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Deposit Refund System

October 25, 2017

Impacts of a Deposit Refund System for One-way Beverage Packaging on Local Authority Waste Services

Eunomia - Deposit Refund System
Eunomia – Deposit Refund System

Report by Eunomia

Dr Dominic Hogg Tim Elliott Dr Adrian Gibbs Andy Grant Dr Chris Sherrington

Report commissioned by Keep Britain Tidy, Campaign to Protect Rural England, Marine Conservation Society, Surfers Against Sewage, Reloop, Melissa and Stephen Murdoch

This study is designed to answer the question: ‘What would be the impacts of the introduction of a deposit refund system for one way beverage packaging on local authority waste services in England?’

Evidence from countries where deposit refund systems (DRS) have been implemented for single-use beverage containers indicates that they can deliver a number of benefits. They can increase beverage container recycling rates, improve the quality of the material that is collected and reduce littering. However, implementing and operating a Deposit Refund System has costs, which must be borne by some or all of the actors involved in the production, sale and consumption of beverages, as well as impacts on those that manage the resulting waste.

There has recently been a good deal of debate in the UK about the introduction of a Deposit Refund System, and, following a process of evidence gathering and analysis of the likely effects, the Scottish Government announced in September 2017 that it plans to launch such a system. Work previously undertaken in Scotland noted a concern voiced by some stakeholders that such schemes would impose net costs on local authorities. For example, the Convention of Scottish Local Authorities (COSLA) expressed the view that a Deposit Refund System would remove valuable materials (such as aluminium and the plastic PET) from recycling collections, increasing the net costs to councils of service provision.

However, initial analysis undertaken by Eunomia Research & Consulting Ltd (Eunomia) on behalf of Zero Waste Scotland indicated that a Deposit Refund System would lead to annual savings to local authorities in Scotland of £4.6 million.1 Subsequently, Eunomia was commissioned by Keep Britain Tidy, Campaign to Protect Rural England (CPRE), Surfers Against Sewage, the Marine Conservation Society, Reloop and Melissa and Stephen Murdoch to undertake a detailed study on the financial impacts of a Deposit Refund System on local authorities in England.

This study focuses on English local authority waste services. It finds that, while it is true that some valuable materials may be removed from existing recycling services, far from leading to additional costs, a Deposit Refund System would be likely to yield net savings, overall, once other factors such as the likely impact on residual waste arisings are taken into account. Even so, in some situations, the distribution of these net savings is uneven, so that some savings available are shared more equitably.

What is a Deposit Refund System (DRS)?

Deposit Refund System Process Flow
Deposit Refund System Process Flow

A one-way Deposit Refund System for single-use beverage packaging (e.g. beer cans, soft-drink bottles) is a system that incentivises the return of used packaging through the use of a refundable deposit. Consumers pay the deposit when they purchase the beverage and receive it back when they return the container to designated collection points, typically located in retail outlets or other centralised locations. If a consumer chooses not to return the empty container, then they lose the deposit. The containers that are collected are recycled.

What impacts would a Deposit Refund System have on local authority waste services?

Financial Impact of Deposit Refund System
Financial Impact of Deposit Refund System

The main concern expressed to date on behalf of local authorities is the potential loss of material revenue. It would thus seem logical that the local authorities that currently achieve high rates of recycling are those that will have the most to lose in the event that a Deposit Refund System is implemented. Therefore, the main focus of this study is the impact on local authorities already performing well in terms of recycling.

We found that for the high performing recycling authorities assessed in this study, despite the reduced amount of higher value materials in kerbside recycling collections, a Deposit Refund System still results in net cost savings. This is due in large part to a reduction in residual waste requiring treatment, along with the possibility of reduced material recovery facility (MRF) costs and potential efficiencies in collection. There also appears to be potential for a reduction in street cleansing costs.

Some additional analysis indicates that authorities with low recycling performance could potentially make greater savings since a larger proportion of the materials captured within a Deposit Refund System are diverted from what is currently collected as residual waste. The estimated annual savings are summarised in Figure 1-2, and across the local authorities considered, range from £62,000 to £495,000. On a ‘per household’ basis, the savings range from £0.72 to £4.06 per household. The (unweighted) mean average saving among the ‘high recycling authorities’ is £1.47 per household, while among the ‘low recycling authorities’ it is £3.33 per household.

To put this in context, residual waste and recycling typically costs between £100 and £140 per household per year, depending on geography, demographics and collection frequency. Assuming, arguably conservatively, that the mean average saving across the high recycling authorities (of £1.47 per household) is replicated across England as a whole, the annual net saving to local authorities under a Deposit Refund System would be close to £35 million. If the mean net savings per household across the eight authorities considered (of £2.40 per household) were scaled up to the England level, the annual net savings would be in excess of £56 million.

Download the Full Eunomia Report Financial impacts of a DRS on Local Authority Waste Services