What are Deposit Refund Schemes?
Deposit refund schemes (DRS) are systems where consumers pay a small amount of money upfront (during the purchase), to be reimbursed when they bring the (beverage) container to a collection point after use instead of throwing it away. This way, the container can be either processed for reuse or be recycled and transformed into secondary raw materials.
Example of an Return Vending Machine (close-up)
What does make a successful Deposit Refund Scheme?
According to Clarissa Morawski, CEO and co-founder of Reloop, an international data-driven research organization on waste reduction who recently released the Global Deposit Book 2022: An Overview of Deposit Return Systems for Single-Use Beverage Containers: “the fact that no other method of collection can effectively recover 90% of beverage containers for closed-loop recycling explains why governments around the world have shown a renewed interest in DRS,”.
Her peer Elizabeth Balkan, Director of Reloop North America published the 10 evidence-based high-performance principles of an effective DRS system which have been agreed by that legislators, policy makers, industry, and advocates. We’ve selected 4 of those principles relevant to Montenegro:
Principle #1 – recognizes that recycling containers depends first and foremost upon people’s willingness and motivation to participate.
Any effective DRS must be human-centered and provide practical incentives, such as making sure participants get refunds in cash immediately.
- High-performing DRS’s are those designed with the redeemer in mind, be it a consumer or a canner.
- Return-to-retail systems have the highest return rates — median 90%, compared with 76% in systems which either rely only on depots or have a combination of retail and depot.
- For DRS to be both easy and equitable, rural residents must be within five miles and urban residents within two miles of a redemption point.
Principle #2 – 90% Collection rate.
Set a high redemption target through legislation to hold producers accountable for meeting it, with enforced penalties if they do not.
- Establishing an ambitious collection rate target through legislation is critical to a high-performing DRS. From the outset, it defines a common goal for producers, retailers, and regulators, encouraging cooperation. Public policy impact can then be measured by the yardstick of meaningful targets. Otherwise it is impossible to assess the effectiveness or efficiency of the DRS. Most importantly, setting a 90% collection target ensures the DRS is designed to maximize waste prevention and litter reduction.
- Perverse outcomes can result when collection targets are not as robust as 90%. For example, an inaccessible or inconvenient redemption network is simultaneously bad for the consumer experience yet translates into lower system costs and greater unclaimed deposit funds. Because of this, producers financing the systems and state agencies each may benefit from those unclaimed deposits. High redemption targets incentivize producers to optimize the user experience and access to return points.
Principle #5 – Producer Funded
Require beverage producers to finance a system capable of achieving a 90% target redemption rate.
- Under a modernized DRS, producers are expected to finance the system: this is key to ensuring that industry takes responsibility for the products and packaging it creates, and that municipalities and taxpayers are not left to pay the costs of managing these materials instead.
- A producer-funded DRS not only shifts the financial responsibility to those who’ve created the beverage packaging and put it out into the world, but also obliges them to manage that product through its life cycle. That gives them a reason to design and manage a container so it can be recycled in a cost effective way (hello DRS!) and the producer gets the material back to use again rather than have it wasted in a landfill.
Principle # 7 – Financial Support of Municipal Recycling Programs.
Ensure an equitable transition to a modern DRS by reinvesting an adequate portion of revenue back into municipal systems and service providers in the initial phase for modernization.
- With an efficient DRS, bottle bill can save millions of dollars through cost reductions on garbage/recycling collection, garbage disposal, and litter cleanup.
- In addition to such significant savings, cities and towns, as well as Material Recovery Facilities, would benefit from unclaimed deposits — monies that accumulate from beverage containers that are not redeemed but are thrown away or recycled through curbside programs. This money (tens of millions of € per year) could be used to significantly support Material Recovery Facilities throughout the country during a transition period.
In conclusion, Reloop stresses that to create a successful DRS, it must be developed in cooperation with ALL relevant stakeholders, including the experts and the civil sector. DRS schemes are proven to be most effective if they are citizen-centred and the financial and logistical burden is carried by the polluters. With planning, outreach, and collaboration, transitioning to a modern DRS can be done well to benefit key stakeholders, as well as create positive economic and environmental impact for all communities.
Do we already have a DRS in Montenegro?
Montenegro have had systems of containers return in most parts of Montenegro for more than 4 decades, but nowadays it is only limited to a few beer glass bottles (for end-users) and soft drink brands also in glass bottles (for restaurants and cafes only). The beer bottle system is not a DRS system per say, as the end customer is not paying upfront for a deposit, but has to return its container to be allowed to purchase a new one. Wine bottles and sparkling water bottles used to be part of those deposit schemes in the past but their collection has stopped along the way.
What is ‘Return & Earn Montenegro’?
BOTTLEBANK announced the launch of the first pilot phase of its new initiative ‘Return & Earn Montenegro‘ in the Fall 2023. BOTTLEBANK defines itself as a company that focuses on plastics, aluminium, and TetraPak collection and trading in Montenegro. It does not describe itself as a Deposit Refund Scheme but defines its model as a BOTTLE-TAX solution. In its system, the deposit that is paid by the customers when a beverage is purchased is called a ‘direct tax revenue’ which will be paid by the citizen who do not claim the deposit / ‘tax’ via its BOTTLEBANK RVM (Return Vending Machines). It is unclear on the available information which party will benefit from the unclaimed deposits / ‘direct tax revenue’ will go. BOTTLEBANK estimates that EUR 20,000,000 will be generated through this new deposit / ‘tax’ system per year in Montenegro. it also indicates on their website that the presence of investors and shareholders in their model. Its first pilot is announced to test a group of 30 Return Vending Machines on beverage containers, analyze user awareness and test understanding with the interacting of consumers with the Return Vending Machines. BOTTLEBANK says that their payout process differs in many ways from traditional redemption systems, where customers receive paper vouchers for the deposit they paid when they purchased the containers/bottles. Its collection scheme involves a “Push2Card” transaction that will refund the funds to their customers’ bank accounts.
Other example of an RVM | © 2023 Plastic Smart Cities
Why do we need an effective DRS in Montenegro?
1- Littering is a huge problem in Montenegro: 56% of litter picked on beaches and riverways is plastic bottles, 30% is aluminum cans (source: Brand Audit report 2022). So the positive impact of a DRS on litter would instantly be noticeable.
2- When Montenegro joins the EU, it will be required by the Single-Use Plastics Directive to separately collect 77% of single-use plastic bottles with caps and lids by 2025, with an ultimate target of 90% by 2029 [which can only be realistically achieved through a full and effective DRS].
3- In order to reduce our carbon/resources footprint as a nation, we need to implement systems to reduce single-use packaging (via reuse/washing of containers) and to recycle those who can’t be reused.
Register to our newsletter (below) to be kept informed on DRS in Montenegro, download our DRS Summary , and also visit Reloop America to read about the 6 other principles of a successful DRS.