QUESTIONS AND ANSWERS
f^. T ..-_ .1.._ -
RETURNABLE BEVERAGE CONTAINERS
FOR BEER AND SOFT DRINKS
July 1975
1. What are returnable beverage containers?
Returnable beverage containers are containers that are accepted
for return after use. Usually a cash deposit is paid when the
beverage is purchased and refunded when the container is returned.
The purpose of the deposit is to provide an incentive for the
return of the container either for refilling or for recycling of
the container materials.
2. What are the environmental and resource conservation benefits of
returnable beverage containers?
The return of beverage containers reduces the generation of beverage
container waste and litter. Reuse and recycling of containers
reduces air and water pollution resulting from the production of
containers, and conserves energy and materials.
3. What is mandatory beverage container deposit legislation?
Mandatory deposit legislation is a law or ordinance which requires
a deposit on all beverage containers sold in a particular jurisdiction,
4. Is there mandatory deposit legislation in existence today?
Three States have enacted mandatory deposit or returnable container
laws for beer and carbonated soft drinks: Oregon, Vermont and
South Dakota.
In Oregon, a refund value of 2 cents is carried by all "certified"
containers, which can be reused by more than one manufacturer.
All other containers carry a refund value of 5 cents. Metal
containers with detachable tab tops are banned.
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In Vermont, all beer and soft drink containers carry a refund
value of at least 5 cents. The manufacturer or distributor is
also required to pay the retailer a fee of 20 percent of the
deposit (1 cent per 5 cent-deposit container) to cover the costs
of handling the returned containers. In January 1977 nonrefillable
bottles will be banned in Vermont, as will metal containers with
detachable tops and non-biodegradable container carriers.
South Dakota has passed a law which requires that every beverage
container sold in that State, subsequent to July 1, 1976 shall be
either a reuseable container or a container which is biodegradable.
Several communities including Bowie, Maryland; Loudoun County,
Virginia and Ann Arbor, Michigan have passed similar laws which
have not been implemented due to legal challenges.
5. Does mandatory deposit legislation eliminate the use of the metal
can as a beverage container?
Mandatory deposit legislation does not prohibit the use of metal
cans. However, in Oregon, after passage of the law, the use of
refillable bottles increased and the use of cans decreased. For
soft drinks, refillable bottles increased from 53 percent of the
market prior to the law to 88 percent of the market in the year
following the law.1 Soft drink cans decreased from 40 percent of
the market to 12 percent.2 Refill able beer bottles increased
from 31 percent of the market before the law to 96 percent after-
wards. Beer cans declined from 40 percent to 3.5 percent.
The use of nonrefillable glass bottles was practically eliminated
for both beer and soft drinks.
In Vermont comprehensive data on pre-law and post-law container
useage is not available. However, as of April 1975, cans and
nonrefillable bottles were still being sold for both beer and soft
drinks, but a trend towards more wjdescale use of refillable bottles
for soft drinks has been reported.5
Nationwide in 1972 approximately 39 percent of all soft drinks
were packaged in refill able bottles, 27 percent in nonrefill able
bottles and 34 percent in cans.6 For beer the figures are
approximately 18 percent for refillable bottles, 24 percent for
nonrefill able bottles and 58 percent for cans.7 The market mix of
containers varies significantly for different geographic regions.
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Mandatory deposit legislation would probably result in a shift
towards the increased use of refill able bottles. Nonrefiliable
glass bottles may well disappear from the market (however for larger
sizes nonrefillable bottles may remain). Cans would probably decline
in market share but would remain in some quantities, especially in
areas where they are currently predominant.
6. How much solid waste can be prevented by such laws?
On a national basis, beer and soft drink containers accounted
for 8 million tons of solid waste in 1973.° This represented
6 percent of total municipal (household and commercial) waste.
Beverage containers are a rapidly growing segment of municipal
waste, with an estimated growth rate of 10 percent per year from
1962 to 1972.9
x If 90 percent of the containers bearing a deposit were returned
^> for refilling or recycling, there would be a reduction in beverage
container waste of 70 to 75 percent, or 5 to 6 million tons on a
national basis.
