Table of Contents
Over the last couple of decades, Belgium has been struggling to deal with the issue of litter, despite millions invested in clean-ups, awareness campaigns and law enforcement (camera’s, fines). The Flemish government set a target to decrease litter by 20% by 2022, compared to 2015. In 2021, there were still 18.171 tons of litter present in Flanders, still more than 1.831 tons away from this target. Consequently, on Friday 23rd December, Flemish Minister of the Environment Zuhal Demir announced that a deposit return system will effectively start in 2025 on all plastic bottles and cans. She gave the industry the opportunity to launch pilots to evaluate ‘Digital DRS’ by the end of 2023. If the evaluation of the pilot is not positive both in terms of feasibility and desirability. The Walloon region is also looking into deposit, through a study for which preliminary conclusions are expected for beginning July 2023.
Deposit Return Systems (DRSs), with a return-to-retail (RTR-DRS) design, are widely spread in Northern-Europe (Figure 1). They have proven their effectiveness in reducing litter and increasing return rates of high quality material. The large number of examples in neighbouring countries provides sufficient benchmarks to implement a RTR-DRS effectively by 2025.
On the other hand, the Belgian ‘Digital DRS’ proposition, which involves scanning two 2D-codes before discarding a packaging in the blue bag or in ‘public blue bins’, has yet to prove whether it could be implemented by 2025, or implemented at all. This analysis presents the concepts of return-to-retail DRS (RTR-DRS) and the Digital DRS proposition. It also assesses the pros and cons as well as the operationality of the Digital DRS in the Belgian context.
Note that most of the information on the concrete set-up of the system for Belgium come from the “DDRS Blueprint”, carried out by the PwC bureau upon request from the Belgian industry. Please note that this analysis will be updated when further information on Digital DRS becomes available.
1) What are 'Return-to-Retail' DRS and the 'Digital DRS'?
Costs and savingsCosts: Firstly, it is important to look at the costs of both systems, as the cost-effectiveness of the system is key to evaluate its success. Several studies have concluded that RTR-DRS can be set up in a cost effective manner for businesses, and without extra costs for public actors given 100% producer responsibility. A study carried out by OVAM in 2015 estimated the total annual cost of a deposit on cans and bottles at 77 million euros, against revenue streams of 82 million euros. Here, estimated revenues are thus greater than costs. Similarly, the cost and effects study of the CE Delft (2017), requested by the Dutch government, suggests even higher potential benefits over costs with a RTR-DRS. When looking at systems that have been operational for some time, we see that the system functions well and are widely accepted by the different stakeholders. Shop owners are compensated by means of handling fee, that the system can generate traffic towards stores from consumers coming to redeem their deposit. Reloop provides a clear overview of how all the Deposit Return Systems in the world are set-up in practice, which provides sufficient information on how the systems work in practice, in terms of organisation and financial flows. For Digital DRS, there is not yet enough information to confirm that this system could also be set up in an equally cost-effective manner. Based on the PwC study, Belgian packaging industry claims that it would be cheaper to implement. However, first of all it is important to note that the PwC study provides very little information about the calculations for both the QR-code system as well as the traditional DRS, making it impossible to thoroughly check them, so the conclusions should not be accepted without further evidence. What we can check, is whether certain costs and revenues have been omitted or whether errors in calculations have been made insofar the study is transparent about it. Even with such a limited analysis, it is clear that several elements in the Financial layer (slides 56-90) of the study appear questionable. Among other (Figure 3, slide 66):
- Costs Traflux – Pillar public blue bins (slide 66): The investment cost in the chosen scenario does not correspond to the market research carried out by PwC (Figure 4, slide 28). The investment and placement costs per bin ranged from 1250 to 1450€ but PwC used a reference cost of €750 per bin. When correcting the investment costs (using the lowest cost of €1,250), this leads to an underestimation of €68,133,500 taking this underestimation into account would lead to a investment cost of €186,619,990.69 for the Digital DRS (compared to an estimation in the PwC study of 118,486,490.69 €), therefore higher than the investment costs of RTR-DRS (€154,864,500), see slide 68.
