Security and deposit systems for packaging

The strict recycling targets for the coming years will not be achieved if a common security and deposit system for various packaging (not only PET bottles) is not introduced. We must develop a model of this system as soon as possible, considering the Polish conditions of the municipal economy, including population density, availability of retail outlets, and recycling capacity. Good practices that have worked well in other countries should be considered, as well.

Diagnosis::

In the coming years, we will face several in-depth reforms that will revolutionize the municipal economy and the recycling market. The goal is simple: bring it closer to the circular economy and deal with the excess of waste, especially plastic packaging, which is growing every year at an exponential rate. It is estimated that Poles throw away more than 3 million tonnes of plastics and aluminium each year, in which everyday products are packed. More than half of which is disposable beverage packaging (including PET bottles and aluminium cans).

Today, they are collected together with other waste under the current municipal system and divided into five fractions. Local governments are responsible for collecting these fractions and indirectly for their subsequent processing. Unfortunately, such results are not enough. In 2018, the expected level of recycling achieved in Poland was 30%. However, approximately 300 municipalities did not manage to achieve this rate. Many experts emphasize that even 30% is an exaggeration, because real recycling (not the one declared on paper) fluctuates around a dozen or so percent. Despite the obligatory segregation, the vast majority (63-73%) of waste is still sent to the sorting plant as mixed waste, from which it is impossible to effectively sort more than a dozen or so percent of valuable raw materials suitable for processing.

This is unfavourable for the entire market: not only municipalities that have to meet the recycling level, but also recyclers and producers from the food industry. The latter of which will be hit by the requirements of the SUP (Single-Use Plastics) directive the most. It should be implemented into national regulations as early as July. Contrary to popular belief, it introduces not only a ban on the sale of plastic straws and other disposable products, but above all it will oblige those introducing products in packaging to be more involved than today in collecting beverage bottles (90% by 2030) and will impose an obligation to use 30% recyclable materials in each newly made PET bottle.

Experts agree that the current system will not allow us to meet these requirements. The market lacks pure and domestic raw material that would be suitable for contact with food and could be used on the scale of the expectations set out in the directive. In Poland, over 240 thousand tonnes of PET bottles are marketed, only 50% of which are recycled. At the current collection rates for plastic drinks packaging, if the directive were to be applied today, Poland would have to pay a fine of approximately EUR 110 million only for plastic bottles.

EU regulations, including the amended frame directive on waste and the directive on the reduction of the environmental impact of certain plastic products impose specific obligations on Poland:

in 2020 - 50%, and in 2035 - 65% waste should be recycled,
by 2025, we must collect a minimum of 77% PET bottles, and by 2030 as much as 90%,
each PET bottle must contain 25% recycled materials by 2025, and by 2030 - 30%.
By 2030, all plastic packaging is to be recyclable or reusable.

Packaging waste recycling targets by 2025/2030:

plastics 50%/55%
aluminium 50%/60%
steel 70%/80%
glass 70%/75%
paper and cardboard 75%/85%

Solutions

The security and deposit system for packaging is a solution that works well in other countries and has allowed our neighbours to meet EU requirements for the next decade. The EU Directive on single-use products explicitly recommends deposit systems as a method to meet the challenge of environmental pollution with plastics. The assumption is simple: a security is added to the price of certain products (e.g., juices, drinks, milk), which can later be refunded on returning the empty packaging to the vending machine at the store or directly to the seller.

The security and deposit systems are often considered as one and the same, although they are in fact two complementary solutions that can be implemented simultaneously. The security system - unlike the deposit system - is based on reusable packaging. An example involves returnable glass bottles used in the brewing industry: they are collected and then delivered back to the manufacturer who prepares them for reuse by washing and refilling. (According to 2016 data included in Deloitte's 2017 analysis, up to “91-94% of bottles placed on the market are refilled”). In this case, the purpose of the security system is not to provide a packaging to be recycled, but to reuse the packaging. The situation is different in the deposit system. Its goal is recycling, i.e., processing the packaging into recyclate used in the production of completely new packaging.

