Peter Jones, Principal Consultant for Eunomia, says extended producer responsibility (EPR) will ‘remove local authority concerns’ over deposit return schemes (DRS).
While Covid-19 has somewhat delayed its progress, the Environment Bill, which will bring into law many of the policies laid out in 2018’s Resources and Waste Strategy, has continued its progress through Parliament. The measures it will introduce usher in a radical shift in the landscape for the management of waste and recycling across the UK, and local authorities will be amongst those most affected.
Despite the scale of the changes in prospect, many local authorities are understandably adopting something of a “wait and see” attitude to the legislation: with COVID-19 disrupting service provision and homeworking leading to more household waste, there have been plenty of more urgent issues to think about.
However, with so much change in prospect, authorities are already making decisions that will affect their ability to respond to the new policies we expect to see implemented. Take the deposit return scheme (DRS), for example: anyone looking to invest in new stillage vehicles or setting up a new MRF contract needs to understand how their needs will be affected by the implementation of deposits on beverage containers (planned for 2023-2024 in England, Wales and Northern Ireland, and 2022 in Scotland).
One thing they don’t need to worry about, though, is one of the more frequently aired concerns authorities have put forward about a DRS: the idea that it will lead to a loss of income from material sales or a big hike in MRF gate fees.
local authorities should not fear – EPR is here. The DRS is not a standalone policy, and the interaction between DRS and EPR, or Extended Producer Responsibility, means that it’s unlikely that authorities will lose out financially due to high-value materials being diverted.
There is a long track record of DRS being used to capture beverage containers for recycling and deter littering, with countries such as Germany and Norway achieving container recovery rates in excess of 90%. With a similar scheme appearing in the UK, authorities should certainly expect to see a significant share of the plastic, metal and glass beverage containers they currently collect moving away from the kerbside system.
It’s little wonder, then, that local authorities should worry about the loss of valuable recyclable material, such as PET plastic. This fear is prominent among those authorities operating a kerbside sort system that have invested in good-quality steel, aluminium, plastic and glass collection, but authorities operating two-stream or commingled collection systems might also be concerned that losing high-value material could adversely affect their gate fee.
However, local authorities should not fear – EPR is here. The DRS is not a standalone policy, and the interaction between DRS and EPR, or Extended Producer Responsibility, means that it’s unlikely that authorities will lose out financially due to high-value materials being diverted. That’s because EPR is set to see packaging producers pay to meet the full net costs of dealing with their products at their end of life.
Although the UK has had a producer responsibility system for packaging for some years, the market-based system, which distributes resources through the purchase of Packaging Recovery Notes (PRNs), is estimated to result in producers covering only around 10% of the costs of managing packaging waste. The rest of the tab is picked up by local authorities and (in the commercial sector) waste producers.
The DRS is properly seen as one part of the new system of producer responsibility proposed in the Resources and Waste Strategy, elaborated in the subsequent consultation and set to be brought into law through the Environment Bill. EPR will introduce the principle of ‘full net cost recovery’, making producers responsible for covering the full necessary costs of an efficient system for managing packaging waste, including collection, sorting and recycling, net of the value of the materials collected.
This removes any concern over material revenues for local authorities. It simply won’t be their problem. Rather, the risks around material value will be borne by producers, who are also the ones who benefit at times when the price of raw materials are low, giving them a natural hedge against low secondary material values. They also have the greatest ability to influence demand for secondary raw materials through their choices about when and how to use recycled content.
While the DRS is likely to remove some packaging from the kerbside collection system, the costs of collecting and sorting what remains will no longer fall to councils
Further, EPR means that producers are responsible for funding services that are capable of meeting packaging recycling targets, and so will often need to pay for services that have better outcomes than is currently the case.
So, while the DRS is likely to remove some packaging from the kerbside collection system, the costs of collecting and sorting what remains will no longer fall to councils.
For those wanting to find out more about how it’s all supposed to work, it’s worth looking at the work Eunomia has done for the European Commission to help it prepare guidance for member states. While it won’t binding on the UK, it’s likely that the UK will end up reaching similar conclusions about what EPR needs to look like.
Of course, councils will be bound to worry that there’s a catch. They have seen their income from central government grants decline sharply over recent years, and it would be encouraging to see the government confirm that what Defra gives through EPR, MHCLG will not take away through the so called “fair funding review”.
They’ll also be keen to see the details of how necessary costs will be assessed, and how EPR resources will be allocated between authorities. With any luck, we’ll see more detail in the forthcoming consultation on the detail of the scheme.
But in the meantime, I hope that this article makes the DRS one less thing for councils to worry about.