents through dirty MRFs. This is relatively straightforward in concept, but might have some operational issues – not least that local authorities and the waste industry have moved away from dirty MRFs, although separation technologies are frequently an important part of mechanical biological treatment (MBT) systems. The most popular alternative suggestion for boosting recycling is to invest money in expanding coverage of kerbside collection scheme. The infrastructure is already quite well developed, and the public are familiar with what is required of them. Figure 5.1 shows that plastic bottle recycling has grown in line with the growth in coverage of households served by kerbside plastic collection.


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Figure 5.1 Correlation Between Plastic Bottle Recycling Levels and Households Served by Kerbside Plastic Collection (1995-2009)


Providing financial support for the expansion of council collection schemes offers a relatively cost effective means of continuing the trend of improving rates. Furthermore, the investment would cover a much wider range of materials – not only certain beverage containers, but other items of packaging, and non-packaging materials as well. Possibly in combination with the above, a number of suggestions were made on how the PRN system could be adapted and improved, all of which involved setting more specific targets. The first suggestion is to set separate targets for household and commercial packaging waste. Instead of just having steel PRNs, there would be household steel PRNs and commercial steel PRNs. A number of the required goals would be achieved through this proposal, but there would be difficulties in correctly accounting for household versus commercial packaging, for producers, for reprocessors, and for Regulators. A variation on this proposal splits the packaging waste streams not by point of arising (household versus business) but by packaging class – primary packaging versus secondary/tertiary packaging. This resolves some of the issues, but some difficulties remain with this classification. Most notably, whether an item of packaging is actually primary packaging or secondary/tertiary packaging can depend on the supply chain involved.



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The second variation on this theme separates the targets by sub-classifications of material or packaging type, with the categories chosen to allow the Government to increase focus on the items of interest in the packaging waste stream. Possible choices for separate targets could include by plastic polymer, or by plastic bottle versus other plastic packaging. This system would also achieve the required goals of deposits, while significantly reducing the difficulties highlighted with the household/business differentiation. However, targets for different polymers may cause producers to change their material choice. For plastic in particular, Recoup suggested that the value of the PRN should not all go to the reprocessor, but be split between collection, sorting and reprocessing, since it is not the reprocessing capacity that is the bottle neck, but collection and sorting. A few stakeholders raised concerns about the current system of protocols, and suggested that, if they persist, there should be a re-evaluation of their values. The most radical alternative raised by stakeholders involved changing the metric by which the targets are set from weight, which is obvious and easy to measure, to carbon, which is arguably a much better indicator of environmental impact. The reasons behind this change are relatively clear, but the general opinion is that the science is not yet well enough developed.

5.2 SUMMARY

ERM would make the following closing comments on the study.

• It is not disputed that a deposit scheme would increase recycling, but alternative schemes could achieve the same or better results at a lower cost.

• Deposits could be seen to impose an additional cost to householders who are not easily able to participate.

• It is likely that the majority of materials collected through a deposit scheme would be diverted from the existing household collection schemes, rather than being new material that is not currently collected.

• Deposits would require the development of a new tranche of infrastructure to collect and store the packaging at retailers, while reducing the usage of the existing kerbside collection infrastructure.

• Deposits may make a contribution to reducing litter, but, for ‘on the go’ packaging, it is thought that the major impact would be to divert packaging from waste bins to recycling bins.

• A deposit scheme would have to be carefully designed, in order not to fall foul of legal requirements to be proportionate and non-discriminatory, and in order not to encourage producers to change their choice of packaging material.


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If Defra decided against introducing a deposit scheme, the report has highlighted alternative schemes that might achieve the same goal of increasing recycling and recovery of packaging waste. ERM makes two suggestions on this matter:

• Further funds could be invested in kerbside collection infrastructure. Households are increasingly familiar with these schemes, and much of the infrastructure required is already in place.

• Those funds could be provided, at least in part, by changes to the PRN system, in which more specific targets are stipulated. A further study or consultation might investigate the detail of this proposal. Of the suggestions listed, it might be that splitting targets according to primary, secondary and tertiary packaging might be the least problematic, but none of the ideas is without its own complications.

Finally, voluntary schemes at large events have proved highly effective in combating littering of the cups on which deposits had been placed. ERM would not suggest that such schemes be made mandatory, but their implementation could certainly be promoted to organisers, and perhaps made a condition by local authorities granting approval for the events to proceed. ERM December 2008

Annex A

Review of Member State Experience


A1

A1 REVIEW OF MEMBER STATE EXPERIENCE

This Annex presents information gathered from Member States, detailing their experiences of packaging deposit systems. The Annex is divided into four sections, associated with the four countries reviewed:

• Denmark

• Germany

• Sweden

• Netherlands

A2 DENMARK

Table A2.1 The Danish Deposit and Vending System (with focus on one-way packaging)

Aspect Description Name of scheme Det danske retursystem (the Danish deposit and refund scheme).

The current Danish deposit and refund scheme was introduced in 2002 with the introduction of one-way packaging for beer and soft drinks on the Danish market. Up until 2002, beer and carbonated soft drinks were required by Danish law to be marketed in refillable packaging only (often referred to as the can ban). However, as a consequence of EU infringement proceedings against Denmark, the Danish government decided to drop this requirement. Prior to the current deposit and refund scheme, schemes for refillable packaging were run by the breweries themselves operating similarly to the current system for refillable packaging. The current Danish scheme is regulated by the Statutory Order on Deposits and Collection etc of Packaging for Beer and Certain Soft Drinks, which has undergone several amendments over the years – the latest being in June of this year. Statutory Order on Deposits and Collection etc of Packaging for Beer and Certain Soft Drinks, Order No. 713 of 24 August 2002. Subsequently amended by:

- set out the detail of the new requirements for a unified deposit and collection system for beer, carbonated water and carbonated soft drinks;

- took account of the lifting of the can ban; and - removed the requirement for Danish producers to market beer and carbonated soft drinks

in refillable bottles only.

Order No. 70 of 9 February 2004 - reduced the deposit paid on the packaging. Order No. 165 of 16 March 2005 - expanded the scope to alcopops, cider and energy drinks. Environmental Protection Act, Act No. 325 of 18 May 2005

- gave Told & Skat, the Danish equivalent to the Inland Revenue, the power to confiscate any beer, soft drinks etc sold in Danish shops that do not comply with the deposit rules.

Order No. 663 of 24 June 2005 - introduced the opportunity for sales locations to legalise any confiscated products.

Date of introduction / changes in recent years

Order No. 113 of 1 February 2007 - consolidated superseded Order No. 713/2002 and its amendments; - introduced a security code as part of the label. The security code consists of five dots

printed with a special ink combination and specific spacing between the dots; - tightened up the requirements to registration. Packaging must now be registered prior to

import; and - postponed the deadline for achieving 95% return rate on non-refillable containers.

Aspect Description Order No. 326 of 24 April 2008 - consolidated superseded Order No. 113/2207;

- expanded the scope to non-carbonated drinks such as mineral water, ice tea, and lemonade; - introduced the requirement that sales locations need to hold a certain quantity of packaging

before collection by Dansk Retursystem; - provided for retailers to receive an allowance for handling non-refillables (similar to

refillables); and - allowed Dansk Retursystem A/S (DRS) more flexibility in how it uses unredeemed

deposits. Order No. 634 of 19 June 2008 - extends the monopoly of DRS to operate the Danish deposit and refund scheme until 2013. Packaging materials covered by the scheme

All cans and bottles that contain: • beer; • carbonated drinks with alcohol content of 0.5% volume or less (eg sparkling water, soft drinks); • other fermented products other than beer, wine and fruit wine with alcohol content of 10% volume or less (eg cider); • mixed products based on spirits, wine and other fermented beverages that are mixed with soft drink, cider, cocoa, or juice, with

an alcohol content between 0.5% and 10% volume; • mineral water (with and without flavour), lemonade, ice tea and other ready-to-drink and non-carbonated drinks (these products

will be fully included in the scheme by 1 December 2008. Until then some products will include a deposit, others will not). Deposits apply to both refillable and non-refillable packaging.

Packaging materials not covered by the scheme

The following drinks are excluded: fruit squash/cordial, juice, milk, cocoa, wine and spirits. The following packaging materials are excluded: beverage cartons, plastic containers used with water dispensers, and beverage packaging over 20 litres. Juice, milk etc are excluded mainly for hygiene reasons; the RVMs are often positioned near the in-store bakery or other food departments and the storage of packaging with potential bacteria growth nearby would not be allowed. Wine and spirits bottles are not generally considered an environmental problem, and the wine producers and importers have not expressed any interest in being part of the deposit scheme. Presently wine and spirits bottles are collected through glass bring banks, RVMs and from bars and restaurants. A study commissioned by the Danish EPA in 2000 found that the collection rate in 1998 was 68% of which approximately half was cleaned and reused either in Denmark or abroad and half was crushing and used as cullet in container glass manufacture. The study compared the environmental impacts of collecting the bottles and reusing them or crushing them and remelting them (a deposit scheme was not considered). Note, the Co-Op operates its own deposit and refund scheme on wine bottles. Crates are not regulated by the deposit scheme. Instead these are covered by an agreement between the retail industry and the breweries. In practice this means that the retailer must accept crates of the same type that it sells.

