DEFRA report rejects the case for bottle deposits

Deposits on cans and bottles should not be introduced to encourage recycling, according to a report for the Environment Department (DEFRA).

The report, by consultants ERM, was commissioned by DEFRA to inform its new packaging strategy, due to be published in February.

It follows pressure from the Campaign to Protect Rural England, which says a deposit of at least five pence on all single-use drinks cans and bottles would increase recycling and reduce litter. Such schemes have long operated in Germany, Denmark, Sweden and elsewhere.

There are no accurate figures on the level of drinks packaging recycling in the UK. In 2007, some 35% of plastic bottles were collected, according to WRAP. It expects the collection rate to plateau at 71% by 2010. Alupro, the aluminium industry’s trade body, says 98% of English households have kerbside collections of aluminium cans, but capture rates can be anywhere between 30% and 70%.

Collection rates are much higher in countries where deposit schemes operate, according to ERM. For example, in Denmark 87% of single-use drinks containers were returned in 2007. Denmark has a 1Kr (12p) deposit on all aluminium cans and plastic and glass bottles below one litre capacity. Higher deposits apply to larger containers.

ERM’s report says a deposit scheme would not reduce littering, as people who currently drop rubbish on the street would not feel a deposit was sufficient incentive to stop. However, the actual amount of litter left on the streets would fall, as other people pick up material to make money.

However, it ultimately rejects a scheme as it would be costly and complicated to introduce. "It is not disputed that a deposit scheme would increase recycling, but alternative schemes could achieve the same or better results at a lower cost."

On the continent, deposit schemes involve packers and fillers charging the deposit to retailers. The cost is passed on to consumers, who receive a refund when they return the packaging to stores, largely through reverse vending machines (RVM). The retailer then claims the deposit back from a central body.

Producers and importers of drinks have to register and label their products so tills and RVMs can recognise their barcodes.

ERM quotes Deutsche Pfandsystem GmbH, the operator of Germany’s deposit scheme, which says its scheme costs "around three times as much per container as household collections". The average price of an RVM in Germany is £11,000, it adds. The report also quotes Tesco’s experience of operating RVMs over the last three years. It will have 85 installed by April 2009, giving customers club card points for any material recycled. It is reported that these do not pay their way, ERM says. The reason Tesco installs them "is the good publicity and staff satisfaction" they deliver.

The report also mentions that the Scottish Government is considering a deposit scheme (ENDS Report 403, pp 43-44 ). An impact assessment accompanying its recent Climate Change (Scotland) Act said a scheme would cost £17 million a year. However, it did not contain any details of whether it would raise recycling rates.

The Act gives ministers powers to introduce secondary legislation on deposit schemes (ENDS Report 407, pp 51-52 ).

ERM’s reasoning is not entirely cost-based. It also discusses the likely impact deposit schemes would have on kerbside collections. "A significant amount of the deposited packaging would be cannabalised from existing collection schemes," it says. This could have a knock-on effect on the collection of other materials. Any drop in the levels of recyclate collected would make it harder for councils to meet their recycling targets and would also lower the revenue received from selling recyclable material.

Instead of a deposit scheme, financial support should be provided to councils to expand kerbside collections, the report says. Altering the UK packaging regulations would be one way to do this.

Under these, any business with a turnover above £2 million and handling more than 50 tonnes of packaging a year must recover and recycle a specific tonnage of packaging. This is done by buying evidence of packaging recycling from reprocessors - so-called packaging recovery notes (PRNs) and packaging export recovery notes (PERNs). A portion of the revenue from selling PRNs is supposed to be invested in improving recycling infrastructure. However, councils have long complained this is not happening (ENDS Report 372, pp 12-13 ). Industry argues the money is used to prop up recyclate prices.

Current packaging recycling targets are based on material types. ERM suggests changing these to targets for primary, secondary and tertiary packaging. Primary packaging is that surrounding products and secondary is display packaging used in stores. Tertiary packaging, such as cardboard boxes, is used to transport goods.

If high targets were set for primary packaging, councils should receive higher prices for recyclate collected, ERM says. This would allow investment in expanded collections.

It also considers other suggestions, most notably changing the targets so they are based on carbon. However, it says "the science underpinning this metric is very much in development".

The Packaging Recycling Advisory Group (PRAG) - a cross-industry body including supermarkets and the Local Government Association - is already examining how the PRN system could be reformed to improve collections (ENDS Report 401, pp 17-18 ).

PRAG has not considered deposit schemes because its members deemed them too complicated to introduce, according to Alice Roberts, head of national projects at the Waste Infrastructure Network and chair of one of PRAG’s working groups.