Deposit return scheme consultation: analysis of responses

Executive summary

1. Between 27 June and 25 September 2018, the Scottish Government undertook a public consultation to explore options for establishing a deposit return scheme (DRS) in Scotland. The consultation paper, A Deposit Return Scheme for Scotland, discussed the key features of a scheme and set out different options for its operation – without putting forward a preferred option. The consultation contained 54 questions seeking views on:

• System components (Questions 1–39)
• The potential risks and opportunities associated with deposit return schemes (Questions 40–48)
• Cooperation with the UK Government (Questions 49–52)
• A partial equalities impact assessment (EQIA) (Questions 53–54).

Description of the responses and respondents (Chapter 2)

2. The analysis was based on 3,215 responses. These comprised responses from 159 organisations, 2,008 individuals and 1,048 postcard campaign respondents submitted by supporters of the Have You Got The Bottle (HYGTB) campaign.

3. Organisational respondents included a wide range of public, private and third sector organisations based in Scotland, elsewhere in the UK, and overseas. The largest categories of organisational respondents were: public sector organisations (25); food and drink producers (24); environmental, conservation, food and health charities (22); retail, vending and retail representative bodies (20); recycling and waste management organisations (16); and packaging manufacturers (16).

Overview of key messages and cross-cutting themes (Chapter 3)

4. There was widespread agreement amongst both organisational and individual respondents that a well-run and appropriately targeted DRS could provide opportunities in relation to improving the environment, changing people’s attitudes to recycling and littering, and building the circular economy. Respondents identified potential benefits (for employment, small retailers, charities and individuals) and risks (both general and specific) of establishing a DRS in Scotland, and they also suggested ways to maximise the opportunities and mitigate the risks.

5. Three particular themes were raised repeatedly – by both individuals and organisations – in relation to a wide range of consultation questions. These ‘cross-cutting’ themes were:

• Deposit return in Scotland should not be seen in isolation. Rather, it should be part of a (preferably, UK-wide) comprehensive approach to waste management, recycling and reuse.
• Deposit return in Scotland should be (i) ‘easy to use’ for consumers and other key stakeholders (i.e. producers, retailers, manufacturers, etc.), (ii) ‘accessible’ and ‘convenient’ for consumers (including those with disabilities, those without private transport, and those living in rural areas), and (iii) it should be ‘simple in design’, so that people can understand it and use it appropriately.
• The scheme should be evidence-based. Respondents thought there was a need for more (and more detailed) impact analysis and cost-benefit analysis, and they called for lessons to be learned from schemes elsewhere.

Materials to be collected in a DRS (Chapter 4, Questions 1–6)

6. The consultation discussed options and possible combinations relating to the materials the scheme might collect – including PET plastic containers, metal cans, glass containers, HDPE plastic containers, cartons and disposable cups. It also discussed the option of a staged introduction to the scheme (i.e. starting with a limited set of materials and expanding to include other materials), and the implications for local authorities (in relation to their statutory duties for recycling) of targeting certain materials within a DRS scheme.

7. There was a high level of support for a scheme that includes the widest range of materials possible. However, organisations were much more likely than individuals to favour a DRS which targeted a more limited set of materials: (i) PET plastic containers only, (ii) PET plastic and metal cans, or (iii) PET plastic, metal cans and glass containers.

8. Those in favour of targeting a more limited set of materials – typically PET plastic, metal and / or glass – emphasised the importance of ‘keeping things simple’ (at least initially) to ensure that the scheme is (i) economically viable, and (ii) easy for people to understand and participate in, while also avoiding competition with existing local authority kerbside recycling schemes. A focus on PET plastic, metal and glass was also seen as tackling the major contributors to the problem of littering.

9. Those preferring a wider scope for a DRS favoured an ‘ambitious’ approach which maximised recycling and enabled Scotland to become a world leader and innovator in this area. This group saw benefits in terms of efficiency and simplicity and also thought this type of approach would be more likely to (i) prompt behaviour change among members of the public, (ii) prevent market distortion and (iii) support innovation in recycling. These respondents – particularly individuals – argued for a scheme based on a wide range of materials (or products) including some beyond the options offered in the consultation paper. 

10. The overall balance of opinion was supportive of a staged introduction of the scheme.  Such an approach was seen as helpful and pragmatic in ensuring the successful introduction of a DRS and in building support for future expansion. Those opposed to a staged introduction expressed concerns about the costs of updating infrastructure, possible public confusion, and producers switching to out-of-scope packaging in the short term. 

11. Respondents identified potential costs and benefits for councils and there was a range of views on the possible net impact of introducing a DRS. Views on both sides of the argument provided detailed evidence in support of their position, and there was agreement that the impact on local authorities could only be assessed once the scheme was fully specified and a full analysis conducted.

