Understanding the Belgian "Digital deposit return scheme" proposal

In recent decades, Belgium has struggled with the issue of litter, despite millions invested in clean-up Actions, awareness campaigns and law enforcement (cameras, fines). The Flemish government set itself the target of reducing litter by 20% by 2022 compared to 2015. In 2021, there were still 18,171 tonnes of litter present in Flanders, still well over 1,831 tonnes away from this target. Therefore, on Friday 23 December, Flemish Environment Minister Zuhal Demir announced that a deposit return system will be launched on all plastic bottles and cans in 2025. She gave the industry the opportunity to launch pilot projects to evaluate the "Digital Deposit Return System" by the end of 2023. If the evaluation of the pilot projects is not positive, in terms of both feasibility and desirability, a conventional deposit return system will be introduced. The Walloon Region is also investigating a deposit return system, via a study whose preliminary conclusions are expected in early July 2023.

Deposit return systems (DRSs), with a return-to-retail (RTR-DRS) design, are widespread in Northern Europe (Figure 1). They have proven their effectiveness in reducing litter and increasing the return rate of high-quality materials. The large number of examples in neighbouring countries provides sufficient benchmarks to effectively implement an RTR-DRS by 2025.

On the other hand, the Belgian "Digital Deposit Return System" proposal, where two 2D codes are scanned before packaging is thrown into the blue bag or into "public blue bins", has yet to prove whether it can be implemented by 2025, or indeed at all. This analysis presents the concepts of return-to-retail DRS (RTR-DRS) and the Digital Deposit Return System proposal. The advantages, disadvantages and operational feasibility of the Digital Deposit Return System in the Belgian context are also assessed.

Note that most information on the concrete design of the system for Belgium comes from the "Deposit Return Blueprint", carried out by the consultancy PwC at the request of the Belgian industry. This analysis will be updated when more information on the Digital Deposit Return System becomes available.

What are 'Return-to-Retail' DRS and 'Digital DRS'?

In this section, we present RTR-DRS and the Belgian Digital DRS proposal and compare their respective costs, implementation timeline, impact on litter, return flow of high-quality material and potential for reuse.

Description of the systems

In general, a conventional deposit return system is a system in which consumers pay a deposit upon purchasing each beverage container. Consumers can get this deposit fully refunded by returning their empty packaging to a collection point, after which the packaging can be recycled or reused. In Europe, these collection points are mainly retail outlets (supermarkets, kiosks, petrol stations…), hence the name return-to-retail (RTR) DRS.

16 European countries have introduced an RTR-DRS system or voted in favour of its introduction. In 10 other countries (Figure 1), discussions on introducing a DRS system are ongoing. Belgium also has a similar system for certain reusable glass bottles.

The Digital DRS (aka 'QR code system' or 'Scanning system') is an alternative proposal to RTR-DRS. Just as with RTR-DRS, a deposit would be paid upon purchase by the consumer. However, with a Digital DRS, the beverage containers would feature a unique, serialised 2D code (Data Matrix or QR code) that is activated upon sale[1] (i.e. receives the deposit value). Several proposals for digital DRS have been investigated (see ResourceFutures, 2022). Here, we analyse the scenario proposed in the PwC study (Figure 2).

Whereas with an RTR-DRS consumers get their deposit back by returning the packaging to a take-back point, with the D-DRS proposal consumers would have to scan the 2D code of each package using their smartphone or a home scanner and "correctly" dispose of the packaging in the designated bin, which also features a 2D code that must likewise be scanned, as shown in the proposed scenario (Figure 2).

Another difference is that consumers would dispose of their packaging in the existing "blue bag" (kerbside PMD collection) or in new public "blue" bins. Thus, 136,000 new bins would be added alongside existing public bins. Note that, according to the PwC study scenario (Figure 2), the blue bag and these new bins would also carry a scannable 2D code.

In the PwC study, the chosen scenario also refers to "smart" bins, but these would only be used sporadically: 138 of these bins are planned for the whole of Belgium, including 137 in Flanders and only one in Wallonia, compared to more than 136,000 traditional 'public bins' in blue. The use of the blue bag and simple "public blue bins" confirms that deposit-bearing packaging would therefore be collected together with non-deposit packaging (and non-food products), whereas with RTR-DRS they are collected separately. PwC itself mentions the "potential contamination of waste streams" with the public blue bins (slide 27).

