Deposit Return Systems

Last modified: March 23, 2019
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Essential Elements
of a Beverage Container Recovery System

A new report on beverage container recycling suggests that we can double recovery of beverage containers - and save money at the same time. These are the unexpected findings of Understanding Beverage Container Recycling: A Value Chain Assessment, a study carried out under the watchful eyes of both beverage industry and environmental representatives.

This ground-breaking study is the first accomplishment of the Multi-Stakeholder Recovery Project (MSRP), a project of Businesses and Environmentalists Allied for Recycling (BEAR). BEAR works under Global Green USA to pursue a 'fact-based approach to public policy making' in order to break through the traditional impasse between supporters and opponents of so-called 'bottle bills.'

Based on the report, a group of NGO and government participants developed the following list of essential elements of a modified deposits system. For detailed presentations of systems that embody some of these elements, follow links to descriptions of deposit systems in Alberta and British Columbia, Canada, and California, USA.

  • 80% recovery goal. The program should establish a mandatory goal of 80% material recovery, consistent with BEAR core principles (the report shows that while most bottle bill states recover at a level close to or greater than 80%, the overall average U.S. recovery rate for all containers is 41%):
    • The recovery goal should cover all types of beverages (all carbonated and non-carbonated beverages such as soft drinks, beer, wine, liquor, juices, waters, and milk) and all types of beverage containers (all metal, glass, plastic, aseptic and composite containers), as well as associated packaging.
    • The recovery goal should be based upon container units sold, excluding exported new containers and imported scrap containers.
    • The recovery goal should focus on material recovery (reuse and recycling) and should not include burning (waste-to-energy, pyrolysis, etc.) or other treatments to produce fuel.
    • The recovery goal should be achieved on an aggregate basis over a 2-year period from program implementation, but should ultimately apply as a minimum for each material type.
    • The recovery goal should increase over time to ensure that the recovery rate continually improves.
  • Consumer redemption incentive. The program should establish a redemption incentive (deposit refund or other financial mechanism) paid to consumers when the container is recycled to encourage recycling.
  • Beverage container returns. Returns of beverage containers should be allowed through a variety of options, ensuring consumer convenience while minimizing costs.
  • Internalization of costs. The cost of beverage container recovery should be internalized, with producers and consumers paying the full cost of recovering their containers, and no part of the cost being borne by the public.
  • Refillables incentive. A redemption system should include incentives for the use of refillable bottles, such as economic incentives and market share set-asides. A return to the refillable packaging systems developed by the beverage industry in the early 20th Century and later dismantled in response to subsidies that made mass-production and long-distance distribution more economical will create opportunities for local business and reduce environmental costs that are now being borne by the public.
  • Closed-loop recycling. A deposit system should encourage bottle-into-bottle recycling in order to reduce environmentally damaging emissions from virgin material extraction and production and minimize market disruptions during periods of rapid increase in container recovery.
  • Centralized fund. Since the program would involve all beverage brands, it may be more cost-efficient to be managed through a centralized fund similar to the industry-managed fund in British Columbia or the state-managed fund in California, so brand sorting is not necessary.
  • Responsibility for compliance. As the party in the value chain with control over packaging design and product marketing, the brand-owner should be ultimately responsible for meeting the 80% recovery goal and ensuring that the members of the supply chain and consumers share responsibility for the cost of recycling. Government would impose corrective measures should the system fail to perform.
  • System design flexibility. The overall program design would depend upon whether it was managed by government or beverage producers (see key issues discussion below); however, producers should be given flexibility to design the system in a manner which minimizes costs. Producers may choose to operate their own programs or to contract with other private or public entities on their behalf, so long as the so long as the full costs of recovering the resources and managing products at the end of life are internalized into the costs of producing and selling products and are not borne by taxpayers.
  • Market development. Producers should be encouraged to actively participate in development of value-added markets for recovered containers.

