03 - DRS is on the rise part-2

In the 2nd part of our episode on how deposit return systems (DRS) significantly improve the circularity of one of the most littered items in the world, beverage containers, Michael Löwe, VP Public Affairs and Head of System Design at TOMRA, talks us through the trends and challenges of implementing DRS around the world, among other things.

Listen to the episode below, or use your favourite platform (Apple Podcast, Spotify, Google Podcasts)

Show Notes

• So, by 2025 plastic bottles must contain 25% recycled content and by 2030 it should be 30%. [04:37] 

• What to do to tackle plastic pollution and in the course of this development. [07:29] 

• What are the trends? [08:38] 

• Yes, setting up deposit schemes all over the world can be a challenge. [12:34] 

• Tomra built and installed more than 10,000 RVM's. [13:32] 

• How about something like culture? [17:56] 

• Where the containers should be identified through, then type of industrial. [20:44] 

• Informal sector is kind of scavengers. [21:59] 

• This will create a lot of jobs, formal jobs for informal people. [25:10] 

• Final thoughts. [26:52] 

Transcript

Mithu: Hello and welcome to Tomra talks circular my name is Mithu Moran. In part one of this two-part series on the rise of deposit return systems, Michael Loewe vice President, system design, public affairs at Tomra talked about where we are today when it comes to DRS globally and the second part of a two-part series, Michael talks about his expectations of where we are headed with this system and what impact he expects it to have. Welcome back, Michael.

Michael: Thank you very much. 

Mithu: OK, so you mentioned before the system started in Canada, I remember hearing about a bottle bill when growing up in the US, although I had absolutely no clue what that was. What do you see happening now? So, we started in in Canada, Sweden and so forth and so on. It's growing, you see. What's going on now? 

Michael: If you listened to some parties, some years ago, they said this is a kind of old-fashioned solution, outdated, nothing to continue with, looking now at the trend, looking at the current situation, those people are definitely wrong or were wrong in their in their statement.

So just looking in into, I said 2022, we had three systems in Europe. Just looking now into this year 2023. There will be one existing system which will be expanded we talked about the cans in in Netherlands. One other system will be modernized, this will be Quebec and Canada. And there will be new systems coming into play. It's about 5 new systems only in 2023, which will be implemented by the end of this year. 

Mithu: When you say modernized and Quebec, what does that mean? I mean it's a modern system, right? 

Michael: It's modernized with regards to deposit value. It's modernized with regards to coverage, kind of beverage categories, container types. They're looking into the infrastructure for the collection. This will be a hybrid model, so it will be combination of obligated supermarkets. There will be depots so it's really, it's this system was established back in 1972. 

Mithu: OK. 

Michael: It required some renewal, and this is what they call the modernization, and we can see this kind of modernization also in in Connecticut for example, as one of the first in in the US, which is looking into an improvement of the system. So, this will take place in next year in 2024 and they will lift the deposit value from 5 to $0.10 and there will be also some parallel activities to go to higher targets and really make it something meaningful. So, this is what I was thinking of when I talked about modernization. 

Mithu: Ok, that's good news. 

Michael: Yeah, just by the end of this year, this is really something which one could celebrate so we will find the first continent being fully covered by deposits. This is Australia, so it's both Tasmania and Victoria, which will kick in by the end of 2023, which with their deposit systems and by that, the full continent will be covered with deposit system and justice looking into little into the future, just three years ahead, another 14, at least the ones we know so far and we are following and the communication and everything another, 14 DRS markets will come to the list of the current 49, so it's. It's growing and this is definitely not the end of the of the development. So just looking at Europe, a strong driver in Europe is definitely the single use plastic directive.

This requires for example, dedicated collection rates for plastic bottles for beverages, plastic bottles. It should be 20 by 2025. 77% of all those should be collected through a separate solution and then it's by 2029 it should be 90% on top comes then also recycled content. So, by 2025 plastic bottles must contain 25% recycled content and by 2030 it should be 30% and then at the end of November last year, there was the proposal on the packaging and packaging waste regulation released and this is even more demanding. It says by January 29, Member States would have to introduce deposit systems for single use Plastic bottles and metal and aluminum beverage containers up to 3 liters. Unless they achieve a 90% separate collection rate through other means. In 2026 and 2027, by the end of this decade we will have all 27 Member States of the EU under deposit. 

Mithu: OK, that's saying something definitely. 

