Agenda item

            The Committee considered the undernoted report:

 

“1.0      Purpose of Report or Summary of main Issues

 

1.1             As agreed at the May 2021 People and Communities Committee, this update is to provide Committee with a copy of the relevant responses from the Council and arc21 to recent consultations on EPR and DRS relating to packaging waste. Both consultations opened on 24 March 2021 and closed on 04 June 2021.

 

2.0       Recommendations

 

2.1       The Members of the Committee are asked to recommend that, in accordance with the Council decision of 4th May 2021, the Chief Executive exercise her delegated authority to:

 

·        Retrospectively (as noted as last month’s Committee meeting, the consultations formally closed on 4th June) adopt the consultation responses to Extended Producer Responsibility for Packaging and Introducing a Deposit Return Scheme in England, Wales & Northern Ireland.

 

3.0       Main report

 

3.1       Members may recall a series of consultations in 2019, relating to packaging.  This consultation process was the beginning of an approach to reform the arrangements for producer responsibility for packaging waste, which has been in place since 1997. The responses, to the original consultations, from both Belfast City Council and arc21, were presented to Committee in June 2019.

 

3.2       These consultations collectively represent possibly the biggest change in UK Waste Management practices in a generation.  These will have profound implications upon BCC’ waste activities and particularly on the financing of collection arrangements and revenue arising from the sale of recyclables. 

 

3.3       The premise of the EPR consultation is to ensure ‘producers pay the full costs of dealing with the waste packaging they produce’.  The original producer responsibility scheme in its current guise has flaws and does not support the principles of producers paying for the full costs, nor that the benefits should be spread across all stakeholders in the supply chain.  This new EPR scheme is focusing more clearly on addressing this shortfall to ensure that it is fairer for all stakeholders. 

 

3.4       The EPR consultation has much to commend it in progressing the development of a Circular Economy and should be viewed as an opportunity, subject to the actual implementation of the detail to be contained within the legislation.  The aim of placing the cost burden on producers with the expectation that this will cause them to question whether their packaging is necessary, could be reduced, or not used at all, is a positive change and should reduce the  overall financial burden placed on councils in dealing with packaging waste. 

 

3.5       Following strong support from the 2019 consultations, Northern Ireland, England and Wales committed to introduce a Deposit Return Scheme (DRS) for drinks containers subject to further consultation. This second consultation is seeking views from across the industry, on how the scheme will function to ensure it achieves the desired outcomes. Responses to this consultation will help inform final policy decisions on key aspects of the scheme, such as governance, targets and implementation timelines.

 

3.6       At its meeting on 11 May 2021, Committee agreed to support an ‘All-in Scheme’ in relation to the size of drinks containers to be included within the Deposit Return Scheme and this has been reflected in the Belfast City Council response. 

 

3.7       Both consultations opened on 24 March 2021 and closed on 04 June 2021. The responses to both consultations are contained in Appendices 1 and 2.  In preparing the Council’s response, officers have also taken on board the views of regional organisations such as NILGA, arc21 and LARAC, in order to recognise the regional and national importance of this consultation.

 

            Background

 

3.8       To help the move towards a more Circular Economy, the UK Government for England (DEFRA), the Welsh Government and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland have all made commitments to develop policy which works towards achieving the aims of resource efficiency and resource productivity, through the development of producer responsibility proposals.

 

3.9       Government highlights that, in 2019, approximately 11.7 million tonnes of packaging was placed on the UK market and that every year across the UK, consumers go through an estimated 14 billion plastic drinks bottles, nine billion drinks cans and five billion glass bottles.

 

3.10      In March 2021, Government launched these Consultations to overhaul the waste and resources sector, in an attempt to boost recycling, tackle plastic pollution and reduce litter.

 

3.11      The proposals within the Consultations are underpinned by powers in the new Environment Bill, to make manufacturers more responsible for the packaging they produce and incentivise consumers to recycle more.

