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11 advantages of a Digital Deposit Return Scheme
At Polytag we’re developing a tag and trace system that will enable, amongst many other things a fully Digital Deposit Return Scheme. But let’s start from the beginning…
What is a Deposit Return Scheme
Deposit Return Schemes (DRS) are widely regarded as a great way to reduce littering and increase recycling rates. A deposit is added to the price of sale of in-scope containers. Once the container is returned, the consumer receives the deposit back.
Over 38 jurisdictions across the world operate DRS with various degrees of success. Several other countries are preparing consultation and legislation on Deposit Return Schemes, including the UK with their recent consultation that will close on the 4th of June 2021.
We think that there is a great opportunity to implement a fully Digital Deposit Return Scheme through a tag and trace system such as Polytag, avoiding some of the pitfalls that more conventional DRS has.
The advantages of implementing a Digital Deposit Return Scheme
Lower costs of deployment and operation: based on the estimations for the UK in the Defra consultation, an all-in conventional DRS system relying on the extensive deployment of Reverse Vending Machines (RVM) would have a cost (Present Value) of £6,346m. Our initial calculations show that a Digital Deposit Return Scheme could cut these costs by 70%. We’ll share the details of our calculations in a future post.
Higher convenience for users: one of the main barriers to the success of a DRS is the fact that consumers need to store uncrushed bottles to return at an RVM. They’re asking for a consumer habit change, something extremely difficult. A system like Polytag’s could be easily deployed, integrating it with the current kerbside collection (for example UK and Ireland) or recycling points (as in other parts of Europe). Users would be able to recover their deposits from the comfort of their homes, building on their current habits and without excluding vulnerable parts of the population.
An opportunity to educate the public on recycling and create the right habits: through a well-designed consumer-facing mobile app that follows the principles of habit-forming products, there is an opportunity to significantly increase the compliance of the general population on the recycling front. A digital DRS would be a great ‘external trigger’ to get consumers to adopt such an app. Furthermore, inside the app instructions on how to recycle can be offered.
No lost value on kerbside: in countries such as the UK and the Republic of Ireland, recycling kerbside collection is funded by high-value material streams. If users are forced to take their empties to central collection points, valuable material streams will be diverted from kerbside, making the system financially less viable.
No lost retail space and lower (or no) cost of operation for retailers. Reverse Vending Machines are fiercely opposed by retailers, as this generates additional costs and flows of materials, causing health and safety concerns. With an in-home Digital Deposit Return Scheme, we can reduce this impact significantly.
Implementation of DRS and Extended Producer Responsibility (EPR) as one policy: if the manufacturers fund the costs of a digital DRS, this could be used to also implement EPR. You can read more about our views of the latest EPR regulations here.
Enhanced digitalisation and reporting: with a completely digital system, reporting and assigning costs to the rightful packaging owner is straightforward. Local councils, compliance agencies, brands and all of the other actors involved would have a reliable source of data.
Enabling modulated fees: a fully digital system would be able to implement different levels of deposit depending on the materials or if, for example, a bottle has been sold as part of a multipack. This would allow balancing formats that would, otherwise, be unfairly penalised.
No cross-border fraud: with different systems across land borders, there could be several ways of claiming deposits in both countries sharing that border, at the expense of the manufacturers and governments. A digital system would be able to identify where the cost of recycling has been paid, implement the right fees and avoid double payments across borders.
Supporting the digitalisation efforts: most countries across the globe have expressed their ambitions to digitalise all aspects of their bureaucracy, tax and legal systems. A digital DRS would be another step in the right direction, allowing data from the system to be seamlessly integrated into all sorts of taxation systems and reports issued by governments.