In the final instalment of this series, we cover the remaining legislative drivers shaping the C&I sector: the Deposit Return Scheme (DRS), the Emissions Trading Scheme (ETS), along with a policy driver, the Circular Economy Task Force. This blog outlines each framework and its anticipated impact on the waste industry - particularly for CIRQLR - and consolidates CEO David Palmer-Jones’ key reflections following his presentation at RWM.
Deposit Return Scheme: Commercial Opportunity & Material Value
By the end of October 2027, the UK Government aims to launch a Deposit Return Scheme across England and Northern Ireland, using reverse vending machines for members of the public to deposit PET plastic drinks bottles - the clear plastic used for most beverages - along with metal drink containers. As it currently stands, 40,000 reverse vending machines are to be installed across the UK, with 25,000 deposit points to be put in place at major retail outlets to help manage over 30 billion items.
It is projected that the scheme will generate more than £5 billion in revenue, with over half of the costs stemming from traditional waste businesses. For CIRQLR, DRS therefore represents a major opportunity, both well-positioned and well-equipped to develop new partnerships with retailers and producers as the scheme is established. As David notes, items deposited through reverse vending machines represent “the highest quality of material you could ever have, it’s even rejected at source by the machine. 98.5% is the minimum requirement of purity post treatment,” resulting in a £250–£500 price increase for PET.
DRS also offers a significant opportunity for producers, who will be able to ‘re-loop’ by reusing their own materials. This will also enable them to meet recycling targets more quickly, particularly for aluminium cans, if these are retained within the system rather than exported abroad.
Deposit Return Scheme: Behavioural Change & Infrastructure Adaption
For David, the shift in public mindset is the most pivotal aspect of DRS. Return behaviour becomes incentivised as producers will be required to collect and refund deposits, leading members of the public to associate recycling with monetary value. He believes this will have a “knock-on effect to the rest of our industry…and recycling generally,” as value becomes embedded in behaviour. Looking to Ireland and its rollout of the scheme, the environmental benefits can also be considerable, with a 50% reduction in litter reported in the first year.
Challenges, however, lie ahead. Existing infrastructure - particularly MRFs - will need to adapt, as they are expected to be “stripped of value by 50–60%” due to the reduction in high-value materials. Adaptation will also be required beyond the waste sector, notably within hospitality, which is anticipated to be included in a second phase of the scheme.
Emissions Trading Scheme: Expansion & Impacts
It has been outlined that the UK’s ETS is set to expand its coverage to include energy from waste (EfW) and waste incineration facilities, potentially by 2028. At its core, the scheme introduces carbon taxation on the fossil fuel elements in waste, which account for approximately 50%. However, as noted by David, there remains a “debate as to whether we are aligning with Europe”, and whether a harmonsied trajectory will emerge, or if the EU’s emissions trading framework will continue to operate independently. There also continues to be “lots of talk” by EfW operators regarding CCUS (Carbon Capture, Utilisation and Storage) in response to the new carbon costs that they’ll face. Yet, while technically possible, CCUS implementation is not anticipated in the near future, as it remains vastly complex, costly, and dependent on major financial and governmental support.
The “fundamental impact” of this expansion, David highlighted, is that “it’s going to be at the heart of what the UK is: money-orientated.” Carbon prices are likely to increase by £50 per tonne initially, with gate fees rising to approximately £180 per tonne, driving higher residual waste costs. This, however, will have a beneficial effect on the transition towards recycling, particularly as Extended Producer Responsibility (EPR) aims to target decarbonisation at the source through reducing CO₂ emissions.
Emissions Trading Scheme: Market Pressures
That said, the UK EfW market is developing very quickly, and faces significant pressure. Around 4 million tonnes of new EfW capacity is set to arrive shortly, which will "start to rebalance the situation", and push forward the need to manage and reduce residual waste..
David also noted that there remains a “great belief that there will be some very easy pass through this”, with some assuming that ETS associated costs can simply be added on to the gate fee charged to waste suppliers. However, customers will be reluctant to pay the same ETS-related costs for their decarbonised waste streams as others who are delivering much higher-carbon waste.
This expansion will therefore not be without dispute between EfW operators, looking to recover their costs, and waste producers, who will not want to ‘overpay.’ In other words, debate will arise around the ‘true’ cost of carbon per tonne, how ETS costs will be fairly distributed between customers and waste types, and whether there should be varying costs for high versus low-carbon materials delivered to an EfW facility - complexities that may well be underestimated, David commented.
Circular Economy Taskforce: A Future Driver
The Circular Economy Taskforce was established to co-create the UK’s circular strategy at a national level. Critically, the strategy is expected to provide longevity and policy clarity through clear objectives, enforceable targets, and sector-based frameworks. David expressed that he was “very pleased it was put into place to look further than this short window of five years”, highlighting that the taskforce is crucial in defining long-term targets that will provide the clarity businesses need to succeed and transition.
In essence, the aim of the taskforce is “all about delivering that next form of strategy”, commented David, who went on to emphasise the importance of defined objectives for businesses: “I really do hope it’s not a talking shop. It’s very important they come with both policy and fiscal instruments which will help us make shifts towards greater circularity." Currently, world circularity stands at just 7% - a figure that demonstrates how far there is to go - and that progress will require intelligent, forward-thinking action and significant investment in the right technology and infrastructure.
David has long argued for an industrial strategy and is pleased that the government has now taken steps towards improving local supply chains. With a framework in place, the UK’s fragile supply chains - which have been severely affected by challenges including Covid-19 and the war in Ukraine - can retain more material, extract greater amounts of value, and support key industries across the four nations.
Looking Ahead
Drawing his presentation to a close, David reinforced the point that “legislation is everything. It delivers everything; it gives us all great opportunities to develop.” Having discussed six key legislative drivers (covered throughout this three-part series), it is clear that a major opportunity lies ahead for CIRQLR, enabling “the chance to put waste to good use; it’s our mission.” If the government provides the necessary clarity and longevity, investment will follow, but continued positive intervention will be essential.
David concluded his presentation with a strong and optimistic statement: "I'm looking forward, certainly, to the next five years together with my team, to exploit and develop greater circularity within the UK”. Watch this space, as CIRQLR continues to grow and expand in pursuit of its mission to give waste a second life.
Emily Nurse, CIRQLR
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