Introduction of a Deposit Return Scheme in England, Wales and Northern Ireland

The Department for Environment, Food & Rural Affairs (DEFRA), in conjunction with their devolved counterparts in Wales and Northern Ireland, had set a target on introducing a Deposit Return Scheme in England, Wales and Northern Ireland (the EWNI DRS) by 2023. DEFRA replied to the responses from the initial consultation on introducing the EWNI DRS in August 2019 and was looking to conduct a further consultation in spring 2021, subsequent to the passage of the Environment Bill. As the Environment Bill has now been delayed for at least 6 months due to Brexit and COVID-19, the date for the further consultation, and the likelihood of DEFRA introducing the EWNI DRS by 2023, is now up in the air, with some sources indicating that the introduction of the EWNI DRS could be pushed back to 2024. By way of contrast, the Scotland DRS is likely to go live in 2022.

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What is a Deposit Return Scheme?

Generally, a Deposit Return Scheme (DRS) is a scheme in which a small deposit is added to the price of an item, in-store or online, which can be refunded to the consumer when they return the packaging for the item. There are a number of countries in Europe that operate a DRS including Germany, Norway, the Netherlands and Sweden.Inspired by nudge theory economics, a DRS could improve recycling rates by:

• Providing a financial incentive to consumers to recycle packaging

• Mandating specified conditions for return, ensuring much lower contamination i.e. a condition that in order to earn repayment of the deposit, packaging returned must be empty and clean.

The main challenges identified for implementing the EWNI DRS were:

• How high to set the deposit – the deposit needs to be high enough to have an effect on behaviour, but not so high as to reduce the rate at which drinks are purchased too significantly, especially in lower income groups

• The UK’s existing kerbside recycling regime – there are very few, if any, case studies where a DRS was implemented after an extensive regime of kerbside household recycling collections, so there are concerns as to whether the cost of implementing the scheme would outweigh the benefits

• Consumer confusion – it was felt that introducing a DRS which included some materials and containers but excluded others could result in consumer confusion and dis-incentivise recycling.

As reported by the Guardian in 2018, in Germany, implementation of a DRS led to 97% of all plastic bottles and aluminium cans being recycled compared to 43% in the UK. However, it should be noted that a DRS has been a substantial part of the German recycling infrastructure since 2003 and Germany has never operated a kerbside recycling collection scheme which is as wide-ranging as the UK’s.With that in mind, it remains to be seen how effective the introduction of the EWNI DRS would be and how long it would take for the recycling of plastic bottles and aluminium cans to reach the same levels.

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What could the EWNI DRS look like?

 

Items included

Under its devolved powers, Scotland has raced ahead of England, Wales and Northern Ireland and has already legislated for the implementation of a DRS (the Scotland DRS). The Scotland DRS will start on 1st July 2022 and will impose a flat 20p deposit charge on plastic, glass, steel and aluminium drinks packaging.From the initial consultation, it is likely that the EWNI DRS will cover the same items as the Scotland DRS. However, there may be scope for the inclusion of Tetra Pak® pouches and sachets and many of the respondents indicated that they would rather see glass containers reused rather than included in the EWNI DRS.    

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Model

DEFRA’s initial consultation proposed two models:

• All-in – this would mean including drinks containers of any size

• On-the-go – this would mean including drinks containers smaller than 750ml and limited to drinks sold in single format containers (rather than multipacks).

The majority of respondents to the initial consultation indicated a preference for the all-in model and the Scotland DRS appears to have adopted this approach, including drinks packaging between 50ml and 3l in size. There is a strong indication that DEFRA may follow suit for implementing the EWNI DRS.

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Deposit charge

Since the initial consultation, there has also been debate around whether a flat deposit charge should be added to drinks containers (i.e. the same deposit charge applied to containers of all sizes and material types) or a variable deposit (i.e. the deposit charge applied will differ depending on the size and material of the item). It has been reported that DEFRA is coming under increasing pressure to introduce a variable deposit. While a flat deposit charge could incentivise an unintended consumer switch from smaller drinks containers to larger 2l drinks containers, a variable deposit would be more reflective of the variable cost associated with recycling containers of differing size and composition.As well as causing more waste (if consumers buy larger containers), other potential downsides to a variable deposit charge might include:

• Increased administration costs for retailers and producers due to the added complexity

• If the deposit for a smaller container were to be reduced, it may result in a diminished effect on consumer behaviour.

The Scotland DRS does not offer a variable deposit, instead electing to use a flat deposit charge of 20p. It will be interesting to see whether the EWNI DRS will adopt a variable deposit in line with respondents to the initial consultation and how that will impact on interoperability between the DRS schemes.

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Interoperability

It has been reported that DEFRA are working closely with the Scottish government on the implementation of the EWNI DRS and want to ensure that the UK operates a coherent DRS strategy and framework.The Scotland DRS places an obligation to charge a deposit on any person who markets, offers for sale or sells an item covered by the Scotland DRS to a consumer in Scotland, regardless of where the sale is concluded. This would mean that if a sale were concluded in a warehouse in England, but in relation to items intended for consumers based in Scotland, the England based retailer would be obliged to provide a means for the Scottish consumer to return the item for their deposit. This obligation could become difficult for producers and retailers to administer if the EWNI DRS and Scotland DRS operated in a disparate fashion.The information on interoperability in DEFRA’s initial consultation was light and as Scotland brought forward its plans to implement a DRS, it will make it harder for DEFRA to introduce the EWNI DRS if it is to differ significantly. It will be interesting to see how DEFRA intends to incorporate interoperability with the Scotland DRS into its framework for the EWNI DRS.

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Energy, Waste and Sustainability