We will soon have to pay an additional S$0.10 to S$0.20 for every canned or bottled drink as a deposit by mid-2024. We will then get this deposit back when we return the drink containers to designated return points. This container deposit scheme is used to encourage recycling and has seen success in many countries. I was curious about how this deposit scheme will work and how will the money flow so I looked deeper into this. In this article, we will look at how the deposit scheme works and if there will be any potential problems.
What Is The Beverage Container Return Scheme Trying To Solve?
The container deposit scheme is trying to increase Singapore’s recycling rate directly and indirectly.
Container returners will get back the deposit that they paid at the point of purchase so there is a financial incentive to return the drink containers. Even if consumers don’t return the cans, there is a great financial incentive for can collectors to locate and return cans as the amount of deposit is much greater than the amount they get by selling the cans in the past. The market price for one aluminium can is less than $0.01, lesser than 10% of the deposit amount. The financial incentive to return containers can reduce beverage litter by 40% or more. The Singapore government hopes to collect 4 out of 5 beverage containers sold, referencing similar successful projects overseas.
In 2021, Singapore’s domestic recycling rate is 13%, the lowest since 2012. Only 6 per cent of plastic waste was recycled in 2021, with the rest being incinerated. We consume more than 1 billion pre-packaged drinks in Singapore every year.
When returned to the designated return points, recycling rates will not only increase, but the purity of the recycled containers will also be higher. With lower contamination, these drink containers will then be recycled into new bottles and cans, minimizing the resource leaks in the circular economy. By reducing the amount of waste going to Pulau Semakau, we will be able to delay the date our landfill gets filled by 2035.
Beverage cartons and glass bottles which are used in smaller amounts may be added to the programme in the future.
The programme might hopefully inculcate recycling habits and sustainability thinking in Singapore consumers. Increasing the focus on recycling can also encourage consumers to also think about how they can reduce the environmental impact using other methods including eating less meat, taking public transport and living a minimalistic lifestyle.
Results Of Beverage Contain Return Schemes Around The World
This scheme has been implemented around the world, with the first iterations starting in the 1970s. Countries like Norway and Germany have seen return rates for bottles and cans be over 90%.
How Will The Beverage Container Return Scheme Work?
What we see on the news mainly only talks about the consumer portion of this scheme. I was curious about how the entire scheme worked for all the different stakeholders. The official scheme and flow of money are not published yet so I will make an educated guess on how things will work.
|Non-Profit Organisation (NPO)||The Singapore government will appoint an NPO to be in charge of the entire operation. They will collect a deposit and licensing fee from drink producers and importers. The fee is part of the Extended Producer Responsibility to make suppliers responsible for the waste they create.
The licensing fee, unclaimed deposits and sales of containers to waste management will cover their operation costs.
|Drink Producers & Importers||They will need to place a special bar code to identify beverage containers eligible for the scheme. They will sell their packaged drinks to retailers at cost plus a deposit fee.|
|Retailers||The retailers will sell their packaged drinks at a markup as profit plus a deposit to the consumer.
They can also act as a point of return for the containers and return the deposit to the consumer.
|Consumer||The consumer will need to buy their drinks at a higher price due to the deposit. However, they will get back their deposit when they return their containers.|
|Designated Refund Locations||These locations should be convenient for consumers to return their containers and take back their deposits.
According to engagement with the public, the most popular refund locations include supermarkets, convenience stores and common spaces in residential estates.
|Recyclers||The NPO will collect the containers from the refund locations and sell them to recyclers. The recyclers will recycle them into new products like cans and bottles and sell them at a markup.|
Here is an illustration of how the containers and money will flow in the scheme.
Drink producers and importers pay S$0.20 (S$0.10 licensing fee + S$0.10 deposit) to NPO for each container produced or imported. Each drink is produced/imported for S$0.40. Each drink will then be sold to retailers at S$0.70 to earn a S$0.20 profit plus a S$0.10 deposit.
Net Profit – S$0.10 (S$0.20 gross profit – S$0.10 licensing fee)
Retailers purchase each drink at S$0.70 (S$0.60 cost + S$0.10 deposit) from the drink producers/importers).They will then sell each drink at S$1.10 to consumers to earn a profit of S$0.40 plus a S$0.10 deposit.
Net Profit – S$0.40
Consumers purchase each drink at S$1.10 under the new scheme as compared to S$1 when there was no deposit. When they finish the drink, they will also return the container to refund locations to get back their deposits, making the drink the same net cost as before.
Net “Loss” – S$1.00 (cost of the drink)
Refund locations collect containers and pay the consumer the deposit amount. They will then need to do a balance settlement with the NPO as the number of containers sold and collected might differ. This process should be done periodically.
Net “Gain” – Increased foot traffic
NPO collect containers from refund locations and pay them $0.10 and sell them to recyclers. The net deposit for all stakeholders should be zero except for the NPO where deposits are unclaimed (collection rate < 100%).