Products to include in a DRS (Chapter 5, Questions 7–13)

12. The consultation paper also considered the types of products that should be included in the DRS. It discussed the broad options of basing a scheme on the material a container is made from or the product it contains, as well as issues relating to including or excluding specific product categories (e.g. dairy, alcohol), and the option of a scheme targeting ‘on the go’ products (i.e. drinks bought and consumed away from the home).

13. There was no clear consensus among respondents about whether the material a container is made from, or the product it contains, should be the primary consideration in deciding the scope of a DRS. Organisations were more likely than individuals to say that the key consideration should be the material a container is made from – however, some organisations thought that both the material and the product were important to consider. At the same time, there were also views that the main considerations in deciding the scope of the scheme should not be either the material or the product, but rather clarity for the consumer and cost-benefit.

14. Overall, few respondents identified any products for specific exclusion from the scheme, although organisations were more likely than individuals to do so. The products identified most often for exclusion were dairy (and especially fresh milk), alcoholic drinks and, less often, fruit and vegetable juice. Concerns about dairy products related to hygiene and contamination issues; increases in the cost of milk (if a deposit is added) which was generally seen as an ‘essential’ foodstuff; the risk of adverse impacts on farmers; and, potentially, an increase in the cost and complexity of the scheme. Regarding alcohol, organisational respondents saw the potential for adverse impacts on the Scottish Government’s minimum unit pricing policy, on licensed premises, and on brewers and other businesses. Individuals noted that including alcohol products could complicate the involvement of children in the scheme. Reasons for excluding fruit and vegetable juice related to hygiene and contamination risks, and the potential problems that such containers might cause for reverse vending machines. 

15. The overall balance of opinion was strongly opposed to a scheme limited to on the go products. There were, however, mixed views among organisations, with public sector bodies, recycling and waste management organisations and the hospitality trade being particularly supportive of an on the go DRS. Those in favour of an on the go scheme thought that this would address the main source of litter; be more acceptable and less confusing for consumers and businesses; and avoid duplicating existing kerbside collections. Those opposed to an on the go scheme highlighted difficulties in defining ‘on the go’; the potential impact on efficiency and cost-effectiveness because of the lower volumes involved; the risk of consumer confusion; and the possibility of market distortion.

Deposit return locations (Chapter 6, Questions 14–16)

16. The consultation asked for views about the options for return location (i.e. the place(s) where people can return their containers and reclaim their deposits). It also asked whether certain types of retailer (including online retailers) should be exempted from participation in a model based on taking containers back to a place that sells drinks.

17. There was very little support among respondents for a scheme that involved solely a return to a designated drop-off point. Respondents wanted the scheme to allow either for a model based on take-back to a place that sells drinks, or a mixture of take-back and designated drop-off.

18. Organisations and individuals had different views about whether there should be any exemptions for certain types of retailer within a take-back model. Organisations – particularly those in the retail sector – were more likely to say that there should be exemptions. Respondents identified four groups for possible exemptions: (i) ‘small’ retailers (including ‘corner shops’, ‘small convenience stores’, kiosks, food stands, etc.; (ii) retailers who did not sell food and drink; (iii) (some) retailers who sell ‘food to go’; and (iv) hospitality premises which sell items covered by the DRS for consumption on the premises.

19. There was a widespread view (among individuals and organisations) that online retailers should be included in a DRS scheme. Those in favour thought there should be a ‘level playing field’ for online and high street retailers. Those opposed thought that it was unrealistic or impractical for consumers to return empty containers to an online retailer, and that such an arrangement would introduce hygiene and food safety risks (because of the need to use the same vehicles to deliver fresh food and collect empty containers).

Financing the scheme (Chapter 7, Questions 17–21)

20. The consultation paper discussed how a DRS might be financed. Four main scheme costs were identified – refunding deposits; providing return points and issuing handling fees; logistics; and infrastructure and staffing associated with the scheme administrator. In addition, three income streams were identified: sale of collected materials (if owned by the scheme); producer fees; and unredeemed deposits. The consultation paper invited views on various issues and options related to these costs and income streams.

21. There was widespread agreement (both among organisations and individuals) that deposit return should be seen as a form of ‘producer responsibility’. However, organisations emphasised the importance of ensuring that this was considered in a ‘holistic way’, alongside other producer responsibility requirements.

22. There was also general support (particularly among organisations) for an arrangement whereby the DRS administrator maintains ownership and income from the sale of materials collected in the scheme. This was seen to be essential for the financial viability of the scheme as well as providing an incentive for the administrator to run the scheme efficiently. Respondents thought that a centralised process for the sale of recyclate via a single administrator would also be more cost-effective, less open to fraud and more accountable than alternative arrangements.

