Cost and complexity could pull the plug on deposit scheme - Chala McKenna

Scotland’s deposit return scheme (DRS), due to be launched in July 2022, could be further delayed amid concerns that global events have impaired the ability of the drinks industry and retailers to suitably prepare for its implementation.
Chala McKenna, Senior Solicitor, Davidson Chalmers Stewart LLPChala McKenna, Senior Solicitor, Davidson Chalmers Stewart LLP
Chala McKenna, Senior Solicitor, Davidson Chalmers Stewart LLP

When it does go live, consumers in Scotland will pay a 20p deposit on each drink purchased in a single-use container which they will recoup when returning the empty over the counter or via a reverse vending machine. The scheme will include: Polyethylene Terephthalate plastic bottles, commonly used for fizzy drinks and water; steel and aluminium cans; and glass bottles, ranging in size from 50ml to three litres.

DRS administrators will handle day-to-day management of the programme, collecting returned containers and serving as the contact for retailers and hospitality by paying the handling fee and reimbursing the return points for deposits issued.

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UK drinks producers and importers must register with SEPA and will be bound by a number of legal obligations regarding container collection and management. Retailers, including online vendors, selling takeaway drinks will be required to impose the 20p deposit and be required to operate a return point at each of their premises for empty containers. Meanwhile bars and restaurants, where bottled drinks are consumed on premises, will pay the 20p per unit deposit to their suppliers and claim it back when the empty containers are collected.

Scotland was to become the first part of the UK to introduce a DRS, with England and Wales also planning to implement their own initiatives. However, the Scottish Government has now commissioned an independent review assessing the impact of the pandemic and other issues including Brexit which could lead to a further delay.

This would be welcomed by most businesses as key operational and legislative issues around the DRS remain. Scottish SMEs, including craft brewers and drinks retailers, have already expressed concerns that the cost and complexity of the scheme could make it unviable to sell their produce. Without a unified, UK-wide approach, they could struggle with additional costs and labelling requirements being initially imposed only in Scotland.

Incorporating glass, one of the three main materials used to make single use drinks containers, into the scheme is also proving problematic. Glass bottles could prove costly, especially for smaller businesses, as they are bulky and heavy to manage. Along with safety concerns being raised about breakages, the Scottish Retail Consortium has estimated the inclusion of glass in the DRS will add £50m per year to businesses’ operational costs. Much of the glass currently collected in Scotland via recycling is not suitable for closed loop recycling due to the mixing of colours and crushing. Its inclusion within the scheme will help address this problem, ensuring more glass can be reused.

Meanwhile the Aluminium Packaging Recycling Organisation has claimed the 20p deposit applied on all sizes of containers will disproportionately impact sales of smaller volume containers. The group’s research suggests two thirds of consumers would opt for larger plastic bottles which could cost the industry around £82m.

Individual companies will meet the initial costs of the scheme before being later reimbursed by the DRS administrator, which will create further commercial challenges. A required investment in expensive equipment or further resources to manually administer returns along with a lack of sufficient storage space for empties are other common concerns being raised by retailers.

This could be partly addressed by businesses working together to utilise the proximity exemption which is available from Zero Waste Scotland. This enables retailers lacking sufficient storage space to use an alternative container collection point within 400 metres of their premises to accept returns on their behalf, provided it operates similar opening hours.

A successful DRS in Scotland offers a positive post-pandemic legacy. It can significantly reduce litter on our streets and in our parks, improving our environment and supporting climate change targets. While the Scottish Government’s initial feedback and evidence from consultation has shaped the scheme’s design, if its roll-out is to be further delayed let’s hope the lingering concerns of the drinks industry and retailers can be further mitigated.

Chala McKenna, Senior Solicitor, Davidson Chalmers Stewart LLP