These differences would lead to different outcomes in terms of costs, timeline for introduction and effectiveness, which we explain further below.

Expenses and savings

Costs: First and foremost, it is important to look at the costs of both systems, as the cost-benefit ratio of the system is essential to evaluate its success.

Several studies have concluded that RTR-DRS can be set up in a cost-effective way [2] for businesses, and without additional costs for public actors, given the 100% extended producer responsibility. In a 2015 study by OVAM, the total annual costs of a deposit system on cans and bottles were estimated at 77 million euros, compared to revenue streams of 82 million euros. Here, the estimated revenues are therefore higher than the costs. The cost and impact study by CE Delft (2017), commissioned by the Dutch government, suggests even higher potential benefits than costs with an RTR-DRS. When we look at systems that have been operational for some time, we see that the system functions well and is widely accepted by the various stakeholders. Retailers are compensated by means of handling fees; in addition, the system can generate footfall to shops from consumers coming to redeem their deposit. Reloop provides a clear overview of how all deposit return systems in the world are set up in practice, providing ample information on how the systems operate in practice with regard to operational and financial flows.

For Digital DRS, there is still insufficient information [3] to confirm that this system can also be set up in an equally cost-effective manner. Based on the PwC study, the Belgian packaging industry claims that its introduction would be cheaper. First of all, however, it should be noted that the PwC study provides very little information on the calculations for both the QR code system and the traditional DRS, making it impossible to audit them thoroughly; the conclusions should therefore not be accepted without further proof. What we can verify is whether certain costs and revenues have been omitted or whether errors were made in the calculations, insofar as the study is transparent about this. 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 others (Figure 3, slide 66):

Costs Traflux Pillar public blue bins (di The investment costs in the chosen scenario do not match PwC's market research (Figure 4, slide 28). The investment and installation costs per bin ranged from €1,250 to €1,450, but PwC used a reference cost of €750 per bin. When the investment costs are corrected (using the lowest cost of €1,250), this leads to an underestimation of €68,133,500. When this underestimation is taken into account, the investment costs for the digital DRS amount to €186,619,990.69 (compared to an estimate in the PwC study of €118,486,490.69), which is higher than the investment costs of the RTR-DRS (€154,864,500), see slide 68.

Cost of home scanners. In the DDRS scenario evaluated by PwC, the costs for home scanners would amount to 15,260,712.69 euros, corresponding to 554,935 scanners (27.5 euros/scanner). The number of home scanners needed for all Belgian households would be 5,024,851 (138,183,402.5/27.5 slide 66). In the evaluated scenario, therefore, only 11% of households have a home scanner. This seems an underestimation given the potential refusal of users to use smartphone apps, digital illiteracy (if home scanners would solve this problem at all), persons with disabilities, home scanners for families with children (so that they can also participate in the system…). It is possible that some Belgian households will want a home scanner, even if they have the application on their phone. Moreover, it is not clear that home scanners can bridge the digital divide. 11% coverage of home scanners therefore seems once again an underestimation of the costs.

The operational costs in the PwC study are not detailed enough, so beyond asking a few questions, no further comments are possible. These include (slide 70): The transfer of pre-sorting costs to the post-sorting bins in 2027 which seems to have been forgotten; in 2027, the annual pre-sorting costs (calculated for the "traditional public bins") simply disappear (more than €337,000) while that same year the post-sorting costs (defined on slide 63 as) "Costs for sorting PMD fractions, based on EPR litter simulation. Applied to volumes collected via public bins (transition) and 'public blue bins'." only increase by around €53,000.

How can that be explained? What are the maintenance/IT costs? Are the operational costs for cleaning public spaces missing? These must be included in the calculation as producers are now responsible for these costs.

Timeline

Another decisive factor when choosing a deposit return system is the speed with which it can be implemented. RTR-DRS requires an implementation period of 12 to 18 months [4] following the political decision. An RTR-DRS in Belgium could therefore be ready by 2025, provided that the plan for RTR-DRS is drawn up in 2023. It can then be launched according to the timetable announced by Flemish Environment Minister Zuhal Demir.