Michael: That's definitely something so on top comes developments in other regions where we haven't seen deposits, returns schemes, systems for single use containers, yet to mention Singapore will be the first market in Asia to implement the deposit system. This is expected to be somewhere in 2024.hen we are looking into Uruguay as being the first market in Latin, also likely to start in 2024 and even Africa is looking now into DRS specifically South Africa, which is the kind of the trendsetter of Africa. So, in each of those new untapped regions. There will be one deposit market and of course one can always refer to markets in Europe or in the US, but then immediate feedback is yes, but this is not our market, it's different, etc.

So, if we now have in those regions a first market well working system, this is of course the prerequisite. Then this could well be the kind of the blueprint for the rest, and we already see some movements in in Uruguay, Uruguay was the country which hosted the 1st in sea November last year, end of November and we already see some movements in in Uruguay, Uruguay was the country which hosted the 1st INC November last year, end of November. 

Mithu: INC if you could help us understand. 

Michael: The Intergovernmental Negotiation Committee there is initiated by the UN. The environmental program there is currently ongoing an attempt to come up with instruments against plastic pollution, a kind of global recommendation or even beyond recommendation, a demand. What to do to tackle the plastic pollution and in the course of this development, there are certain or several of those INC meetings and the first took place just last November in in Uruguay, and of course, it was grand opened by the Prime Minister of Uruguay and also by the Minister for the Environment and Mr. Penea, that's the name of the Minister. He, when standing in front of the of the audience said proudly that Uruguay will be the first country implementing a deposit and Latin and that he is expecting that more countries to follow. 

Mithu: So, until now, Michael, we've actually seen all of the deposit return systems are bottle bills or cses, they're called in Australia really the Western Hemisphere, the northern Hemisphere, this it's like for Australia of course now we're seeing global movements. Traditionally, where we haven't seen it in the past, which is good news, why do you think this is happening? What are the trends? That you see, it's pushing all of this. 

Michael: So, governments, they see definitely the positive effects of DRS for the environment, for the realization of the circular economy and if designed and set up well, then accept DRS they can reach good and best results extremely fast. Good example for this is for example Lithuania. So, Lithuania implemented its deposit system on February 1, 2016, prior to the start, the containers which are then covered by the deposit system, they were collected with the collection rate of only 34% and just after less than a year, by the end of 2016, the collection rate was at 74%. 

Mithu: That's quite a bit in one year. 

Michael: In one year, but then looking at the second year, by the end of the second year, it was reaching 92 percent and we haven't seen such a fast and positive development through any other kind of scheme being implemented other than deposit. So, this kind of head start is kind of unique, other solutions they're dependent on communication, training, and education to consumers. We see programs for German Green dot system which UH was established back in 92. Still, you see advertisement what to separate? What to do, what not to do, and still, you also see wrong inserts in the in the waistband or in the in the dedicated bin, but as soon as you kind of touch the purse of the consumers. They are willing to react, so money, money, talks and money makes this happen fast.

So, that means there is a political will to implement such schemes because they see the kind of the value and the speed of such implementations. Then we talked about already the single use plastic directive, the packaging, packaging, waste regulation from the EU, the UN activity with regards to plastic pollution. All this is also part of the trend and it's very likely that this existing momentum in in Europe with regards to DRS, will rather sooner than later also impact decision makers in other jurisdictions and regions and on top of course comes the front runners like Uruguay like Singapore like South Africa, which then kind of will lead ultimately. 

Mithu: Really, The Pioneers of the regions, right? 

Michael: Do you need those pioneers and those front runners? There's seeing is believing and hoping that something which works in Europe also works in in Asia and Africa and that is not easy to kind of transfer and therefore if you have something in your region where you can just compare and see well. This is my situation, my circumstances, so why should we not work here as well? That helps so this is a huge enabler. 

Mithu: So, Michelle, you just talked about getting the system set up all over the world, but I'm guessing that this is not easy. I mean, just the logistics of getting reverse vending machines to remote areas, get them set up is enough, much less all of the other logistics that surround these efforts like keeping the system running, Right. 

Michael: Yes, setting up deposit schemes all over the world can be a challenge, and especially I think when we look at the at the mere number, the growing number of new markets kicking in at more or less the same time, I think that's the biggest, biggest one of the biggest challenges. So we at Tomra, we have very dynamic agile production concepts and that allows us to flexibly adapt for varying technology supplies. Of course, all this requires also good forecasting of coming situations and also good procurement planning.

One thing for sure is building the RVMS but one the other thing is then putting them on the ground, installing them and getting them into operation, right? We have proven this and others as well. In 2006, Tomra built and installed more than 10,000 RVM's with some partially comprehensive backroom and only in a few months, and that was, of course, a stretch. We used some of our own people from local organizations, but we also had huge help from colleagues from the Tomra network all over the world and some external parties. So, it is really important, and one has a rich pool of good people, good people, committed people who then help to build up the infrastructure in the new markets.