This distinction does not actually matter much to the consumer. In both cases, he/she does not have to worry about the further fate of the disposed packaging, but only takes care to throw it into the appropriate machine or return it directly to the store. The deposit systems are used much more often. In Europe, more than 133 million people use them, which is on average one in four people living in the EU. This is just over a quarter of the population. They function in ten European countries: Croatia, Denmark, Estonia, Finland, Germany, the Netherlands, Norway, Sweden, Iceland, and Lithuania. It is possible that other countries will soon join this group: Austria, Belgium, France, Latvia, and Great Britain.

The Polish government was also planning to introduce the system. Prime Minister Mateusz Morawiecki spoke about it in his exposé. In addition, the representatives of the Ministry of Climate and Environment express their supporter to this system. However, no detailed proposals on how these solutions could be implemented were presented.

Good practices and examples

The main goals of implementing the security/deposit system are: promoting environmentally friendly packaging, improving recycling, ensuring access to high-quality and locally produced secondary raw materials, and reducing the amount of waste going to landfills. The point is that the streams of returned packaging should be homogeneous, without any contamination from other fractions (e.g., food scraps), thanks to which they would be a valuable raw material for which relatively high prices can be obtained.

The experiences of other countries that have showed that these goals are achievable as long as the key assumptions are kept. First of all: the system must be universal, easy to use and readable. The consumer must be aware of which goods are covered by the security system and know where and how he/she can return unnecessary packaging to recover the deposit. Such an exchange must not be burdensome or involve practical and logistical difficulties for the residents. In practice, this means that the system should guarantee the possibility of returning the packaging and recovering the deposit in as many stores as possible, not only in the store where the purchase was made.

There are many forms to show that such a system works. Despite the differences regarding, as well as other things, trade structure and population density (for example sparsely populated Finland and densely populated Germany), many security and deposit systems are organized in a similar way. An operator is required for the efficient management of the system. In Norway, Sweden, Finland, Iceland, Lithuania, Estonia, the Netherlands, Denmark (as well as in the planned systems in Slovakia and Scotland), it is a newly established organization associating producer groups and trade organizations, which reports to the institution specified by law, e.g., The Environmental Protection Agency or the Ministry of the Environment. From the Polish perspective, the best-performing systems should be analysed, and proven solutions implemented.

Norway

Norway can be one of the best examples. The local collection system for plastic bottles and cans has been operating since 1999. It covers plastic and metal beverage packaging. One company, Infinitum, was entrusted with the operation of the system throughout the country. At the same time, apart from recycling machines (approx. 3,700 items, which fall to approx. 15,000 businesses, i.e., shops, gas stations, kiosks), manual collection is also carried out at all points of sale. Packagings are counted by hand and kept in warehouses. Although the vast majority (94%) of packaging goes to recycling machines, the alternative collection method makes the system universal and easily accessible to everyone. Effects? Today, Norway boasts a recycling rate of over 92% of plastic bottles and limiting waste disposal to 4%. In addition, the Norwegian government is encouraging producers to reuse plastic bottles and cans. This is achieved by appropriately calibrated ecological tax rates, which depend on the recycling level achieved by the company. The higher the level, the lower the fee. If it reaches 95%, the recycling tax rate is reduced to zero.

Finland

The Finnish security system, managed by one operator - the Palpa company, is also centralized. It is a private non-profit consortium of beverage sellers (50%) and producers and importers (50%), whose activities are supervised by the Ministry of the Environment. The system covers disposable packaging for water, juices, ciders, soft drinks, long drinks (alcoholic cocktails), energy drinks, beer, wine, and strong alcohols. Consumers can return them in 4.6 thousand points, most of which have machines (there are 4,000 of them). They are the property of the seller. However, it is the system administrator (Palpa) that determines the conditions to be met. An alternative, as in Norway, involves the possibility of manual collection in the store. Over 9.5 thousand locations decided to apply such a solution in the so-called HoReCa industry (hotels, restaurants, catering). These solutions allowed Finland to have up to a 93% level of bottle and can returns. The statistical Finn returns 234 soda cans, 89 plastic and 25 glass bottles annually. What makes such a good result? Three factors are crucial here: consumer habits (habituation to returning packaging and environmental awareness), convenience (extensive system, efficient machines, the location of collection points), and security (a wide range of products covered by a security and an appropriate financial level).

