Congratulations on crossing the finish line!
Welcome to the 20th and last issue (for now) of Bottle Bill Common Ground — a limited-series newsletter from Reloop North America highlighting evidence-based guidance for policymakers, industry, and advocates working on bottle bills. (If you haven’t read our first 19 issues, you can do so here.) If you’ve made it this far, you’re well on your way to becoming an expert on deposit return systems (DRS).
To help maintain your expertise, we’ve created for release next month, A Guide to Modern Deposit Return Systems: 10 Essential Practices. It compiles and expands on content from Bottle Bill Common Ground, putting this information — research, charts, tables, case studies — all in one place for quick and easy reference. If you’re a subscriber, look for an email. If not, well, why not? Subscribe now and be the first on your block to get this roadmap to a modern DRS.
We focus here on the last of the 10 essential practices — requirements on how to build, run, and maintain a modern deposit return system (DRS) for beverage containers. The 10th essential practice is:
A defining feature of modernized DRSs is the use of technological platforms to reconcile the number of empty containers returned with those sold, as well as the refund of deposits against those collected. This not only establishes a high bar for transparency and accountability but also achieves something few waste or material management systems can: unit-specific tracking.
Why does this matter? Let us count the ways. The ability of DRSs to track each beverage container moving through the system:
Establishes a required standard for transparency and accountability
Enables efficient clearing — deposit containers registered at the point of sale get matched with those returned
Maximizes visibility for producers, distributors, and system operators into the flow of money and materials within the system
Creates a valuable database of information to inform future policymaking
Supports government reporting on progress towards zero waste and climate goals
How does this work? First, there should be a direct online connection (e.g., via reverse vending machines, also known as RVMs) between return points or counting centers and the system operator. Besides reducing any potential data leakages within the system, this direct connection ensures accurate and reliable data can be captured during the return process.
Second, the information collected should be seamlessly and automatically uploaded to a central database that is easily accessible to the regulatory body. This enables efficient data management and facilitates monitoring and oversight of the system’s operations.
Third, unit tracking enables a high level of transparency in financial transactions. It ensures that every deposit collected is properly accounted for and can be traced back to the specific container it originated from. Effective legislation requires that these specific activities be followed:
- Maintaining a central database with barcode and registration information for all products in the system (see Practice 3: Official Reporting and Compliance)
Aggregating material and financial flow data from both automated and manual collection points
Clearing deposits in a transparent, timely, and unit-specific manner
Paying handling fees and other compensation, as required, to the appropriate parties
Invoicing deposit initiators, such as producers or importers, for the costs associated with the DRS, including handling fees, processing fees, and other related expenses
All of these activities should be both reported to and monitored by the appropriate regulatory agency (see Practice 4: Oversight and Enforcement).
Processing Fees and Requirements
Processing fees are typically negotiated in a service contract and set on a per container or tonnage basis. They tend to be most influenced by material and size of container, sales volume, who owns the scrap material, and the level of automation involved in processing the containers.
Effective legislation also sets out processing requirements for deposit initiators, such as producers or distributors, to ensure they take back their containers from the retailers they deliver to or from the authorized redemption center that serves those retailers. Some DRS jurisdictions also require:
- Minimum pickup frequency (e.g., once every two weeks)
- Volume-based pickup requirement (e.g., once 10,000 beverage containers are amassed)
- Minimum operating hours for return points
Implementing robust quality assurance processes for reconciling depot and/or processing center counts, particularly for manual collections, is crucial for minimizing the potential for overcounting and other fraudulent activity within a DRS. In instances where the use of automated counting and sorting equipment for containers is minimal, ensuring effective quality control measures becomes paramount.
Incidents of counting centers inflating the reported number of containers for their own financial benefit have been observed in both Canadian and U.S. programs. While auditing procedures have been implemented to address and curb such fraudulent actions, legislators must continue to prioritize mitigation strategies to safeguard the integrity of the system.
Just as meaningful deposit levels are essential for achieving high redemption rates, handling fees are a critical part of what makes DRSs work well. This is especially true in jurisdictions where there is no legal obligation on retailers to provide take-back services. Handling fees should be determined based on the actual cost of service.
Similarly, careful determination of processing fees and requirements greatly impacts system outcomes. Experience shows considerable benefits of automation in reducing fraud. And the use of spot audits to verify the number of declared containers against the number received at processing centers serves as a valuable tool in mitigating potential fraud within the system.
Case Study: Denmark
Established in 2002, Denmark’s deposit system — operated by Dansk Retursystem — is one of the highest performing DRSs worldwide, achieving a redemption rate of 92% in 2022. The Danish legislation includes the following provisions to ensure material flow and financial data is well recorded:
Processing Empty Containers:
Empty containers can be counted and registered at return points using RVMs equipped with a compactor or sealed container system. Alternatively, counting machines at Dansk Retursystem can be used.
When counting is done electronically in RVMs, the central control unit registers various data about the packaging, such as packaging type, product type (GTIN), deposit group, sales group, recipient of returns, provider, and deposit code.
If the compactor or sealed container system is non-operational at return points, Dansk Retursystem assumes responsibility for counting, registration, and data forwarding.
In cases where containers cannot be scanned by a counting machine, manual control procedures are employed to identify the deposit mark.
Data Registration and Forwarding:
Dansk Retursystem electronically transmits the registered data and estimates (if the exact number of packaging items collected is uncertain) to a central server maintained by the operator with whom they have a contractual agreement. Subsequently, the data is deleted, and Dansk Retursystem is prohibited from copying, storing, or accessing the information.
Dansk Retursystem is obligated to enter into an agreement with an independent operator for the registration and forwarding of data regarding returned and collected empty single-use packaging. The operator is required to transmit the registered data to the auditing company and Dansk Retursystem.
The agreement between Dansk Retursystem and the operator should solely include the data specified in the law. If the operator submits any other data, Dansk Retursystem will terminate the system operator agreement.
A copy of the agreement between Dansk Retursystem and the operator is filed with the Danish Environmental Protection Agency (EPA).
Data Forwarding by the Operator:
The operator is responsible for forwarding data received from the central control units of RVMs and from Dansk Retursystem to the auditing company.
Additionally, the operator supplies data to Dansk Retursystem, specifying the number of returned and collected containers categorized by deposit groups and sales groups.
Overall, the Danish legislation ensures an accurate and controlled process for counting, registering, and managing empty beverage containers. Whether handled by return point operators or Dansk Retursystem, the system establishes secure and traceable financial data flow, facilitating proper auditing and monitoring by relevant entities.
The management of material flow and financial data through the “clearing” exercise is an essential operational function of DRS. All stakeholders stand to benefit from this practice.
Remember that Reloop will release next month a compendium guide to all the content covered in this newsletter series. Watch out for our email alert. (If you’re not already, become a subscriber to get it.) Or follow us on social media and check out our Reimagining the Bottle Bill website. You can find all the issues of this newsletter on the blog.
Thanks for reading! We encourage you to share this newsletter, and all issues that came before, widely with those who want or need to know about these 10 principles and 10 practices. Working together from a common ground of knowledge, we can move good bottle bills forward.