When it comes to getting the machines to remote areas and that of course can be a challenge. We're relying on existing logistics, so it's nothing new. It's existing logistics in the market and logistics is all over the world one and very often you find free capacities. So, under normal circumstances we are trying really to rely on conventional logistics like ships, trains, trucks. However, in some cases it's impossible to just use the rather lower cost solutions, so one has to go for expensive solutions like planes, this happened in the past, but that was due to time constraints, so we had short time to do a production delivery and therefore, we had to go for this plane supply or delivery. But normally uh, if if, if the planning is there, I think it's all about planning, it's about forecasting, it's about understanding the markets and that enables you to really do a proper planning and utilization of existing capacities at kind of acceptable costs when it comes to logistics within the operations. 

So, when the system is up and running and you want to kind of, you need to get hold of the material and you need to collect it from the collection points get it to the processing plant, get it, then ultimately to the recycler. Then it's also relying in existing solutions, existing logistics solutions and there is no intent to create any kind of new capacities, but really utilizing the existing ones in a in a better manner. For example, in markets where we have a return to retail model, there we often see a so-called backhauling. What does that mean? So, trucks are used for the delivery from the warehouse to the individual supermarkets and then when they have done the delivery normally, they go back empty. 

Then you can utilize those resources, those free capacities to pick the material transport it to the warehouse, to the central warehouse where they consolidate, and then it's picked up by the organization and transported further to the processing plant, for example. So, by this you reduce the number of extra transports immensely because it's really utilizing something existent and by this you even give a benefit to the retailer who is doing the backhauling because they will receive a remuneration for that. So, it's not that they have to do it for free, but they get compensation for that. So, it's a win, win situation. You don't have to ask for additional new resources on logistics and they can utilize their existing capacities in a better way. So, it's a win win. 

Mithu: So, it's possible it then might take a little bit more effort in some regions than in others, but it is possible that's the logistics. How about something like culture? So, I often hear now from some colleagues. You're never going to get ex to do this because they're just not used to it. They just don't know it and maybe they have other priorities. Is this something that that you face because you are now starting to see interest globally, so I think you're facing these sorts of cultural issues? 

Michael: Actually, the impact on the effectiveness has not yet been proven because we're just starting to, to look into those markets and they're kind of ahead but not yet. But one can question whether really the cultural differences will have an impact on the effectiveness. It's rather different in setting up, which might lead to different results. I think in general; every human being will be motivated by money. It's a question of the amount. So, the concept of LDRS of deposit by giving waste value. That should work for all the people. The question is just will you me to be motivated with the one you were sent to do something to get your deposit back or it doesn't need to be $0.25 like you have in Germany. As said, its which value must be chosen picked to motivate. 

The majority of people collecting their empty containers and bringing them back, returning them back to dedicated locations. That's the kind of the question so looking at developing markets, our countries one often finds a strong presence of very old traditional retail. That means rather small shops or small formats and modern supermarkets like we see here, hypermarkets, big formats, big square meters, they are difficult to find, and the consequence is that the deployment of RVMS will be rather low. That can be expected because in small stores one can expect small quantities and hence also small quantities and sales and also hence small quantities and return, so there is no real justification for an investment.

But deposit systems as such can also work with the lower level of automation at the connection points automation then has to kick in at the later stage in the process, for example in depos or in the final processing. where the containers should be identified through, then type of industrial RVM’s and this and this is really where we say there it's needed, because this means our helps to achieve than The Wanted transparency and the integrity of the system so you would need technology, but at the different stage and a high level of manual collection front end and then kind of counting afterwards. But other than that. The impact or the effectiveness of the system means the return rate is rather triggered, triggered by the deposit value, so therefore I don't really see a big difference. Due to cultural differences, that's the case. 

Mithu: OK, any other challenges that come to mind? 

Michael: I think many of those developing markets do not really provide any kind of proper waste management, recycling solutions, majority there or waste related activities is then provided by the informal sector. 

Mithu: And these are the informal sector. 

Michael: Informal sector is kind of scavengers. They are not organized; they are not employed. They just collect the valuable material for the sake of the value of the material like PT bottle as a value of X local currency. I collect it, I collect it from the street I collected from the landfill, I bring it somewhere. It's weighed by kilo and then based on the actual price; I will receive a small amount of money. 

Mithu: So, this is their way of earning money, this is their livelihood, right? 

