FACTSHEET

Packaging & Deposits

Introduction

Charging a refundable deposit on a pack on top of its price is intended to encourage the holder to return it when empty in order to redeem the deposit. This is why companies charge businesses a deposit on reusable delivery crates and pallets. Some regulators have suggested that deposits should be applied to some consumer packaging, usually drinks containers. However, deposits:

  • do not help achieve higher recycling rates because they just divert highly recyclable containers from multi-material kerbside and bring collection schemes to a parallel system. As a result kerbside and bring schemes are then more expensive to operate;
  • operating alongside existing recycling schemes, double the negative environmental impact because it increases the amount of transport needed for sending materials for reprocessing;
  • do not cure the anti-social habit of littering and perversely may increase litter;
  • are expensive to operate and increase costs to the consumer;
  • on non-refillable containers, do not protect refillable systems;
  • can only be applied to a tiny proportion of household waste.

GlassBottles

Deposits in other Countries

There are three reasons why a deposit has been applied by law to drinks containers in some regions or countries. They are intended to: -

  • encourage the return of containers for recycling.
  • be an anti-litter measure to encourage consumers (or someone else) to return a container to collect the deposit, rather than dropping it in the street
  • encourage the use of refillable containers in the mistaken belief that refillable systems are environmentally preferable.

Deposits and the UK

1. Deposits will not help the UK achieve higher recycling rates

The UK has established recycling systems to handle all packaging waste. In 2008 nearly 62% of all packaging in the UK was recycled.

It is far from certain that deposits would generate high return rates if they were introduced in the UK. Even in the 1970s, the 12p deposit on refillable bottles at best achieved only a 33% return rate.

The Body Shop offered its customers a 10% price reduction if they returned containers to the shop for refilling. It discontinued this in 2002 because only 2% of its customers used the service.

Woman shopping in the sixties

There is a nostalgic image of children earning extra pocket money by returning empty bottles for the deposit. A deposit – even at a high rate of 20p - would represent a small proportion of the average child’s pocket money today. And the best facilities for returning empty containers would be at large out-of-town supermarkets with car parks, which are inaccessible to unaccompanied children.

It is not feasible to expect people to queue up to reclaim a deposit on every item of recyclable packaging used in the home.

Deposits undermine the economics of collecting other materials from the household, since without the critical mass offered by valuable drinks containers, the cost per tonne collected is much higher.

Imposing deposit systems on top of existing recycling schemes increases the number of lorries on the roads, with their associated pollution. Deposit containers have to be transported from special collection centres (usually retailers) to recycling companies, when there are already lorries transporting other recyclables from council collection centres to sorting centres and then to recycling companies.

The way to increase recycling rates is to encourage more people to support their local council’s recycling schemes.

2. Deposits do not cure littering

The drinks containers likely to be subject to a deposit represent only a very small proportion of total litter – less than 0.4% in England in 2008. Source: ENCAMS report for INCPEN Litter Composition Survey of England Aug-Oct 2008.

In the UK all packaging is only 1.3% of littered items so putting a deposit on a few items of packaging will make little difference.

A deposit will not fully prevent drinks containers being littered and will do absolutely nothing to prevent the littering of other items. Indeed, putting a reward on certain items may send the message that it’s OK to litter everything else. As already noted for recycling, it is impossible to impose a deposit on every article that might be littered.

Until recently, the Dutch government supported deposits on plastics drinks bottles as a means to prevent litter but it has now decided that a holistic approach for all litter is necessary. It has abandoned its plans to impose deposits on non-refillable containers and is instead working on a comprehensive anti-litter action plan.

The solution to littering is public education, law enforcement and regular cleaning up.

3. Deposit systems are expensive

A group advising the UK government concluded recently that a deposit system could cost between £1billion and £7billion to establish, depending on how the system was set up. The drinks containers handled by such a system are roughly 10% of all packaging waste.

Pound sign

In comparison, industry spent £50million in 2007 to recycle 62% of all packaging waste, including a high percentage of drinks containers.

Even in Germany, where the new deposit system was introduced alongside an existing refill system, the initial investment was 726 million euros, mostly for the purchase of reverse vending machines to refund deposits automatically, and annual operating costs are nearly 800 million euros. DPG, the deposit system operator, has admitted that the cost per container is three times as much as household-based collection.

4. Deposits increase costs to consumers

Deposit systems cost more to run than industry can make from them through the retention of unclaimed deposits and the value of the reclaimed material.

Deposit systems are more expensive than collecting materials through kerbside collection or bottle banks. By reducing economies of scale and diverting easy to recycle materials, they make kerbside and bring collections more expensive.

Handling costs of the German deposit system are 8p per container. If the UK could do it for 2p per container this would cost £280 million for soft drinks alone. These additional operating costs will be borne partly by drinks producers and partly by supermarkets. They will be passed on to consumers in retail prices of both drinks and other products.

And in addition to those costs, consumers have to pay the deposit.

USA

Mandatory deposits on non-refillable containers operate in 11 US states out of 50. Except for Hawaii, which introduced deposits in 2002, all the laws were introduced in the late 1970s or early 1980s, when refillable drinks container systems still operated.

The aim of the laws was mainly to reduce litter but also to increase recycling and to protect the refillable glass bottle.

Map of USA

The impact of deposits on litter was not as significant as had been hoped. In 1978/79 Dan Syrek of the Institute of Applied Research conducted a series of "before and after” studies in states that introduced deposits and concluded that while drinks container litter declined, the changes in total litter were not statistically significant. This led other states that had been considering deposits to abandon the idea.

Work by Syrek in 2003 shows deposits are by far the most expensive way of eliminating an item of litter.

Perversely, a deposit can contribute to the litter problem. There have been reports of homeless people emptying litter bins to obtain deposit containers, leaving other items strewn on the street.

The deposit did not protect refillables. Retailers found it easier to toss cans and plastic bottles in a sack for recycling rather than place glass bottles carefully in stacked crates, which took up much more space. The deposit therefore accelerated the disappearance of refillable glass bottles from the market.

SCANDINAVIA

Map of Scandinavia

Sweden and the other Nordic countries introduced a mandatory deposit system when non-refillable drinks containers first came on the market and refill systems still operated.

As a result, consumers were still accustomed to returning empties in-store, and the infrastructure for deposit-refund was already in place. The deposit has not protected refillables. In Sweden, use of refillables for beer, soft drinks and water fell from 31% of the market in 2005 to 14% in 2008.

The Swedish deposit system is often held up as an effective model. However there are key factors that are not replicated elsewhere, and particularly not in the UK.

Sweden has a low population density, and the structure of production and distribution is unique.

Soft drinks and waters are produced by the brewers, the grocery retail sector is highly concentrated with few independent grocery stores, and there is a state monopoly on the sale of alcoholic drinks. Supply chains are therefore comparatively simple and there is no need to transfer the deposit, with all its associated administration costs, through a number of sectors.

In any case, a number of European countries with no deposit have achieved higher recycling rates for metal and plastics packaging than the Nordic deposit countries.