Deposit Return Schemes are usually presented as simple, common-sense environmental policies. Put a deposit on a bottle or can, people return it, recycling improved, job done; and in fairness, in some countries that’s exactly what happens - return rates climb, litter falls, hoorah.
When a scheme fails, stalls or collapses before it even starts, the obvious question is why and the answer, more often than not, has nothing to do with recycling but has everything to do with politics, logistics and money.
On paper, DRS looks like a waste policy but it’s something very different. It’s a national cash-handling system supporting a retail logistics network employing a data-tracking operation operating around a fraud-sensitive financial model and a recycling system on top of all that.
Once deposits are attached to containers, you’re no longer just moving waste, you’re moving money in the shape of cans and bottles and that changes everything.
Failures
The most obvious example is Scotland. Scotland attempted to launch its own DRS ahead of the rest of the UK. The scheme included glass, had different rules and was set on a different timeline. The result was regulatory conflict with the UK internal market causing delays and industry resistance leading to the eventual collapse before launch with over £100 million in sunk costs.
The environmental idea was sound but the political framework wasn’t aligned. A DRS cannot work properly in a fragmented market because containers can and do cross borders in the form of supply and retail chains. So, if the scheme doesn’t, problems start immediately.
A single DRS region may involve:
In several countries, early problems have included reverse vending machines full or broken, retailers overwhelmed, poor rural access and site closures after launch. The schemes didn’t fail because people refused to return containers, they struggled because the logistics weren’t ready for the volume.
In some regions of Australia, the deposit has sat at 10 cents for years, the result being that return rates stuck around 60–65% and billions of containers still going to landfill. When the deposit becomes trivial, behaviour doesn’t change; the scheme exists but it underperforms. A deposit system only works if the deposit actually matters.
Many schemes assume that retailers will simply absorb the operational burden but in reality storage space is limited, staff time is limited and hygiene matters; having loads of empty bottles and cans hanging around is simply not permissible.
In some areas, small return sites have closed after launch because volumes were too high which disrupted the business and systems relied too heavily on manual returns. Retailers are not recycling centres and if the system isn’t designed around that fact, friction builds quickly.
Fraud
As soon as a deposit is attached to a container, it becomes a financial instrument and financial instruments attract creative thinking.
Examples seen in various schemes include:
Modern schemes rely on:
DRS is expensive to build. For a single region, a realistic start-up might involve:
When those costs hit producers, retailers and hospitality resistance grows and, in several countries, that resistance has delayed schemes often leading to them being watered down or stopped entirely
Across different countries, the same themes keep appearing.
DRS fails when:
The UK scheme will almost certainly work in the long run. Most do, but its success won’t depend on slogans, targets or policy documents.
It will depend on:
It’s no secret that two of the UK’s national operators will undoubtedly bid for the collection of DRS in scope containers. I’ll throw in another three and see whether I was right or wrong when they’re announced: -
On paper, DRS looks like a waste policy but it’s something very different. It’s a national cash-handling system supporting a retail logistics network employing a data-tracking operation operating around a fraud-sensitive financial model and a recycling system on top of all that.
Once deposits are attached to containers, you’re no longer just moving waste, you’re moving money in the shape of cans and bottles and that changes everything.
Failures
The most obvious example is Scotland. Scotland attempted to launch its own DRS ahead of the rest of the UK. The scheme included glass, had different rules and was set on a different timeline. The result was regulatory conflict with the UK internal market causing delays and industry resistance leading to the eventual collapse before launch with over £100 million in sunk costs.
The environmental idea was sound but the political framework wasn’t aligned. A DRS cannot work properly in a fragmented market because containers can and do cross borders in the form of supply and retail chains. So, if the scheme doesn’t, problems start immediately.
A single DRS region may involve:
- Millions of containers per day
- Thousands of retail return points
- Dozens of vehicles
- Hundreds of staff
- Multiple depots
- Constant collections
In several countries, early problems have included reverse vending machines full or broken, retailers overwhelmed, poor rural access and site closures after launch. The schemes didn’t fail because people refused to return containers, they struggled because the logistics weren’t ready for the volume.
In some regions of Australia, the deposit has sat at 10 cents for years, the result being that return rates stuck around 60–65% and billions of containers still going to landfill. When the deposit becomes trivial, behaviour doesn’t change; the scheme exists but it underperforms. A deposit system only works if the deposit actually matters.
Many schemes assume that retailers will simply absorb the operational burden but in reality storage space is limited, staff time is limited and hygiene matters; having loads of empty bottles and cans hanging around is simply not permissible.
In some areas, small return sites have closed after launch because volumes were too high which disrupted the business and systems relied too heavily on manual returns. Retailers are not recycling centres and if the system isn’t designed around that fact, friction builds quickly.
Fraud
As soon as a deposit is attached to a container, it becomes a financial instrument and financial instruments attract creative thinking.
Examples seen in various schemes include:
- Cross-border container smuggling
- Barcode cloning
- Bulk industrial returns
- People retrieving containers from bins to claim deposits
- A MRF extracts cans and bottles from mixed recycling.
- Those containers are sold on.
- They are fed into return machines.
- Deposits are claimed.
Modern schemes rely on:
- Barcode validation
- Return-point monitoring
- Sales-versus-returns checks
- Audits and anomaly detection
DRS is expensive to build. For a single region, a realistic start-up might involve:
- 40 - 80 collection vehicles
- 10 - 25 bulk trailers
- Multiple depots
- Hundreds of staff
- IT integration
- Financial systems
When those costs hit producers, retailers and hospitality resistance grows and, in several countries, that resistance has delayed schemes often leading to them being watered down or stopped entirely
Across different countries, the same themes keep appearing.
DRS fails when:
- Politics are fragmented
- Logistics are underestimated
- Deposits are too low
- Retailers are overloaded
- Fraud controls are weak
- Costs shock the system
The UK scheme will almost certainly work in the long run. Most do, but its success won’t depend on slogans, targets or policy documents.
It will depend on:
- Depots
- Drivers
- Vehicles
- Retail integration
- Fraud control
- And financial discipline
It’s no secret that two of the UK’s national operators will undoubtedly bid for the collection of DRS in scope containers. I’ll throw in another three and see whether I was right or wrong when they’re announced: -
- Biffa
- Veolia
- Suez
- FCC
- Urbaser
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