- Cost of home scanners. In the DDRS scenario evaluated by PwC, the cost of home scanners would be of €15,260,712.69, corresponding to 554,935 scanners (€27.5/scanner). The number of home scanners needed for all Belgian households would be 5,024,851 (138,183 402.5/27.5 – slide 66). So in the evaluated scenario, only 11% of the households has a home scanner. This seems low coverage given potential refusal of users to use smartphone apps, digital impairment (if the home scanners would even fix this issue), handicapped people, home scanners for families with children (so they can take part in the system as well…). It is possible that some Belgian households may want a home scanner, even if they have the application on their phone. Moreover, it is not clear that home scanners can solve the digital divide. 11% coverage of home scanners therefore seems to be another cost underestimate.
- Please note that the operational costs in the PWC study are not detailed enough, therefore preventing any further comments beyond simply raising some questions. Questions include (Slide 70):
- The transfer of the pre-sorting cost to post-sorting bins in 2027 seems to have been forgotten: in 2027, the annual pre-sorting costs (calculated for the ‘classic public bins’) simply disappears (more than 337,000€) while that same year the cost of post-sorting (Defined slide 63 as) “Cost for sorting PMD fractions, based on EPR litter simulation. Applied to volumes collected through public bins (transition) and ‘public blue bins’”. only increases by about 53,000€. How can that be explained?
- What is the detail of the maintenance / IT cost?
- Why is there no operational cost for the cleaning of public spaces? This should be factored in given that producers are now responsible for those costs.
Benefits and savings also need to be nuanced. The PwC study assumes equal revenues between both systems from a) litter savings, b) unredeemed deposit (i.e. revenues of all packaging not returned) and c) recycling revenues (see Table 1). Those figures are based on an assumed collection rate of 90%. However in practice the ability to achieve a certain return rate is linked to the level of convenience and accessibility for consumers. It is unclear if Digital DRS can achieve a similar level to RTR-DRS and without further evidence, such assumptions are not justified and should not be made.
Even more so, with the same collection rates, the recycling revenues (c) would likely be lower for Digital DRS, given that material is worth more when it is collected separately from other packaging and substances, as it avoids contamination, making it easier to use for fully recycled bottles and cans. PwC itself puts forth this challenge (slide 27) without taking it into account in its cost analysis. A RTR-DRS will likely lead to tens of million euro more recycling revenue compared to a Digital DRS.
TimelineAnother determining factor when opting for a DRS is how fast it is ready to be implemented. RTR-DRS requires an implementation time of 12 to 18 months after the political decision. Thus, a RTR-DRS in Belgium could be ready for 2025, providing that the plan for RTR-DRS is worked out in 2023. It can then start in line with the timeline announced by Flemish minister of the environment Zuhal Demir. There is no indication of the required amount of time for the implementation of a Digital DRS, given that it has not been introduced anywhere. Due to the research needed, the lack of understanding of how to set up the system together with other stakeholders and the technological developments still needed to be made and implemented, it is unclear if the whole Digital DRS will be market ready at some point. The Belgium packaging industry has until the end of 2023 to prove not only the technical feasibility of this system but also whether the system can effectively reach the goals it is set to and be truly accessible to all. Pilot projects are seen as a crucial part to prove possible implementation but so far, past pilot projects launched by the packaging industry in Belgium to reduce litter have not been effective and have taken years to be tested out, causing already a lot of delays in the decision-making process. This is for instance the case of the Prime de Retour in Wallonia and the ongoing reward system of the Click. The city of Antwerp actually stopped recently with the Click, given its high costs and the absence of reduction of litter. When it comes to pilots on Digital DRS, there have only been small scale pilots (in Dublin and Conwy ) a few hundreds of households and for less than a month. They were by no means representative of how a system would function on the scale of a whole country and in the long term. Pilots projects tend to take up a lot of time and considering all the elements that still remain to be proven in terms of feasibility, accessibility and effectiveness of Digital DRS, realistically at this phase pilot projects can only help to provide part of the answer on the question of whether Digital DRS will ready for implementation by 2025. All research up until now highlights the low market readiness of Digital DRS (see ResourceFutures, 2022) and the long timeline which would be needed to adapt the production (PwC study, slide 12). And it cannot be that the industry tries to further delay the introduction of a system in Belgium. As stated by minister Zuhal Demir in front of the plenary of the Flemish parliament on Wednesday 18th January, “the bottomline is that deposit will be introduced in 2025” and that “suppos[ing] the pilot projects do not yield, then it will be the classical system”. The pilots will be evaluated by the OVAM (Flemish Public Waste Agency), together with a sounding board ‘klankbordgroep’ including societal stakeholders such as representatives of consumer organisations, municipalities and environmental NGOS.