 

3.12      The new proposals include Extended Producer Responsibility for packaging where manufacturers will pay the full costs of managing and recycling their packaging waste, with higher fees being levied if packaging is harder to reuse or recycle. The scheme is being developed on a UK-wide basis.

 

3.13      Also included is a Deposit Return Scheme for drinks containers, where consumers will be incentivised to take their empty drinks containers to return points hosted by retailers. The scheme would cover England, Wales and Northern Ireland, with a separate scheme already under development in Scotland.

 

            Extended Producer Responsibility for Packaging (EPR)

 

3.14      The current producer responsibility system for packaging has been in place since 1997 and predates the introduction of devolved government in Scotland and Wales in 1999.  It operates UK-wide under GB and parallel Northern Ireland regulations. In response to commitments made by the four governments to reform the existing regime and to incentivise producers to take more responsibility for the materials and products they place on the market, the UK Government, the Scottish Government, the Welsh Government and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland published a joint consultation in February 2019 setting out proposals to reform the producer responsibility system for packaging.

 

3.15      Extended Producer Responsibility is an established policy approach adopted by many countries around the world, across a broad range of products and materials.  It gives producers an incentive to make better, more sustainable decisions at the product design stage including decisions that make it easier for products to be re-used or recycled at their end of life.  It also places the financial cost of managing products once they reach end of life on producers.

 

3.16      This second consultation sets out proposals for the introduction of EPR for Packaging.  Views are sought from across the industry, as well as members of the public, on how the scheme will function to ensure it achieves the desired outcomes.  Responses to this consultation will help inform final policy decisions on key aspects of the scheme, such as governance, recycling targets and implementation timelines to help ensure an effective system is put in place and inform the regulatory framework required to deliver this change.

 

            A synopsis of the EPR scheme is outlined in the following sections.

 

            Targets

 

3.17      Under the Packaging Waste Regulations 2007, obligated producers are required to meet annual recycling targets, with UK packaging waste recycling rates reported annually by Defra. Government will separately report overall packaging waste recycling rates for England, Northern Ireland, Scotland, and Wales.

 

3.18      The consultation proposes minimum recycling targets for six packaging materials. These equate to an overall recycling rate for EPR packaging of 73% by 2030. It also proposes the introduction of a recycling target for fibre-based composite packaging such as food and drink cartons and single use paper cups.

 

            Full Net Costs

 

3.19      Following strong support in the 2019 consultation, subsequent evidence development and stakeholder engagement, Government intends to progress with the broad scope of full net costs of managing packaging waste as set out in the response to the first consultation. This includes:

 

·        The collecting, sorting, and recycling of packaging waste from households and businesses

·        The collecting and disposing of packaging in the residual waste stream from households only

·        Litter and refuse management costs, including bin and ground litter

 

            Obligated Producers

 

3.20      Government proposes the introduction of a single point of obligation (i.e., a single producer is responsible for the cost of managing a piece of packaging). This will focus the obligations onto those who are best placed to reduce and/or increase the recyclability of the packaging they use. The consultation details the proposed obligations for reporting and payment of costs for the different types of obligated producer. In the current system, the obligation for a single item of packaging is shared across multiple businesses.

 

3.21      The consultation proposes lowering current ‘de-minimis’ levels so that more producers are obligated and also obligating online retailers for any imported packaging.

 

            Disposable Cups

 

3.22      The consultation seeks views on whether a mandatory cup takeback and recycling requirement should be placed on businesses selling filled disposable paper cups to provide for the separate collection of used cups (either generated in-store or consumed ‘on-the-go’). Currently there are some voluntary schemes being operated by retailers in relation to disposable cups.

 

            Modulated Fees

 

3.33      The consultation proposes that the fees producers will pay to cover the disposal costs of their packaging should be varied to reflect criteria such as recyclability. For instance, producers whose packaging contributes positively to scheme outcomes (e.g., easily recyclable) will pay lower fee rates, while fee rates for packaging which does not contribute positively to scheme outcomes will be increased (e.g., unrecyclable).

