Deposit Return Scheme (DRS)

A Deposit Return Scheme (or DRS) is a legislation implemented by a government to increase drinks containers' recycling and reduce plastic, aluminium and glass waste.

How does a DRS work?

The government passes a legislation indicating in broad terms that deposits should be paid on drinks containers.

A Scheme Administrator, typically a non for profit organisation is appointed. This will then give specific guidelines on how the DRS should be implemented.

An entire system is set up between the beverage industry, retailers, collection companies, recycling bodies and others.

Guidelines on other consumption places like hospitality, sport venues and many others will also be issued. Click here to see the diagram.

The European Union Directive requires 90% collection by 2029

The industry consensus is that governments around Europe will have to implement Deposit Return Schemes to achieve this target.

These countries have began or concluded their legal journey towards a DRS: Scotland (2022), England Wales and Northern Ireland (2023-2024), Portugal (2022), Slovakia (2022) Romania (2022), Turkey (2023), Latvia (2022), Malta (2022), New Zealand (2022), Singapore (2022), Victoria Australia (2023).

Read Directive (EU) 2019/904

Are Deposit Return Schemes Effective?

A "well implemented" Deposit Return Scheme is normally welcomed by the beverage industry.

In those few countries where DRS have been operationally for more than a decade, recycling rates are record high.

The result is that empty containers are not found littered around streets and parks, plastic doesn't end up in oceans, and less resources are extracted from mother Earth to produce new containers.

DRS Collection Modalities

A crucial factor that determines the success of a DRS system is the convenience and accessibility for consumers to return containers. There are three main models a return could be set up:

Return-to-Retail

When the DRS is focused on returning drinks containers to retailers.

This method is considered the most convenient for the consumer, also avoiding CO2 emissions as it's combined to the normal shopping habits.

Return-to-Depot

Also called Return-to-Redemption Centre, in which the containers are returned to specifically build collection centres.

Hybrid

A combination of Return-to-Retail and Return-to-Depot.

Is a DRS connected to money flow?

Yes.

Consider the billions of drinks sold in a country every year. Multiply it by a certain deposit amount. The number is staggering!

Then consider all of this money will be paid to retailers upon purchase of drinks. A small part of this money will stay with retailers to support them servicing collecting empty bottles.

Then consider retailers will pay out the full deposits amounts when drink containers are returned.

However, an empty container is worth its deposit when returned at any connection point, not just where the drink was purchased.

So the monies went: from the consumer, to the retailer, to the scheme administrator, back to the retailer, back to the consumer.

It's a long cycle of a lot of cash.

European DRS in a nutshell

European countries where a DRS is in force have the most successful interception levels for beverage containers, with an average rate of around 91% compared to the quantities of containers placed on the market.
In all countries, beverage producers and distributors are managed through a system operator designated by them, with the exception of Croatia where a public company oversees the system.
In all countries, the DRS was introduced through a legislative act.Current European DRSs include beverage containers such as plastic (PET) bottles, glass bottles and cans.
The security systems of Norway, Sweden and the Netherlands do not include glass.
In the Netherlands, a cautionary system has been in place since 2005 for plastic bottles with a content exceeding one liter only, which from next July 2021 will be extended to smaller bottles.
The cans will instead be included in the system from 31 December 2022, with the aim of reaching 90% of them by 2024.

Who pays for a DRS Implementation?


The beverage industry and the retailers typically suffer the most net costs.

However, there is a natural way to sustain the starting up of a DRS.

When a DRS starts, the typical recycling rate of drinks containers is <50%.

In the first three years of a DRS, the recycling rate is expected to grow, optimistically to 70%, then 80%, then 90%.

Bottles which are not returned, so they are recycled via home collection or not recycled, are therefore 30%, 20%, 10% in the first three years.

The deposits paid on those bottles will not be redeemed (the cash won't go back onto the consumers' hands) so the cash will remain in the Scheme Administrator funds.

This extra cash, however bad it is that some containers' weren't potentially recycled, are used to cover the costs of activating a DRS. This will ultimately be good for the planet.

Scotland is about to launch a DRS in 2022, with the rest of the UK to follow soon after

Due to the pandemic, Scotland has delayed its DRS start date from 2021 to 2022. There are discussions to potentially delay it further. The rest of the UK is planning to start a DRS in 2023.

Visit Circularity Scotland - The Appointed Scheme Administrator

The Beverage Industry

Governments are issuing "Extended Responsibility" to the beverage industry, so it is responsible for the full lifecycle of their products. So to include what happens to the containers after use.

The beverage industry has often expressed positive comments about Deposit Return Scheme systems, as long as they are "well designed".

Retailers

The general rule of a Deposit Return Scheme is that "if you sell a container, you must take it back".

This is a short sentence to declare that if a retailer is selling drinks, it has the responsibility of organising the collection of the empty containers.

Retailers can do the collection and deposit redeeming process manually, but most often the adoption of Reverse Vending Machines becomes a must in favour o operations efficiency.

Every retailer operating as a 'drink sellers & containers collector' within a DRS will open up a "double entry system" with the Scheme Administrator: money in debit every time a drink is sold and cash is taken from the consumer, money in credit every time a container is collected and the deposit is paid back to the consumer. A regular balancing of the account happens regularly between the Retailer and the Scheme Administrator.

Retailers are paid a fee per container by the scheme administrator for providing this service

Waste Collection Companies

When designing the operations of a DRS, the scheme administrator will cover many details of the overall project, including where and how containers will be collected and actually sent for recycling.

In some DRS's "counting centres" could be organised so to validatre the collection quantities declared by the retailers and all of the other bodies appointed to do collections.

Retailers can still utilise their own reverse logistics and bring the containers for recycling, as long as this is in agreement with the Scheme Administrator.

Recycling Plants

The ultimate goal of a DRS is to increase recycling rates. Recycling Plants are therefore involved in planning for the volume of containers that will require recycling. This volume is expected to grow rapidly especially in the first years after starting a DRS.

The technology available for recycling will have an impact on the Deposit Return Scheme design: can PET Bottle and Aluminium Cans be collected together because the recycling plants can separate them? Will glass be required to be split by colour, or pre broken in pieces of certain sizes?

DRS and Home Delivery

Home deliveries of groceries have expanded drastically in recent times and this is bringing new challenges for a well designed Deposit Return Scheme.

Home Delivery vans will probably have to organise collection of empty containers, with challenges around safety, hygiene, efficiency and organisation.

Retailers selling online and delivering to homes will have to organise a system to collect empty containers from homes. This technology can be integrated with Recyclever's portal.