23. Respondents largely indicated support for the scheme to ‘pursue additional benefits’ (rather than prioritising the maximisation of profit). However, there was less support for this among organisations, and it was clear that respondents had different views about what these ‘additional benefits’ might be – with some focusing on DRS operational benefits (e.g. maximising recycling and the quality and value of recyclate collected in the scheme), and others discussing benefits external to the scheme (e.g. other environmental initiatives and research into the development of alternatives to single use plastics).

24. There was a strong degree of consensus (among organisations and individuals) that any excess funding and unredeemed deposits should be ringfenced for the continued maintenance or improvement of the DRS, rather than being made available for other purposes (such as environmental projects).

Consumer communication (Chapter 8, Question 22)

25. The consultation paper highlighted the importance of consumer information for the success of deposit return schemes, and the role that product labelling might play in that.

26. There was general agreement among respondents (both organisations and individuals) that (i) producers should be required to put DRS-related information on each container, (ii) those putting small amounts of material onto the market in Scotland should not be exempt from this labelling requirement, and (iii) rather than exempting small importers, such companies should be required to put a DRS-related label onto their existing packaging.

Preventing fraud (Chapter 9, Questions 23–24)

27. Respondents were asked about measures (including labelling) that might be taken to prevent fraud. In general, both organisations and individuals thought that the use of a specific barcode should be the preferred method for preventing fraud. Respondents thought this would provide a simple, cheap and easy-to-use option that was proportionate to the likely scale of fraudulent activity and would encourage industry cooperation.

28. However, environmental consultancies, packaging manufacturers and some individuals were more likely than other respondents to favour the use of a high security label for preventing fraud. This group suggested that such labels would (i) ensure single-return only, (ii) support traceability and audit, and (iii) be tamper proof and difficult to forge.

Level of deposit (Chapter 10, Questions 25–26)

29. Respondents were asked for their views about what level the deposit on containers should be set at. More than half of all respondents suggested deposit levels of between 15p and 20p. Respondents argued that the deposit level needs to balance (i) the financial impact on consumers, (ii) the financial and administrative impacts on retailers and manufacturers and (iii) the need to incentivise participation in the scheme.

30. The balance of opinion in relation to variable deposit levels differed markedly between organisations and individuals. Around a third of individuals favoured a variable deposit rate, compared with just one in eight organisations. Individuals who were in favour of this, focused on the use of the deposit level as a tool to influence consumer behaviour. However, the main reason respondents, on balance, favoured a flat-rate deposit was that it would be simpler.

Infrastructure and logistics (Chapter 11, Questions 27–29)

31. Respondents were asked for their views on various aspects of the infrastructure and logistics relating to the operation of a DRS. Specific questions focused on (i) the type of take-back system used and (ii) the way in which retailer handling fees should be calculated.

32. In terms of return method, a large majority of both organisations and individuals favoured using a combination of manual take-back and reverse vending machines.

33. Regarding the retailer handling fee, there were four main suggestions: (i) no handling fee should be paid, (ii) costs incurred through collecting and recycling containers should be reimbursed in full, (iii) a flat fee for participation in the scheme should be paid, and (iv) a variable fee should be paid depending on the number and volume of containers collected, the value / quality of the recyclate, and time required to process returns.

Creating additional benefits from the scheme (Chapter 12, Questions 30–31)

34. Respondents were asked for their views on whether additional benefits should be pursued by the scheme. These could include (i) providing an option for consumers to donate their deposits to charity, and (ii) making use of variable producer fees or deposit rates to encourage manufacturers to design products which can be recycled more easily.

35. There were mixed views on whether a DRS should pursue additional benefits. Organisations were more likely than individuals to say ‘yes’, but food and drink producers and packaging manufacturers were much more likely than other organisations to say ‘no’ or ‘don’t know’. Among those who were in favour of pursuing additional benefits, there was endorsement for the proposal to give consumers the option to donate their deposits to charities or communities, rather than having it returned. Those who were not in favour argued that the environmental benefits likely to be achieved by a DRS were already substantial and burdening the scheme with pursuing additional benefits was likely to be detrimental. This latter group thought efforts should focus (at least initially) on developing an efficient and financially sustainable scheme, and they called for the DRS to ‘keep it simple’ and ‘get it right’ before attempting to do a multitude of other (unrelated) things.

System ownership (Chapter 13, Questions 32–34)

36. The consultation paper covered the issue of system ownership, asking about the type of organisation that should ‘own’ or run the DRS and act as scheme administrator, the basis on which the scheme administrator should operate, and the roles that they should carry out.

