Deposit and Return Scheme for Scotland Regulations 2020 (as amended): business and regulatory impact assessment

Executive summary

Issue and why it needs to be addressed

3. The Scottish Government is committed to creating a more circular economy – maximising resources to benefit the economy and the environment.

4. A new Extended Producer Responsibility system for packaging (packaging EPR) will transfer the full net costs of packaging waste management to producers. Drinks containers are being considered separately because of the proportion that are consumed “on-the-go”, the predominance of drinks containers in litter and the potential to move towards a closed-loop system if the drinks containers are collected separately.

5. It is estimated that the recycling rate for aluminium and steel cans in Scotland is around 74%, and 65% for PET plastic (polyethylene terephthalate), including materials sorted from residual waste.^[1] A Deposit Return Scheme (DRS) charges a deposit on select drinks containers ‘scheme articles’ to incentivise consumers to return their used container to a designated return point for recycling. A DRS’s separate collection system and the need to maximise material revenues mean contamination and loss rates are minimised.

6. The Scottish Government had previously planned a DRS that would additionally include glass drinks bottles. However, in order to move the scheme forward, the Scottish Government agreed to align with the UK Government and the Department of Agriculture, Environment and Rural Affairs (DAERA) in Northern Ireland approach. The draft Deposit and Return Scheme for Scotland (Amendment) Regulations 2025 and the Designation Order make several changes to the previous scheme, including:

• Changing the launch date of the scheme from October 2025 to October 2027.
• Removing glass drinks containers from the scope of the scheme
• Removing mandatory takeback services for scheme articles purchased online.
• Minimum size of container has increased to 150ml from 100ml.
• The scope of return point obligation on retailers is reduced. Groceries retailers must operate a return point at any retail premises in Scotland unless they have an exemption. They are automatically exempt if the retail premises of the groceries retailer has limited retail space (less then 100m2), and is situated in an urban area. A groceries retailer can apply for an exemption from operating a return point if there is an alternative return point within reasonable proximity; or on the grounds that the location, layout, size, design, or construction of the retail premises does not permit, or cannot reasonably be altered to permit, the operation of a return point. 
• Designating the scheme administrator and giving it functions, including, setting the deposit level, which may be a variable or flat rate depending on the size of the container. 

7. The Scottish Government is committed to working with the other Governments in the UK to ensure the respective DRSs are interoperable and as simple as possible for businesses and consumers.

Intended outcomes

8. The DRS will have a collection target for scheme articles of 90% by year three of operation. Achieving this will increase the quality and quantity of recycling and help to reduce drinks container litter in terrestrial and marine environments.

9. Reducing the number of drinks containers sent to landfill or incineration, and replacing virgin material with recycled material, will reduce Scotland’s greenhouse gas emissions.

Options

10. Experience has shown that local and voluntary initiatives for drinks containers do not sufficiently drive behaviour change or support a level playing field for industry. The two options considered in this BRIA are:

• Baseline: No policy change, meaning all drinks containers are managed in the existing waste management system and producers only cover a small percentage of costs with Packaging Recovery Notes (PRNs).
• Option 1: DRS for aluminium and steel drinks cans and PET drinks bottles. Producers must be registered with the designated Scheme Administrator (SA), which will be industry-led.

Sectors affected

11. The primary sectors affected are drinks producers (including manufacturers, brand owners and importers) and drinks retailers. Groceries retailers such as supermarkets and convenience stores, with some exemptions outlined below, will be required to host a return point.

12. Consumers, who will pay a deposit and need to return their used container to claim a refund of the deposit, will be affected.

13. The Scottish Environment Protection Agency (SEPA) will have a role as the statutory regulator. Other sectors not directly involved in delivering the DRS, but affected by it, include: local authorities; waste management organisations; energy from waste and waste incineration facilities; reprocessors; the drinks container and drinks label supply chain and, potentially, charities.

Engagement completed, ongoing and planned

14. In 2018, the Scottish Government held a public consultation on the design of a DRS and 12 businesses were interviewed for the Scottish Firms Impact Test. In 2021, Gateway Reviewers for the scheme at the time interviewed a cross-section of key stakeholders. Additionally, there was a DRS Implementation Advisory Group comprising trade bodies from the drinks, retail and hospitality sectors.