There is no indication of the time needed to implement a digital DRS, as it has not yet been introduced anywhere. Due to the required research, the lack of understanding of how to set up the system together with other stakeholders, and the technological developments that still need to be made and implemented, it is unclear whether the entire digital DRS will be ready for the market at any point.

The Belgian packaging industry has until the end of 2023 not only to prove the technical feasibility of this system, but also whether the system can actually achieve the set targets and is genuinely accessible to everyone. Pilot projects are seen as a crucial element in demonstrating feasible implementation, but so far previous pilot projects launched by the packaging industry in Belgium to reduce litter have not been effective and have taken years to test, causing significant delays in the decision-making process. This is the case, for example, with the Prime de Retour in Wallonia and the ongoing reward system of the Click. The city of Antwerp even recently halted the Click, given the high costs and the lack of any reduction in litter.

As for pilot projects with digital DRS, there have only been small-scale pilot projects (in Dublin and Conwy[5]) of a few hundred households and for less than a month. They were by no means representative of how a system would function on the scale of an entire country and over the long term. Pilot projects typically take a lot of time, and given all the elements that have yet to be proven regarding the feasibility, accessibility and effectiveness of the digital DRS, pilot projects at this stage can realistically provide only part of the answer to whether the digital DRS will be ready for rollout in 2025. All research to date highlights the low market readiness of digital DRS (see ResourceFutures, 2022) and the long time that would be required to adapt production (PwC study, slide 12).

And it cannot be the case that the industry tries to delay the introduction of a system in Belgium any further. As Minister Zuhal Demir stated before the plenary session of the Flemish Parliament on Wednesday 18 January, "it comes down to deposit return being introduced in 2025" and that "supposing the pilots do not deliver, it will be the classic system". The pilots will be evaluated by OVAM, together with a sounding board group that includes societal stakeholders such as representatives of consumer organisations, municipalities and environmental associations.

Effectiveness of the system

It is not enough to verify whether the digital DRS can be introduced within a given timeframe. It is also essential to ensure that the objectives for which deposit return systems are designed are actually achieved. That is to say: reduction of litter, increase in the collection of high-quality material, transition to reuse systems. In the PwC study, the effectiveness of the system on those elements is not discussed, but it is simply assumed that the effect is comparable to a classic DRS. Even though the design of a classic DRS is completely different. Furthermore, the PwC study pays no attention to whether digital DRS provides any possibility for reuse at all, even though the intention of the future 'Packaging and Packaging Waste Regulation' is to encourage reuse for beverage packaging.

Effect on litter

A study by CE Delft[6], commissioned by the Dutch government, looked at international data on the effects of DRS and estimated the potential reduction in litter for small plastic bottles and cans to be between 70 and 90%.

Just one year after the expansion of the Dutch system to include small plastic bottles, "Zwerfinator" Dirk Groot recorded 76% fewer small plastic bottles per kilometre (Figure 5[7]). Note that there are still old plastic bottles without a deposit in litter, illegally imported plastic bottles without a deposit, and plastic bottles for fruit juices or dairy that are exempt from the deposit obligation.

Meanwhile, no study or monitoring has demonstrated the effect of the digital DRS on litter. While we can expect its effect to be better than having no system at all, it cannot be assumed that it would be the same as with an RTR-DRS, as was done in the PwC study (see Table 1). The impact of the digital DRS would largely depend on consumer participation and the accessibility of the system for the consumer[8], and there are many questions and uncertainties surrounding this (see next section).

Effect on the collection rate of high-quality material

Countries with RTR-DRS systems have the best collection rates for deposit packaging (Figure 6).

Most classic DRS systems in Europe already achieve the target of 90% separate collection for single-use plastic bottles by 2029 under the European SUP Directive. The Netherlands (large plastic bottles) and Germany even achieve separate collection rates of over 95%. There is currently no verified information on the separate collection rate of single-use plastic bottles in Belgium, but it is widely assumed that the target can only be achieved with a deposit return system.