 

            Labelling

 

3.34      The consultation proposes that mandatory recyclability labelling should be introduced on packaging as soon as is feasible and by end of 2026/27 at the latest. The expectation is that labelling is introduced on different packaging types in line with requirements for their separate collection by local authorities (so along the lines that the OPRL is designed). It is proposed that the broad requirements for labelling are set out in legislation, including a requirement to use a label approved by Government (or the Regulator). 

 

            Plastic Film and Flexible Packaging

 

3.35      It is proposed that plastic films and flexibles should be required to be collected for recycling as soon as is practical, and the costs of achieving this are paid by producers. It is assumed this will be possible by end of financial year 2026/27 but views are sought in the consultation.

 

            Bio-degradable Packaging

 

3.36      This type of packaging will fall under EPR proposals. The consultation suggests that until such time as the state of evidence, collections and infrastructure for this packaging can be improved on this type of packaging, it is unlikely to be considered recyclable under packaging EPR and will therefore attract higher fee rates than packaging that contributes positively to scheme outcomes.

 

            Payments for Household Waste to Local Authorities

 

3.37      The consultation sets broad principles underpinning the implementation of payment mechanisms. These include the scope of ‘necessary costs’ and that costs paid by producers should be for the delivery of ‘efficient and effective’ services.

 

3.38      It proposes that payments should be based on both the tonnages and quality of packaging waste collected and recycled, with these requirements being phased in and a Scheme Administrator encouraged to support local authorities to improve and meet performance benchmarks, to obtain their full payments.

 

3.39      Only local authorities which operate efficient and effective systems will have their full net costs recovered via a modelled approach based on the tonnage collected.

 

            Payments for Business Waste

 

3.40      The consultation seeks views on three different approaches to facilitate payments from packaging producers to businesses generating packaging wastes. Two of these approaches foresee a clear role for compliance schemes, whilst one foresees full responsibility for payment, and therefore achievement of targets, placed on a Scheme Administrator.

 

            Data and reporting required

 

3.41      To support the payment mechanisms proposed, Local Authorities will need to report data to the Scheme Administrator. This will include data on their collection and disposal services and facilities, the types of households and businesses they service, the tonnages collected through their systems and local communications activities.

 

3.42      It is proposed that producers pay according to the tonnage of packaging they place on the market in the previous calendar year as they currently do, and that Local Authorities are paid on a financial year basis, based on previous years tonnage data, quarterly in arrears.

 

            Payments for Littered Waste

 

3.43      The consultation proposes that producers of commonly littered packaging items be made responsible for the costs that are directly attributable to their management, both as bin and ground litter. This includes costs incurred by Local Authorities, other duty bodies, litter authorities and statutory undertakers.

 

            Scheme Administrator and Governance

 

3.44      The consultation seeks views on two broad approaches:

 

·        A single administrator / management organisation: responsible for administering and managing delivery of the packaging waste management cost requirements and producer compliance with packaging waste recycling targets.

·        Multiple compliance schemes with certain functions undertaken by a Scheme Administrator: A Scheme Administrator would take on functions that are better delivered UK-wide such as developing the approach to determining packaging waste management costs for household waste, setting the fee modulation mechanism, and administering payments to local authorities; with compliance schemes primarily responsible for managing compliance with obligations in respect of non-household packaging waste.

 

            Monitoring and Enforcement

 

3.45      It proposes that the environmental regulators in England, Northern Ireland, Scotland, and Wales will be the primary regulators and have the powers to monitor, audit, and use civil and criminal penalties to drive compliance and address non-compliance. There are no proposals for local authority involvement in aspects of regulation relating to the EPR system.