Voluntary or mandatory system

Mandatory

Aspect Description Criticism of the scheme

During the establishment of the Danish deposit and refund scheme, Carlsberg’s influence Danish scheme was heavily criticised. The argument was that Carlsberg, through its share majority in DRS, would be able to access confidential sales data about its (foreign) competitors and thereby seek to exclude them from the market. Confidential data is handled under strict procedures in DRS and to date no cases of Carlsberg or other interested parties having gained access to this information have been confirmed. With regard to concerns over any restrictions on imports due to the operation of the scheme or Carlsberg’s involvement in establishing DRS, the following developments have been seen in the time period 2002 to 2006 (note, not exclusive to one-way packaging): - the quantity of imported beer has increased from 4 million litres to 13 million litres; - the number of producers and importers increased from 269 to 343; - the quantity of products (EAN numbers) increased from 2,050 to 4,918. Criticism was also raised of the monopoly granted to DRS which was considered by some to distort competition. Under a recent review of the system, carried out by PwC, DRS was found to be cost-effective and it was recommended that the Danish deposit scheme should continue in its current format. The deposit is determined by the material and the volume. For one-way packaging, the different types of deposit are:

Before 12 Feb 2004 Since 12 Feb 2004 Type A Cans, glass and plastic bottles under 1 litre DKK 1.50 (~ 11 pence) DKK 1.00 (~11 pence) Type B Plastic bottles of 0.5 litre DKK 2.50 (~ 27 pence) DKK 1.50 (~16 pence)

Level(s) of deposit levied

Type C Cans, glass and plastic bottles of 1 litre or more DKK 4.25 (~ 45 pence) DKK 3.00 (~32 pence) Type of collection systems

Reverse vending machines (RVMs) and (in small outlets) manually.

Role of retailers, beverage manufacturers, local authorities

Suppliers must register with DRS if they wish to sell beverage products that are included in the scope of the Danish deposit and return system. Suppliers are defined as producers, importers, and distributors marketing beverage products on which deposits are payable on the Danish market. In order for DRS to administer the individual packaging, the product must also be registered with the scheme before it can be sold on the Danish market. The registration fee is DKK 2,000 (~ £212) per packaging, payable upon first packaging registration in a calendar year. When registering new packaging, applicants must consider how the packaging will be labelled as deposit refundable. There are two options: direct printing onto the packaging or onto the original product label; or self-adhesive deposit labels. Sales locations (supermarkets, grocery stores, kiosks, hotels, restaurants, catering, and other outlets) selling beverage in refundable packaging must register with DRS. This ensures free collection of non-refillable packaging. Registration is free of charge. Temporary outlets such as music festivals, sports tournaments can also seek registration. All sales locations selling beverage in refundable packaging have a duty to take the empty packaging back and pay a refund. Importers, suppliers/distributors and producers must pay a deposit fee to DRS. The value of the fee is based on the sales volumes from the previous year and predicted sales for the year ahead. The importers, suppliers/distributors and producers report data to an independent accounting firm which sends summary reports to DRS. DRS then invoices importers, suppliers/distributors and producers accordingly. For non-refillable packaging where the deposit label is printed directly on the packaging, sales volume reporting must be done every four weeks. For packaging where adhesive deposit labels are used, different options of reporting are available: Suppliers/distributors must report every four weeks; whereas importers and producers can choose to report every four weeks, yearly or not at all. Payment is made in advance. For the parties that are reporting, actual sales are checked against predicted sales and the deposit fees are corrected

Aspect Description

Importers and producers must pay a logistics and collection fee to DRS (see Table 1.2 to 1.4). The logistic fee is set according to the type of material and the volume and covers administrative overheads and efficiency improvements in grocery stores. Thus, logistics fees are only paid for sales to the grocery trade. The collection fee, which can vary depending on the volume of the packaging, covers the cost of collecting the packaging. Local authorities do not play any role in the Danish deposit and refund scheme.

Mechanisms for reimbursing deposit to retailers

Repayments to sales locations of deposits paid on non-refillable packaging are handled exclusively by DRS. Deposit refunds are paid to sales locations when the empty packaging has been tallied up at one of DRS’s two terminals. Packaging that has been returned via RVMs does not require counting as it is registered in the machine and information is sent to DRS electronically.

Mechanisms for reimbursing deposit to consumers

Reverse vending machines (RVMs) are the main option for returning packaging. These are generally placed by the entrance of the store, but can also be place elsewhere on the premises, and are built into the wall. The cans and bottles are laid one by one on a conveyor belt in a ‘hole’ in the machine that takes the packaging through to the sorting area the other side while at the same time scanning the packaging (the RVM used to recognise the packaging based on the shape and the barcode. Now, more and more RVMs recognise the packaging based on the barcode and the recently introduced security code. The transition period for moving to security code has been extended to end 2009). Full crates can be placed through a different ‘hole’. Rejected containers are returned out of the machine. After loading the packaging into the RVM, the consumer presses a button indicating that they have finished loading and the machine generates a refund slip which the consumer can redeem in the shop. A purchase is not required. If a manual system is operated, the consumer will take the empty cans and bottles to staff who checks the labelling and a refund is given. Stores with RVMs must accept all types of one-way packaging with the Danish deposit label. Stores without RVMs that sell drinks must accept types of packaging materials if they sell these materials (eg cans for cans, plastic for plastic etc). To be eligible for a refund, the packaging must be marked with the deposit label, an EAN number and a two-digit code allocated by DRS. The packaging must be whole and undamaged so that the container can rotate and the barcodes can be read electronically in the RVMs.

Importer / producer /

supplier

Sales location

Consumer

Dansk Retursystem

(DRS)

For recycling

Collection by contractor

Container flows Deposit and refund flows DRS income and expenses

Aspect Description Geographical areas covered

Nationwide.

Storage and handling of collected packaging

Larger stores will have compactors for plastic bottles and cans. The compactor will be lined with a plastic bag into which the bottles and cans are dropped from the conveyor belt. When the bag is full the content with be compacted and the bag will be removed manually from the compactor. In stores without compactors, the plastic bottles and cans are also dropped into large plastic bags, the content is however not compacted. Glass bottles are taken via the conveyor belt to a sorting table, where the bottles are sorted manually. The glass bottles are then either packed in smaller plastic bags or, for stores handling large quantities of non-refillable glass bottles, stacked onto half and full pallet containers. The bags are made from recycled plastic. The bags and pallets are ordered from DRS along with closures, security seals, barcodes etc.

On-ward shipping of waste packaging to recyclers

The store will contact DRS to arrange collection. Larger stores may have regular collection, many have collection on a need-to basis. The waste packaging is collected by a haulier. The haulier is selected by DRS through a tendering process (the contract is generally for a two year period). The waste packaging is taken to one of DRS’s two counting stations where the sending location of every sack and pallet is recorded. The packaging is then fed through a counting machine before being compacted. Counting is not necessary for cans and plastic bottles compacted in the RVM as it will have registered the quantity and type of packaging for each bag. DRS arranges deals with recyclers for the recycling of the waste packaging. These contracts are based both on price and environmental considerations. The recyclers collect the waste packaging as and when appropriate quantities are available for collection.

Links with other non-deposit packaging collection systems and local authority collection systems

Stores can choose to accept cans and bottles not covered by the Danish deposit and refund scheme. DRS does not charge to collect this packaging from registered stores, surplus deposits are used to cover the expense of this. Kerbside collection of non-deposit bearing cans, plastic, glass and paper / board. Bring schemes in the form of civic amenity sites as well as bottle banks are also available. There are no link between these systems and the deposit and refund scheme.

Consumer information issues

Regular campaigns are run on TV, radio and written media. The campaigns focus on the environmental benefits of recycling as well as the fact that the consumer gets his/her deposit back (ie the cost implications to each individual consumer). The legislation allows for surplus deposits to be used, amongst others, on information campaigns to help improve environmental awareness and increase the return rate. No problems have been registered with consumer understanding of the reasoning behind the scheme nor the operation of the RVMs. The main issue identified has been that old habits die hard in that Danes, due to the can ban, have been used to cans (bought on trips to Germany) not being deposit-bearing. This has been identified as one of the reasons why the return rate for cans is still relatively low.

Administration of the scheme (including cost)

Dansk Retursystem A/S (DRS), a private non-profit organisation, with exclusive rights to operate the Danish deposit and return system. Initially this right was to terminate at the end of 2008 but has been extended based on findings from an independent review of the scheme.

Aspect Description As a non-profit organisation, DRS is financed by fees paid by importers and producers for the beverages they sell on the Danish market. To accommodate this, fees are adjusted on an annual basis. The calculations are based on the importers and producers’ registered sales volumes in the previous year, together with their forecasts for sales volumes for the year ahead. The fees charged, and the actual overheads covered by the fees are required to balance over a six-year period from 2002 to 2008. The fees that finance the Danish scheme cover logistics and collection. Logistics fees cover administrative overheads, handling fees and efficiency improvements in grocery stores. Collection fees cover the costs associated with collection and counting one-way packaging. Key financial figures for the years 2004, 2005 and 2006 (DKK 1,000): 2004 (actual) 2005 (estimated) 2006 (budgeted) Net turnover 223,000 385,000 511,000 Logistics fees 96,343 104,000 96,000 Deposit turnover 97,656 222,000 334,000 Collection fees 20,194 44,000 66,000 Other income (eg material sale) 8,805 15,000 15,000 Profit on core activities -7,932 -7,000 0

Broader financing issues

Direct costs to the retailer includes the purchase of any RVMs (the camera and computer inside the RVM is provided by DRS), compactor, glass bottle sorting table (partly funded by DRS), floor space and staff. Financial support is provided to stores in the form of a handling allowance/subsidy (see also Table 1.5 at end of document). For shops that take back more than 50 packaging containers per day it is worthwhile to join the handling subsidy scheme. The annual cost to the shop is DKK 500 (~ £53). The allowance is paid per container and varies according to container type, in-store equipment (ie RVMs, compactors), and whether the store has received subsidies under the efficiency improvement programme. These subsidies are provided to stores in order to optimise the “bottle room” with regard to equipment and lay-out. The first such programmes ran in the period 2003 to 2006. A new programme is to start in the autumn of 2008. In 2006, the Danish Environment Ministry commissioned a study, which found that the Danish deposit and refund scheme costs DKK 0.55 (~ 0.06 pence) per packaging container. If unredeemed deposits were included, the cost was DKK 0.382 (~ 0.04 pence). One of the conclusions was that the amount will be reduced in the future through the expansion of the scheme. Despite often voiced concerns over the costs involved, the study also found general satisfaction with the scheme by all parties involved, from producers and importers, to retailers and consumers.