~%j
7. What about littered beverage containers?
^ Most studies show that beer and soft drink containers comprise
t/-> between 20 to 30 percent of roadside litter by item count.10'']»12
^; However many other littered items are smaller and less visable
r^ than beverage containers and degrade more rapidly in the natural
^ environment. On a volume basis, which is a better measure of litter
visibility, beverage containers have been found to represent
62 percent of highway litter.'' For the year following enactment
of deposit legislation, beverage container litter decreased by
66 percent in Oregon and by 67 percent in Vermont.13'5
8. How much energy could be saved by use of returnable containers?
Beverage containers that are refilled or recycled save energy and
materials. A glass beverage container used 10 times consumes less
than one-third of the energy of nonreuseable containers used to
deliver the equivalent quantity of beverage.14 Aluminum and all-
steel cans that are recycled save 78 and 39 percent, respectively,
of the energy required to manufacture a can from virgin raw
materials.1^
The energy that would be saved through mandatory legislation depends
upon the resulting container mix and the return and recycling rates
for the containers. For example, if national mandatory deposit
legislation had been in effect in 1973, and if the bottle and can
container mix had not changed, and if 90 percent of all bottles
had been returned and refilled and 80 percent of all cans had been
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recycled, approximately 151 trillion British Thermal Units (BTU)
of energy would have been saved. If on the other hand in 1973
refillable bottles had represented 80 percent of the market share
(and bottle and cans had been returned and recycled at the above
rates) approximately 209 trillion BTU's of energy would have been
saved.16
9. How significant are these energy savings?
A saving of 209 trillion BTU's is equivalent to the energy content
of 39 million barrels of oil. It is also equal to about one-half
of the energy used in producing the current mix of beverage containers,
While this amounts to a saving of just 0.3 percent of total national
energy use, it is important to note that it is of similar magnitude
to the saving achievable through other energy conservation measures
currently being considered. For example, it is equivalent to one-
half of the energy saving that can be achieved from strict
enforcement of a 55 mile per hour speed limit nationwide.!7
10. How much materials could be saved through the use of returnable
containers?
If in 1973 90 percent of all bottles had been refilled, and
80 percent of all cans had been recycled, between 5 and 6 million
tons of raw materials would have been saved that year. This would
represent a savings of 3.8 to 4.6 million tons of glass, 1.1 to
1.3 million tons of steel and 300,000 to 350,000 tons of aluminum.16
11. How would a returnable system affect beer and soft drink prices?
Beer and soft drinks sold in refillable containers are generally
cheaper to the consumer than beverages in one-way bottles and
cans. Savings in the range of $.03 to $,05 per 12 ounce container
have been frequently observed.1**' '» However, it has been
argued that the costs of handling and transporting returned
containers are not fully reflected in retail prices. These costs
have been estimated to range from less than $.01 to $.02 per
container.22,23 Therefore, even if these costs are assumed not to
have been reflected and are added, beverages in refillable
containers cost less to the consumer. To the extent that
mandatory deposit legislation induces a shift to refillable
bottles, average prices for beer and soft drinks should decline.
However, it should be pointed out that a rapid widescale shift to
an all refillable bottle system would require considerable equipment
changeover in the brewing and soft drink industries and would result
in additional costs that could be passed on to the consumer. If
the transition to refillables takes place gradually over a period
of years, the costs of rapid changeover would be avoided.
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12. How many times do containers have to be returned before energy and
cost savings are achieved?'
For an energy saving to be achieved from use of a refillable bottle,
it must make at least four trips or have a return rate of 75 percent.24
Refillable bottles generally become cheaper than one-way containers
at return rates of 80 percent (5 trips), although this varies from
bottler to bottler.25
In Oregon one year after passage of the deposit law, refillable
soft drink containers were returned at a 96 percent rate,2^ and
refillable beer containers at an 80 to 95 percent rate.2''2**
Approximately 65 to 70 percent of all cans were being returned and
this rate was increasing.26,28 Detailed data are not available
from Vermont, although several bottlers have indicated return
rates of 90 to 95 percent.5
The subject of average national return rates for refillable bottles
is a matter of considerable debate. An estimate calculated by dividing
container fillings by container purchases results in an average return
rate during the period 1963 to 1972 of 94 percent for soft drinks and
96 percent for beer.29 These figures may not represent actual
return rates since bottle inventories may have been changing.