 

            Implementation Timetable

 

3.46      The governments intend to have the first phase of EPR established in 2023 which would enable payments to local authorities to commence from October 2023.  Full cost recovery is anticipated to be achievable in Phase 2 from April 2024.

 

            Deposit Return Scheme

 

3.47      This consultation focuses on specific policy proposals for the introduction of a deposit return scheme, including the scope of materials, scheme governance, return points, and collection targets. The proposals set out in the consultation work together to create a scheme that incentivises consumers to change their behaviour, leading to higher recycling rates and lower levels of littering. The consultation refers solely to deposit return schemes for drinks containers.

 

3.48      Following the first consultation on a Deposit Return Scheme, in 2019, Government indicated the intention was to introduce a deposit return scheme for drinks containers in England, Wales, and Northern Ireland from 2023 and that the introduction of a deposit return scheme would be subject to receiving additional evidence and carrying out further analysis on the costs and benefits of such a scheme.

 

3.49      Government remains committed to delivering on its commitments to introduce a deposit return scheme, but it also recognises that the Covid-19 pandemic has disrupted the economy and society in unimaginable ways. On this basis, the second consultation builds on the first consultation, offering a chance to explore further what the continued appetite is for a deposit return scheme in a ‘post-Covid’ context.

 

3.50      Government have reassessed what a realistic timeline for implementation of a deposit return scheme looks like, ensuring that sufficient time is given for a successful roll-out of the scheme. They anticipate that the introduction of a deposit return scheme in England, Wales and Northern Ireland would be in late 2024 at the earliest. Updated information on the implementation timeline is provided in the consultation.

 

3.51      Views are being sought on how a deposit return scheme will operate, for example, scheme design, scheme governance, implementation timelines and enforcement. DEFRA is seeking views from across the industry, as well as members of the public, on how the scheme will function to ensure it achieves the desired outcomes.

 

3.52      The Consultation document covers ten major areas relating to a deposit return scheme. Of particular relevance to local authorities are the chapters covering the scope of the scheme, the scheme governance, return points and local authorities. Other areas covered include the collection targets, financial flows, labelling, monitoring and enforcement, the implementation timeline and the impact assessment.

 

            Scope

 

3.53      The Consultation sets out the scheme participants who will take on obligations under the deposit return scheme – namely producers, retailers, and the Scheme Administrator (Deposit Management Organisation or DMO). These obligations include requiring producers to sign up to the DMO and carry out reporting obligations, paying a producer registration fee to the DMO to fund the deposit return scheme, and placing a redeemable deposit on in-scope drinks containers they place on the market. Retailers will be required to accept all deposit return scheme containers returned to their store and ensure the deposit price is added to the purchase price of an in-scope drink at the point of purchase.

 

3.54      It sets out what materials will be within the scope of a DRS. This will be based on materials and not the type of product and it is proposed that the scheme will include PET bottles, glass bottles and steel and aluminium cans. These will either be drinks containers up to 3 litres for the ‘all in’ scheme or drinks containers under 750ml for the ‘on the go’ scheme.

 

            Four options are proposed:

 

1.      Do Nothing

2.      All in (drinks containers up to 3 litres)

3.      On the go (drinks containers under 750ml)

4.      All in without glass

 

            Welsh Government have stated a preference for an ‘all in’ system.

 

3.55      As noted, at its meeting on 11 May 2021, Committee agreed to support an ‘All-in Scheme’ in relation to the size of drinks containers to be included within the Deposit Return Scheme.

 

            Within the Consultation response, although we support the inclusion of all proposed materials, we highlight the fact that the Republic of Ireland is developing a deposit return scheme excluding glass, and that this has the potential to cause confusion and even fraudulent cross-border activity. We also suggest that consideration could be given to additional materials, for example cartons.

 

            Targets

 

3.56      There are proposals that legislation will set out targets for a proportion of drinks containers placed on the market to be collected for recycling. It is proposed that there should be an obligation placed on the DMO to achieve a 90% collection rate after three years from introduction. It will be the responsibility of the reprocessor to provide evidence how much has been recycled.  The point at which material will be counted towards recycling targets will be when it reaches end of waste criteria.