Impact on quality of collected waste materials

No information (deposit and refund schemes have run in Denmark for many years).

No before and after collection rates available (the requirement for Danish producers to market beer and carbonated soft drinks only in refillable bottles was lifted in 2002, at the same time as the deposit and refund scheme was established for one-way packaging). The return rate target, as laid down in legislation, is: 95% (for one-way packaging). Order No. 326/2008 postponed the deadline (once again) to 1 January 2013. The deadline was 1 October 2004, and was first postponed until 1 October 2005, then 1 January 2008. Actual return rates for one-way packaging:

Impact on collection rates

2005 2006 2007

Aspect Description Metal 83% 84% 84% Plastic 88% 88% 93% Glass 83% 87% 91% Total 84% 86% 87% The return rates are calculated for the whole country. DRS estimates that collection rates are higher in urban areas than in the country-side. Approximately 300 million cans are sold under the deposit scheme annually. Of these, 42 million cans are not returned. Reasons given for the target not having been met are that the one-way packaging market has not grown as rapidly as forecast in the Statutory Order and that consumers may not be used to having to return cans yet. There are on-going (although as far as understood not yet legislative) discussions about increasing the deposit on cans to encourage higher return rates.

Impact on litter arisings and composition

Only cans and bottles sold via Danish stores are covered by the scheme. It is estimated that 400 million cans of beer and soft drinks are bought annually in Germany and brought into Denmark for personal consumption. A recent nature clean-up lead by the Danish Society for Nature Conservation collected 154,389 cans of which only 7,989 (5%) were deposit cans. The rest were foreign cans not part of the Danish scheme.

Issues arising from competition in the sector between refillable / disposable

The proportion of non-refillable packaging is increasing and there is evidence of some substitution of refillable bottles with non-refillable packaging. Reasons for changing the packaging or choosing non-refillable packaging include: - practicality and cost: Refillables, although part of the deposit and refund scheme, are collected by the breweries themselves. By

switching to non-refillables the task of collection and sorting is taken over by DRS; - marketing: A refillable bottle looks less attractive with its scuffs, marks and chips.

Issues arising from competition in the sector between packaging materials

The recent inclusion of non-carbonated drinks in the deposit and refund schemes means that packaging for some beverages (such as still water) may now be available in both refundable (eg plastic bottles) and non-refundable packaging (eg cartons). The extension of the law in 2005 to also include alcopops followed a study commissioned by the Danish Environmental Protection Agency on how best to manage the waste from disposable packaging not currently covered by the mandatory deposit. The study also recommended extending the deposit to waters. However, at the time it was decided not to accept this recommendation as only water plastic bottles would have been subject to the deposit. Since some waters in Denmark were sold in beverage cartons, the Government concluded there would have been competition problems. In its recent review of the Statutory Order the Government decided that the environmental benefits outweighed any concerns about competition. Some substitution to non-refundable packaging may take place due to the inclusion of all waters in the scheme, however other aspects such as consumer acceptance are just as important if not more.

Evidence of substitution of new packaging material

See above for competition between refillable and disposable packaging.

Note: Exchange rate: £1 = DKK 9.4249


A8

A2.1 COLLECTION AND LOGISTICS FEES

Producers and importers who have registered one-way packaging deposit labelled with direct printing must pay upfront fixed fees on the packaging. The same fixed fees are applicable to producers and importers using deposit labels who have chosen to report every four weeks.

Table A2.2 Upfront Fixed Fees (excluding VAT) for Sales of One-Way Packaging (valid 4 September 2008 to 31 December 2009)

Packaging material Container size [litre]

Deposit Collection fee [øre (pence)]

Logistics fee [øre (pence)]

Glass bottles 0.10 Type A 34.0 (~ 0.036 pence) 0.0 0.18 Type A 34.0 (~ 0.036 pence) 0.0 0.25 Type A 34.9 (~ 0.037 pence) 0.0 0.28 Type A 35.2 (~ 0.037 pence) 0.0 0.30 Type A 36.4 (~ 0.039 pence) 0.0 0.33 Type A 38.6 (~0.041 pence) 0.0 0.34 Type A 37.5 (~ 0.040 pence) 0.0 0.35 Type A 37.6 (~ 0.040 pence) 0.0 0.36 Type A 36.7 (~ 0.039 pence) 0.0 0.37 Type A 36.7 (~ 0.039 pence) 0.0 0.38 Type A 36.6 (~ 0.039 pence) 0.0 0.40 Type A 37.4 (~ 0.040 pence) 0.0 0.50 Type A 45.6 (~ 0.048 pence) 0.0 0.55 Type A 51.0 (~ 0.054 pence) 0.0 0.57 Type A 52.7 (~ 0.056 pence) 0.0 0.60 Type A 53.9 (~ 0.057 pence) 0.0 0.63 Type A 54.1 (~ 0.057 pence) 0.0 0.64 Type A 54.1 (~ 0.057 pence) 0.0 0.65 Type A 55.0 (~ 0.058 pence) 0.0 0.66 Type A 55.9 (~ 0.059 pence) 0.0 0.70 Type A 56.6 (~ 0.060 pence) 0.0 0.75 Type A 55.0 (~ 0.058 pence) 0.0 0.80 Type A 60.5 (~ 0.064 pence) 0.0 1.00 Type C 67.4 (~ 0.072 pence) 0.0 1.50 Type C 82.6 (~ 0.088 pence) 0.0 2.00 Type C 98.9 (~ 0.105 pence) 0.0 3.00 Type C 162.2 (~ 0.172 pence) 0.0 Plastic bottles 0.33 Type A 20.6 (~ 0.022 pence) 0.0 0.50 Type B 21.7 (~ 0.023 pence) 0.0 0.60 Type A 22.6 (~ 0.024 pence) 0.0 1.00 Type C 21.1 (~ 0.022 pence) 0.0 1.50 Type C 26.8 (~ 0.028 pence) 0.0 2.00 Type C 31.1 (~ 0.033 pence) 0.0 Aluminium cans 0.25 Type A 11.2 (~ 0.012 pence) 0.0 0.33 Type A 9.8 (~ 0.010 pence) 0.0 0.36 Type A 9.9 (~ 0.011 pence) 0.0 0.44 Type A 9.9 (~ 0.011 pence) 0.0 0.50 Type A 10.7 (~ 0.011 pence) 0.0 Steel cans 0.33 Type A 21.2 (~ 0.022 pence) 0.0 0.50 Type A 22.2 (~ 0.024 pence) 0.0 0.65 Type A 21.8 (~ 0.023 pence) 0.0 5.00 Type C 239.1 (~ 0.254 pence) 0.0


A9

Producers and importers who have registered one-way packaging deposit labelled with self-adhesive deposit labels, and who choose to prepare a yearly sales report or not to report at all, pay fixed account fees at year end.

Table A2.3 Fixed Account Fees (excl VAT)

Packaging material Container size [litre]

Deposit Collection fee [øre (pence)]

Logistics fee [øre (pence)]

Glass bottles Less than 1 litre Type A 40.7 (~ 0.043 pence) 0.0 1 litre and above Type C 68.6 (~ 0.073 pence) 0.0 Plastic bottles Less than 1 litre Type A 18.9 (~ 0.020 pence) 0.0 Exception: 0.5 litre Type B 21.7 (~ 0.023 pence) 0.0 1 litre and above Type C 30.5 (~ 0.032 pence) 0.0 Aluminium cans Less than 1 litre Type A 9.9 (~ 0.011 pence) 0.0 Steel cans Lest than 1 litre Type A 21.7 (~ 0.023 pence) 0.0 1 litre and above Type C 126.3 (~ 0.134 pence) 0.0

If the producer or importer purchases self-adhesive deposit labels, the cost includes the material cost for the label, as well as the deposit fee. In addition, the producer or importer has to pay collection and logistics fees.

Table A2.4 Price of Deposit Labels (øre (pence) excl VAT)

Cost per label Production of labels 7.5 (~ 0.008 pence) Deposit value Type A = 80.0 (~ 0.085 pence) Type B = 120.0 (~ 0.127 pence) Type C = 240.0 (~ 0.255 pence)

Table A2.5 Handling Allowances, 2008 (øre (pence) excl VAT)

Single use packaging

Shops with RVMs, who have received efficiency

subsidies

Shops with RVMs, who have not received efficiency

subsidies With

compactors Without

compactors With

compactors Without

compactors

Shops, who handle packaging

manually and who have not received

efficiency subsidies Metal 0.9 (~ 0.0010

pence) 1.5 (~ 0.0016

pence) 0.9 (~ 0.0010

pence) 3.6 (~ 0.0038

pence) 8.6 (~ 0.0091 pence)

Plastic 1.9 (~ 0.0020 pence)

6.0 (~ 0.0064 pence)

1.9 (~ 0.0020 pence)

6.0 (~ 0.0064 pence)

10.3 (~ 0.0109 pence)

Glass 6.0 (~ 0.0064 pence)

7.8 (~ 0.0083 pence)

6.0 (~ 0.0064 pence)

7.8 (~ 0.0083 pence)

11.2 (~ 0.0119 pence)

A2.2 REFERENCES FOR DANISH INFORMATION

Email communication (06.10.2008) with Knud Støvring, Business Development, Anker Andersen A/S. APEAL’s New Position on the Danish Return System, Dansk Retursystem’s website, www.danskretursystem.com


A10

Telephone interview (13.08.2008) with Rikke Møller, Dansk Retursystem. Telephone interview (14.08.2008 and 25.09.2008) with Inge Fisker, Communication Manager, Dansk Retursystem.

