Hello to the Seventh Principle, but we do not rest…
Welcome to the seventh issue of Bottle Bill Common Ground — a limited-series newsletter from Reloop North America highlighting evidence-based guidance for legislators, policy makers, industry, and advocates working on bottle bills. (If you haven’t read our first six issues, you can do so here. This issue focuses on Principle #7 of the 10 high-performance principles for an effective deposit return system (DRS), the keystone of a better bottle bill.
Successfully transitioning to a modernized DRS takes thoughtful implementation and support within the existing recycling infrastructure. One of the impacted stakeholders are Material Recovery Facilities, commonly referred to by their acronym — MRFs. There are pluses and minuses for MRFs in this DRS transition.
Let’s start with the overall system impacts. As a modern DRS takes hold, here’s what happens:
- Returning containers becomes easier for everyone (Principle 1: Easy & Equitable) so…
- Collection rates rise (Principle 2: 90% Collection Rate) as…
- Consumers find it more convenient (Principle 1 again) and are more incentivized to take containers back to redeem their deposit (Principle 3: $0.10 Minimum Deposit).
So what’s the downside? MRFs will see fewer containers flow through their facilities, so their revenue from sales of higher value materials such as aluminum and PET drops. They also lose tipping fees — the amount paid by municipalities or private haulers for the management of materials.
What’s the upside? MRFs will see lower volumes of materials that are costly to process and have limited markets, such as glass and cartons, so they will have lower operational costs. Plus, the overall cost savings to towns and cities can help to offset the negative impacts of DRS modernization.
With an efficient DRS, bottle bill states can save millions of dollars through cost reductions on garbage/recycling collection, garbage disposal, and litter cleanup. Reloop North America did research on the impacts of DRS modernization in Northeast states and found these states could realize the following savings (click image for larger version):
In addition to such significant savings, cities and towns, as well as MRFS, would benefit from unclaimed deposits — monies that accumulate from beverage containers that are not redeemed but are thrown away or recycled through curbside programs.
How does that work? In early phases of transition to DRS, policymakers can require a portion of unclaimed deposit funds be used to reimburse MRFs or municipalities for lost revenue or to cover upgrades and modernizing municipal recycling programs, including helping MRFs invest in new technologies to manage hard-to-recycle materials. And it’s not pennies we’re talking about.
Our research in the Northeast shows this value for unclaimed deposits in early years of a transition to a modern DRS:
Clear rules must be set up to guide distribution of these funds and strike a balance between compensating MRFs fairly while benefiting municipalities so a state’s DRS operates efficiently and cost-effectively for all stakeholders.
A Reloop survey of 21 Northeast MRFs on technology needs found that optical and enhanced sorting equipment were the most common investment demands. Modernizing a plastic line can cost between $1 million-$1.5 million per MRF, and modernizing a paper line can cost between $500,000-$1.5 million per MRF. With clear eligibility requirements and a process for requesting technology upgrade funding, a portion of that $822 million in unclaimed deposits could be used to significantly support MRFs throughout the Northeast during a transition period.
Revenue from unclaimed deposits also creates an opportunity for targeted, neighborhood-driven programs that can deliver meaningful improvements in quality of life for everyone and some vulnerable populations in particular. For example, research to better understand the needs of canners might result in government-supported siting of canner-oriented redemption centers.
Careful oversight, however, is needed on how stakeholders spend unredeemed deposit revenue, and prioritize meaningful system investments. (Look for upcoming Principle 10: Government Oversight & Enforcement) Plus, every jurisdiction faces different baseline conditions. Impact assessment and full cost accounting are necessary to determine the scale of potential revenue lost to municipalities and current service providers, and serve as the basis for an equitable transitional funding strategy.
With planning, outreach, and collaboration, transitioning to a modern DRS can be done well to benefit key stakeholders, as well as create positive economic and environmental impact for all communities.
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