Introduction
Deposit Return Scheme (DRS) systems make producers of single-use drinks packaging legally responsible for the collection and preparation for recycling of the containers they put on the market.
Government have confirmed that the regulations for the DRS in England, Wales and Northern Ireland will be passed into law in 2023 and will be fully implemented by 1 October 2025. It is now likely that it will go live at the same time as the Scottish DRS system, which was pushed back to this launch date in June 2023.
Two government consultations have been held on developing the DRS in England, Wales and Northern Ireland, with the latest government response released in January 2023. This article outlines the current information we have about the design of the scheme, and the associated responsibilities for drinks producers and return-point operators.
Please note that you can also watch a recording of a live webinar we ran on 6 February 2023 with Resource Futures on the government response that included how producers and local authorities will be impacted but the DRS, insights into a potential Digital DRS and a live Q&A.
Scheme operation
Scheme articles
Consumers will pay a deposit on every single-use drink container between 50ml and 3L that are made of:
PET plastic, steel or aluminium (in England and Northern Ireland)
PET plastic, glass, steel or aluminium (in Wales and Scotland)
Waste management is a devolved policy area, hence the lack of consistency between the four nations. The deposit amount in England, Wales and Northern Ireland has not been decided and will be finalised by the yet-to-be-established Deposit Management Organisation (DMO), although it will be capped by an upper limit set out in the legislation.
Consumers will be encouraged to return containers with any caps/lids, but this will not be mandatory.
Scheme management
The DRS will be an industry-led scheme. After legislation is laid for the system, the DMO will be established from the private sector and will be responsible for:
Testing how online retailers can comply with their take-back obligations
Establishing the deposit level
Exploring the implications of regulatory misalignment between the four nations
Although the collection target for in-scope containers will legally rest with producers, they will be obliged to contract the DMO to fulfil these obligations on their behalf. This means the DMO will be responsible for achieving collection rates of 70% in Year 1, 80% in Year 2, and 90% in Year 3.
The DMO will be appointed by Summer 2024 through an application process set out in the regulations and will be not-for-profit.
Financial flows
There will be three key financial flows in the DRS:
The producer registration fee will be set by the DMO and will part-fund the management of the scheme. This means producers of in-scope containers are more financially responsible for the packaging they place on the market, implementing the ‘polluter pays principle’. The fees will be set with consideration of business size and material use.
Unredeemed deposits will part-fund the scheme to whatever extent they remain in the system. In short, where containers are not returned by consumers, the value of the deposit will be retained by the DMO. The higher the collection rate, the lower this revenue stream.
The deposit amount, once set by the DMO.
The DMO will make up the remainder of its income through the material it collects and sells to reprocessors and recyclers.
Producer required actions
Producers will be defined in the legislation as brand-owners or manufacturers of drinks in in-scope containers that are then sold in England, Wales or Northern Ireland. This includes importers of in-scope containers sold in England, Wales and Northern Ireland. Retailers will only be defined as producers when selling their own-branded drinks containers, but will have additional obligations described below. Producer obligations will include:
Placing the deposit amount on the container when it is sold.
Registering with and reporting placed on market data to the DMO.
Paying a producer registration fee to the DMO, to fund the start up and ongoing operational costs of the scheme.
The latest consultation response indicates that there will be a mandatory labelling requirement too. This will be two-fold: a label to indicate the container is part of a DRS; and an identification marker – such as a QR or barcode – so it can be recognised at return points. The specifics will be decided by the DMO in the future.
Retailer required actions
Retailers will be defined in the regulations as a seller of in-scope containers directly to a consumer in England, Northern Ireland and Wales. Their requirements under the DRS will include:
Charging consumers the deposit value on all in-scope containers sold, and ensuring this additional cost is clearly displayed.
Operating a return point for the scheme, unless eligible under an exemption criteria that will be set out by the DMO. Retailers will be able to receive returns either manually, or via reverse vending machines.
Retailers operating online will have to offer free take-back of containers.
There will be grounds for which a retailer can refuse returns. These may include where a container is soiled, not empty, or unidentifiable as a DRS scheme article.
Handling fee
A handling fee will be paid to retailers to compensate them for the non-recoverable expenses of hosting return points. This fee will be funded by the DMO revenue streams outlined above.
The following criteria will be considered by the DMO when calculating the fee:
Costs of purchase, lease, maintenance or upkeep of any collection and storage infrastructure. This might include reverse vending machines, or collection vehicles
Space requirements of return points
Additional staffing
Utility costs
Distance seller take-back
Online and distance sellers, particularly large grocery stores, will be obliged to offer a free take-back service for empty containers. This is largely to ensure those with accessibility issues can participate in the DRS. The DMO will be responsible for managing this requirement, but as yet there is limited information as to how this will be implemented.
Hospitality businesses
Where containers are being sold in a closed-loop environment – for instance in pubs or restaurants – those operators will not have to charge the deposit where the drink is consumed on site. However, they will be obliged to arrange collection and return of the containers to the DMO. If these businesses do charge their customers deposits, or sell drinks for off-site consumption, they will be obliged to host return points.
Exemptions
There will be two criteria set out in the legislation by which a retailer can apply for an exemption. These will be:
Where there is a breach of safety. For instance, lack of space.
Close proximity to another return point.
The DMO will be responsible for managing the application process. Exempted retailers may still have obligations, however, which might include displaying signs to the nearest available return point. The legislation will require exemptions to be reviewed every three years.
Interoperability and interaction with other packaging policy
Scotland will implement their DRS separately in 2025. It is possible that England, Wales and Northern Ireland will introduce a variable deposit, not a flat rate like Scotland, again causing potential complications.
As stated in the packaging EPR consultation response in 2022, producers of in-scope DRS containers will continue to meet recycling obligations by purchasing Packaging Waste Recycling Notes (PRNs) and Packaging Waste Export Recycling Notes (PeRNs) until the DRS is live.
However, they will not be obligated to pay local authority waste management fees, once the EPR system commences in 2024. This is excepting producers placing glass bottles onto the English and Northern Irish markets, who will pay local authority costs.
How Ecosurety can support you
We can help ensure that you have the necessary high-quality data captured to enable future reporting requirements. This data can also enable our data specialists to provide you with early DRS cost modelling, based on the information we currently have from government.
We can conduct this work alongside other services such as EPR and plastic packaging tax preparation and modelling, to help you achieve a holistic understanding of your future exposure to costs, and opportunities to mitigate those costs.
Ultimately this can help you to improve the environmental credentials of the packaging that you produce.
Find out more here about our data services that can help you prepare.
Any other questions you may have
If you have a question on DRS which is not captured in this article, our team of experts will be happy to help you. Please contact your account manager directly, call us on 0333 4330 370 or send an email to info@ecosurety.com.
External resources
Government response to the DRS for England, Wales and Northern Ireland consultation
Louisa Goodfellow
Policy Manager
As Policy Manager Louisa provides key support to our team, including preparing reports on environmental policy issues and maintaining awareness of new developments.