 

3.57      To ensure that all material collected through a deposit return scheme will be recycled, the governments propose that there should be a legal obligation on the Deposit Management Organisation to ensure that the material that is collected via a deposit return scheme is passed on to a reprocessor and evidence is provided of this.

 

3.58      Within our response, we agree that in order to make the DRS system worthwhile it should achieve a high capture rate.  However we highlight that consideration may need to be given to defer the scheme, until the outcomes of EPR and the plastics tax are realised before making additional investment for a DRS. We also stress that equality issues should be considered, to ensure that no one is disadvantaged or discriminated against, in order to achieve high capture and collection rates for all materials.

 

            Scheme Governance

 

3.59      The consultation outlines the role of the Deposit Management Organisation (DMO) whose role is to manage the operation of the deposit return scheme. The DMO will own the material returned by the consumers and be responsible for meeting the high collection targets set out in legislation and will be appointed via a competitive tender process. The consultation elaborates on how the DMO will be held accountable for the success of the scheme. The DMO will have to ensure that financial provisions are made available to make payments to local authorities and/or the Extended Producer Responsibility scheme administrator to fund the collection of deposit return scheme containers that are collected through local authority waste streams.

 

3.60      Within our response, we stress the importance of including local authorities within the conversations and overall process. We also make reference to the digital trial which was recently conducted in Northern Ireland. 

 

            Financial Flows

 

3.61      The consultation sets out proposals for the DMO to be funded via three revenue streams: material revenue, producer registration fees, and unredeemed deposits.

 

3.62      It also discusses the approach to setting the deposit level (i.e., a maximum and minimum deposit level is set in secondary legislation with the DMO having flexibility to set the level within this threshold and may lead to variable deposit levels depending on the product), proposing that a fixed deposit level is not set in legislation but rather set out a minimum, and possibly maximum, deposit within the secondary legislation. This in theory will allow the DMO flexibility to set or change the deposit level in a way that influences behaviour change and increased recycling by consumers.

 

3.63      Within our response, we reference Equality issues and stress the importance in designing a system that is accessible to everyone. We also highlight the annual Northern Ireland cost of cleaning up litter and illegal dumping and we suggest that a detailed Northern Ireland specific cost-benefit analysis would be vitally important in examining potential savings associated with litter reduction.

 

3.64      With regards to the question on the minimum deposit level set in legislation, we propose 10p and highlight that the deposit should be sufficient to engage consumers but not be too much of a financial penalty for those unable to return the container. We wouldrecommend that Government conduct further research on the issue of multipacks but suggest that a variable deposit scheme could be implemented in order to minimise the multipack impact on consumers, especially those on lower incomes.

 

            Return Points

 

3.65      The Consultation sets out further details of the retailer options in the deposit return scheme, proposing that all retailers who sell in-scope drinks containers will be obligated to accept returns of in-scope material by hosting a return point. This will likely be via reverse vending machine or manual return points, but the regulations will be broad in nature to ensure alternative methods of return are not ruled out.  Requiring online retailers to be included in the scheme is discussed.

 

3.66      The Consultation also discusses the potential for innovation in technology to be deployed in a deposit return scheme system and provides further detail on how this might support the return points provisions using smart phone applications allowing the electronic redemption of a deposit. This could mean that residents could continue to use their kerbside collection systems and reclaim their deposit and so cut out the need to take containers back to the shops with them.

 

3.67      Within our response we highlight the importance of making the scheme as user friendly as possible, with minimal inconvenience involved for everyone participating. The concept of a digital scheme is interesting and could be further explored through larger scale trials.

 

            Labelling

 

3.68      The Consultation proposes mandatory labelling be legislated for as part of a DRS. We support this proposal as a means of minimising the potential for fraud. 