Effectiveness of the systemIt is not enough to see whether Digital DRS could be implemented within a given timeline. It is also key to ensure that it would effectively meet the targets that DRSs are designed to reach. That is to say: reducing litter, increasing the capture of high-quality material, transitioning towards reuse systems. In general, the PwC study doesn’t discuss the effectiveness of the system on those elements, but simply assumes the impact to be similar to a traditional DRS, in spite of its set-up being completely different. , except for the possibility to collect reusable containers because the PwC study doesn’t pay head to that at all, even though the upcoming Packaging and Packaging Waste Regulation intends to stimulate reuse for drinks packaging.
Effect on litterA study by CE Delft, requested by the Dutch government, looked at international evidence on the effects of DRS and estimated the potential in litter reduction for small plastic bottles and cans to be between 70 and 90%. Only one year after launch, Zwerfinator Dirk Groot registered 76% fewer small plastic bottles per kilometer (Figure 5). Note that there are still old non-deposit plastic bottles in litter, illegal import of plastic bottles without deposit, and plastic bottles with juices or dairy are exempted from the deposit obligation. When correcting for these factors, the real effect of the deposit is a reduction of small plastic bottles in litter by 85%. The Rijkswaterstaat estimated a reduction of 53% of small plastic bottles in litter compared to 2020. The effect of RTR-DRS is further supported by monitoring in Denmark6, showing that cans with a deposit have 90% less chances of ending up in the environment than cans without a deposit. Meanwhile, no study or monitoring has shown the impact of the Digital DRS on litter. While we can expect that its impact would be better than having no system at all, it cannot be assumed that it would be the same as RTR-DRS, as is done in the PwC study (see Table 1). The impact of the Digital DRS would be largely linked to consumer participation and the accessibility of the system for them and for that there are many questions and uncertainties (see following section).
Effect on return rate of high quality materialCountries with RTR-DRSs have the best return rate for packaging with a deposit (Figure 6). Most RTR-DRSs in Europe already achieve the 90% separate collection target for single-use plastic bottles by 2029 from the SUP European directive. The Netherlands (large plastic bottles) and Germany even achieve separate collection rates of above 95%. There is currently no verified information about the level of separate collection of single-use plastic bottles in Belgium, but it is generally accepted that the target can only be achieved with a deposit scheme. With RTR-DRSs, the waste material collected is of very high quality, as the packaging is fully isolated from other (non-food) material which could contaminate the waste stream. This allows for bottle-to-bottle and can-to-can recycling easily which is important for reducing the CO2-impact of these packaging. With a Digital DRS it remains to be seen what separate collection rates could be achieved and if the EU 90%-target would be within reach. Indeed, with this system the deposit packaging would still be collected together with non-deposit packaging whether in the blue bag or in ‘public blue bins’, leading to contamination risks. Currently, no recycled bottles or cans are made from materials that come solely from a PMC system such as the blue bag. For plastic this is due to safety requirements (EFSA, 2012), for cans due to technical feasibility issues. At the moment, it is not possible to make bottles and cans from 100% Belgian recycled material collected with the blue bag, given that the packaging stays in the same stream of materials. The D-DRS would not change this, as the packaging would stay in the same streams. This is key in the transition towards a truly circular, and more local economy, which Fost Plus itself is indicating willing to move towards.