A3 GERMANY

Table A3.1 The German Deposit and Vending System (with focus on one-way packaging)

Aspect Description Name of scheme Die Deutsche Pfandsystem (the German deposit system).

The current German deposit and refund scheme was introduced on 1 January 2003, with significant amendments introduced in May 2005. The main purpose of the Ordinance is to increase to at least 80% the share of beverages in refillable containers and ‘environmentally favourable’ non-refillables. In drafting the 1991 Ordinance, the government’s initial idea was to introduce a deposit scheme for non-refillable beverage containers. However, it was agreed with industry representatives that used packaging and beverage containers could also be collected as part of a ‘dual system’ and exemption clauses were added to the Ordinance. Therefore, prior to the introduction of the deposit scheme in 2005, non-refillable beverage containers were subject to collection under the Green Dot system (run by Duales System Deutschland GmbH (DSD)) through kerbside household collection and forwarding of sorted packaging for recycling. Nevertheless, in order to protect refillable beverage containers, refill quotas were added to the Ordinance to help achieve this and the deposit provisions remained in the text to provide an incentive to continue to use refillables.


Ordinance on the Avoidance and Recovery of Packaging Wastes of 1991

- required that, under certain circumstances, a deposit on non-refillable beverage containers, and containers of detergents and cleaning agents and of emulsion paints should be charged;

- stipulated, with regard to beverage containers, that if the national market share of refillable containers fell below 72% (the level in 1991) and if the market share of the individual beverage categories fell below their 1991 level, a mandatory deposit would be imposed on non-refillable beverage containers. The market share of the individual beverage categories in refillables was in 1991 82% for beer, 73% for carbonated soft drinks, 91% for mineral water, 35% for still soft drinks and juices, and 29% for wine. For pasteurised milk, the market share of refillable containers and PE pouches together were not to fall below 20%;

- obliged retailers to take back all sales packaging from consumers and ensure it is recycled; - exempts the above, provided that a ‘dual system’ operates that collects used packaging from

households and meets the recycling targets specified in the Ordinance.

Aspect Description Packaging Ordinance of 21 August 1998

- clarified that if the market share was still below 72% 24 months after the announcement, mandatory deposits would be imposed six months later on the beverage categories whose market shares were below the 1991 levels or in the case of milk, below 20%.

In 1997 the market share of refillable containers fell below the 72% threshold for the first time, and the shares for beer and mineral water were below their respective 1991 levels. After prolonged discussions and many legal proceedings, mandatory deposits were imposed from January 2003 on non-refillable containers for water, beer and carbonated soft drinks. As an effect of the deposits taking effect by default, the legislation did not specify the operational rules for the deposit system. As a consequence, the government gave manufacturers and retailers until October 2003 to introduce a nation-wide clearing system. As a result of political disagreement and legal uncertainty, this deadline was not met and instead a series of independent, mutually exclusive arrangements emerged. Some arrangements were so-called ‘open systems’ (eg P-Pfand, Vfw, Westpfand), which accepted all containers as part of the system, and therefore operated clearing systems to ensure the retailer was refunded any additional refunds paid out. However, the majority of the market was covered by individual schemes, so-called ‘island solutions’ (eg discount chain own systems, PET-Cycle, Red Bull), where retailers took back only the containers sold in store. Retailers operating these independent solutions avoided the need to participate in expensive clearing systems by only accepting their own containers. This was done by specifying bottles of particular shapes for the products sold in their stores. This was not possible with cans, which have a generic shape, and as a consequence these retailers often stopped selling cans. The number of different deposit systems and island solutions, each with its own requirements for special marking or pack design, fragmented the beverage market in Germany adding to production costs and reducing economies of scale. The government acknowledged that charging deposits n some drinks categories but no on others was confusing. It therefore proposed charging a deposit only on beverage containers considered ‘environmentally unfavourable’. However, this initially met opposition in the Bundesrat.

Packaging Ordinance of 24 May 2005

- repealed the provisions of the 1998 Ordinance; - the scope now applies to beverages in ‘environmentally unfavourable’ non-refillable

containers, including non-carbonated soft drinks (eg flavoured water, iced tea, fruit drinks) and alcoholic mixed drinks (eg alcopops), and no longer to containers below the 72% refillable threshold. The objective is for 80% of beverages to be in either refillable or ‘environmentally favourable’ containers. The categorisation of ‘environmentally unfavourable’ containers was based on the outcome of second life cycle assessment of drinks packaging commissioned by the Federal Environmental Agency (UBA);

- removed the legal basis for the individual solutions (‘island solutions’). This means that from 1 May 2006 stores now have to take back all containers of the material they supply, regardless of brand or size;

- reduced the deposit paid on packaging of 1.5 litres and above.

Aspect Description Packaging Ordinance

of 4 April 2008 - clarifies the single use packaging covered by the legislation; - expands the deposit system to include dietetic drinks as of April 2009; and - exempts bioplastics bottles made with more than 75% renewable materials [ie PLA bottles]

from the deposit scheme with effect from end 2008 until end 2012. The purpose is to promote innovative packaging.

Packaging materials covered by the scheme

All ‘environmentally unfavourable’ one-way packaging from 0.1 litres to 3 litres. This includes cans, glass and plastic bottles for: • beer, including mixed drinks containing beer; • mineral water, including sparkling and still water, spring water, table water, flavoured water, water with caffeine, and

water with oxygen; • carbonated and non-carbonated soft drinks, including cola, lemonade, mixed drinks containing fruit juice or tea and

mineral water, sports drinks, energy drinks, tea and coffee drinks intended for consumption as cold drinks; and • mixed alcoholic drinks produced using products subject to spirits tax or fermentation alcohol made from beer, wine or

wine-like products, as well as drinks containing less than 50% wine or wine-like products. Packaging materials not covered by the scheme

Currently the following drinks are excluded: fruit juice and nectar, drinks containing a minimum of 50% milk, dietetic beverages (ie food for special dietary uses, such as baby foods, weaning foods, slimming foods), wine and spirits. In addition, the following packaging materials are categorised as ‘environmentally favourable’ and therefore excluded: cartons, polyethylene bags and stand-up bags.

Voluntary or mandatory system Mandatory European Court of Justice proceedings

In 2001, the European Commission referred a case to the European Court of Justice (ECJ) in which it argued that, by introducing deposit and return obligations that depend on the proportion of reusable packaging on the German market, the German legislation imposes a particular burden on producers of mineral water and thereby constituted a barrier to intra-Community trade that is not justified by reasons relating to environmental protection. The specific subject of mineral water was partly chosen as mineral water is required, under other European rules, to be bottled at source. To make up for the cost of transporting goods over long distances, foreign producers preferred non-refillable containers. In a parallel case, brought by the Austrian producer Radlberger and Spitz, which export beverage to Germany, against Land Baden-Württemberg before the Administrative Court of Stuttgart, the Administrative Court had referred several questions to the ECJ. Radlberger and Spitz submitted that the German rules on rates for reusable packaging and the related deposit obligations were contrary to the Packaging and Packaging Waste Directive and the free movement of goods. In its ruling (published in December 2004), the ECJ found that the German rules did not affect sales of drinks produced in Germany and those from other Member States in the same manner. It agreed that deposit systems for non-refillable packaging do help increase the return rate for used packaging and thereby contribute to improved recycling of waste, and that promoting reusable packaging contributes to reducing the amount of packaging waste to be disposed of. However, it found that a transitional period of only six months was not sufficient to enable producers of mineral water to adapt their production and management of non-refillable packaging waste to the new system. Specific to the Radlberger and Spitz case, the ECJ ruled that a sufficient number of return points must be ensured so that consumers can recover the deposit even if they do not go back to the initial place of purchase. Not enough of those were available, according to the court.

Aspect Description Level(s) of deposit levied For non-refundable packaging, the types of deposit are:

Packsize Before 28th May 2005 After 28th May 2005 Volumes of less than 1.5 litres 25 cent (~ 20 pence) 25 cent (~ 20 pence) Volumes of 1.5 litres or more 50 cent (~ 40 pence) 25 cent (~ 20 pence)

Type of collection systems Reverse vending machines (RVMs) and manually. Role of retailers, beverage manufacturers, local authorities

All parties in the system must register with Deutsche Pfandsystem (DPG), including fillers, importers, retailers, service providers, suppliers of RVMs, operators of counting centres, label printers including can makers. DPG’s role is to conclude contractual agreements with all these, control the use of the on-pack logo, manage the central database for deposit clearing, approve all participants’ data systems and equipment, and undertake marketing. DPG does not handle deposit and refund flows, nor have information about deposit monies received and refunded by producers and retailers. This means that DPG does not have access to unredeemed deposits. Instead, this aspect of the system is handled by the producer/importer and retailer directly, or through commercial service providers (mainly existing deposit system operators, data processors, waste management companies etc). If using service providers, producers and retailers negotiate individually with these. In that sense, the German system is modular with no central clearing house. Individual retailers contract waste management companies (or service providers) to collect the returned containers for recycling. The waste companies (or service providers) must provide evidence to the authorities that the containers have been recycled. Retailers purchase their own RVMs, or make other arrangements for counting the containers and refunding the deposit. Retailers must negotiate directly with their suppliers on any arrangements to share the cost of these. A one-off registration fee is to be paid to DPG for each barcode registered with the system (see Table A3.4). The fee depends on the number of containers placed on the market each year. In addition, each participant of the deposit system pays an annual fee. The fee covers only registration and participation in the national scheme. Participants also bear other costs, including: fees to service providers for data management, logistics and other services; costs of RVMs; counting centres; and transport to recycling.


Retailers reimburse deposits either directly with the producer / importer or through service providers if the retailer decides to have these act on its behalf. When purchasing beverages from producers/importers, the retailer pays a deposit. The deposit is put into a “deposit account” and the producer/importer acts as the deposit account holder. If the retailer has RVMs installed, readings from the RVM will determine the bill to be sent to the deposit account holder. If the retailer does not have any RVMs, the packaging must be counted at a counting centre prior to a bill being issued. Unredeemed deposits end up with the deposit account holder. In some cases, unredeemed deposits may be part of the negotiations between retailers and fillers/importers.

