The proposalNovember 2022 saw the European Commission (Commission) present a proposed Regulation on Packaging and Packaging Waste. The proposal contains various recyclability and packaging minimisation measures including a requirement for each Member State to introduce a Deposit and Return System (DRS) by 1 January 2029 for all single-use plastic and metal beverage containers up to 3 litres (excluding packaging containing wine, spirits, and milk products). Member States are exempted if they can show recycling rates of at least 90% for the in-scope materials, in the two years prior to the entry into force of the regulation.
A number of member states, including Germany, already have a DRS scheme in place. However, for those that do not, they and industry alike have a headache to come. Conceptually, the DRS is simple: consumers pay a small deposit for product packaging at the point of purchase and are reimbursed upon returning the empty packaging to a return point. Practically however, implementing a DRS can throw up a host of challenges for authorities, producers, retailers, and consumers.
Hot topicThe concept of the DRS will be familiar to many Member States. Germany, Finland, and Denmark were amongst the first adopters over two decades ago and have since achieved recycling rates of over 90% for PET plastics. Then, countries such as Estonia, the Netherlands, Croatia, and Lithuania followed suit.
In recent years, the EU's increased focus on sustainability has led to a spike in DRS adoption, with Member States including Slovakia, Latvia and Malta implementing DRS in 2022; and Poland, Romania, Portugal, Greece and Ireland scheduled to go live before 2025. In the UK, Scotland is due to implement its DRS in August 2023, with England, Wales and Northern Ireland to follow in 2025.
Given the number of existing and planned DRSs, might certain aspects of the Commission's proposal throw a spanner in the works for Member States?
Cross-border considerationsIn its proposal, the Commission requires Member States to strive for maximum DRS interoperability, particularly in border areas where it is demonstrated that a lack of interoperability is causing lower return rates.
Generally, maximising interoperability between Member States will prove challenging, particularly for those that have established and well-functioning systems. Maximising interoperability between bordering States will require unprecedented levels of cooperation between authorities and nominated system operators, and will prove particularly challenging for States with multiple borders.
From producers' perspective, cross-border returns will likely require investment in traceability systems in order to accurately monitor return rates. Interoperability will also require producers to design and manufacture a range of labels with multiple symbols or instructions for return in various Member States, which can get complicated and costly.
The grudge against glassUnlike plastic and metal, the Commission's proposal requires Member States to "endeavour" to establish and maintain DRS for glass.
Many Member States, including those with the highest glass recycling rates of over 90% (Belgium, Luxemburg, Slovenia and Sweden), use Extended Producer Responsibility (EPR) systems such as kerbside collections, bottle banks and other single stream glass collection systems. It is unlikely that the Commission's encouragement will see these States change approach - as the old adage goes, "if it ain't broke…"
More importantly, the hope is that Member States with lower glass recycling rates will be persuaded to act. However, due to the additional handling, storage and transport costs, health and safety concerns, and the risk of reduced recyclability due to smashing and mixing, many Member States will welcome glass' voluntary status.
Member States are likely to prioritise implementation of effective systems for mandated materials over voluntary, meaning that varying approaches to glass can be expected in the short to medium term. Looking across the sea, the challenge of taking varying approaches is already playing out in the UK. Despite vocal concerns from industry leaders, Scotland and Wales are including glass in their DRS, whilst England and Northern Ireland are not. As a result, producers and retailers will need to manufacture, store, and distribute two versions of products, inevitably resulting in increased costs for producers, increased administration for retailers and increased prices for consumers. If the additional burdens weigh too heavy, consumers may also see reduced choice of products as producers opt out of non-viable markets.
The Commission's proposal is designed to allow for innovation whilst offering a level of flexibility to adapt to local circumstances, resources and capacity. As a result, and despite being contained in the regulation, the Commission's proposal is less prescriptive than one might expect leaving much of the detailed decision-making to Member States:
- Deposit amount: The deposit must be high enough to encourage returns, but not so high that it precludes purchases. This will vary depending on the micro- and macro-economic conditions in each Member State, as well as consumer sentiment and behaviour. Extensive research and consultation will likely be required to determine the "sweet spot".
- Collection methods: Many existing DRSs rely on retailers installing reverse vending machines (RVMs). These are expensive to install and take up floor space, forcing smaller retailers to consider manual collection (if available) as an alternative. Manual collection still requires storage space and has the potential to cause backlogs in the event of staff shortages. To avoid queues, consumers may opt to return at larger stores with RVMs, resulting in a loss of footfall for small retailers. Some systems may offer DRS exemptions for small stores, but this in itself may result in a loss of business if consumers opt for convenience by returning and shopping at stores that offer collection services. Therefore, protections for small retailers require careful consideration. The potential digitisation of kerbside collection to recognise labelling presents an opportunity for local authorities/councils.
- Conflict and confusion with existing systems: Many Member States have alternative waste collection systems (such as kerbside collections) that generate revenues for government-funded collection of other waste. DRS uptake may decrease these revenues and have a knock-on impact for other waste collection systems. There is also the potential for confusion and low recycling rates if consumers are not educated about DRSs and how they work alongside other systems. Labelling must be clear for the same reason.
- Protecting the vulnerable: The most vulnerable in society (including those the elderly, disabled or on low incomes) are less likely to have easy access to cars or other means of transport and are therefore less likely to redeem deposits. Member States must ensure that these social groups do not suffer the resulting additional costs, by making return points as accessible and easy to use as possible.
The message to Member States: Don't bottle it
It's important to remember that the EU has set itself a plastic bottle collection target of 90% by 2029 and a target to make all packaging recyclable or reusable by 2030. It is not currently on track to meet either. To add to the challenge, recession risks, energy crises and rising costs of living are permeating the EU. As such, it remains to be seen whether the Commission's proposal will prevent sustainability slipping down government agendas.
Whilst the flexibility of the proposal will be welcomed, there are many conversations to be had in order to implement effective DRSs that do not disproportionately burden retailers, consumers or distort the market for businesses looking to sell across the EU.
The Regulation on Packaging and Packaging Waste is making its way through the EU's ordinary legislative procedure and is currently in its first of a potential three readings. If passed, Member States must legislate for, plan and implement their schemes before the 2029 deadline. It is imperative for businesses to keep abreast of updates across Member States and to take part in stakeholder consultation where possible. This will ensure they are prepared for the launch of numerous new or updated DRSs across the EU and the worst of all worlds, slightly different schemes in each state.
Please also read our Waste not, want not: packaging recyclability and minimisation article for further insights.
If you have any questions regarding DRS, points raised in this article or would need legal advice, please contact one of the authors below or your usual DWF contact.