Furthermore, these figures include both "on-premise" beverage
consumption (in taverns and restaurants) where return rates would
be expected to be higher than for "off-premise" consumption (e.g.
beverages purchased from supermarkets or retail stores). Another
estimate indicates soft drink container trippage of 10 to 1530
(return rate of 90 to 94 percent) and a beer container trippage of
183' (return rate of 95 percent).
In any case, for a mandatory deposit system it appears reasonable
to expect a return rate for beer and soft drink containers that
would be much greater than that necessary for energy and cost savings.
13. How would a mandatory deposit law impact on the beverage production,
container manufacturing and distribution industries?
The impacts of mandatory deposit legislation upon industry would
depend upon the extent of the change in the market mix of containers
and the time period over which this change takes place. Most estimates
of economic impact have been based upon the extreme assumption of a
complete and sudden switch to refill able bottles. Under these
circumstances, facilities for the production, storage and distribution
of one-way containers, not convertible to returnable systems, would
become obsolete and would have to be replaced. Glass and metal
container production would decline. Bottlers and brewers would
initially have to invest in additional bottle washing equipment and
refillable container lines. Additional transportation costs would
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be incurred for the distribution of beverages and the return of
containers. Some retailers would need additional storage space
and would have to add employees to handle returned containers.
Based on 1969 data in an industry-sponsored study of the impacts of
a ban on nonrefillables, tax writeoffs would amount to $1.3 billion,
and total new investments $1.2 billion. More recently the brewing
industry has claimed total "conversion costs" of $5 billion for a
sudden switch to refillables and a ban on one-way containers.33
The 1969 study indicated that cost increases in the brewing and
soft drink bottling industries would be more than offset by container
cost savings.3^ Some of these sayings could also be passed on
to beverage distributors and retailers to offset increased costs in
these sectors. The study found that the aggregate cost to all
sectors of the industry (beverage producers through retailers,
inclusive) would be $250 million in the first year of a ban, but
would actually become a $40 million gain in subsequent years due
to container savings.
Tax losses and new investment requirements would be lower for a
mandatory deposit system in which nonrefillable containers were
not completely eliminated. Capital losses would be reduced if
time were allowed for normal amortization of current investments
over a period of years. A 1975 study for the State of New York,
assuming a 3 year phase-in to a market mix of 80 to 90 percent
refillables, concluded that new investment requirements in that
period would be $53 million per year, compared to a normal
investment requirement of $30 million per year with no legislation.35
It should also be noted that normal industry competition resulting
in changes in relative container prices or introduction of new
container types (such as the plastic bottle) could have similar
impacts on the container industries.
14. What would be the effect of National mandatory deposit legislation
on employment?
The impact of mandatory deposit legislation upon employment would
also depend on the rate of change of container useage. A rapid shift
toward the use of refillable bottles would eliminate some jobs,
primarily skilled positions in the container manufacturing industries.
It has been estimated that a complete ban of nonrefillable containers
in 1969 would have resulted in the loss of 60,000 jobs that year.
However it was also estimated that the establishment of a returnable
system would also create a roughly equal number of new jobs,
primarily jobs of lower skill classification and pay, in the retail
and distribution sectors of the economy. It is important to note
that the employees displaced would not be directly transferable to
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these new jobs. Employment dislocations would be reduced if
nonrefiliable bottles and metal cans continued to be sold or
if the change in container useage took place over a period of
time. A transition period would allow natural attrition in
employment to absorb some of the job losses. Also it would
provide time for employment to shift to other plants or
industries manufacturing other containers or similar products.
