Return to vendor

Last autumn I spent a very enjoyable time with my family visiting the Black Forest. Ever the environmental consultant, there were two green features of the trip that stuck in my mind.

First, there was the public transport. We took the Eurostar to Paris, then a double decker TGV to Strasbourg, followed by a couple of local trains to our destination. On arrival, we were given a Konus Guest Card which entitled us to free train, tram and bus travel around the whole region. The trains were clean, ran on time, and connected pretty much seamlessly with trams, buses and even cable cars! For someone used to UK rail travel it was all very refreshing, and I highly recommend it as a low-carbon, low stress holiday destination.

However, my entrepreneurial children found the idea that on returning a drinks container to a reverse vending machine they could pocket the €0.25 deposit even more exciting than going upstairs on a train. They immediately saw the potential to generate a bit of extra holiday spending money from any littered cans or bottles. Cracking idea – except they couldn’t find any. They thought they’d struck gold on a train back from a day in Freiburg – several empty Heineken cans had been left on a seat. However, the train originated in Basel, and having been sold in Switzerland, the cans bore no deposit.

Money honey

These results may only be anecdotal, but they are consistent with the intuitive expectation that placing a value on such items reduces the likelihood that they will be littered. Indeed a 2011 study from PwC reporting on the German Einwegpfand, or one-way deposit, noted that:

‘With a deposit system, there is practically no longer any littering of single-use beverage containers bearing deposits.’

Such an approach also leads to very high rates of collection and subsequent recycling (due to the high quality of the collected packaging). The same report states that:

‘98.5% of the PET bottles bearing a deposit are collected in the deposit system and recycled, while only 25-31% of the PET bottles which do not bear a deposit are collected and subsequently recycled in the German green dot (kerbside) system.’

Purists may well argue that refillables more closely reflect the aspirations of a circular economy than such one-way packaging, but for me, the relevant point here is the importance of the policy mechanism that secures such high return rates in the first place. Providing a financial incentive for the consumer to return the bottles clearly works. Littering is very low, and the materials are returned in good condition, with virtually no contamination, making it a real, practical step towards a truly circular economy. So could, and should, such financial incentives be more widely applied?

The King of economic incentives: Deposits have a track record on incentivising better waste management. Photo: Rochelle Hartman (CC BY 2.0), via Flickr.

In the case of business to business (B2B) transactions, such circular approaches are already gaining ground. The high concentration of valuable materials amongst a relatively small number of actors means that approaches such as return logistics, leasing, and service-based models can often stack up financially without any further inducement.

However, when it comes to the business to consumer (B2C) side of things, the items containing the materials of interest are much more widely dispersed amongst a significantly greater number of players. An additional financial driver is needed if the business case for implementing systems to ensure high levels of return of good quality material is to be made.

WEEE’re caught in a trap

For example, at present many small items of waste electronic and electrical equipment (WEEE) such as toasters and kettles are not separately collected for recycling, let alone presented for repair or disassembly. Placing a deposit on such items would seem an entirely appropriate way to encourage consumers to aim for the top of the hierarchy. Perhaps the entire deposit could be returned if the item is in a state where it can be reused or repaired, while only a proportion would be returned if the item were suitable only for recycling. Disposal in the residual waste stream would mean that the deposit is foregone entirely.

As well as incentivising the management of WEEE in such a way as to maintain the highest possible value, such a policy instrument would likely prevent the continued accumulation of redundant electrical and electronic items in people’s homes, which at present increases the relative demand for primary resource extraction.

Boosting WEEE return would also support the operation of initiatives such as repair shops and cafés that in addition to creating opportunities for disassembly and repair of items can play an important social role, for example by providing training for those in long-term unemployment.

Mattress unknown

At the other end of the scale, an item that seems ripe for some kind of financial incentive for correct disposal is the humble mattress. Bulky, unwieldy, and possessing little material value at the end of life, it’s no wonder that when faced with having to put in the effort, and potentially part with the cash, required to do the right thing, some people take the easy but anti-social option.

Paying a fee, at the point of purchase, into a fund to cover the eventual cost of collection and disposal, would not only significantly reduce future flytipping, but would also increase the viability of mattress recycling schemes. In the absence of external funding, there would be a bit of a time delay as the scheme is implemented – with the first fees paid on new beds being redeemed several years down the line. However, once up and running it would be fully self-funding and able to continue in perpetuity, as long as fees are periodically reviewed.

Surely to the sea

A more wide-reaching application of such financial incentives could be to reduce the dumping of waste at sea by commercial vessels. The Port Reception Facilities Directive states that the fee system charged by ports for the receipt of waste should:

‘Encourage the delivery of ship-generated waste to ports instead of discharge into the sea.’

Some ports implement a 100% ‘direct fee’ approach, where vessels owners are charged based on the amount of waste collected from their ship. It is clear to see how this kind of charge could encourage illegal dumping. An alternative is to charge a flat rate fee, known as a 100% ‘indirect fee’ under which a vessel can deliver an unlimited amount of waste. (There are also a number of variants between these two extremes).

However, while an indirect fee means no extra payments at the margin for delivering waste, the process of delivery takes up the time of crew members, meaning it incurs an opportunity cost for owners and crew alike. In a recent study for DG Environment, Eunomia reviewed a range of incentive approaches, and concluded that, to genuinely incentivise disposal at each port visited, as required under the PRF Directive, a deposit refund system is required.

Don’t procrastinate, don’t articulate

Encouragingly, the European Commission’s revised Circular Economy Action Plan, which focuses squarely on maintaining the value of products, materials and resources in the economy for as long as possible, promotes the use of such approaches. In support of this, the proposed revisions to the Waste Framework Directive include amendments to Article 4 on the waste hierarchy, Article 8 on extended producer responsibility, and Article 11, on re-use and recycling, all explicitly requiring Member States to make adequate use of, or promote the use of, economic instruments.

There has been plenty of conversation about how to make European economies more circular, but the stage is now set for a little more action – with economic instruments being one of the best established ways to make sure that traditional, linear thinking gets all shook up.