Aspect Description Mechanisms for reimbursing deposit to consumers

Reverse vending machines (RVMs) are the main option for returning packaging, especially in larger shops. The RVMs are generally situated near the entrance of the store, near the drinks section, or sometimes tucked around a corner. For vending machines providing beverage in refundable containers, legislation requires it to be possible to redeem the deposit nearly (which is generally done by placing an RVM nearby).. The DG Enterprise survey identified three predominant RVM designs in supermarkets: - a wall mounted or floor mounted RVM with a circular opening where the container is placed horizontally on a

conveyor belt and taken through to the sorting area the other side while at the same time scanning the packaging. Rejected containers are rejected and returned to the consumer;

- a floor mounted RVM with an upper and lower vertical opening, each with a door. Containers are placed upright in either opening and the door is closed while the container is scanned. When a green light comes on, the consumer can again open the door. The empty containers are stored upright in a large trolley inside the machine with an upper and lower tray. When the machine is full, the front of the machine is opened and the trolley is wheeled away and replaced with an empty trolley;

- a floor mounted machine with a single circular opening and a conveyor belt. The machines were not sited near the stockroom, which may indicate that the containers are stored inside the machine.

If the RVM is not working or if it does not accept a refundable container, the store must accept containers manually. The DG Enterprise survey found that in stores without RVMs, refundable containers are generally returned at the checkout, where the containers are checked visually and generally stored in large boxes nearby. The hypermarket REAL had a special covered area for returning empty containers. The containers were checked visually, sorted and a refund voucher was printed to be deducted from the bill in store. Stores with shop floor less than 200 m2 can choose to only accept non-refillable containers of brands they sell themselves. To be eligible for a refund, the packaging must be marked with the security logo, a barcode and the DPG logo. To obtain the special inks required for the security logo, label printers and can makers must be registered and certified with DPG.

Geographical areas covered Nationwide. German retailers near the Danish border are authorised through an exemption by the local government in Schleswig Holstein to sell drinks to Scandinavian consumers without charging the German deposit. This is not the case for other border areas in Germany. The Scandinavian consumers must complete an export declaration confirming their intention to export the beverages purchased to their home countries on the same day. The declaration does not contain a statement preventing these customers from returning empty beverage containers to the border shops.


Larger stores will have compactors for plastic bottles and cans. The compactor will be lined with a plastic bag into which the bottles and cans are dropped from the conveyor belt. When the bag is full the content with be compacted and the bag will be removed manually from the compactor. In stores without compactors, the plastic bottles and cans are also dropped into large plastic bags, the content is however not compacted. The bags are then sealed and transported to a sorting centre. Glass bottles are taken via the conveyor belt to a sorting table, where the bottles are sorted manually. The glass bottles are generally packed in plastic bags and transported to a counting and sorting centre. There are in Germany some 22 counting and sorting centres. The counting and sorting centres count the packaging and report deposit values back to the relevant service providers. The plastic bottles and cans are then compacted and the packaging is delivered to/collected by a waste management company.

Aspect Description Onward shipping of waste packaging to recyclers

Individual retailers contract waste management companies (or service providers) to collect compacted packaging containers for recycling. The waste companies (or service providers) must provide evidence to the authorities that the containers have been recycled. Waste that has not been compacted is collected and taken to a counting centre for counting and subsequent compaction.


The survey for DG Enterprise found a number of deposit-bearing products marked with a ‘foreign’ Green Dot (eg a Green Dot indicating participation in FOST Plus in the Belgium market). These were mostly imports and could potentially be confusing to the German consumer.

Consumer information issues The uniform 25 cent deposit on all non-refillable containers covered by the Ordinance was introduced to reduce confusion of refund values. The DG Enterprise survey found that there were potential sources of confusion between deposit-bearing products and non-deposit products between: - fruit juices and soft drinks containing fruit juice; - drinks falling into the ‘dietetic beverage’ category and similar drinks not exempt from the deposit; and - alcopops covered by the deposit and those that are not (this depends on the wine or alcohol content).


DPG, a not-for-profit organisation formed by the trade associations representing the retailers (HDE) and the food producers (BVE)., is responsible for the management of the labelling standards, the provision of the master database, IT interface, ownership of the deposit label. The organisation was formally registered in June 2005. DPG does not handle deposit and refund flows.

Broader financing issues As a not-for-profit organisation, DPG is financed by fees paid by the participants of the deposit system. To accommodate this, fees are adjusted on an annual basis. No information about DPG’s annual accounts has been identified. The Roland Berger study, commissioned by AGVU, reports that initial investments to set up the scheme has been in the region of €726 million. Retailer investment was in the region of €702 million including purchasing of RVMs, and industry investment in the region of €23.8 million. The study estimates the annual cost to be in the region of €793 million, of which €699 million is the annual cost to retail in the form of clearing, personnel and depreciation and €93.7 million is the annual cost to other industrial players. The Prognos study, commissioned by APEAL, Ball Packaging Europe and SKB, applied a macroeconomic input-output model and found the direct monetary effect of installing and operating the new deposit scheme to be €640 million, of which the cost of the RVMs account for approximately 200 million Euro and the personnel cost to the retail market more than €300 million. Other costs include investment in clearing houses (service providers), personnel costs etc. The indirect up/downstream effect was identified as an additional €340 million. The effect on the various sectors varied considerably: a positive effect was identified for RVM manufacturers of €170 million and 1200 employees, and an indirect up/downstream effect of €140 million and 1100 employees; a negative effect was identified for beverage can and glass bottle manufacturers of 2100 and 800 employees respectively; whereas a positive effect was identified for plastic bottle and carton manufacturers of 2600 and 500 employees respectively.

Aspect Description Impact on quality of collected waste materials

Some sources do not considered the scheme to have had any impact on the quality of the waste materials collected compared to the quality while being collected by DSD in the past. Others consider there to have been some quality improvement in the counting centres due to the packaging arriving non-compacted and thereby enable better sorting. Contrary, the glass industry has experienced problems with the quality of the cullet produced from the collected glass bottles owing to the bottles no longer being pre-sorted by colour at bottle banks. The Roland Berger study states that compulsory deposits have further destabilised the reuse system in that the existence of a separate collection system has led to inefficiencies in the Duales System. The argument is that the compulsory deposits diminish the efficiency of household-based collection.

Impact on collection rates There is no longer a legal obligation to publish collection and recycling rates. Recycling rates are measured by the different clearing systems. However, these data are not made publicly available partly due to the criticism of the amount of unredeemed deposits from consumer organisations. It is assumed that the current recycling rates are high, unofficial figures suggest approximately 95%. Collection rates under the Green Dot system operated by DSD were relatively high. For example, the recycling rate for metal packaging was in the region of 80-82%. Critics of the German deposit system question the cost benefit of establishing a separate system to increase recycling rates by 13-15%.


The Prognos study reports that no quantitative effects on litter reduction and no economic effects in street cleaning has been identified as a result of deposits on non-refillable beverage containers.

Issues arising from competition in the sector:

- between refillable / disposable

After the initial shift back to refillables just before the deposit on non-refillables was introduced, BMU figures show that their market share has resumed its previous decline – though less markedly in the case of beer than in the soft drinks, juice and water sectors (see attachment).. BMU has not yet published official data for 2006 or later. A limited survey for DG Enterprise found that non-refillable containers were more widely available than before the 2005 amendments entered into force. It also found that a wider range of products were available in refillable containers compared to the time with island solutions in some supermarkets. However, availability varied between the different supermarket chains with discount supermarkets now seemingly offering less choice of container type. Drinks brought into the deposit system from May 2006 are hardly ever packed in refillable containers. The Consumer Scan survey done by the market research institute GfK found that in the first six months of 2008 soft drinks and mineral water packaged in refillable containers accounted for 27.2% of the market share. This was 2..6% lower than in 2007 and 25% below the market share prior to the introduction of the deposit scheme. For beer the market share of refillables is still high (some 86%) held up by the well-established brewery collection and filling systems using refillable glass bottles and the lower deposit of 8 cents on refillable containers. The target, as set out in the Packaging Ordinance, is to achieve a market share of 80% for refillables by 2010.

Aspect Description - between packaging materials During the period of island solutions, most stores stocked no deposit-bearing drinks in cans at all with the exception of the

energy drink Red Bull. According to the survey commissioned by DG Enterprise, some increase in the availability of canned beer was noticed with only few soft drinks available in cans. PET is the preferred container for refundable non-refillable containers. Non-refillable glass is not common for deposit-bearing products and the survey noticed a switch to refillable PET in some supermarket chains compared to the situation during island solutions. Cartons are predominate for still soft drinks and juices as well as some brands of water, but the survey did not identify any significant increase in the use of cartons for deposit-bearing products. The Prognos study reported that in the time period 2002 to 2006, refillable glass bottles had fallen by 10% of the total packaging mix, cans by 7.3%, and non-refillable plastic bottles had increased by 12% (see Table A3.3).


The DG Enterprise survey found that drinks subject to the deposit before May 2006 are still packaged mainly in refillable glass, refillable PET and non-refillable PET. Drinks brought within the deposit system from May 2006 are seldom packaged in refillable containers. Instead they are found mainly in non-refillable PET and glass bottles, cans, cartons and pouches. Although exempt from the deposit system if sold in cartons and pouches, the survey found no or very little evidence of this being taken advantage of. It seems that the main example of the exemptions having been used to avoid the deposit, is where producers are making a dietary claim (generally by lowering the calorific content and thereby claiming it to be slimming beverage).