Transition towards reuseMore high-quality recycling is obviously a step towards a more circular economy. However, Belgium, similarly to all other countries, needs to operate a shift towards more reusable packaging. Keeping the packaging in the blue bag or, even more so, in ‘public blue bins’, fosters an economy based on (lower quality) recycling, rather than on reuse. In the current system, drink packaging is mixed with other (non-food) waste, making the transition towards reuse way more complex as the packaging risks being damaged or warped. The new Packaging and Packaging Waste Regulation proposed by the European Commission on November 30th 2022 makes it clear that a transition towards more refillable packaging is expected from all state members by 2030. RTR-DRSs straightforwardly enable reuse systems for drink packaging. This is actually already the case in Belgium for beer glass bottles. The system could be easily scaled up for plastic bottles and cans. This is also the case for some plastic bottles in Germany (“Mehrweg“). The deposit system which will be set-up in Belgium needs to enable the transition towards reuse. Systems based on curbside collection currently don’t match with refillables and adding unique codes to plastic bottles and cans doesn’t change that.
2) Weighing the Digital DRS: uncertainties of the system
3) Operationality: when would a Digital DRS be ready for implementation?
Below we review certain elements on which research and technological innovation must still happen or be further developed before being able to take a decision on the introduction of a Digital DRS. Please note that there could still be other factors that we can’t foresee now, but could still come up with the further development of the Digital DRS.
At the core of the Digital system is the attribution of a unique serialised 2D-code on each in-scope packaging. Specifically, the PwC study opts for data matrix 2D-codes, an alternative to QR-codes. Those codes can be printed in a smaller size than QR-codes as they contain less data. However, many smartphones do not have the functionality built in to scan Data Matrix codes, and thus a third-party app is needed to read this code.
While printing unique 2D-codes is technically possible on labels that are later applied on a packaging (e.g. for plastic or glass bottle), it is way more complicated to do so directly on the packaging, without significant adaptation costs. In the case of cans for instance, it is at this stage not possible to do such a printing without a significant loss of speed on many production lines (resulting in increasing cost per unit produced).
The PwC study mentions substantial adaptation costs ranging between 1 and 11 million per producer (slide 12). This doesn’t take into account the difference in cost structure for smaller producers. They could have higher costs per unit, as they don’t benefit from the economies of scale or advanced printing machinery which large producers more easily have access to. The conclusion is that it is not feasible at this point to include a unique 2D-code on beverage packaging without significantly increasing production costs. It remains unknown what would then be the impact of this increased production cost on the price for consumers.
Similarly, the question of products manufactured in other countries still need to be addressed: how to include them in the deposit system? For cans for instance, it could be that producers would either need to be dependent upon a few producers who have made investments in new technology (still at a lower production speed) or would need to stop producing for the Belgian market. This raises the question of whether digital DRS would be in line with the European Single Market. With regard to simple 2D codes, GS1 – the global organisation that standardises coding methods – mentions that 2D codes will only be generalised by 2027 – this is about generic 2D codes for product lines and not even unique codes for each product. GS1 also mentions the many barriers still present in the standardisation of these codes.
The problems with 2D codes are not only related to the printing of the unique code, but also at its activation in retails. The PwC study (slide 13) indicates that the 2D-codes would be activated at check-out points in retail or check-out areas. But what about self check-out areas? Does the consumer have to activate the code himself? And what happens if they don’t? And what about packaging from resellers? For instance a night shop who would purchase drink packaging. How to ensure that the activation doesn’t take place too early, thereby increasing the opportunities for fraud mentioned before. This needs to be further developed to prevent issues of activation between retail and resellers.
The current proposition of a Digital DRS by the industry involves adding ‘public blue bins’ outside of supermarkets (mainly regular open bins which would be of a blue color, as well as 138 ‘smart’ bins). Those would require using extra public space (parks, city centers, commercial areas). The involvement and support of municipalities are essential for the whole ‘on-the-go’ part of the system (see slide 40). Municipalities and waste intercommunal organizations in The Netherlands protested heavily when industry planned to collect cans with a deposit in the public space.
