Is DRS a load of rubbish? Economic report slams UK’s plan to introduce deposit return scheme

18 Apr 2019 --- A UK-wide deposit return scheme (DRS) would be a “highly inefficient” way to increase recycling and recovery rates in the nation, an Institute of Economic Affairs (IEA) report has warned. However, UK supermarkets have come under increased pressure to back the introduction of a DRS and received warnings against “lobbying behind the scenes” in an open letter written by the Head of the Marine Conservation Society (MCS). The fate of DRSs continue to hang in the balance after the UK government launched a series of consultations in February with the aim of “overhauling the waste system.” The potential introduction of a DRS forms a key component of this.

The consultation is running until May 13, 2019 and is asking the public, businesses and industry about the type of DRS that they would like to see – including how it should be operated and the size and material of drinks bottles and cans to be included. Under a DRS, consumers are charged a small deposit for every single-use plastic/glass/metal drinks container they buy. The deposit is redeemed when the bottle or can is taken to a reverse vending machine or manual collection point, with the ultimate aim being to increase recycling and recovery rates and reduce littering.

In launching the consultation, the government has proposed a DRS designed for cans, plastic and glass bottles. The government will seek views on two options for how the DRS could work if introduced. The first option, known as the “all-in” model, would target a large number of beverages placed on the market, irrespective of size. The second option, known as the “on-the-go” model, would restrict the drinks containers in-scope to those less than 750ml in size and sold in single format containers. This would target drinks most often sold for consumption outside of the home.

Authored by Christopher Snowdon, Head of Lifestyle Economics, IEA, the scathing report notes that a DRS would increase recycling rates for beverage bottles and cans from 70-75 percent to 85-90 percent, but at a disproportionate cost.  

“A DRS is expected to cost over £1 billion (US$1.3 billion) in its first year and £814 million (US$1,059 million) per annum thereafter. The tangible economic benefits are expected to be less than £100 million (US$130 million) per year. In financial terms, a DRS would be highly inefficient, largely because kerbside collection already recovers 72 percent of these containers,” notes Snowdon in the report. MCS’s CEO, Sandy Luk, urges the industry to put the environment before profit.

“The government’s impact assessment is only able to claim a net economic gain by including intangible benefits of £968 million (US$1,259 million) per annum from a reduction in litter. This figure is highly questionable. The impact assessment neglects to include the much larger costs of unpaid labor that will be incurred by households having to collect, store and return empty containers. When the full costs and benefits are included in the analysis, there seems to be no economic case for a DRS,” he explains.

On the other hand, MCS’s CEO, Sandy Luk, says that some companies and manufacturers seem keen to thwart the introduction of a comprehensive scheme. “It is highly regrettable that some elements in UK industry, with vested interests, seem intent on making up as many excuses as possible to resist a scheme which will remove and recycle the largest numbers of containers. Lobbying behind the scenes must not be allowed to derail the most ambitious and comprehensive scheme from being introduced,” Luk notes.

She says that it is imperative that an all-inclusive scheme which as a minimum accepts all sizes and materials, plastic, glass bottles and cans – the first option proposed by the government – is chosen. If size limits are introduced, “producers simply make bigger or smaller bottles to circumvent the scheme. In addition, evidence has shown that restricting the sizes of containers to which the scheme applies confuses consumers. This must be avoided in the UK,” she says.

Luk has sent the letter to the CEOs of UK’s most prominent supermarkets, to coincide with the launch of MCS’s latest campaign, #BottlesforChange. 

DRS success 
Similar schemes already operate successfully in other countries and proponents of setting up a DRS in the UK often cite such achievements. For example, total return rates of drinks containers in Denmark, Finland, Germany, Norway, the Netherlands and Sweden are at 90 percent, 92 percent, 98 percent, 92 percent and 85 percent, respectively.

However, Snowden asserts that comparing the current rates of beverage bottle recycling in the UK with countries that operate under DRSs is an “apples and oranges” comparison. Also, he notes that parts of the US, Canada and Australia, which have had a DRS in place for many years, have recovery rates that are similar to – or lower than – the UK.

Although Snowdon does not want a DRS to be implemented, he does acknowledge that more bottles would likely be recovered with such a scheme. But, “the question is whether the benefits of operating a deposit return scheme alongside kerbside collection are worth the additional expenditure.”

Scotland is leading the way on introducing a DRS in the UK. It is consulting on a scheme, covering all drinks containers, which could be rolled out as early as next year. Meanwhile, in March, after finding that 81 percent of people would go out their way to deposit a bottle or can, a reverse vending machine designed to accept plastic bottles and aluminum cans was installed at King’s Cross in Central London by UK recycling group Veolia and restaurant chain LEON. 

The result of the government consultations will likely provide some more clarity on the direction the UK is heading regarding its waste management. The consultations follow growing concern around the performance of UK recycling systems and infrastructure. For example, Think tank Policy Connect recently published a report entitled “The Plastics Packaging Plan” which suggests that the UK is lagging behind European recycling standards and can no longer afford to “sweep its plastic waste issues under other countries’ carpets.”

One certainty is that the pressure to tackle plastic waste will continue to mount, and, according to industry experts, will only intensify depending on the outcome of the UK's impending exit from the EU.

By Laxmi Haigh