Note: Exchange rate: £1 = €1.2631


A19

Table A3.2 Percentage Share Of Refillable Beverage Containers (excluding milk) in Germany, 1991 – 2005 (BMU)

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Mineral water 91.33 90.25 90.89 89.53 89.03 88.68 88.31 87.44 84.94 80.96 74.03 68.33 72.98 67.60 60.47

Non-carbonated soft drinks

34.56 38.98 39.57 38.76 38.24 37.93 36.81 35.66 34.75 33.62 33.16 29.24 23.96 20.62 17.37

Carbonated soft drinks

73.72 76.54 76.67 76.66 75.31 77.50 77.76 77.02 74.90 66.96 60.21 53.97 65.42 62.15 54.55

Beer 82.16 82.37 82.25 81.03 79.07 79.02 77.88 76.14 74.83 72.81 70.84 67.99 89.23 87.79 88.53

Wine 28.63 26.37 28.90 28.54 30.42 28.66 28.10 26.20 26.75 25.03 25.41 25.29 24.62 20.04 19.03

Overall (excl milk)

71.69 73.54 73.55 72.87 72.27 72.21 71.33 70.13 68.68 64.98 61.13 56.20 63.60 60.33 56.02

Source: http://www.bmu.de/files/pdfs/allgemein/application/pdf/mehrweganteil_zeitverlauf.pdf

Table A3.3 Percentage Share of Refillable Beverage Containers in Germany, 1991 – 2006

1991 2000 2002 2003 2004 2005 2006* Water 91 81 68 73 68 61 50 Soft drinks 58 53 43 46 43 39 39 Beer 82 73 68 89 88 89 86 Overall 74 67 57 65 62 57 53 Source: Prognos AG (2007) Effects of Deposits on Beverage Packaging in Germany, Apeal, Ball Packaging and SKB.

Table A3.4 Annual Fees to be Paid to DPG

Operator Annual fees (€) Producer, importer or retailer - 15 million containers or less 1,200 (~ £950) - between 15 and 80 million

containers 8,500 (~ £6,730)

- more than 80 million containers 18,000 (~ £14,250) Deposit account holder 20,000 (~ £15,830) Deposit account service provider

20,000 (~ £15,830)

Deposit claimant - three collection centres or less 3,900 (~ £3,090) - more than three collection centres 6,000 (~ £4,750) Deposit claimant service provider

20,000 (~ £15,830)

Collection centre enterprise - three collection centres or less 600 (~ £475) - more than three collection centres 900 (~ £710) Label printer 2,500 (~ £1,980) Can manufacturer 23,000 (~ £18,210) RVM manufacturer - 200 million RVMs per year or less 8,500 (~ £6,730) - more than 200 million RVMs per

year 18,000 (~ £14,250)

Counting centre enterprise - three high speed counting machines or less

9,000 (~ £7,130)

- more than three high speed counting machines

25,000 (~ £19,790)


A20

A3.1 REFERENCES FOR GERMAN SECTION

Court of Justice of the European Communities (2004) Judgments of the Court of Justice in Cases C-463/01 and C-309/02, press release No. 98/04, 14 December 2004. Email communication (29.09.2008) with Anders Linde, Director – External Environmental Affairs, Rexam plc, and Gert-Walter Minet, Vice President – Regulatory Affairs, Ball Packaging Europe GmbH. Email communication (06.10.2008) with Knud Støvring, Business Development, Anker Andersen A/S. Europen (2004) Mandatory Deposits on Non-Refillable Beverage Containers in Germany: The Economic, Environmental and Social Effects, Europen, available at http://www.europen.be//?action=onderdeel&onderdeel=3&titel=Key+Topics&categorie=1&item=1 Ronald Berger (2007) European Packaging Policy - The Consequences of a Deposit Scheme for Disposable Packaging based on the German Example, Arbeitsgemeinschaft Verpackung + Umwelt e.V. (AGVU). Deutsche Pfandsystem GmbH, http://www.dpg-pfandsystem.de/servlet/PB/-s/6wij9813oxkdz130zd3i217v1izv6md/menu/-1/index.html Perchard D and Bevington G (2007) Study on Factual Implementation of a Nationwide Take-Back System in Germany after 1 May 2006, DG Enterprise, available at http://ec.ecuropa.eu/enterprise/regulation/goods/docs/art2830/study_deposit_systems.pdf Thörner, T., Schütz, N. and Motz, G. (Prognos AG) (2007) Effects of Deposits on Beverage Packaging in Germany, APEAL, Ball Packaging Europe and Stichting Kringloop Blik (SKB).

A4 SWEDEN

Table A4.1 The Swedish Deposit and Vending System (with focus on one-way packaging)

Aspect Description Name of scheme Det svenska retursystemet (the Swedish deposit system).

The current Swedish deposit and refund scheme was introduced in 1984 for aluminium cans. The can deposit system was introduced in law after a multi-national can producer starting to produce cans in Sweden. In 1994, the scheme was expanded to include PET bottles, and in 2005 the scheme was expanded to also include steel cans and all types of plastic bottles. Prior to the introduction of the current deposit system for non-refillable beverage containers, deposit systems for refillable containers have been run by the breweries themselves for more than a hundred years. The Swedish scheme is regulated by the Ordinance on Deposit Scheme for Plastic Bottles and Metal Cans, introduced in 2005. Lag om återvinning av dryckesförpackningar av aluminium, SFS 1982:349 (Law on recycling of beverage packaging of aluminium, No. 349 of 1982)

- introduced the deposit and refund system for aluminium cans; - applied to beer and soft drinks; - did not specify the administration or organisation of the deposit system (instead

this was left up to breweries, importers and retailers).

Lag om vissa dryckesförpackningar, SFS 1991:336 (Law on certain beverage packaging, No. 336 of 1991)

- expanded the deposit and refund system to also include PET bottles.


Forördning om retursystem för plastfaskor och metallburkar SFS 2005:220 (Ordinance on deposit scheme for plastic bottles and metal cans, No. 220 of 26 April 2005)

- expands the deposit scheme to also include steel cans and all types of plastic from 1st January 2006;

- specifies that all producers and importers of beverage products in single use plastic bottles or cans must register with an approved deposit scheme; and

- specifies that the packaging must be labelled with information about the deposit scheme to which it belongs and the amount of deposit applied.


All plastic and metal beverage containers for ready-to-drink beverages (Order No. 220 does not specify the content of the beverage containers except for a few exemptions as listed below). Deposits also apply to refillable glass bottles.


The following drinks are excluded: drinks containing 50% or more of dairy products, juice (fruit or vegetable). Squash and cordial is also excluded as they are not ready-to-drink beverages. Juice and milk are excluded mainly for hygiene reasons. The potential hygiene issues due to bacteria growth and the nuisance of smell is not considered acceptable. Non-refillable glass bottles account for approximately 0.5% of the beverage packaging market and are not required by Swedish law to be part of a deposit scheme.

Aspect Description Voluntary or mandatory system

Mandatory

Level(s) of deposit levied The deposit is determined by the material and the volume. For one-way packaging, the different types of deposit are: - Cans: SEK 0.50 (~ 6.2 pence); - PET bottles of 1 litre or less: SEK 1.00 (~ 12.4 pence); and - PET bottles larger than 1 litre: SEK 2.00 (~ 24.8 pence).

Type of collection systems

Reverse vending machines (RVMs) and (in small outlets such as corner shops) manually.

Role of retailers, beverage manufacturers, local authorities

Producers and importers must register with a deposit scheme if they wish to sell beverage products that are included in the scope of the Swedish deposit and return system. Retailers who wish to be part of the deposit scheme also need to register with Returpack. However, their registration is not required by law. Registration with Returpack is free of charge. In order for Returpack to administer the individual packaging, the product EAN code must also be registered with the scheme before the product can be part of the scheme. There are two options for deposit labelling: direct printing onto the packaging or onto the original product label; or self-adhesive deposit labels (purchased from Returpack). Any changes in packaging design or label must be forwarded to Returpack. Producers, importers/distributors and producers pay the deposit fee to Returpack, as well as an administration and sorting fee. Payment is made in advance. The sales locations pay the producer, importer or distributor the deposit when purchasing their products. The consumer pays the deposit when purchasing a beverage product in store and gets the refund when returning the empty packaging to store. The returned packaging is counted in either the RVMs or Returpack’s counting centre and the retailer is reimbursed the deposit. Collection of the returned packaging is the responsibility of the retailers or breweries. Collection is generally carried out at the same time as the store receives new deliveries of drinks. The empty beverage containers are taken back to the distribution chain, collated and transported onto Returpack’s Norrköping sorting and counting facility.

Producer / supplier / importer

Sales location

Consumer

Returpack

Refund

Deposit

Deposit

Deposit Deposit

For recycling

Fees

Container flows

Deposit and refund flows

Returpack income and expenses

Brewery collection

Aspect Description Each deposit scheme, producers and importers must pay an annual registration fee of SEK 10,000 (~ £1,240) to Jordbruksverket

(the Swedish Board of Agriculture), which is the authority approving and overseeing such schemes. The fees are collected by Returpack and finance the auditing of the scheme.


Repayments to shops of deposits paid on non-refillable packaging are handled by Returpack. Returpack pays the deposits to the retailers weekly and prepares monthly summary reports. Deposit refunds are paid to sales locations when the empty packaging has been tallied up at Returpack’s sorting plant. Compacted packaging does not require counting as it is registered in the RVM and information is sent to Returpack electronically.