The installation of additional bins would require permits and the development of additional logistics (trucks, manpower), which would all take extra time and means to realize. The federation of Flemish municipalities Vereniging van Vlaamse Steden en Gemeenten (VVSG) warned that “if a deposit system is introduced, the total cost of a deposit system should lie with the producers. Under no circumstances should local governments be responsible for additional costs caused by a deposit system. VVSG is not in favour of the scenario where the take-back is mainly through the public domain and the responsibility is placed on local governments” (VVSG, 2022).
The reliance on municipalities does not stop at the simple placement of extra public spaces. The PwC study suggests that they could also be responsible for the “registration and distribution” of the home scanners to households (slide 14). Municipalities could also be responsible for the management of the customer accounts such as “handling citizens moving house” (slide 52). Again, this puts an additional burden on municipalities, which is unnecessary within a RTR-DRS.
RTR-DRSs already have a robust extensive back-end system to function. This back-end system is in place in many countries, providing examples of best-performing systems. With a Digital DRS, new specific research and investments are needed to make the whole system operational. For instance, a more complex IT-system is required to store the unique serial of each packaging, allow for redeeming the deposit to each user on their account and limit fraud. It is uncertain how long it will take for this system to be operational – if it can be – and at which cost. Those costs are not only financial but also environmental: there have been concerns about the environmental impact of such a large IT-backend system. Its impact on the environment in terms of energy consumption will necessarily be much higher than the existing structure required for RTR-DRS.
As an example of the potential complexity of the system, let’s look at fraud. To prevent fraud, a third scanning of the packaging in sorting centers might be needed, to confirm that the packaging has indeed been collected. This would require large investment and time to adapt existing infrastructures. Those investments are unnecessary with a RTR-DRS and therefore extra costs to take into account.
Once the Digital DRS will have been developed and trialled properly, certain features could be added on top of RTR-DRS infrastructure to improve the large environmental benefits that RTR-DRS already achieves. However, this will still take years as the technology is not ready yet. Beyond the simple feasibility of the system, there are still many doubts on the actual impacts of the Digital DRS – especially compared to RTR-DRS, for which these impacts are proven.
With the introduction of a deposit system on all plastic bottles and cans in Belgium planned for 2025, and after years of unsuccessful attempts of the industry to significantly reduce litter, Belgium urgently needs a system which is accessible to all, reduces effectively the amount of packaging present in litter, and closes the loop by fostering high-quality recycling and reuse. Return-to-retail DRS is the only system which has proven to address those issues. It is very unlikely that in the course of 2023, Digital DRS will prove to be a good alternative for implementation in 2025.
- See PwC, DDRS Blueprint – Consolidated report, 27 Sept 2022, slide 51 ↑
- See Norwegian system (Infinitum) presentation, speech from managing direction of Infinitum ↑
- This is because D-DRS has never been implemented so far. Only a couple of – small scale – trials and studies have been carried out in the UK. ↑
- Based on examples in other European countries (see Reloop Global Deposit Book for dates) ↑
- See PwC study, slide 152, note that the Whitehead pilot was not a DRS pilot but a reward system ↑
- CE Delft, 2017. Kosten en effecten van statiegeld. Ordered by the Dutch government ↑
- Zwerfinator, 2022. Onderzoek Drankverpakkingen 2017-2022H1 ↑
- Eunomia, 2022. Deposit Return in the Netherlands: An assessment of the Afvalfonds proposal for beverage can collection in the public domain ↑
- Note that most RTR-DRS have a take-back obligation, so that consumers can bring their packaging in all points of sale (with possible exemption for smaller shops). ↑
- Reward system tested by Fost Plus. ↑
- See ResourceFutures, 2022, Digital DRS Feasibility study Phase 1, p11 ↑
- Based on PwC study and direct information from can producers. ↑
- See Resource Futures, 2022, D-DRS Feasibility Study – Phase 2: End-to-end system design, slide 10 ↑
- See Resource Futures (June 2022), DDRS Feasibility Study, Phase 2: End-to-end system design ↑