Part of Our EU-27 Green Tax Wiki

Introduction

Beverage pollution taxes have been increasing their role within the EU in the past three decades. They promote recycling, reduce beverage container litter, especially along highways, and can extend the lifetime of taxpayer-funded landfills that are rapidly filling up. Further, as the issue of plastic oceans has come to the forefront of people's minds, the interest in container taxes has been reenergized.

In Europe, most container-deposit legislation is a deposit refund system (DRS). The deposit refund system follows the polluter pays principle. When a beverage container is purchased, the consumer pays a monetary deposit. This deposit at the point of sale can be refunded when the container is returned to an authorized redemption center. Most commonly, these redemption centers are in grocery stores and landfills. These systems are a useful tool in collecting vast volumes of empty beverage containers that can then be reused or recycled. DRS are mostly implemented to manage plastic, metal, and glass containers.

Looking at the EU, over 130 million people live in countries that have deposit-refund systems in place. Croatia, Denmark, Estonia, Finland, Germany, Iceland, Lithuania, Netherlands, Norway, and Sweden have already implemented deposit-refund systems. Looking at figure 1, we can see DRS systems are heavily concentrated in Northern Europe.

Figure 1.

Source:http://www.cmconsultinginc.com/wp-content/uploads/2017/05/BOOK-Deposit-Global-24May2017-for-Website.pdf

The Origins of Deposit Refund Systems in Europe

Finland pioneered DRS for Europe when its government first introduced a DRS for beverage containers in 1950. This DRS evolved into one of Europe’s most successful systems in reducing packaging pollution. Today, the DRS collects disposable and refillable glass and plastic bottles. In 1994 the government introduced a packaging tax on soft and alcoholic drinks; their ambition was to incentivize producers and importers to participate in the DRS. Containers that weren’t part of the DRS were taxed 4x more, so companies' hands were forced into joining the system. From close co-operation between the government, society, and the beverage industry, return rates for single-use packaging reached levels of 95% in 2015.

For more details, please see the page dedicated to the Finnish deposit-refund system.

From Finland's success, other DRS systems were implemented throughout Europe. Figure 2 shows a brief overview of the timelines of countries with DRS. Each country has a different program scope; for instance, while The Netherlands recycle plastic (predominantly PET), other countries like Croatia, Denmark, Estonia, and Finland recycle Plastic (predominantly PET), metal (aluminum/tinplate), and glass. Another difference in nations DRS systems are their system operators; these are generally centralized, but as in the case of Germany can be decentralized. To learn more about the specifics of each countries' deposit-refund system, I recommend consulting the CM Report.

Figure 2.

Source:http://www.cmconsultinginc.com/wp-content/uploads/2017/05/BOOK-Deposit-Global-24May2017-for-Website.pdf

Should more European countries have DRS?

Deposit refund systems have an enormous environmental benefit. With a financial incentive, people are much more likely to bring back their containers, which can then be transformed into secondary raw materials for reuse. DRS allow materials to be kept within the system rather than having to produce more. Further, DRS is a useful tool in achieving EU new environmental policies. In March, the European Parliament agreed on ambitious environmental goals, specifically to ban single-use products made of plastic and set a 90% collection target for plastic bottles by 2029. Member states have two years to transpose the legislation into their national law, so we can expect to see more changes in 2020.

The ten countries with DRS systems have all achieved incredible results. The least successful country, Estonia, still has an 82.7% total return rate of can, PET, and glass, which is significantly higher than other countries in Europe. Norway, the most successful country, has a 97% recycling rate for PET.

Reading about its successes, you may begin to question, why do only ten countries in Europe implementing a DRS? As with many environmental policies, there are costs of implementation that often deter countries from adopting the system. For a DRS system to be successful, there must be easily accessible collection points. While these collection points are for lack of a better term reverse vending machines, they can cost more than €15,000 to install and have added costs in the transport, maintenance, and installation. Another factor that deters countries from adopting a DRS is that it inflates costs because of the deposit fee. While this fee is refunded once the bottle, can, etc. is turned in, the change in price can be enough to change consumer behavior and shift demand.

Another argument against implementing deposit refund systems is that consumers pay the cost. Many argue against this and believe it should be the producers, not the consumers, who take on the burden of the cost. Further, on a more theoretical basis, deposit-refund systems rely on the production of plastic, glass, cans, etc. which goes against a zero-waste society. Recycling also has an energy cost to collect it and transform it. These countries argue that rate than systems that promote recycling the EU should prioritize systems that incentivize waste reduction and reuse.

DRS for Reuse
Today DRS is usually talked about in terms of recycling; however, up until the 1980s DRS was often for reuse as with glass or plastic bottles. Countries like Germany, Spain, and Belgium still have DRS for reuse policies. Germany is one of the only EU countries that have deposit-refund systems for recycling and reuse. Why did it stop? Development of plastic packaging at an industrial scale made it cheaper and more accessible, plastic is light, affordable, and single-use material doesn't need as much treatment process. With increasing demand and a sense of urgency to cut back on plastic waste, the future of the DRS system is likely to change in Europe.

Resources:

http://www.acrplus.org/images/technical-reports/2019_ACR_Deposit-refund_systems_in_Europe_Case_Studies_Finland.pdf

http://www.cmconsultinginc.com/wp-content/uploads/2017/05/BOOK-Deposit-Global-24May2017-for-Website.pdf

https://www.eea.europa.eu/publications/environmental-taxation-and-eu-environmental-policies

https://europa.eu/rapid/press-release_STATEMENT-19-1873_en.htm

https://www.governmenteuropa.eu/deposit-return-schemes-plastic/91699/

https://meta.eeb.org/2017/11/23/the-5-most-successful-environmental-taxes-in-europe/