15. The UK Government conducted two consultations in 2019 and 2021 for the implementation of DRS in England and Northern Ireland. These consultations have been taken into account by the Scottish Government and are relevant to the Scottish legislation following the agreement on interoperability.

16. Internationally, the Scottish Government has engaged with several countries that have either long-standing or recently established DRSs including Latvia, Hungary, the Netherlands, Ireland, Norway, Finland, Germany and Sweden.

Anticipated impacts (intended and unintended, positive and negative) and mitigating actions

17. Drinks producers will be required to change their packaging to incorporate the scheme logo and scheme code. They will pay producer registration fees, set by the Scheme Administrator (SA) in relation to the scheme articles which they place on the market in Scotland. These fees are expected to part-fund the not-for-profit scheme, along with the SA’s income from unredeemed deposits and revenues from recycling any collected material. Producers may choose to register a product line does not exceed 5000 units placed annually on the market across the UK as a ‘Low Volume Product’ (or 6250 units in the first year of operation), which will then be exempt from DRS obligations. Producers will still be required to register with the SA and report the number of Low Volume Products placed annually on the market.

18. Groceries retailers must operate a return point at any retail premises in Scotland in which a scheme article is marketed, offered by sale or sold by that groceries retailer, unless:

• that retail premises of the groceries retailer has limited retail space (less then 100m2), and is situated in an urban area, or
• the groceries retailer has been granted an exemption by the SA because there is an alternative return point within reasonable proximity or on the grounds that the location, layout, size, design, or construction of the retail premises does not permit, or cannot reasonably be altered to permit, the operation of a return point.

19. They may incur costs when they act as return points, however they will be compensated by the SA with handling payments for each container they take back.

20. A DRS could increase the supply of food-grade recycled PET (rPET) to help producers meet voluntary recycled content targets and/ or reduce their liability under the Plastic Packaging Tax. The DRS offers potential benefits to retailers by giving customers another reason to visit their shop. The DRS is expected to reduce littering for local authorities and could reduce the hospitality, hotels, restaurants and cafes (HORECA) sector’s waste management costs.

21. With the targeted 90% return rate, it is estimated that the DRS could recycle an additional 2,400 tonnes of metal and 6,400 tonnes of PET per year in Scotland. This increased recycling would give annual carbon savings of over 36,000 tonnes CO₂e. The increase in material collected for recycling could also help to stimulate domestic reprocessing markets.

22. Over the 10-year assessment period, the DRS in Scotland is estimated to cost £900 million and to deliver a benefit of £1,270 million. This gives a Net Present Value of £366 million and a Benefit Cost Ratio of 1.4.

Enforcement/ compliance

23. SEPA will be the regulator for producers, retailers and the SA. Producers and return point operators will be required to register with the SA. The SA will be required to share returns data with SEPA. The SA’s responsibilities include maintaining and publishing a register of scheme producers, return point operators, voluntary return point operators, exempt return point operators and registered takeback service providers.

24. In addition to SEPA’s statutory role, the SA will take on a monitoring and supporting role for both producers and retailers, given the need to meet return rate targets and to reduce losses from fraud.

Recommendations/ implementation plans

25. Recommendation is to proceed with Option 1 - DRS for aluminium and steel drinks cans and PET drinks bottles. Producers must be registered with the designated Scheme Administrator (SA), which will be industry-led. The legislative framework for the DRS will be set out in the Deposit and Return Scheme for Scotland (amendment) Regulations 2025 and the Deposit and Return Scheme for Scotland (Designation of Scheme Administrator) Order 2025. The DRS will launch in October 2027.

Evaluation and monitoring of implementation/ review of BRIA

26. Once fully operational, the DRS will be reviewed for effectiveness, costs and benefits. Performance against annual return rate targets will be monitored. SEPA will be responsible for approving the SA operational plan, which will detail how the SA intends to fulfil the functions conferred on it. Scottish Ministers must carry out a review of the DRS Regulations by October 2032 and provide a report of the review to the Scottish Parliament.