The UK authorities have announced the introduction of a deposit return scheme (DRS) for England, Wales and Northern Ireland to commence on 1 October 2025.
In a DRS, consumers are required to pay a small deposit when purchasing drinks which they can then redeem when returning the drinks containers to a designated collection point. The aim is to incentivise recycling (with recycling rates in the UK being around 70% lower than in other countries which have a DRS in place) by providing a financial incentive to ensure that drinks containers do not enter normal household and public waste streams.
Which drinks container materials will be in-scope?
The DRS will apply to:
- polyethylene terephthalate (PET) bottles and steel and aluminium cans in England, Wales and Northern Ireland; and,
- in Wales only, glass bottles.
This difference in scope results from the fact that responsibility for waste management has been devolved from the national UK government to the local administrations in Wales and Northern Ireland, each of which has the power to decide on the DRS' exact scope.
Although not in scope of the DRS in England and Northern Ireland, glass bottles will be covered by the Extended Producer Responsibility (EPR) for packaging scheme in both jurisdictions (and you can find our recent article on EPR here). This will place targets on producers in relation to glass recycling.
The Northern Irish authorities have elected to keep the potential inclusion of glass in its implementation of the DRS under review in light of whether or not relevant recycling targets are met.
Which drinks container sizes will be in-scope?
In each of the three jurisdictions the DRS will apply to relevant containers of between 50ml and 3l (a so-called 'all-in' approach as compared to one only including 'on-the-go' containers of under 750ml in size and excluding those sold in multi-packs).
Will there be any new labelling requirements?
Both a mark to identify a product as part of the DRS and the use of an identification marker such as a barcode or QR code to enable a container to be recognised at return points will be mandatory in each jurisdiction.
Will drinks containers be returnable anywhere in the UK?
In England, Wales and Northern Ireland, for polyethylene terephthalate plastic and aluminium/steel cans, consumers will be able to redeem a deposit irrespective of where in the three jurisdictions the drink was purchased.
As glass bottles will only, at least initially, be included in the DRS in Wales, their return will only be possible in Wales.
In light of the looming commencement of a separate DRS in Scotland in August 2023, the English, Welsh and Northern Irish authorities have stated that they will seek to 'encourage' the body responsible for running the DRS, the Deposit Management Organisation (DMO), to "explore interoperability and reciprocal return arrangements" between the schemes. However, unless such arrangements are agreed, the two UK schemes (English, Welsh and Northern Irish on the one hand and Scottish on the other hand) will remain functionally separate.
It also remains to be seen whether efforts will also be made to ensure that containers purchased in the Irish Republic, which is poised to implement its own DRS early in 2024, will be returnable in Northern Ireland and vice-versa.
How much will the deposit be?
It is intended that, while a maximum deposit amount will be set in law, the DMO will have the power to set the deposit level up to that limit. Expectations are that the deposit amount will be around £0.20.
How will the DRS be funded?
The DRS will be funded by a combination of revenue from the material it collects and sells, producer registration fees and unredeemed deposits.
What are the next steps before the DRS become operational?
Despite the announcement, a significant amount of work will need to be done before the DRS can become operational. There is, as yet, no draft legislation setting out how exactly the DRS will operate, including in relation to the appointment of a suitable DMO (or multiple DMOs given the three jurisdictions involved).
What should potentially affected businesses do now?
Our experience advising clients in relation to other DRS schemes shows that early engagement with the relevant authorities in relation to the operational aspects of such schemes is crucial.
DRS schemes impose significant operational burdens on affected businesses and, while these cannot ultimately be avoided, businesses should do what they can to ensure that they are in a position to influence and shape the implementation of the DRS such that the impacts are minimised as far as possible.
The UK authorities have stated that the implementation of the DRS will be industry-led and there are likely to be number of specific operational elements which businesses will want to focus on as the DRS is finalised. These could include:
- the identity of the DMO, the legal structure under which it is established and the terms on which it proposes to operate;
- the sources of funding for the DMO, including whether drinks producers could be required to make advance payments to help fund the DMO's start-up costs;
- the contractual terms and conditions which drinks producers may be asked to agree to before they are eligible to participate in the DRS and whether these can be amended on a producer-by-producer basis;
- the level of fees set by the DMO and whether or not drinks producers will have any input on those fees;
- the sell-off period allowed before in-scope products which are not labelled to allow them to participate in the DRS are permitted to remain on the market after the commencement of the DRS;
- clarity over packaging and labelling requirements such that sufficient time is given for packaging amendments and design decisions;
- record-keeping requirements and whether the DMO will expect audit rights in relation to drinks producers' compliance with the DRS;
- the use of standard packaging across multiple jurisdictions (such as the four UK jurisdictions and Ireland) without contravening DRS requirements in each of those jurisdictions; and
- whether any anti-fraud measures will be required.
How can Fieldfisher lawyers assist?
We have experience in advising businesses in relation to the implementation and operation of deposit return schemes. We can advise both on the regulatory and commercial law (such as contractual terms and conditions, intellectual property rights and data privacy) aspects of such schemes.
If you are concerned that your business may be impacted by the DRS, please contact Aonghus Heatley (Director) or Jessica Gardner (Partner) in Fieldfisher's market-leading London Competition, Regulatory and Trade team.
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