The headline for this issue should be ‘DRS is an EPR tool!’  However, many readers might scratch their heads and click off. Let’s explain why these two acronyms belong together.

• Deposit return systems (DRS) —  modern and effective ones — by requiring parties selling beverages to achieve the target return rate for those beverage containers, implicitly oblige them to support a redemption network centred on equity and access.
   
• Extended Producer Responsibility (EPR) — a term coined in 1990 by a Swedish economics expert — is an environmental strategy that makes producers responsible for the entire life cycle of their products, especially takeback, recycling and final disposal. Why?  To stimulate environmentally beneficial product design and an effective supply chain.

Under a modernised DRS, producers are expected to finance the system: this is key to ensuring that industry takes responsibility for the products and packaging it creates, and that municipalities and taxpayers are not left to pay the costs of managing these materials instead.

Today in the United States, there are very few examples of extended producer responsibility for packaging and paper products (PPP). We rely on the waste management sector to do what is primarily landfilling, along with some recycling and some incineration. A producer-funded DRS not only shifts the financial responsibility to those who’ve created the beverage packaging and put it out into the world, but also obliges them to manage that product through its life cycle. That gives them a reason to design and manage a container so it can be recycled in a cost effective way (hello DRS!) and the producer gets the material back to use again rather than have it wasted in a landfill.

In our earlier issue on Principle 3: 10-cent Minimum Deposit, we highlighted the importance of offering a financial incentive to consumers to return their beverage containers. Principle 5 is about offering a financial incentive to producers. And aligning that incentive to reach our target of a 90% collection rate (i.e. Principle 2).

When DRS and government recycling reforms operate purely as a stick over producers, systems perform poorly. The producer has no real skin in the game, so they put their beverages into badly designed, unrecyclable containers and care little about their return. They’re actually incentivised for low redemption and poor performance, since they receive unredeemed deposit money, especially in many Northeast DRS states.

When producers finance the system, their beverage containers get redesigned and the system is managed in a way that the material is not lost but keeps flowing. Surprisingly, the more at stake for the producers, the greater the benefit for them. In fact, many of the DRS jurisdictions with the highest recovery rates also have the lowest producer fees, as illustrated in this chart. 

Is this approach putting the fox in charge of the hen house? Not if one follows the high-performance Principle 10: Government Oversight and Enforcement. And that oversight of producers is informed by Principle 8: Clear System Standards & Function and Principle 9: Producer Reporting on Units Sold.

Reloop North America’s research on the impacts of DRS modernisation modelled a producer-funded DRS in five Northeast states and found substantial positive economic impact across the region. Generally, the changes to regional DRS will also have a wider benefit to Gross Domestic Product. The gross value added (GVA) of the improved system will also rise in states due to increased tax revenues from increased employment and other factors.

In New York State, transferring financial obligation for beverage packaging to the bottle bill will save New York City and municipalities across the state significant budget obligations. By Reloop’s estimate, and taking into account the full loss of revenue to material recovery facilities (MRFs), an expanded NYS bottle bill would generate cost savings of $872 million over four years (2023-2026) statewide, and $449 million for NYC alone. Over this same time period, contributions from EPR will be $0.

There are additional environmental impacts when producers fund the DRS:

• Producers will have access to more than 1.9 million additional tons of aluminium, glass, and plastic beverage containers, at a value of roughly $93 million.
   
• 34% of brand and material manufacturers’ needs for post-consumer recycled content to meet national commitments would be met just by modernising existing DRS systems in Connecticut, Maine, Massachusetts, New York, and Vermont.

Ownership of this material will enable beverage brands to meet the voluntary recycled commitments they have made to consumers and shareholders, as well as comply with environmental regulatory mandates, which are expected to multiply in the years to come and have already been passed regionally in Maine and New Jersey.