For example, it has been estimated that a gradual transition
over a 5 year period to a 90 percent reduction in nonrefillable
containers would result in the loss of 39,000 positions.37
A 10 year transition to a similar market would result in the
loss of about 17,000 positions.37
Studies conducted for the States of Maryland, Minnesota, New York,
Connecticut, Illinois, Michigan and Maine all found that the job
gains in the retail and distribution sectors would be greater than
the losses in container manufacturing.38'44 in New York, for
example, a job gain of 5,200 and a loss of 1,200 jobs was
predicted, with a net annual payroll increase of $35 million.45
In Oregon, where a deposit law is in effect, one study estimated an
addition, of 175 to 200 new jobs and a loss of 340 to 427 existing
jobs but did not estimate job increases in retail stores.4^
Another study estimated a net job gain of 365 jobs (including
retail).47
15. Is mandatory deposit legislation at cross-purposes with plants built
for the recovery of energy and materials from waste?
A resource recovery plant processes mixed municipal waste in order
to extract materials and other products which can be sold. Changing
the composition of municipal waste through mandatory deposit
legislation would not significantly affect the economics of most
resource recovery plants. Approximately 80 percent of the municipal
waste stream is organic materials—paper, plastics, etc. This
fraction should be the primary concern of a resource recovery
facility, as it represents the bulk of the waste, and provides the
bulk of revenue ($10 to $15 per ton of waste processed) needed to
make resource recovery economically feasible.48
As a maximum result of mandatory deposit legislation, glass in the
waste stream could be reduced by about 35 to 45 percent, ferrous
metal wastes could be reduced by 15 percent, and, where use of
aluminum cans is substantial, aluminum wastes could decline by 30
to 45 percent. Under favorable market conditions, gross revenues
from the beverage container fraction of the waste stream amount to
about $1 to $2 per ton of waste processed. When the costs of
recovering and transporting these fractions are considered, the
net revenue contribution is considerably less. Removal of the
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8
beverage container fraction through a mandatory deposit system
would probably not cause a net revenue reduction in excess of
$1 per ton of waste processed.49
It should be emphasized that recovery technologies for glass and
aluminum are for the most part not yet fully demonstrated and
markets for recovered glass and metal resources have just begun
to be developed. In light of the uncertainties of separating and
marketing aluminum and glass from solid waste, beverage container
legislation does not entail undue risk for the installation of
resource recovery facilities.
Resource recovery system feasibility should not be decided solely
on the basis of glass, aluminum and steel recovery economics.
Other more important factors are the general uncertainty regarding
future markets (especially for the organic fraction) and the insti-
tutional obstacles to organizing and implementing a venture of this
sort. A significant number of future recovery investment decisions
should not be adversely impacted by mandatory deposit legislation.
16. Are there other mechanisms, such as the litter tax enacted by the
State of Washington, that will achieve benefits similar to a
mandatory deposit law?
Litter taxes are generally very small taxes (a fraction of a cent
per product) imposed at the time of sale of products likely to be
littered. Such taxes could provide additional revenues to collect
litter along streets, highways, and recreational areas. The major
shortcoming of a litter tax is that it does not create a disincentive
for littering (the tax is paid regardless of whether the individual
purchasing the product litters the item or not). Furthermore, such
a mechanism would not reduce the generation of solid waste, nor
would it result in savings of energy or materials. Thus while a
litter tax is not incompatible with mandatory deposit legislation,
it is not a substitute for such legislation.
17. Is there a sanitation problem in storing used containers?
While there is a possibility of insect problems associated with the
storage of bottles and cans containing beverage residues, it should
be noted that returnable containers have been used for many years
without significant adverse public health impacts. If public health
laws and sanitation codes are strictly enforced, and containers are
picked up on a frequent and timely basis, such problems should be
minimized.
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18. Isn't there a loss of convenience to the consumer?
A deposit law does not require return of the container, but does
make the consumer who discards the container pay the amount of the
deposit. A study for the State of Oregon found that 87 percent
of those surveyed found no inconvenience with returnables.^O
Furthermore this survey found that 91 percent of the respondents
approved.of the legislation and only 5 percent voiced any disapproval
at all.51
19. What is the position of the U.S. Environmental Protection Agency
on mandatory deposit legislation at the Federal, State and local
levels?