The report findings clearly demonstrate the benefits of a modified redemption system:

  • Provides universal coverage. A deposit program is universally available to all consumers. Based on the data in Table 2-6 of the report, curbside and drop-off programs are only available to 59% and 63% of the U.S. public respectively. Considering the 80% recycling goal, it would appear that any strategy focusing on curbside or drop-off program programs would require a massive investment to provide equivalent recycling opportunities to the public.
  • Utilizes the local recycling infrastructure. By utilizing local recyclers as well as retailers, a modified redemption system supports the recycling infrastructure in the local community.
  • Promotes low program costs. According to Table ES-2 of the report, a modified redemption system similar to California has costs significantly lower than a traditional deposit program or a curbside recycling program, due to efficient use of the local recycling infrastructure. Program costs may be substantially reduced or even eliminated by the use of scrap revenues and unredeemed deposits to finance the system.
  • Internalizes fiscal responsibility. Unlike curbside and drop-off recycling programs, the costs of a modified redemption system are entirely internalized through fees paid by producers. Costs are distributed equitably among producers based upon the actual net costs of recycling (gross costs less scrap values).
  • Demonstrates proven experience. The first North American deposit program was established in British Columbia in 1970; the most recent in the United States was established in California in 1986. Deposit programs have 15-30 years of experience and have proven themselves to be reliable and well supported by the public.


As the MSRP moves into Phase II, including refining the adopted recovery programs, preparing a detailed implementation plan and securing needed support and other commitments, a variety of issues will need to be resolved.

Producer responsibility. As the party in the value chain with the greatest control over package design and product marketing, the brand-owner (party whose brand appears on the beverage container) should be ultimately responsible for meeting the 80% recovery goal.

Program management. A key element that must be addressed is whether the program would be managed by government or industry. The California [link to California model page] deposit program is government-managed; however, other countries and jurisdictions have implemented industry-managed systems for recycling. An industry-managed system can be designed to provide producers with the responsibility for meeting the 80% recovery goal, but provide them with the flexibility to design and implement the system. The most relevant examples are the deposit system in Alberta and British Columbia, Canada, which is managed by an industry-funded, non-governmental organization.

If an industry-managed approach is developed, it should be established through legislation which would establish the goal of 80% recovery across all beverage types and all container types, in order to level the playing field for all beverage producers. The legislation should also establish certain design requirements for the beverage container recovery system to achieve the objectives in the BEAR pledge and MSRP principles. Brand-owners would be responsible for reporting on progress towards meeting the material recovery goal. Government would review and approve beverage container recovery business plans, through monitoring reports of system performance and progress toward interim benchmarks and the 80% goal.

Incentives for refillables. The report did not analyze the value chain of a well-developed refillable bottle system. Refillables are an important zero waste strategy because they are far more energy and resource efficient than traditional one-way containers and they stimulate local economic growth and enable local manufacturers to more effectively complete for beverage market share.

Deposit level (2½ - 10 cents). Clearly, a higher deposit provides a greater incentive to recycle and leads to higher recycling rates. Amongst the ten deposit programs, the recycling rates were reached in 1999:

  • 2½ cents (CA) = 73%
  • 5 cents (CT, IO, ME, MA, NY, OR, VT) = 72%-80%
  • 10 cents (MI) = 95%

Based on the existing states, it appears that a 5 cent deposit should be the minimum level to ensure achievement of an 80% recovery rate.

Developing opportunities to recycle. A modified redemption system takes advantage of substantially reduced costs through the use of recycling centers in the private sector. Many areas of the country currently do not have an extensive recycling infrastructure and would require additional efforts to develop opportunities for the public to recycle the development of private sector beverage container recycling centers will create economic opportunities in local communities.

Type of recycling cost reimbursement. A critical element of a modified redemption system is providing a financial incentive to recycling centers. While handling fees in traditional deposit programs (typically 1-3 cents/container) are simple to calculate, they typically do not reflect the true cost of recycling between material types. As a result, aluminum containers typically subsidize the higher costs of recycling glass and plastic containers. A variable fee system could be based upon the net cost of recycling for each material type. Such a fee structure would internalize the costs of recycling each container type and would reflect the actual changes in recycling costs and scrap values, encouraging a reduction in recycling program costs and an increase in the use of high-value end-use markets.

Use of unredeemed deposits. Depending upon the recycling rate, deposit programs can generate tremendous revenue from unredeemed deposits. Amongst the ten programs, two programs have an escheat provision whereby deposits revert to the state. The remaining traditional deposit programs allow unredeemed deposits to remain within the recovery system to help cover the costs of managing the program. The California program is managed by the state which holds all unredeemed deposits and uses those funds to support a variety of recycling programs and program administration. Likewise, the British Columbia, program allows producers to use beverage container funds to manage the beverage container system, and does not require the beverage industry to subsidize other environmental programs.

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