Scotland leads the UK’s first Deposit Return Scheme

The UK’s first Deposit Return Scheme (DRS) will go live across Scotland on 16 August 2023, helping to increase recycling, decrease litter and ultimately tackle the climate emergency. This is another example, alongside recent updates to the UK's EPR framework, of the government moving towards a Circular Economy and net-zero carbon emissions by 2050, by applying the ‘polluter pays’ principle and extending the environmental responsibilities of producers for their products, making them liable for the associated costs.

The Deposit and Return Scheme for Scotland Regulations 2020 (the 2020 Regulations) apply to single-use containers made from PET plastic, glass, steel or aluminium that are sized between 50ml and 3 litres. This means everything from a can of fizzy drink to a bottle of wine will be caught by the Scottish scheme, although the exclusion of HDPE plastic (which is used for most milk bottles) means that very few dairy items will be captured. The 2020 Regulations place legal obligations on drink producers, importers, and anyone marketing or offering for sale drinks in Scotland packaged in such a container.

Dumbiedykes flats residential area built in the 1960s. Autumn leaf colours and bright turquoise coloured high-rise buildings. View from Salisbury Crags, Holyrood Park, Edinburgh.

What’s happening in the rest of the UK?

A DRS will not be in place in England, Wales and Northern Ireland until 2024 at the earliest, although the Department for Environment, Food and Rural Affairs (Defra) has recently confirmed that the system, when introduced, will follow in the footsteps of the Scottish scheme (although in England and Northern Ireland glass bottles will not be covered).

What does this mean?

For customers, a deposit return scheme means they will be charged a 20p deposit when buying a drink in a bottle or can that meets the specifications described above (a ‘scheme container’). This 20p will be refunded when the scheme container is returned, either over-the-counter in a shop or restaurant, via a reverse vending machine or via an online retainer. The Scottish government’s aim is for there soon to be tens of thousands of return points across Scotland, and billions of bottles and cans recycled every year.

Drinks producers are required to register with the Scottish Environment Protection Agency (SEPA) to be part of the DRS, and they will have a legal responsibility for the collection and management of scheme containers. In very simple terms, and subject to exemptions, for products branded in the UK the producer is defined as the owner of the brand. For products which are imported into the UK, the producer is defined as the importer.

Drinks producers can either discharge their obligations under the 2020 Regulations directly, or nominate a scheme administrator to fulfil these obligations (and register with SEPA) on their behalf.

The obligations of a producer under the DRS, if they decide not to use a scheme administrator, are explained in detail in Chapter 3 of the 2020 Regulations. In summary, producers will be responsible for:

  1. Collecting (and keeping for at least four years a record of) the following information:
    • The number of scheme containers they first make available to be marketed, offered for sale or sold in Scotland;
    • Whether the packaging in which those scheme containers were contained or sold was made wholly or mainly from PET plastic, glass, steel or aluminium;
    • The number of items of scheme packaging returned to them by wholesalers and retailers; and
    • The number of items of scheme packaging collected by them from each return point operator, retailer providing a takeback service, or hospitality retailer.
  2. Providing the above information to SEPA as and when requested;
  3. Accepting any return by a retailer or wholesaler of any relevant scheme packaging and paying the associated 20p deposit back to the retailer (who in turn will refund the 20p to the customer); and
  4. Meeting the minimum collection targets specified in Schedule 3 of the 2020 Regulations. These are, in simple terms:
    1. In 2023, 70% of the scheme containers first made available by the producer to be marketed, offered for sale or sold in Scotland are to be collected from return point operators, retailer providing a takeback services and hospitality retailers;
    2. In 2024, 80% are to be collected; and
    3. In 2025, 90% are to be collected.

A scheme administrator is responsible for the day-to-day management of Scotland’s DRS. Once approved by Scottish Ministers, scheme administrators can act on behalf of producers to fulfil the legal obligations described above.

Circularity Scotland Ltd is currently the only approved scheme administrator in Scotland, although any organisation wishing to operate as a scheme administrator may apply in writing to Scottish Ministers using this application form.

Anyone who sells drinks in a scheme container on the Scottish market will have a legal obligation to make sure the container comes from a registered producer, and that a deposit is charged on each drink. Retailers may also have to operate a return point or offer a takeback service to customers.

DRS infrastructure, such as reverse vending machines, will start rolling out from summer 2022 and, where possible, the Scottish Government has agreed to work with retailers to enable the use of this infrastructure on a voluntary basis from November 2022. (Lidl have already launched their own deposit return scheme for Lidl bottles - installing in-store vending machines across Scotland).

Parallels with other Extended Producer Responsibility changes across UK and Europe

The 2020 Regulations impose new obligations on drinks producers, as explained in this article, for single-use containers made from PET plastic, glass, steel or aluminium and sized between 50ml and 3 litres.

The Regulations are expected to push more responsibilities and costs up the chain, from a focus on waste management (and local authorities) to a focus on producers. The intention is to drive in-depth consideration of what happens to products at the end of their useful life and to change product design to encourage reconditioning, reuse and recycling of products, rather than disposal as waste.

The focus of more responsibilities and costs on producers is the central theme in the current changes in extended producer responsibility (EPR) across the UK and Europe - for example in the amendments to existing packaging, batteries and waste electronics and electrical equipment schemes (and the introduction of wide ranging new EPR schemes in countries like France). Businesses operating throughout the UK and overseas will need to chart how these developing new frameworks sit together, as although the laws come from a common goal, they are being implemented differently across Europe.

How can PwC help?

  • With the new DRS in Scotland and those DRS to follow in England and the rest of the UK, our legal specialist can help our clients to:
  • Understand the regulatory framework applicable to DRSs in Scotland and the rest of the UK and how this matches your responsibility as a producer of drinks
  • Respond to any questions on compliance with the DRS Schemes
  • Help you create a road map to comply what the new DRS Scotland regulatory framework
  • Liaise with regulatory authorities and scheme operators to support you in making the most effective choice on how to comply with DRS
  • Assess reporting requirements and data collection timeframes
  • Produce bespoke guidance to assist internal teams as well as supply chain partners such as wholesalers and retailers
  • Put in place a compliance approach with reflects these and wider EPR changes across the UK and Europe
  • Consider the structuring and optimisation of compliance costs
  • Advise on pan-European EPR compliance and optimisation
  • Help businesses to horizon scan the developments in the EPR framework and identify risks and opportunities presented to the business.
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