37. There was no clear consensus on the best model for system ownership. Public ownership was the most popular option selected by just under half of respondents. Respondents thought that this model would (i) allow wider environmental and community benefits to be prioritised, (ii) ensure transparency, accountability and good governance, and (iii) encourage scheme support and ‘ownership’ among members of the public. However, organisations were more likely to favour an industry-operated not-for-profit model. This group argued that industry stakeholders had the necessary knowledge and expertise, as well as access to existing supply chains and the logistics infrastructure needed to run a successful scheme. They also thought that this model would encourage buy-in and compliance from industry stakeholders and ensure a cost-effective scheme which would give the best return to communities. Note that there was little support for a privately-owned, commercially operated scheme.

38. Respondents offered a wide range of suggestions about the potential role and functions of the scheme administrator. These included (i) ensuring that the scheme meets its objectives, (ii) ensuring that it operates in accordance with wider ethical and environmental principles, (iii) working with stakeholders to establish and develop the scheme, (iv) ensuring compliance with legislation and accountability to government and the public, (v) overseeing finances and securing the best value for collected recyclate, and (vi) promoting, monitoring and evaluating the scheme. There was a view among organisations in particular that the administrator should be able to operate largely autonomously within a framework set by government. 

Regulation of a DRS in Scotland (Chapter 14, Questions 35–39)

39. There was general support for an existing body, such as Trading Standards or SEPA to have the responsibility for regulating (i) producers and (ii) return sites. However, individuals were more likely than organisations to prefer this arrangement. Among organisations, charities, food and drink producers and hospitality and restaurant trade bodies were more likely to think the scheme administrator should have this role – both in relation to producers and return sites. Some respondents thought that both an existing body and the scheme administrator should have regulatory functions for different aspects of the scheme.

40. Organisations were more likely than individuals to comment on the possible regulatory powers of the scheme administrator. However, a majority of respondents overall thought that the scheme administrator should have a role in approving products that go on sale to make sure they are compatible with the scheme. Retailers were more likely than other organisations to oppose this type of role for the scheme administrator.

41. There was strong support (both among organisations and individuals) for the Scottish Government to have responsibility for regulating the scheme administrator. However, retailers were less likely than other respondents to support this view.

Discussion of example systems (Chapter 15, Questions 40–48)

42. The consultation paper set out four example deposit return schemes to demonstrate how different scheme components (ownership model, materials accepted, return locations, deposit level, etc) might be combined in different ways. Each example included a qualitative assessment. Respondents were asked (i) which example best matches the ambition of a DRS for Scotland, and (ii) if they agreed with the assessment provided for each example.

43. There was no clear consensus (among organisations or individuals) about which of the example schemes best matched the ambition for a DRS in Scotland. It was common for respondents to say that there was insufficient detail provided to allow an informed response to the question about whether they agreed with the assessment made in relation to each example, and some highlighted additional information (and assumptions) which they thought should be included in a full impact assessment, while others noted the uncertainty surrounding some of the contributory factors and argued that changing (any of) the scheme parameters could have a large impact on the Net Present Value (NPV) assessments (and therefore on the relative merits of the examples and on the viability of the scheme overall).

44. There was widespread agreement among both organisations and individuals about the opportunities that a DRS in Scotland could provide – if it was well run. These related to improving the environment, changing people’s attitudes in relation to recycling (and littering), increased employment, and building the circular economy. Respondents also saw potential benefits for retailers, charities and individuals who collect litter. The economic risks of a DRS identified by respondents were more diverse and included (i) general risks (for example, lack of engagement by the public and the costs of implementation) and (ii) specific risks linked to scheme design (for example, the risks of running a Scotland-only scheme or a scheme that was not fully aligned with Extended Producer Responsibility (EPR) requirements).

Cooperation with UK Government (Chapter 16, Questions 49–52)

45. A majority of both organisations and individuals thought that being part of a UK-wide DRS system would be beneficial. Organisations were almost unanimous in this view. However, there was no clear consensus among respondents about whether having a compatible but separate system across the UK would have the same effect as a single system – although organisations were more likely than individuals to say that it would not.

46. Respondents saw the benefits of UK-wide DRS system in terms of cost efficiency, consistency and fraud prevention. Some individuals (but no organisations) saw risks in being part of a UK-wide (or even a UK-compatible) system. These were in relation to delays in introducing the scheme; possible ‘watering down’ of the system in Scotland; and loss of control over key aspects of the scheme.

Equality impact assessment (Chapter 17, Questions 53–54)

47. There was some concern (amongst organisations in particular) that a DRS would disproportionately affect older people, disabled people (including those with mobility issues), those with learning disabilities, those on low incomes, people living in rural areas, people living in flats, and people without access to private transport. The effects on these groups were thought to be related to accessing return points and managing cashflow if they could not redeem their deposits quickly and easily. Respondents who raised these concerns believed that the EQIA had either not adequately assessed the impacts on these groups or had underestimated them.