Key elements of high-performing deposit return systems: #7 - Extended producer responsibility financing

In this System Spotlight article series, TOMRA provides a deep dive into the best practices of high-performing container deposit return schemes.
 
 

Ocean plastic pollution, waste management costs and mandated collection targets are causing more and more governments to make sustainable resource management a priority. One policy that is actively being discussed is the concept of giving waste a value, to incentivize the public to collect it for recycling. This is a particularly popular approach for the items that are most commonly littered and found in oceans, such as beverage containers. Container deposit return systems (or “bottle bills”) add a deposit on the container on top of the price for the beverage, which is repaid when the consumer returns it to be recycled.Since 2017 alone, at least 23 states or countries have committed to update existing deposit systems or develop new systems. In this ongoing article series and its latest white paper, "Rewarding Recycling: Learnings From the World's Highest-Performing Deposit Return Systems", TOMRA explores the best practices that separate the leaders in deposit return systems from the laggards.

Key element #7: Extended producer responsibility financing

 

Extended Producer Responsibility (EPR) is defined as an “environmental protection strategy to reach an environmental objective of a decreased total environmental impact from a product, by making the manufacturer of the product responsible for the entire life-cycle of the product and especially for the take-back, recycling and final disposal of the product.”1 

Producers taking responsibility for the packaging waste they sell is a key element of any high-performing deposit return system (DRS). Beverage producers manage the take-back of packaging and cover the costs of the system, while also reinvesting the unredeemed deposits and the sale of the returned container materials (or “commodity revenue”) within the deposit system. If the system’s costs exceed these revenues, the difference is covered by producers. When producers manage the deposit system through a centralized organization, they can agree to pay this net cost in the form of an “EPR fee”. (This is not to be confused with a “handling fee”, which is a payment from the Central System Administrator to redemption providers, such as retailers, for container redemption and storage services.) These EPR fees can be set based on the full cost of handling and recycling the material type that the producer chooses to place on the market (e.g. plastic, glass, aluminum, and/or liquid paperboard). This is known as an “eco-modulated” fee. It ensures no producer is cross-subsidizing for another and has the added incentive for producers to use packaging that is designed for recyclability (see Figure 1), in both cases ensuring they have direct responsibility for the packaging they produce. 

System spotlight: 

Norway

Norway’s Central System Administrator, Infinitum, sets out EPR fees for each producer based on the recycling cost and material value of each container material. It even differentiates between clear and colored PET, based on the ease of recyclability. For example, aluminum cans carry no additional EPR cost for producers in Norway because their inherent commodity value plus the unredeemed deposits exceed the cost to recover and process the cans (see -0.08 NOK in Figure 1).2

Saskatchewan, Canada

Alternatives to producer responsibility financing include models that force consumers to pay for part of the system. Consumers pay the container deposit when purchasing a product, yet only recoup a portion of their deposit upon redemption. Half-back models only exist in regions with relatively small populations (1.5 million and less). For half-back models in regions with more than one million residents, the highest return rate is Saskatchewan at 84%. This contrasts with Germany, which repays 100% of the deposit and achieves a 98% return rate.3

4

 

A producer’s responsibility to reduce environmental impacts 

EPR is a strategy that reduces the environmental impact from a product, by making the manufacturer of the product responsible for the entire life-cycle of that product. This concept is key to a DRS, as the costs of running the system are covered by the beverage companies and place emphasis on producers to ensure that materials are handled sustainably post-consumption. 


Sources
1 Thomas Lindhqvist, 1990
2 “Global Deposit Book 2020,” Reloop. 2020. 
3 “Global Deposit Book 2020,” Reloop. 2020.
4 “Cost Calculator,” Infinitum.no. Accessed on November 12, 2020 via: https://infinitum.no/kostnadskalkulator