What do new details of deposit return scheme mean for industry?

In a consultation response released today (20 January), Defra has confirmed details of the incoming deposit return scheme.

DRS Resource deposit return schemeThe consultation was produced collaboratively between the UK Government, Welsh Government and the Department of Agriculture, Environment and Rural Affairs (DAERA) in Northern Ireland. While Scotland’s deposit return scheme (DRS) begins in August this year, the response highlights that all four nations will work together ‘on how the schemes interact’.  

It was previously announced in a consultation response for extended producer responsibility (EPR) in March 2022 that the DRS for England and Northern Ireland will cover polyethylene terephthalate (PET) bottles and steel and aluminium cans of 50 millilitres to 3 litres. In Wales, it will also apply to glass bottles.

Environment Minister Rebecca Pow said: “We want to support people who want to do the right thing to help stop damaging plastics polluting our green spaces or floating in our oceans and rivers. 

“That is why we are moving ahead using our powers from our landmark Environment Act to introduce a Deposit Return Scheme for drinks containers.

“This will provide a simple and effective system across the country that helps people reduce litter and recycle more easily, even when on the move.”

The Defra response follows two consultations on implementing a DRS, with 83 per cent of respondents indicating support for DRS to be introduced.

Details of the deposit return scheme

The consultation response confirms that the implementation of DRS in England, Wales and Northern Ireland is set for 1 October 2025.

Deposit Management Organisations (DMOs) will be appointed through an application process to be determined in the final regulations and will be responsible for the management of the overall operation of the DRS, as well as for meeting the collection targets set out in the regulations. The responsibility sits with producers but is passed onto the DMO to which they register.

The collection target has been confirmed as 90 per cent within three years of the start of DRS. This will be phased in, with an initial target of  70 per cent in 2025, increasing to 80 per cent in the second year of operation, and subsequently to 90 per cent.

Notably, as suggested in the initial consultation, only collection targets will be set – not recycling targets – due to ‘difficulties the DMO would have in ensuring material has been recycled once sold to a reprocessor’.

In order to avoid one material weighting more heavily towards the collection target, each material in scope must achieve a minimum 85 per cent collection rate. Monetary penalties will be imposed on DMOs which fail to meet collection targets.

The response confirms that all DMOs will be mandated to include a mark to identify the product as a part of DRS and also an identification marker such as a barcode or QR code to be used at the return point.

DMOs will be responsible for setting both the registration fees and deposit level (which can be either fixed or variable) but must do so in consultation with producers and abide by parameters set out in the final regulations, which will include a maximum deposit. Unredeemed deposits will go towards the funding of the DRS itself.

Local authorities who collect items included in the DRS will be able to collect these separately and redeem the deposits.

Retailers which sell containers within the scope of the DRS will be obligated to host a return point with the possibility of applying for exemption. The DMOs will also be responsible for ensuring takeback services for online purchases.

The response states that the next phase of the implementation will be to finalise the regulations by the end of 2023 and appoint the DMOs by the summer of 2024. An agreement between the Government (including the Scottish Government), HM Treasury and HM Revenue and Customs still needs to be reached regarding the place of VAT in the scheme.

Industry response

The industry has given a mixed response to today’s announcement.

Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, called the 2025 implementation date ‘disappointing’ given the amount of time ‘the Government has spent pondering the issue’.

He continued: “In the UK, we discard eight billion drinks containers a year, and recycling rates have plateaued. This new scheme needs to play a significant part in increasing recycling rates.

“Our Committee took evidence on plans for the DRS in 2021. The experts we heard from then were in favour of an ‘all-in’ model that would provide the greatest reduction in litter, ensure the collection of high-quality material for recycling and avoid market distortion. We heard conflicting views on whether the system should include glass, amid safety and storage concerns, but concluded on balance glass should be included: it has been successfully introduced in schemes in other countries. It is therefore a missed opportunity that glass will not be in England’s DRS at launch, but both Scotland and Wales’ DRS will include glass.

“An all-in deposit return scheme across all four nations of the UK is the only way we will radically reduce our dependence on natural resources. We cannot continue to ignore the UK’s chronically low levels of glass recycling. We need urgent systems changes that do not create perverse incentives in the market and leave our environment open to perpetual degradation.”

Criticisms of the exclusion of glass also came from the Chartered Institution of Wastes Management (CIWM), Sian Sutherland (Co-Founder of A Plastic Planet), and wildlife campaigner Dominic Dyer, who said Defra was set to ‘disincentivise consumer recycling’ of excluded items.

CIWM also had several criticisms including that ‘the scheme should wait until both national packaging EPR and Consistent Collections in England have been fully implemented’.

It also said it was ‘dismayed’ with the proposed payment to local authorities for DRS items given ‘the overwhelming response back to government was that redeeming deposits was not workable’ and that the issue of VAT needed to be resolved.

Robbie Staniforth, Innovation and Policy Director at compliance scheme Ecosurety says: “While unfortunate that the system change is still over two years away, given the scheme has been in design for several years now, it represents a pragmatic approach to the realities of implementing such a major change. How the differing systems across UK nations will work in practice remains to be seen.

“It is sad to see that the four Governments could not get around the table and agree on one harmonised system for the sake of UK citizens, not to mention the businesses who will now be dealing with unnecessary extra complexity. However, we look forward to working closely with all stakeholders to ensure this significant change delivers the environmental benefits promised.”

Gavin Partington, Director General of the British Soft Drinks Association, said: “We welcome Defra’s commitment to introducing an all-in can/PET deposit return scheme in England, Wales and Northern Ireland.

“By kickstarting the UK’s circular economy for drinks containers, the Deposit Return Scheme will help consumers play their part in ensuring the containers they buy are returned for recycling. We look forward to working with officials to help guarantee its success.”

​​Executive Director of the Environmental Services Association (ESA), Jacob Hayler added: “We welcome the additional clarity today’s response from Defra brings to our sector after a prolonged period in limbo, but we do still have reservations about the underpinning logic of, what is effectively, an “all-in” Deposit Return Scheme.

Defra has rightly focused on addressing littering and other environmental outcomes as its rationale for introducing a DRS but has opted for an “all-in” system, instead of focusing only on “on-the-go” container formats, which are most commonly littered and which often go unrecycled away from the home. As a result, the DRS system holds the potential to cannibalise household recycling collections while adding additional cost and complexity.

Other reforms contained within the Resources and Waste Strategy, namely EPR and more consistent collections, hold the potential to deliver many of the same beneficial outcomes as DRS and we would have preferred them to be introduced first, with DRS phased in later to address any remaining materials not being captured. This would limit the impact on consumers and the potential for these systems to work at odds with each other.”