Michael: And of course, very often we talked about streets, we talked about landfills, sometimes they are just following them if there is a waste, at least pick up for mixed waste and then everything is dumped to the to the landfill. They are following the truck so it's definitely it's unhealthy, it's inhuman, its non-dignifying activity, but this is where families people make up their living from the only kind of income and that, of course, is a challenge and talking about implementation of a deposit system. Where part of this valuable stream is taken away and redirected to the deposit. That might raise concerns with the politicians because they care about the future of those. 

Mithu: Which is good. 

Michael: Which is good, and this is what we this is definitely what we see in in Uruguay. This is what we see in in South Africa as well and this is also why we are looking already for a while into solutions, not how to eliminate but integrate those people into the DRS and the intention is really not to keep them as they are, but rather to provide formal jobs with an employment contract, healthcare with vocation, health, human dignifying work environment. it's hard and it's difficult and it's impossible actually to say it's impossible that this integration of the informal sector will help to heal the world, heal the world with regards to informal sector so that a small deposit system is not able to absorb and offer jobs for all the people from the informal sector.

But we're of the opinion that access to general waste collection must be ensured for all citizens in all regions as a kind of universal human right and global access to waste collection is imperative to prevent litter and illegal dump sides or burning and but this kind of human right fulfilling the human right. This will create a lot of jobs, formal jobs for informal people and this ultimately all together will then hopefully work and lead to an end of informality. So, but it's not the possible, but we see that we have a certain responsibility as designer or supporters in designing systems. That it's not only a kind of environmental act, it's also a social act, and inclusion is a very fundamental part of that, and that, by the way, was also coming back to the UNINC meeting. That was also one of the relevant things, integration, integration of informal people integration of young people of yeah, integration of all the people, so it's not only isolated looking, but really kind of embracing everybody to being part of the game or of the of the venue. 

Mithu: As it should be to be honest, because if this is going to work, we really do need to work together across the board and as deeply as possible. So, I'm happy to hear this and I'm happy to hear that Tomra is also looking at solutions to involve the informal sector. In a situation that we haven't been faced with yet, Michelle, one final question on a personal level and this is something I asked many of our guests on a personal level, how optimistic are you about turning the tide on climate change? 

Michael: Fairly optimistic, OK, now let me explain to you why. So, I think technology and solutions by Tomra, and others are out there, so that many solutions are out there are under development will come soon mid future long term but there is a lot of solutions available to really address many of the challenges which are boosting the unwanted climate change. But what have we seen in the past with regards to solutions, implementations, deployments voluntary solutions? Voluntary development of take back solutions I worked in this arena for a while trying to establish incentive-based collection schemes which are voluntary, where you need to ask commitment from parties, financials and those implementations they are slow. They are not always quite seldom they are viable sustainable, so as that we have tried many of those incentive driven solutions and then parties came on board, participated for a while often it was a serious art activity and then budget was used imbalances in comparison to competitors were identified.

So, I'm doing something. This gives me a financial disadvantage that others are not doing it. Why should I continue and then simply they abandoned, they stopped it so that means. It's basing something, leaving it with the industry, with all the players, without having any kind of rule book is not to my mind not working. So, we need politicians. We need decisions which really describe demand. What to be done to really accelerate the establishment of these new solutions, which then ultimately are tackling the climate crisis? They are setting the rules. They're demanding targets. They're having consequences in place if there is noncompliance. Just to name a few and those will be the same for all parties involved and by this I think that is the most relevant thing and that requires some certain push by, by politicians and also by the public. So, the public push is not to neglect. You're creating a level playing field for all market actors and that's kind of then also realizes the kind of the, the solution and leads to the solutions which then impact the climate change. So, this is why I said fairly it's I think industry solution providers are out there, but solutions must be embraced by other industry players. 

Mithu: I'm glad you brought up the public because, uh, this is something I believe very strongly, and This is why I am optimistic because I see this younger generation coming up the episode before this one. We have a generational conversation, and you hear the young people, and you hear the fear they have, so we have to have a responsibility. We have a responsibility to really clean up the mess we made, at least play a very strong role in it, so I'm sure we will for your children and your grandchildren and for mine as well. 

Michael: I think we can even go beyond this we have an obligation to perform, we have an obligation to perform. 

Mithu: So, Michael, exciting times for DRS and it's really nice to see that it's getting some global attention, as you've told us today. So, this is something completely new and actually you make it sound so easy. We know that DRS is the best way to keep material in a closed loop, which is what we what we talk about in the circular economy and that's actually where we all need to go. Of course, Thanks Michelle for taking the time. I know you're a busy person. So, thank you very much for all your insights. 

Michael: Thank you, Mithu for giving me the opportunity, talking to you, it is my pleasure, really, I enjoyed it. Thank you very much. 

Mithu: 

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