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ICIS: Scotland’s challenges raise questions around Deposit Return Schemes

London, United Kingdom

The challenges faced by Scotland’s upcoming Deposit Return Scheme (DRS) continue to grow, while recent industry data shows high collection rates can be achieved without a DRS in place, potentially raising questions whether DRS is the only route to better collection.

  • Scottish DRS facing court hearing in March
  • Concerns raised around cost, loss of profit, abuse by criminals
  • Industry data shows high collection rates possible without DRS

For years, there has been a consensus that DRS is the only effective way of raising a country’s collection rate for items such as polyethylene terephthalate (PET) bottles, which in turn will lead to better recycling rates.

Analysis by ICIS shows that countries with a DRS in place generally have higher collection rates to those countries that do not. The highest PET bottle collection rates have been found in those operating DRS, with the top six highest rates ranging from 80% to 97%.

Scotland will be the first UK country to introduce a DRS on 16 August 2023, after being delayed due to the COVID-19 pandemic. The remaining UK countries – England, Wales and Northern Ireland – have plans to launch a DRS in 2024, though no date has been confirmed.

But the system in Scotland has faced multiple delays and challenges, with the latest being a hearing at the Scottish Court of Session set for 30 March.

In December, a successful petition from Abdul Majid, former president of the Scottish Grocers Federation, was granted permission to proceed, with the petition challenging the legality of retailer handling fees imposed by the scheme administrator, Circularity Scotland.

This follows concerns about the loss of earnings councils may face due to the change in collection, plus the possibility the DRS could enable large-scale fraud by organised crime gangs.

DRS not sole solution

However, recent data from RECOUP shows that the UK’s household collection rate for PET has reached 75% without a DRS.

Helen McGeough, Senior Analyst for Plastic Recycling at ICIS said: “There are examples across Europe of countries that have achieved higher collection rates through existing non-DRS systems, and as seen in the case of Belgium, a clear strategy to achieve the mandated collection rate without a DRS system.”

“As long as the outcome is attaining collection rate targets, the choice of method should remain open.”

“Without engagement by all parties in the supply chain, there could be challenges to the system succeeding. It is instrumental to have all parties aligned in the design and implementation of such systems. Unsupported, these are costly mistakes to make but also damaging to the reputation of recycling with consumers,” McGeough added.

Scotland's challenges

In recent months, there have been other questions raised about the DRS before its implementation next year.

Falkirk Council in Scotland said it will lose £234,000 once it stops kerbside collection of glass, plastic and aluminium, which will instead go into the DRS.

According to industry press, the Council had commissioned an independent forecast report via Zero Waste Scotland to understand the impact of the DRS.

The report highlighted that, while savings of £54,000 were available due to a reduction in household recyclate being produced, the council will lose £234,000 because of the loss of revenue generated by the sale of glass, cans and plastic.

“The issues highlighted by the Scottish situation are common themes raised against DRS. The conflict with existing systems, especially kerbside collection that generate much needed revenues for government funded systems, are valid. The loss of value is potentially significant to those systems which then use those revenues to support the collection of other plastics wastes – an important role in circular plastics overall,” McGeough said.

The concerns do not stop there. In December, Police Scotland’s Specialist Crime Division raised concerns that organised crime gangs may use the system to commit large-scale fraud, though details of what form this crime may take were not given.

Detective Constable Jamie Sinclair said analysis so far suggests that there is a potential for the DRS to be targeted by organised crime gangs intent on committing fraud, and that police will continue to work with partners to be ready for August.

There is also clarity needed on the application of VAT on the 20p deposit placed on all bottles. In a letter to the Scottish Parliament Committee on 15 December 2022, Lorna Slater, Minister for Green Skills, Circular Economy and Biodiversity, stated the UK Government’s HM Treasury is still to give clarity on the application of VAT on deposits by July, but Slater continues to press the Treasury for an answer.

Despite the apparent challenges faced by the Scottish system, the Republic of Ireland recently announced plans to push ahead with its DRS for PET bottles and aluminium and steel cans. The scheme’s planned go-live date is February 2024 and will be administered by Deposit Return Scheme Ireland CLG, trading as Re-turn.

The Irish scheme will add a charge of 15 cents (c) to containers of 500ml or less, and 25c to containers over 500ml.

Author: Matt Tudball

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