Germany

The security system for non-returnable packaging, mainly cans and plastic bottles, has been in force in Germany since 2003. The deposit of 25 Euro Cents covers glass, aluminium, and PET beverage containers from 0.1 litre to 3 litres. It is lower in reusable packaging: with a glass bottle of beer, it is 8 Euro Cents. The deposit does not apply to juices, milk and dairy products, wine, champagne, or strong alcohols. Producers marketing the goods covered by the security pay premiums corresponding to the amount of marketed products that finance the entire system. Disposable bottles can be returned at any store, as long as it has the drinks of the returned brand in its range of products. The seller is required to accept the bottles regardless of where the product was purchased. When returning packages to the machine (there are approx. 45 thousand of them), consumers receive a security return voucher, on the basis of which the security is returned at the cash desk, and the voucher can also be used for shopping.

Lithuania

The system introduced in 2016 allowed Lithuania to be promoted to the forefront of countries with the highest recycling rate of plastic beverage packaging. The country can boast a spectacular success. The functioning not-for-profit security operator is responsible for the organization. More than 92% of PET bottles, 93% of cans and 85% of glass packaging covered by the deposit system is provided there (the average level in the EU for plastic packaging is 44%). Only in the first five months did Lithuanians hand over 130 million packagings for purchase - half more than estimated. It is thanks to the convenience and simplicity: a security fee of 0.1 Euro is added to the price of the product, which, after returning the bottle to the recycler, can be recovered in the form of a voucher that can be exchanged at the cash register or to lowers the price of purchases. Security machines are located in every store selling products included in the system. They are placed at the entrances to stores or in car parks.

Structural, financial, and organizational barriers

The implementation of the system is associated with several serious challenges, although it may seem simple. When preparing specific regulations, it will be necessary to find answers to questions regarding the financing of the system, the organization model, and the security amount. It will also be necessary to analyse the impact that the introduction of the system will have on the entire chain of entities involved in waste management. In this case, it is not only about stores where recyclates are to be located, but also recyclers, municipal installations, and municipalities.

The role of self-governments can be crucial for the success of the system, especially due to the fact that most municipalities in Poland are rural ones, with a lower population density and different infrastructure than large metropolises. It should be considered that there are many small-area stores in Poland, and the overwhelming majority of European security and deposit systems are based on recyclates located near large-format stores. In the case of smaller units, the problem can involve finding enough space to install the device. A similar problem will also occur in the case of using the model based on manual collection.

The question of the involvement of local governments also has a legal dimension. Currently, municipalities are obliged to achieve high levels of recycling of municipal waste, a large part of which involves packagings, including valuable on the market, because PET bottles are relatively easy and cheap to be processed. It is necessary to analyse whether the exclusion of this fraction from the municipal system under the security system, which would be served by an industry organization established for this purpose, similar to the solutions used, for example, in Norway, will not increase the costs of waste processing in local governments. Plastic waste left in yellow containers, the management of which will still be their responsibility, because they will be worth much less on the market (because it is less attractive for a recycler as a non-uniform raw material). This, in turn, can negatively affect conditions.

In addition, the question is who will invest in the development of the system: setting up the machines and their maintenance? In Lithuania, investment costs amounted to EUR 5 million (until 2016). In Slovakia, in a study prepared by the Institute of Environmental Protection, it was calculated that the operator's investment costs would amount to EUR 15 million. Operating costs are estimated at EUR 33 million. Revenues were calculated at EUR 28 million. The difference, i.e., EUR 5 million, will be covered by packaging producers. However, it should be noted that the countries mentioned are definitely smaller than Poland. With reference to the scale effect, the costs will undoubtedly be much higher.

Author: TOGETAIR Editors

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