May 2015

Investigating the Feasibility of a Deposit Refund System in Scotland

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Eunomia has recently completed a review for Zero Waste Scotland examining the feasibility of introducing a deposit refund system (DRS) in Scotland for one-way beverage containers.

The study, published today, found that none of the challenges posed by introducing a DRS was insuperable. The indicative financial costs for a Scottish DRS appear to be well within the range of schemes in other countries, and perhaps even at the lower end. The greatest costs resulting from the introduction of a DRS would fall upon consumers who do not return containers for recycling, but these foregone deposits would effectively fund the DRS’s operation.

Although it was not intended to provide a full cost benefit analysis, the study did model the key financial flows in a Scottish DRS and estimate the main environmental impacts. It found that the monetary value of the environmental benefits (principally increased recycling and reduced land-based and marine litter) appears significantly higher than the financial costs.

The study assessed the key design features of DRSs, looking at examples of existing schemes around the world. The features were considered in the light of the Scottish context to understand:

  • whether there were any constraints that would prevent a DRS being implemented in Scotland; and
  • what permutation might be most suitable for a Scottish DRS.

The review found the Scottish Government already has the majority of the powers necessary to implement a DRS. There would be no major legislative hurdles to overcome, although support from BIS may be necessary in order to require producers to include the necessary deposit markings on the beverage packaging. However, alternative solutions to the labelling issue, such as including a labelling requirement in the operating license of the DRS, could also be possible.

A DRS would also need to function alongside the UK’s Packaging Recovery Note (PRN) system. The most straightforward approach would be to treat the DRS much like a recycling collection scheme within the existing PRN scheme, allowing the DRS’s operator to derive the benefit from the material recovered.

The DRS would also require cost-effective mechanisms to limit fraud. The report indicates that labelling is the main way to achieve this, and suggested that two labelling options be included in any DRS:

  • a Scottish DRS logo and individual barcode for beverages sold in Scotland only (Scottish specific label); or
  • a Scottish DRS logo added to all beverages sold in the UK.

Producers would be free to choose the option that best suited their manufacturing and distribution system, as in Estonia’s DRS. However, there might be lower fees where a producer opted for the Scottish specific label.

Project Manager Tim Elliott said:

 “We are very pleased to have been asked to carry out this work and are encouraged by the findings. The potential benefits of a DRS appear clear, and challenges that had been of concern now appear to be quite readily overcome. Based on this evidence, we hope to see the Scottish Government pressing forward with plans for a DRS for beverage containers, which could serve as a model for other parts of the UK.”