Economic Instruments in Environmental Protection in Denmark

8. Deposit refund system

8. Deposit refund system
8.1. Deposit refund system for containers
8.1.1. Introduction
8.1.2. Purpose
8.1.3. Basis for calculation
8.1.4. Collection
8.1.5. Assessment

8. Deposit refund system

8.1. Deposit refund system for containers

8.1.1. Introduction

Sales of beers and carbonated soft drinks are only allowed in Denmark, provided that it is in reusable containers that can be either refilled or recovered. For domestically produced items, the containers must be refillable, and the container needs to be approved by the Environmental Protection Agency. Further, all imported containers must be covered by a deposit-refund system, while all domestically produced items must be covered by a return system. The sale of beer and carbonated soft drinks in metal containers is not allowed.

The European Commission argues that the above requirements conflict with the stipulations of the European Packaging Directive. The Commission argues that metal containers, glass containers, and plastic containers, all comply with the Packaging Directive. It is the position of the Danish government that the Directive does not, until now, contain sufficient, comprehensive harmonisation in the area concerned. On the contrary, it is argued that the Danish rules can be seen as a natural extension of the environmental intentions of the Directive. If a solution is not found, the European Commission can bring the case to the European Court of Justice.

The system has been in effect since 1981. One of its core components is the deposit-refund system. The system implies that a deposit is paid upon purchase of beer and carbonated soft drinks. The deposit is repaid upon return of the container in question. In addition to beer and carbonated soft drinks, other beverages in refillable containers are also, in some cases, covered by a deposit-refund system.

The containers that are covered by a deposit refund system are typically collected by the retail outlets. Other containers are mainly collected through special municipal collection schemes. In towns with more than 2,000 inhabitants, the municipalities must provide a collection scheme to collect all glassware waste, including glass containers (see chapter ).

8.1.2. Purpose

The purpose of the system is to maximise the reuse of beverage containers. On average, a glass bottle may be re-used 35-40 times.

8.1.3. Basis for calculation

There is a deposit on each individual container, and it applies to glass containers and PET-containers (plastic containers made of polyethylene terephalat). The current deposit for small containers ( < 50 CL) is DKK 1.25/container and for large containers, it is between 2.5 and 4 DKK/container.

8.1.4. Collection

The size of the deposit is set in an agreement between the breweries and the retailers. The deposit level reflects a balance between the need to ensure a sufficient economic incentive to return the container, and the need to ensure that producers who use the containers have an incentive to actually re-use the returned bottles, rather than new ones.

In 1991, the system was modified. The modification consisted of the introduction of a handling fee for containers received by a retail outlet that does not sell products in similar containers, and that receives more containers that the retailer sells. The handling fee is to be paid by the retailers who handle the system vis-à-vis the consumers. The result of the handling fee is that deposits and refunds are larger at the level of the retailer/producer, than at the level of retailer/consumer, thereby, the retailers have an economic incentive to fully support the system.

8.1.5. Assessment

The Danish deposit refund system has been successfully applied for many years. The return rate is estimated to be as high as 99% for containers of beers and carbonated soft drinks. The return rate is almost 90% for containers of wine and spirits that are covered by a voluntary deposit-refund system. For all other glassware collected through other means, notably the municipal collection arrangements, it is estimated that the return rate is almost 65%.

The use of refillable wine containers implies that about 60,000 tons of waste is avoided each year. Further, the reuse of the containers implies a reduction in the necessity to produce new containers, and a consequent reduction in the use of energy and raw materials.

About 2.8 billion containers for beers and carbonated soft drinks are refilled each year. As a consequence, it is estimated that about 390,000 tons of waste is avoided each year. This corresponds to about 20% of municipal waste collected from households^[1]. Life Cycle Assessments indicate that the refillable containers have a smaller environmental impact than throwaway containers and steel containers. The assessments also show that aluminium containers perform poorer than refillable containers if their production is based on fossil fuels. However, if the production of the aluminium containers is based on nuclear power, this conclusion is reversed.

Notes:

1. These estimates assume that throwaway containers were used instead and that glassware was not collected and remelted.