 

            Local Authorities and Local Councils

 

3.69      The Consultation explores the impact a deposit return scheme will have on local authorities and the way in which containers in scope of the scheme will be treated when these containers still end up in local authority waste streams. It seeks views on three options for financially reimbursing local authorities for any DRS items they must deal with, in recycling, residual or litter.

 

3.70      In our response, we highlight the need for a solution that maximises the potential return of DRS material and offers a fair system of payment to cover all the DRS material that councils collect (recycling, litter, and residual). However, under current circumstances, there will probably be a reliance on MRFs to provide accurate data to councils.

 

            Compliance, Monitoring and Enforcement

 

3.71      The Consultation provides an overview of how the deposit return scheme will be monitored and enforced. Whilst some functions will fall to the environmental regulators in England, Wales and Northern Ireland, the governments consider there is a role for local authorities/Trading Standards to regulate the consumer-facing obligations that are placed on retailers. This is likened to functions undertaken in relation to the carrier bag tax.

 

3.72      Within our response, we highlight the additional obligations placed on local council staff and note that this could be quite significant, particularly in the short term as the scheme is set up. 

 

            Implementation timetable

 

3.73      The Consultation lists several activities required in advance of a DRS going live including:

 

·        2021 - Carrying out this second consultation, analysing the responses and publishing a Government response

·        2021 - Finalising the Impact Assessment

·        2021 - Securing the primary powers in the Environment Bill

·        2022 - Securing the secondary legislation required

·        2023 Appoint the DMO

·        2023 – 2024 Rollout of infrastructure and other mobilisation activities

 

3.74      The governments currently anticipate that a DRS could launch in late 2024, subject to the outcome of this consultation and parliamentary passage of the Environment Bill.

 

3.75      Within our response, we note that timeline seems very ambitious, and will need to take into account the lead-in times required by scheme participants, particularly where production or contracting changes are required. We also note that a number of key policy pieces are not in place in Northern Ireland, such as decisions on the future of recycling, ‘TEEP’ policy and a MRF code of practice; these will need to be agreed and published as soon as possible. We suggest that the introduction of the DRS could be deferred until the EPR policies have been implemented and the outcome of the plastics tax is better known. This would allow these policies and regulations to work and see if they deliver the desired increases in recycling before determining whether a DRS is needed.

 

            Approach to Impact Assessment

 

3.76      Four options are included in the impact assessments:

 

·        Baseline - do nothing

·        An ‘All In’ system

·        An ‘On the Go’ system

·        An ‘All In’ system that does not include glass

 

3.77      We note in our response that in the associated Impact Assessment, only limited data is available from the devolved administration. Also, if the digital solution is to be incorporated into the scheme design, this option should be fully evaluated as it is likely to substantially change the impacts/costs. 

 

3.78      We do not necessarily agree with the analysis presented on littering as there is unlikely to be a cost saving related to operational aspects of litter collection.  The impact assessment makes a direct correlation between the reduction in litter and cost savings in terms of manual sweeping and picking and emptying bins. We do not believe this is an accurate reflection as staff will be required to cover the same area to litter pick and bins will probably have to be emptied with the same frequency. 

 

            Financial and Resource Implications

 

3.79      Whilst there are no current financial or resource implications associated in responding to these consultations. As stated above in terms of full net cost recovery under EPR, there are likely to be considerable financial implications upon implementation of these schemes in due course and the impacts for district councils will need to be clearly defined and recoverable in terms of net impact on ratepayers .

 

            Equality or Good Relations Implications

 

3.80      There are no equality or good relations implications in responding to the consultations.”

 

            In accordance with the Council decision of 4th May, the Members agreed that the Chief Executive exercise her delegated authority to retrospectively adopt the consultation responses to Extended Producer Responsibility for Packaging and Introducing a Deposit Return Scheme in England, Wales and Northern Ireland.