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By D. Guissard, consultant Budapest, 24 February 2009

Are deposit systems a worthwile alternative to selective packaging waste collection systems ? Presentation of a methodology to support the decision making process. By D. Guissard, consultant Budapest, 24 February 2009.

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By D. Guissard, consultant Budapest, 24 February 2009

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  1. Are deposit systems a worthwile alternative to selective packaging waste collection systems ?Presentation of a methodology to support thedecision making process By D. Guissard, consultant Budapest, 24 February 2009

  2. Is a deposit system on non-refillable beverage packaging a worthwile alternative to the current Hungarian selective collection system ? • To answer the question : 5 essential steps • Identification of all key parameters impacting costs & performances of both kind of systems • Assess the total net cost of the current selective collection system • Definition of the different possible scenarios for the future • Simulation of the total costs associated to each defined scenario • Results and comparison in terms of : • Total net cost for the citizen • Performances (recycling rates) Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  3. Is a deposit system on non-refillable beverage packaging a worthwile alternative to the current Hungarian selective collection system ? Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009 • Identification of all key parameters impacting costs & performances of both kind of systems • Selective collection system Based on current system experience • Deposit system Based on assumptions & costing model

  4. Selective collection systems : key parameters impacting cost • Quantities/types of targeted packaging • Level of service : • Density of bottle banks network • Collection frequency • Collection & transportation costs • Network of bottle banks / container parks (=fixed costs) • Removal costs of bottle banks / containers parks (driver + truck + time) • Cleaning / maintenance of bottle banks (manpower) • Kerbside collection costs (driver + loaders + truck + time) • Country / city environment (distance, speed, traffic) • Distance to recyclers / sorting plants Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  5. Selective collection systems : key parameters impacting cost • Sorting costs (incl. baling) • Quality of collected materials • Sorting centre related costs (manpower + equipment) • Specifications of recyclers • Values of materials • Quality of collected/sorted materials • International markets • Worthwile commercial outlets for materials • Communication • Overhead (co-ordination – management) Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  6. Deposit systems on n-ref bev. packaging : assumptions • Functioning / organisation : physical flows Recycling plant Beverages producers/importers Pre-processing plant Beverages wholesalers Retail stores without a deposit station Retail stores with a deposit station Redemption centres or depots N-ref beverage containers before consumer use Consumers Post-usern-ref beverage containers Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  7. Deposit systems on n-ref bev. packaging : assumptions • Functioning / organisation : financial flows Material values 100 % refunds + other DSMO net costs* Deposit System Mngt Organisation overhead costs Recycling plant 6 Beverages producers/importers Processing & transport costs 7 1 5 Pre-processing plant Beverages wholesalers 1 80 - 95 % refunds + handling costs Beverage price incl. deposit (100 %) 4 4 1 Retail stores without a deposit station Retail stores with a deposit station Redemption centres or depots Beverage price incl. deposit (100%) 80 to 95% refunds Financial flow 3 2 2 3 * net costs : 5 - 20 % total unredeemed deposits & materialvalues to be deducted Consumers Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  8. Deposit systems on n-ref bev. packaging : assumptions • Functioning / organisation : controls Recycling plant Deposit System Management Organisation “DSMO” Beverages producers/importers Pre-processing plant Beverages wholesalers Retail stores without a deposit station Retail stores with a deposit station Redemption centres or depots Contract Information& control flows Physical weighing/counting Consumers Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  9. Deposit systems on n-ref bev. packaging : costing model PROCESS ACTIVITIES Handling at the retail/depot Transport to pre-proces- singplant Regrouping , counting and/orbaling at pre-proces- singplant Delivery to recycling plant Collecting refunds and other financial resources Allocating refunds and paying handling fees (clearing) Paying transportation and pre-processing costs Controlling physical/financial flows Issuing statistics Negotiating with all stakeholders SUPPORT ACTIVITIES Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  10. Deposit systems on n-ref bev. packaging : Key parameters impacting costs • Quantities of targeted n-ref beverage packaging • Materiality of the deposit fee • Possibilities of fraud • Border areas • Level of service : • Density of network of deposit stations • Automated (RVM) / manual process Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  11. Deposit systems on n-ref bev. packaging : Key parameters impacting costs • Handling costs • RVM associated costs : • # of RVM’s per deposit stations (# of packaging returned at peak hours) • Depreciation of acquisition value • Cost of fixtures associated to the installation of RVM’s • Maintenance & repairs contract • Daily cleaning (employee hourly rate x time spend) • Placing & removing bags/boxes to collect packaging behind the RVM (employee hourly rate x time spend) • Or if manual take back : time spend at employee hourly rate • Cost of space : • Required m² in front and behind RVM’s + temporary storage space • Crushing rate of RVM • Rent cost • Opportunity cost of loss of shelf space dedicated to sale of goods Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  12. Deposit systems on n-ref bev. packaging : Key parameters impacting costs • Removal and transportation costs to pre-processing plant • Volume capacity of trucks • Driver + truck related costs • Frequency of removals (depends on storage space) • Time of a removal / # removals per hour • Pre-processing plant associated costs (all materials) • Additional sorting per colour for PET / Glass / Metals … • Counting of packaging units in case of manual take back • Baling / regrouping per material for delivery in bales or bulk Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  13. Deposit systems on n-ref bev. packaging : Key parameters impacting costs • Transportation to recyclers • Volume capacity of trucks • Driver + truck related costs • Distances to recyclers • Value of materials (idem current system) • Communication • Overhead (co-ordination – management) • Manual take-back versus automated (RVM’s) • Depends on # of deposit stations Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  14. Is a deposit system on non-refillable beverage packaging a worthwile alternative to the current Hungarian selective collection system ? • Assess the total net cost of the current selective collection system for the citizens • What are the average cost/T for the collection, sorting, transportation ? Identify fixed/variable costs in the total costs • What are the average value paid to/received from the recyclers ? • What are the overhead costs of the Green Dot organisation ? = communication, education, management, ... These should be reflected in the Green Dot fees paid by the contributive companies and paid indirectly by the citizens • What is paid directly by the citizens ? (e.g. : specific bags for the curbside collection, ...) Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  15. e.g. BelgianFost Plus system Plastic bottles Metal cans bev. Cartons 2 x / month Paper 1 x / month Glass 1 / 1.000 inhab. • Glass collection : 50 €/T* • Fixed costs** : bottle banks network + cleaning/maintenance • Variable costs*** : bottle banks removals + transportation to recycler • Paper collection : 47 €/T* • Mainly fixed costs** : kerbside collection + transportation to recycler • Blue bags collection & sorting : 368 €/T* • Mainly fixed costs** : kerbside collection + transportation to sorting centre • Variable costs*** : sorting costs • * These are operational costs that do not correspond to the Green Dot fee. Dated 2004. • ** Given a quality standard of service to the population (minimize temporary storage of selective collected packaging & maximize proximity of collection points) to ensure high participation rate • *** Depends on collected quantities Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  16. Assess the total net cost of the current selective collection system for the citizens Total current net cost per year : mn € / year Fixed Variable Total costs costs costs • Glass collection • Paper collection • Blue bags collection & sorting • Revenues from recycling (-) • Communication cost • Management cost (overhead) • Projects follow up cost • Total FOST Plus net cost • Blue bags paid by citizens • Total net cost of the system e.g. BelgianFost Plus system Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  17. Is a deposit system on non-refillable beverage packaging a worthwile alternative to the current Hungarian selective collection system ? • Definition of the different possible scenarios for the future • Improved/enlarged current selective collection system in stand alone (e.g. : with full coverage of the country & more communication) • Improved/enlarged current system + a deposit system • For specific beverage packaging • For specific beverages These should be defined clearly & precisely in order to quantify the quantutities and types of materials that will be diverted from the current selective collection system and managed through the new deposit system Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  18. Is a deposit system on non-refillable beverage packaging a worthwile alternative to the current Hungarian selective collection system ? • Simulation of the total net costs associated to each defined scenario Based on : • The total net costs of the current system (if stand alone) • The additional costs due to the enlargement/improvement of the current system in stand alone + the assocoated new perfromance • The costs of possible deposit systems according to the different possible options (which packaging materials, …) • The interdependencies of both systems functioning together (= impact of the diversion of packaging leaving selective collection for to deposit system on the costs of the selective collection system) Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  19. Is a deposit system on non-refillable beverage packaging a worthwile alternative to the current Hungarian selective collection system ? • Results and comparison in terms of : • Total net cost • Performances (recycling rates) As example : the Belgian study case (2004) Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  20. Deposit system in Belgium : 3 scenarios (2004) • Deposit system working in stand alone without continuing FOST Plus system • Consider only the cost of deposit system (175 mn €) • Deposit system in combination with FOST Plus system as currently existing • Consider: cost of deposit system (175 mn €) + 57% of current FOST Plus total cost (47 mn €) The « 43% cost savings » on FOST Plus system are due to less bottle bank removals and blue bags collection limited to once a month. • Deposit system in combination with FOST Plus system limited to paper collection • Consider: cost of deposit system (175 mn €) + 23% of current FOST Plus total cost (19 mn €) Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  21. Deposit system in Belgium : results of the simulation * Total recycled packaging / total packaging put onto the national market (in weight) Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  22. Conclusions (1/2) • The development of selective packaging waste collection management programs is in most of the cases the best way to reach efficiently high recycling rates. Compared to deposit systems on n-ref beverage containers, selective packaging waste collection management programs can offer : • a more flexible solution that will follow the consumption development and the packaging evolution, • higher recycling rates when considering total quantities of household packaging waste, • at a lower cost, • a more consumer friendly approach, • a more environmental awareness not driven by cash redemption, • no discrimination between small and large retailers, • no risk of fraud, • a progressive and adapted coverage of the whole country, • a solidarity approach of all packaging fillers. Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  23. Conclusions (2/2) • A combination of both systems would lead to significantly higher costs than a single selective packaging waste collection management scheme due to the diversion of n-ref beverage containers from the household packaging waste stream. • Indeed, remaining packaging waste represents too low quantities that cannot : • absorb the fixed costs of selective packaging waste collection system; • and motivate the participation of households to selective packaging waste collection programs. Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

  24. Total cost of a deposit system : WARNING !Do not confuse total cost for the management organisation and total costs of the system for the citizens ! • Demonstration : • Considering on a yearly basis : • Total cost of Deposit System = handling/transportation/processing/administration costsafterdeduction of revenues from sale of materials = 50 • Total depositfeespaid by consumers = 100 • Redemption rate = 80% • Computation of total « net » costs of the organisation : • Revenues fromdepositfees of the organisation = 100 • Costs of depositassociatedactivities* = - 50 • Redeemeddepositfees = - 80 • Total «net » costs of the organisation30 • Computation of total net cost of the system : To be allocated on all beverage units and included in sale price Consumers who return Consumers who don’t return Total Depositfeespaid by consumers 20 80 100 Net costs of the system (incl. in sale price) 6 24 30 Depositfeesrec’d back 0 - 80 - 80 Total paid by consumers 26 24 50 = total costsassociated to deposit system * After deduction of sale value of materials Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

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