The U.S. Environmental Protection Agency has testified in favor of
the adoption on a nationwide scale of a mandatory deposit system
for beer and soft drink containers.^ Based upon several years of
analysis and observations in the States which have enacted mandatory
deposit laws, it is concluded that a mandatory deposit program
would result in significant conservation of energy and materials,
and a reduction in solid waste and litter caused by beverage
containers. A sudden shift to a returnable system, however, would
likely result in excessive economic disruption and unemployment.
To minimize the adverse economic repercussions, it is recommended
that a nationwide system be phased in over an extended period of
time.
While ideally such legislation should be national, State-level
legislation, based upon the experience in Oregon and Vermont, also
appears to be effective in achieving the benefits. Below the
State-level, ordinances requiring mandatory container deposits would
probably be effective in large regions, counties or metropolitan
areas. Not enough experience has been acquired to indicate whether
local ordinances for smaller communities would be effective.
EPA neither supports nor opposes State or local deposit legislation.
EPA favors national legislation in this area and has decided not
to promote the adoption of State or local laws, which may be super-
seded by a national law at a later time. Furthermore the Agency
does not have the resources to analyze the economic impacts of
different State laws. However EPA does not oppose State or local
deposit legislation that is designed to reduce negative employment
and economic impacts and contains provisions anticipating possible
national laws.
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References
1. Applied Decision Systems, Inc. Study of the effectiveness and impact
of the Oregon minimum deposit law. Legislative Fiscal Office,
Salem, Oregon, 1974. p. II-3.
2. Applied Decision Systems. Study of the Oregon deposit law. p. II-4.
3. Applied Decision Systems. Study of the Oregon deposit law. p. 11-67.
4. Applied Decision Systems. Study of the Oregon deposit law. p. 11-68.
5. Loube, M. Beverage containers, the Vermont experience. U.S. Environmental
Protection Agency, Washington, D.C., 1975. Draft.
6. Franklin, W. E., and D. Hahlen, W. R. Park and J. M. Urie. Baseline
forecasts of resource recovery, 1972 to 1990. Midwest Research
Institute, Kansas City, Missouri, 1975. p. 241.
7. Franklin, W. E., Baseline forcasts. p. 255.
8. Smith, F. A. Technical possibilities for solid waste reduction and
resource recovery: prospects to 1985. U.S. Environmental Protection
Agency, Washington, D.C., 1975. (In press.) p.5.
9. U.S. Environmental Protection Agency calculations from Franklin, W.E.
Baseline forescasts. p. 79, 98.
10. Applied Decision Systems. Study of the Oregon deposit law. p. 1-31.
11. Bingham, T. H., and P. F. Mulligan. The beverage container problem.
Washington, U.S. Government Printing Office, 1972. p. 30.
12. Scheinman, T. Mandatory deposit legislation for beer and soft drink
containers in Maryland, an economic analysis. State of Maryland
Council of Economic Advisors, 1974. p. 3.
13. Applied Decision Systems. Study of the Oregon deposit law. p. 1-26.
14. Hunt, R. G., and W. E. Franklin. Resource and environmental profile
analysis of nine beverage container alternatives. Environmental
Protection Publication SW-91c. Washington, U.S. Government
Printing Office, 1974. p. 21.
15 Hunt. R. G., and W. E. Franklin. Resource and environmental profile
analysis, p. 40.
16. U.S, Environmental Protection Agency calculations from data presented
in References 6 and 14.
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17. Personal communication. National Science Foundation to H. Samtur,
U.S. Environmental Protection Agency, April, 1975.
18. Dildlne, R. and R. Rainy. Impacts of beverage container regulations
in Minnesota. Minnesota State Planning Agency, St. Paul,
Minnesota, 1974. p. 14.
19. Environmental Action, Inc. Washington, D.C. Press Release. October 17,
1974.