Reverse vending machines (RVMs) are the main option for returning packaging. Stores have specific RVMs for cans, PET bottles, or combi-RVMs taking both cans, plastic and glass bottles. The combi-RVMs are generally only seen in larger stores as they are significantly more expensive (~ €50,000) compared to the single item RVMs ((~ €5,000). The cans and bottles are put through a ‘hole’ in the machine that takes the packaging through to the sorting area the other side while at the same time scanning the packaging. After dropping all the packaging into the RVM, the consumer presses a button indicating that they have finished loading and the machine generates a refund slip which the consumer can redeem in the shop. A purchase is not required. If a manual system is operated, the consumer will take the empty cans and bottles to staff who checks the labelling and a refund is given. To be eligible for a refund, the packaging must be marked with the deposit label and an EAN number. The packaging must be whole and undamaged so that the container can rotate and the barcode can be read electronically in the RVMs. The RVMs also assesses the shape (height and width) of the plastic bottles. For cans, even if the packaging is damaged or if it not part of the deposit scheme (eg bought abroad) the RVM will still accept the packaging for recycling. For plastic bottles this is not the case, they are returned to the consumer. The reason is that it might be made from a plastic type not collected by Returpack and if accepted may contaminate the waste stream. The Swedish system does not operate a special ink to avoid fraud like other national deposit schemes, only the barcode and bottle shape recognition. Fraud has been encountered, such as imported PET bottles being labelled with barcodes for the SEK 2.00 deposit although the bottles were of the size that only entailed the SEK 1.00 deposit.

Geographical areas covered

Nationwide.


The cans and bottles are crushed as they pass through the RVM and are then stored in large cardboard boxes or plastic bags ready for collection. Cans and plastic bottles must be packaged separately. Cardboard boxes, plastic bags, bag closures and barcodes are bought from the breweries or wholesalers who are also responsible for the collection of the returned packaging. Collection is generally carried out at the same time as the store receives new deliveries of drinks.


The packaging is collected from the shop by the breweries or wholesalers and transported to Returpack’s sorting plant. A handling fee is paid to the breweries by Returpack for the collection. The manually collected packaging is then counted using high speed counting machines. Packaging collected through the RVMs does not need counting, it is already counted in the RVM and the information has been sent electronically to Returpack. The packaging is then sorted (PET bottles by colour, cans by metal), compacted and baled. The PET bottles are transported next door to the Cleanaway recycling plant and the can are transported to a smelter.

Aspect Description Links with other non-deposit packaging collection systems and local authority collection systems

RVMs accept cans not covered by the Swedish deposit and refund scheme. Kerbside collection of non-deposit bearing cans, plastic, glass and paper / board. Bring schemes as well as bottle banks in residential areas are also very common. There are no link between these systems and the deposit and refund scheme.

Consumer information issues

Regular advertising campaigns are run on TV and radio. A specific website has also been set up for younger people, www.pantamera.nu and a number of campaigns are run for young people to encourage them to recycle more in general. No problems have been registered with consumers not understanding the reasoning behind the scheme nor the operation of the RVMs. The main issues identified is that consumers find it confusing that cans bought abroad and squash and cordial bottles are not part of the scheme (as not ready-to-drink beverage).


AB Svenska Returpack operates the Swedish deposit and return system. The Swedish legislation does not require one single Swedish deposit scheme, however Returpack is the only national scheme. Returpack is in effect two organisations: Returpack-Burk Svenska AB, set up in 1984, which administers the deposit scheme for cans, and Returpack-PET Svenska AB, set up in 1994, which administers the deposit scheme for PET bottles. The two organisations operate under the same name and brand, Returpack. There are a few organisations running their own own-brand / business-to-business deposit and refund schemes, eg Delå AB, Svenska Retur PET AB, and PET-System AB. Returpack is financed by fees paid by producers and importers for the beverages they sell on the Swedish market and the income for selling on the metal and plastic for recycling. Key financial figures for the years 2006 and 2007 (SEK 1,000): AB Returpack-Burk Svenska AB AB Returpack-PET Svenska AB 2006 2007 2006 2007 Net turnover 667,857 710,772 918,311 1,010,193 Deposits, admin and sorting fees 459,001 481,062 884,818 968,811 Scrap, pellet income 208,856 229,710 33,493 41,382 Other income 4,077 292 432 69 Profit on core activities 41,646 42,497 21,377 12,008 The fees paid by producers and importers cover administration and sorting. In 1998, the administration fee was dropped on the aluminium cans due to the good returns achieved for waste aluminium. The deposits and fees to be paid by producers and importers are (SEK excluding VAT of 12%): PET/plastic bottles Cans Clear Coloured Alu Steel Deposit 0.89 (~ 11p) 1.79 (~ 22p) 0.89 (~ 11p) 1.79 (~ 22p) 0.45 (~ 5.6p) 0.45 (~ 5.6p) Administration fee 0.22 (~ 2.7p) 0.52 (~ 6.5p) 0.22 (~ 2.7p) 0.52 (~ 6.5p) na 0.25 (~ 3.1p)

Broader financing issues

Sorting fee na na 0.05 (~ 0.6p) 0.05 (~ 0.6p) na na

Aspect Description Direct costs to the retailer include the purchase of any RVMs, packaging, floor space and staff. Financial support is provided to stores in the form of a handling allowance/subsidy. The allowance is paid per container and varies according to container type and in-store equipment (ie RVMs, compactors). The handling allowance is provided by Returpack to contribute the costs involved in handling the bottles and cans (including materials, RVMs, space, and personnel). The allowance is higher for shops with RVMs to encourage the uptake of RVMs. The allowances are (SEK excluding VAT of 12%): Handling allowance for manual

take-back Handling allowance for RVM take-back

PET/plastic bottles ≤ 1 litre 0.20 (~ 2.48 pence) 0.40 (~ 4.97 pence) PET/plastic bottles > 1 litre 0.20 (~ 2.48 pence) 0.50 (~ 6.21 pence) Cans 0.00 0.15 (~ 1.86 pence) The Roland Berger study reported the total cost per container to be, in 2005, €0.012 (~0.95 pence) for aluminium cans, €0.04 (~ 3.17 pence) for steel cans, €0.04 (~ 3.17 pence) for clear PET bottles, and €0.055 (~4.35 pence) for coloured PET/plastic bottles. These figures covered the costs involved with the collection, logistics and recycling of the packaging less the income from the sale of the materials.


Prior to the introduction of the deposit scheme, non-refillable beverage containers ended up in the general household waste stream. By introducing a dedicated collection system for beverage containers the quality of the collected materials has significantly improved. No before and after collection rates identified. The return rate target, as laid down in legislation, is: 90% (for one-way packaging), raised from an initial 75% target. At present the average return rate achieved in Sweden is 85%. Actual return rates for one-way packaging: 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Metal 91% 92% 91% 87% 85% 86% 86% 86% 85% 85% 86% 85% Plastic 78% 80% 77% 80% 76% 78% 78% 77% 79% 80% 86% 82%

Impact on collection rates

The return rates are calculated for the whole country. Returpack has found that the return rate is lower in large cities. For example, the average big city dweller returned 114 containers annually compared to the national average of 135. Reasons given for the target not having been met include laziness of the consumer.


No information identified.

Issues arising from competition in the sector between refillable / disposable

The long-tem trend towards non-refillable packaging is also evident in Sweden, although briefly interrupted by the introduction of refillable PET bottles in 1991. However, due to practicalities and costs and the fact that consumers prefer the non-scratched single-use containers all breweries have switched to non-refillable containers (Coca-Cola were the last ones to switch last year). Thus, the proportion of non-refillable packaging is increasing and there is evidence of substitution of refillable bottles with non-refillable packaging.

Aspect Description Issues arising from competition in the sector between packaging materials

Some substitution to multi-layer PET bottles has been seen in previous years. Another example is a juice producer that used a different plastic to PET for its products (prior to 2005, juice was not exempt from the deposit system). The legislative expansion of the scheme to include all types of plastic is in response to these developments.


See above for competition between refillable and disposable packaging.

Note: Exchange rate: £1 = SEK 8.0487. £1 = €1.2631.


A27

A4.1 REFERENCES FOR SWEDISH SECTION

AB Svenska Returpack and AB Svenska Returpack-PET website, www.returpack.se Naturvådsverket (2008) Samla in, återvinn! Uppföljning av producentansvaret för 2006, Rapport 5796. Returpack information DVD. Returpack-Burk Svenska AB (2007) Årsredovisning - för räkenskapsåret 1 januari - 31 december 2007 (Annual Report for the financial year 1st January to 31st December 2007), Returpack-Burk Svenska AB. Returpack-PET Svenska AB (2007) Årsredovisning - för räkenskapsåret 1 januari - 31 december 2007 (Annual Report for the financial year 1st January to 31st December 2007), Returpack-PET Svenska AB. Ronald Berger (2007) European Packaging Policy - The Consequences of a Deposit Scheme for Disposable Packaging based on the German Example, Arbeitsgemeinschaft Verpackung + Umwelt e.V. (AGVU). Telephone interview (20.10.2008) with Hans Funke, Finance Manager, AB Svenska Returpack.

A5 NETHERLANDS

Table A5.1 The Dutch Deposit and Vending System (with focus on one-way packaging)

Aspect Description Name of scheme “Inzamelsysteem voor eenmalige drankenverpakkingen met statiegeld” - collection system for drinks packaging with

deposits Date of introduction / changes in recent years

The current Dutch deposit and refund scheme is implemented through three pieces of legislation, each implementing different aspects of the system. The 2003 Regulations and Execution Decree puts in place a system for collecting the deposit, whilst the 2005 Decree places obligations on the importer and producer to organise collection of containers and industry to achieve specific recycling targets with regard to packaging. Articles 8 to 11 of the Decree sets out further measures to the scheme, expanding the scope of deposits to also include cans and smaller soft drink bottles. If the recycling targets set in the Decree are not achieved, then Articles 8 to 11 will come into force.

Second Packaging Covenant 1997 - voluntary scheme; - prevented beverage producers and importers from substituting refillable beverage

containers with single-use containers unless it could be proved that they had no additional impact on the environment.