Net “Gain” – S$0.10 licensing fee + unclaimed deposits + sale of containers used to cover operation costs
The returning process needs to be easy, convenient and there have to be enough machines or collection points to reduce queues. If the collection points are not set up properly, recycling rate will not be optimized and/or sales of canned or bottled drinks will drop and the sales of other beverages will rise.
The process should be easy to allow everyone to return and merchants to collect the cans easily. If it is not easy, it can discourage the return and collection of cans.
There have to be collection points available to returners near places with high foot traffic and housing estates. If individuals have to travel too much to return the cans, they might just rather forgo the deposits.
Sufficient Returning Points
If there are not sufficient returning points, people might need to queue to return their cans. This can be made worse since individuals usually hoard a number of cans before returning the cans to minimize the number of trips.
I am just thinking out loud about what are the potential problems that might arise from this scheme. When I was writing this article, the feedback deadline had just closed. Hopefully, all the issues will be addressed when the official regulations are released. We will also need to see the actual results of the program before it can be tweaked and improved.
Parallel Imported Cans Not Eligible
To prevent exploitation, parallel imported drinks are not eligible for the program as the initial deposits during import or production are not captured. There are cases overseas where individuals get their hands on cans “outside” the scheme to collect deposits on them to defraud the system.
Retailers that relied on this source for their inventory might face higher costs. They need to either pay an additional “tax” that is more than the deposit or manually place the special barcode on each of the drinks sold.
Can Collectors’ Future Unpredictable
There might be fewer cans to collect anymore as consumers are incentivized to directly return the cans to collect the deposit amounts. Previously, hawker centres and coffee shops might help these collectors consolidate cans for them to sell as a favour. However, since they are worth so much now, the retailers might just keep them for themselves.
Will they switch strategies to instead go around collecting cans directly from consumers when dining?
Increased Operating Costs
There are increased operating costs for all stakeholders. Producers and importers will have to make sure that the drink containers have a special barcode. Smaller importers might also have to pay a “tax” if they do not have the resources to place special bar codes to account for potential fraud.
The accounting for the deposit amounts for all stakeholders will increase their costs as it is not automatic. Each stakeholder (especially on the retailer and return point level) will also have to make sure they do not lose out in their deposit scheme. If they pay out more deposits than collecting, they will need to make sure they collect the balance from the NPO. The system also has to make sure there is no fraud or else the number of deposits paid out will be more than the amount collected.
Guilt Removed From Not Recycling
For individuals that are not price-sensitive, they might feel less guilty if they do not recycle. If the refund locations are not convenient or if they are just lazy, they might ignore the deposit amount and just throw them in the trash. They might rationalize that the containers will be collected by “cardboard uncle/aunties” since they are worth much more now. This might create the opposite effect of discouraging recycling but this should only apply to a small minority.
Additionally, if the cans are brought home, the individuals might just forgo the deposit and throw them away as it is less convenient as compared to just throwing them away or at a blue bin just downstairs. The individuals will need to especially collect the empty cans and make a trip to return the cans to get back their deposits. If every can needs to be scanned to get back their deposit, it might discourage a busy working adult to queue and spend time to get back a few dollars at max.
No Incentive, No Recycling
Similar to the tray and trolley deposit system, it is very sad that Singaporeans need a financial incentive system to make sure we do the right thing.
有什么好处？What is it in for me?
If there are no longer any schemes involved, will we stop recycling or doing the right thing? Perhaps not exclusive to Singaporeans, humans cannot be trusted to do the right thing without the proper laws and enforcement.
That said, a well-designed incentive system can make sure we perform actions that are beneficial to society as a whole.
Cans And Bottles Recycled But Plastic Cups Used
Consumers can choose to drink from plastic cups so that they do not have to deal with the deposit issue. The retailer will serve the drinks in plastic cups and deal with the cans directly. This should not increase the number of plastic disposable cups used as consumers are usually served with plastic cups containing ice in the first place.
Consumers that would like to drink on the go, they might choose to use plastic cups instead of just using the can straight, creating more plastic waste but this should be a fringe case.
Net Recycling Should Still Go Up
Despite the potential hiccups, I believe that the net recycling rate should still go up. There is a large financial incentive for consumers to return their drink containers.
|Price Sensitive Consumer||Price sensitive -> will return containers to get back deposit -> recycling rate up|
|Price Insensitive Consumer (Minority)||Price insensitive -> will not return containers to get back deposit -> recycling rate down|
|Can Collectors||Price sensitive -> pick up the slack of those that don’t bother about deposit -> recycling rate up|
We will need the official statistics to come out before determining the success of the program.
That said, bring out your own water bottle and drink water to save money and be healthier. You don’t have to deal with the deposit issue too.
Most beverages are filled with sugar and are empty calories. You can check out the list of common drinks in Singapore with their sugar content here for you to make informed choices.
The beverage container return scheme aims to increase the recycling rate. It has worked wonders in other countries but will it work in Singapore? I also worked out the entire flow of containers and money to make things clearer.
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