20. Stern, C., E. Verdieck, S. Smith, and T. Hedrick. Impacts of beverage
container legislation on Connecticut and a review of the
experience in Oregon, Vermont and Washington State. Report
to the Connecticut State Legislature, 1975. Final Draft, p. 28.
21. Smith, J. L. President, Coca-Cola, Inc. Hearings before the
Subcommittee of the Judiciary, United States Senate on S.3133,
August 8, 1972. Washington, U.S. Government Printing Office,
1973. p. 164.
22. Alpha Beta Acme Markets, Inc. Bottle survey 1971: a California
supermarket report on the cost of handling returnable soft drink
bottles. La Habra, California, 1971.
23. SCS Engineers. Solid Waste Management in retail food stores. Long
Beach, California, 1973. p. 111.
24. Hunt, R. G. Resource and environmental profile analysis, p. 38.
25. Stern, C. Impacts of container legislation on Connecticut, p. 5.
26. Applied Decision Systems. Study of the Oregon deposit law. p. II-4.
27. Applied Decision Systems. Study of the Oregon deposit law. p. 11-68.
28. Gudger, C. and J. Bailes. The economic impact of Oregon's bottle
bill. Oregon State University Press, Corvallis, Oregon, 1974.
p. 24, 26.
29. U.S. Environmental Protection Agency calculations from data presented
in Reference 6.
30. Franklin, W. E. Baseline forecasts, p. 247.
31. Franklin, W. E. Baseline forecasts, p. 256.
32. Mai Hie, J. The National economic impact of a ban on nonrefillable
beverage containers. Midwest Research Institute, Kansas City,
Missouri, 1971. p. 2.
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33. United States Brewers Association, Inc. Resource/energy recovery
and recycling vs. source reduction: A simple economic analysis
of two basic resource conservation strategies. Prepared by
R. S. Weinberg & Associates, St. Louis, Missouri, 1975.
34. Mallie, J. National impact of a ban on nonrefillable containers.
p. 35.
35. Quinn, R. R., and S. F. Sloan. No deposit no return... A report on
beverage containers. New York State Senate Task Force on Critical
Problems, Albany, New York, 1975. p. 7.
36. Bingham, T. H., The beverage container problem, p. 59.
37. Average of estimates presented in: Employment dislocations data.
Research Triangle Institute memo to the U.S. Environmental Protection
Agency, April 10, 1974.
38. Scheinman, T. Mandatory deposit legislation in Maryland, p. 10-16.
39. Impact of beverage container regulations in Minnesota, p. 76-83.
40. Stern, C. Impacts of container legislation on Connecticut, p. 3.
41. Quinn, R. R. No deposit no return, p. 68.
42. Folk, H, Employment effects of the mandatory deposit regulation.
Illinois Institute for Environmental quality,
43. Ross, M. Employment effects of a ban on nonreturnable beverage
containers in Michigan. Kalamazoo Nature Center for Environmental
Education, Kalamazoo, Michigan, 1974, p. 1-15.
44. O'Brien, M. Returnable containers for Maine: an environmental and
economic assessment. Maine Citizens for Returnable Containers.
Portland, Maine. 1975.
45. Quinn, R. R. No deposit no return, p. 5.
46. Applied Decision Systems. Study of the Oregon deposit law. p. iii.
47. Gudger, C. Economic impact of Oregon's bottle bill. p. 69.
48. U.S. Environmental Protection Agency. Third report to Congress;
resource recovery and waste reduction. (Draft) p. 130.
49. U.S. Environmental Protection Agency calculations based upon
estimate of solid waste stream composition, material recovery
processing costs and revenues.
50. Applied Decision Systems. Study of the Oregon deposit law. p. Ill - 38.
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51. Applied Decision Systems. Study of the Oregon deposit law.
p. III-6.
52. Quarles, J. R. Statement of the Deputy Administrator, U.S.
Environmental Protection Agency before the Subcommittee on the
Environment, Committee on Commerce, U.S. Senate. Washington, D.C.,
May 7, 1974.
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