Third Packaging Covenant 2002 - voluntary scheme; - maintained the provisions of the 2nd Packaging Covenant; - introduced greater emphasis on minimising litter; - stipulated that if the aims of litter prevention (introduced in the Second Packaging

Covenant in 1997) were not reached and the collection and reuse percentages for PET bottles were not met, a deposit system was to be introduced; and

- expired 31 December 2005. Execution Decree of the Packaging

Regulation 2003 - defines the level of deposit on each particular size of container.

Packaging Regulation of the Beverage Branch Organisation 2003

- sets the legal requirements for the beverage branch organisation called Productshap Dranken. There are four sections of Productschap Dranken: beer; soft drinks; liquor (includes wine and <15% alcohol); and spirits (>15%alcohol);

- defines the responsibilities of the beverage producers, importers and retailers; - sets out the requirements regarding the deposit and refund as laid down in Article

2 and 3 and includes the following: a deposit is to be clearly specified on the sales receipts; manufacturers, importers and retailers are required to refund the deposit for

the beverage packaging that originates from them and are sold in the Netherlands.

Aspect Description Packaging, Paper and Card

(Management) Decree 2005

- changed the scheme from a voluntary to a mandatory scheme; - specifies that the importer and producers responsibilities for organising the

collection of the containers and achieve recycling targets.

Possible future measures Section 4 (containing Articles 8 to 11) of the Packaging, Paper and Card (Management) Decree outlining a revised system for deposits on drinks containers, is not yet in force. One of the main differences between the revised deposit system compared to the Packaging Covenant III, is the allocation of waste management costs. The cost of separate collection and sorting will shift from the citizen (waste collection levies) through the producer (financially responsible for the cost of collection) to the consumer (as the producer will charge its costs on). This is in line with the aim of internalising environmental costs in the product price. A further significant difference is the inclusion of cans and small plastic bottles in the deposit system. The revised system will include deposits on all drinks that are produced in packaging which is “to be made available to another party”. The following beverages and packaging items are to be excluded:

• medicinal drinks, wine, strong drink1, moderately alcoholic drink2; • drink cartons, intended for drinks and made of at least 80% paper or card; • packaging filled with a drink immediately prior to sale; • drinks packaging with a capacity of 0.1 litre or less; • drinks for which the producer or importer can demonstrate that less than 500,000 units of consumer packaging are

made available per annum to consumers in the Netherlands. Exemptions apply to these products for a variety of reasons, principally associated with the less serious burden on the environment (drinks cartons), as well as market/economic considerations. In the case of wine and other strong drinks, there are considerable objections to deposits owing to the great diversity of products while turnover per product/market combination is relatively small. In addition, the transport distance for the empty packaging also plays a part. In the case of strong drinks, these often have a very low rate of turnover, whereby the deposit may be reclaimed several years after purchase. Furthermore, virtually all of this packaging ends up in the domestic waste stream or bottle banks, rather than in litter. Moderately alcoholic drinks are also exempt from the deposit, as the packaging waste from advocaat, liquorettes and cream drinks, is hardly ever found in litter and their situation is very similar to that of strong drinks and wine.

The Packaging, Paper and Card (Management) Decree specifies that the annual report (by producers and importers) must state the manner in which the obligation to charge a deposit has been fulfilled and the results achieved. The administrative costs ensuing from this are included in the administrative costs associated with the obligation to report. The additional cost was estimated in 2005 to amount to approximately €500,000. The total cost of reporting amounts to a total of some €650,000 (150,000 plus 500,000), assuming collective implementation.


Deposits on single use beverage containers are applicable only to bottles of specific sizes, including: - plastic bottles for soft drink and water larger than 0.5 litre.


The following packaging materials are not included in the scheme: steel and aluminium cans.

(1) 1 Strong Drink: is defined in the Licensing and Catering Act as a drink which at 20 degrees Celsius, has an alcoholic content of fifteen or more percent proof, with the exception of wine.

(2) 2 A moderately alcoholic drink is an alcoholic drink which, at a temperature of twenty degrees Celsius, has an alcohol content of more than twelve but less than fifteen percent proof. These generally consist of advocaat, liquorettes, cream drinks and fruits in alcohol.

Aspect Description Voluntary or mandatory system

Mandatory.

Level(s) of deposit levied For single-use bottles the deposit is €0.25.

Type of collection systems Reverse vending machines (RVMs) and manually. Role of retailers, beverage manufacturers, local authorities

Beverage producers or importers introducing a packaged drink on the Dutch market that is covered by the deposit legislation, are obliged to levy a deposit on this packaging. To the consumer, deposit-bearing beverages may have a label on the packaging, or it may only be visible through in-store product displays and on the sales receipt. Beverage manufacturers and importers are obliged to have a system in place to allow for the collection of returned bottles. Local authorities do not play any role in the Dutch deposit and refund scheme.


Sales locations collect the packaging in their distribution centres and the bottles are transported to return centres. The return centres after counting and selecting the packaging pay back the deposit to retailers. Return centres receive the deposit and handling fee from the manufacturers and importers.


Reverse vending machines (RVMs) are the main option for returning packaging. These are generally placed somewhere within the store of purchase of drinks (eg supermarkets, chip shops, kiosks and club houses). The cans and bottles are laid one by one on a conveyor belt in a “hole” in the machine that takes the packaging through to the sorting area the other side while at the same time scanning the packaging. Packaging is scanned in the RVM’s and all encoded bottles are accepted. After loading the packaging into the RVM, the consumer presses a button indicating that they have finished loading and the machine generates a refund slip which the consumer can redeem in the shop. A purchase is not required. Stores without RVMs that sell drinks must still accept the types of packaging materials that they sell. In these cases, where a manual system is operated, the consumer will take the bottles to staff who check the packaging and a refund is given.

Geographical areas covered Nationwide. Storage and handling of collected packaging

PET packaging is collected in return bags at the retail stores. These bags are automatically filled from the RVM machines via a conveyor belt. After exiting the RVM, the bags are closed with a barcode for identification.


The store transports the collected package into its distribution centres. The distribution centres transport the collected package to the return centres. Transportation costs are paid by the distribution centres. Bags for return are transported to the return centres. The return centres count and select the bottles according to the material and colour. PET bottles are perforated, compacted and sent to recycling companies.


Stores do not collect non-deposit packaging and this responsibility rests with the local authorities. Waste containers are placed on streets for the collection of glass and plastic packaging in order to recycle these. Non-deposit packaging is regulated via the Packaging, Paper and Card (Management) Decree.

Consumer information issues No special information campaigns are run on the deposit system for packaging in the Netherlands, as it is common understanding that a deposit apply. This may be attributed to the fact that deposit-earing refillable bottles have been sold in the Netherlands since 1989.

Aspect Description Administration of the scheme (including cost)

The Foundation of Return Packaging (Stichting Retourverpakkingen) coordinates the collection of one-way deposit-bearing PET containers. Manufacturers and importers can join the Foundation (eg all soft drink manufacturers are members), however this is not compulsory. Return centres handle the collection, counting and recycling of packaging for Foundation members. There are three return centres for plastics in the Netherlands. Members pay a processing fee and the deposit to the Foundation. The Foundation sends soft drink producers or importers a weekly statement of the quantity of packaging collected and processed and an invoice. The producer and importers then must pay for the collection and organisation of the levy of the system dependant on these costs. There is no such co-ordinating organisation for beer bottles and co-ordination is directly with the breweries.

Broader financing issues Financial information is not publicly available.



Impact on collection rates The collection rate is approximately 95%. The Foundation of Return Packaging report that there are 600 million PET bottles returned every year.



Issues arising from copetition in the sector between refillable / disposable

The proportion of non-refillable packaging is increasing. For example, in 2006 a number of large beverage companies introduced the non-refillable PET bottle with a deposit. The main reason for choosing non-refillable packaging includes: - ease of collection: the variety of refillable PET bottles on the market made segregated collection difficult; - hygiene issues are eliminated; - space saving at the production location: Washing facilities are not required in a bottling plant for non-refillables; - marketing: A non-refillable is more representative (no scratches compared to a refillable bottle). In 2005, more than 85% of beer was packaged in refillable bottles or large packaging with a deposit. For soft drinks and water, the percentage was slightly lower.

Issues arising from competition in the sector between packaging materials





A32

A5.1 REFERENCES FOR DUTCH SECTION

Decree of 24 March 2005, laying down regulations for packaging, packaging waste, paper and card (Packaging, Paper and Card (Management) Decree) Stichting Retourverpakking Nederland (Foundation of Return Packaging) website, www.ral.nl/srn Productschap Dranken website, www.productschapdranken.nl Telephone interview (17.09.2008) with a representative of Stichting Retourverpakking Nederland.

Annex B

List of Contributing Stakeholder Organisations


B1

B1 LIST OF CONTRIBUTING STAKEHOLDER ORGANISATIONS

The following organisations provided stakeholder input into this project: Advisory Committee on Packaging Alupro Anker Andersen A/S Association of Convenience Stores Ball Europe BERR Biffpack British Beer and Pub Association British Glass British Soft Drinks Association Campaign for the Protection of Rural England Coca Cola Enterprises Dansk Retursystem Environment Agency Green Alliance Incpen LARAC Local Government Association Marks & Spencer Michael Warhurst Nampak Novelis Packaging Federation Recoup Rexam Stichting Retourverpakking Nederland Svensk Returpack Tesco Tomra Valpak WRAP

ERM consulting services worldwide www.erm.com

ERM has over 100 offices across the following countries worldwide Argentina Malaysia Australia Mexico Belgium The Netherlands Brazil Peru Canada Poland Chile Portugal China Puerto Rico Colombia Russia Ecuador Singapore France South Africa Germany Spain Hong Kong Sweden Hungary Taiwan India Thailand Indonesia UK Ireland United Arab Emirates Italy US Japan Vietnam Kazakhstan Venezuela Korea ERM’s Oxford Office Eaton House Wallbrook Court North Hinksey Lane Oxford OX2 0QS T: 01865 384849 F: 01865 384848 www.erm.com

Documents

December 2008 - GOV.UK