Are deposit systems a worthwile alternative to selective packaging waste collection systems ? Presentation of a methodology to support the decision making

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

2Deposit system versus selective collection packaging schemes - Budapest - 24/02/2009

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

1) Identification of all key parameters impacting costs & performances of both kind of systems

2) Assess the total net cost of the current selective collection system

3) Definition of the different possible scenarios for the future

4) Simulation of the total costs associated to each defined scenario

5) Results and comparison in terms of :

Total net cost for the citizen

Performances (recycling rates)


1) 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



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

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)

Selective collection systems : key parameters impacting cost


Functioning / organisation : physical flows

Beverages producers/importers

Retail stores without a deposit station

Consumers

Retail stores with a deposit station

Redemption centresor depots

Recycling plant

N-ref beverage containers before consumer usePost-user n-ref beverage containers

Beverages wholesalers

Pre-processing plant

Deposit systems on n-ref bev. packaging : assumptions


Functioning / organisation : financial flows

Material values

Financial flow


Consumers

Deposit SystemMngt Organisation

overhead costs

Beverage priceincl. deposit

(100%)

Beverage priceincl. deposit (100 %)

100 % refunds+ other DSMO net

costs*

80 - 95 % refunds+ handling costs

* net costs : 5 - 20 % total unredeemed deposits & material values to be deducted

Processing & transport

costs

80 to 95% refunds

Beverages wholesalers





Recycling plant

1

1

2

1

2 3

3

4 4

7

5

6



Functioning / organisation : controls


Consumers

Contract

Information & control flows

Physical weighing/counting

Deposit System Management Organisation

“DSMO”Beverages wholesalers





Recycling plant



Handling at the

retail/depot

Transport to pre-proces-sing plant

Regrouping , counting

and/or balingat pre-proces-

sing plant

Delivery to recycling

plant

Collecting refunds and other financial resourcesAllocating refunds and paying handling fees (clearing)

Paying transportation and pre-processing costsControlling physical/financial flows

Issuing statisticsNegotiating with all stakeholders

PROCESS ACTIVITIES

SUPPORT ACTIVITIES

Deposit systems on n-ref bev. packaging : costing model


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 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



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



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



2) 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, ...)



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

Glass1 / 1.000 inhab.

Plastic bottlesMetal cans

bev. Cartons2 x / month

Paper1 x / month

e.g. Belgian Fost Plus system


2) 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. Belgian Fost Plus system


3) 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



4) 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)



5) Results and comparison in terms of :

Total net cost

Performances (recycling rates)

As example : the Belgian study case (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 in Belgium : 3 scenarios (2004)


Deposit system in Belgium : results of the simulation

* Total recycled packaging / total packaging put onto the national market (in weight)

ComparisonTotal net cost

(mn €/year)

Total net cost per inhabitant

(€/year)

Global packaging recycling

performance*

Current FOST Plus system in stand alone 82 8,2 84%

Deposit system in stand alone 175 17,5 43%

Deposit system together with current FOST Plus system 222 22,2 82%

Deposit system with FOST Plus system limited to paper collection 194 19,4 71%


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.


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.

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 costs after

deduction of revenues from sale of materials = 50• Total deposit fees paid by consumers = 100• Redemption rate = 80%

Computation of total « net » costs of the organisation :• Revenues from deposit fees of the organisation = 100• Costs of deposit associated activities* = - 50• Redeemed deposit fees = - 80• Total «net » costs of the organisation 30

Computation of total net cost of the system :

Deposit fees paid by consumers 20 80 100Net costs of the system (incl. in sale price) 6 24 30Deposit fees rec’d back 0 - 80 - 80Total paid by consumers 26 24 50

= total costs associated to deposit system

Consumers who don’t return

Consumers who return Total

* After deduction of sale value of materials

To be allocated on all beverage units and included in sale price


Documents

Are deposit systems a worthwile alternative to selective packaging waste collection systems ? Presentation of a methodology to support the decision making