Funding and Implementation Details for Beverage Container Return Scheme

Mr Ang Wei Neng asked the Minister for Sustainability and the Environment (a) what is the projected cost per annum for the new proposed beverage container return scheme; (b) whether NEA will consider setting up return points at hawker centres, food courts and canteens of significant size; and (c) how will NEA ensure that the non-profit administrator of the proposed scheme will operate the container return scheme efficiently and effectively.

Mr Liang Eng Hwa asked the Minister for Sustainability and the Environment with regard to the model in which the beverage container return scheme will be implemented (a) what is (i) the envisaged scale in its implementation and (ii) its projected initial and recurring costs under this model; and (b) whether the Ministry has considered other non-monetary related schemes to achieve the same outcome that is expected under this model.

Thank you. The proposed beverage container return scheme aims to encourage good recycling practices, conserve resources and reduce waste and carbon emissions. This is in line with our Zero Waste Masterplan and contributes towards our climate ambition to achieve net-zero emissions by or around mid-century. The scheme, which was first proposed by the Citizens' Workgroup on #RecycleRight in 2019, will be the first phase of an Extended Producer Responsibility (EPR) approach to manage packaging waste.

This Extended Producer Responsibility approach means that the scheme will be funded by producers of pre-packaged beverages. Under the EPR approach, beverage producers, such as manufacturers and importers, will be responsible for the collection and recycling of the products they put out on the market as well as funding the scheme. This is similar to the EPR scheme that was implemented for e-waste in 2021.

Under the beverage container return scheme, a small refundable deposit will be applied when a consumer buys a pre-packaged beverage. I must emphasise that this is a refundable deposit. Consumers will get a full refund of their deposits when they return their empty beverage containers at designated return points. Compared to non-deposit-based recycling schemes, the refundable deposit will encourage a higher recycling rate and aggregate a stream of cleaner and higher quality recyclables that can be used to produce new products, thus enhancing the resource loop. Similar schemes in countries such as Norway, Sweden and Lithuania, have achieved return rates of 80% or higher.

Producers typically appoint an operator to carry out their responsibilities under the scheme. Based on the experience of other countries, a not-for-profit, industry-led scheme operator is preferred. It will be able to tap on the industry's capabilities and resources, such as existing logistics channels to make use of backhaul trips to improve operational synergies. As the scheme is owned and run by the industry, it will have a strong incentive to operate the scheme efficiently and cost-effectively, to keep scheme costs low for all parties. In addition, the revenue from the sale of clean, high quality and high value recyclables, and any unclaimed deposits, will be utilised by the scheme operator to reduce the scheme costs. In Singapore, the eventual cost pass-through to consumers in beverage prices, if any, will likely be moderated by price competition among industry players. This is also the experience in other countries that have implemented similar schemes.

To ensure that the scheme operator operates efficiently, cost effectively and fairly across multiple producers, the Government will exercise regulatory oversight over the scheme operator. The scheme operator will be licensed by NEA and be required to meet conditions set out by NEA, including a collection target.

To develop the scheme framework for Singapore, my Ministry and NEA have conducted over two years of extensive engagements and consultations with stakeholders, including members of the public and over 250 beverage producers, retailers and waste management companies. We have taken into account their feedback and views in developing a proposed scheme framework, and we are currently conducting further public consultation via REACH. As public consultations are still ongoing, not all the details of the scheme have been finalised.

We are proposing for the scheme to cover plastic bottles and metal cans as a start, as these have high material value, high consumption rates and are easy to collect and compact. We also propose to include all beverage types to reduce consumer confusion and maximise the number of containers that can be collected for recycling. The scheme would include containers from 150 millilitres to three litres, which can be accepted by typical reverse vending machines. With these proposed parameters, the scheme is estimated to cover more than one billion beverage containers in Singapore each year.

In designing the scheme, we will make it easy for consumers to understand, to enable each of us to play our part in building a circular economy. We will need to have an extensive network of conveniently located return points to enable consumers to easily claim their deposit refunds. Based on a survey conducted with 1,000 households, supermarkets were among the most preferred return locations across all the age segments and are a major sales channel for prepackaged beverages. We have thus proposed that large supermarkets with a total floor area of more than 200 square metres be mandated to set up return points. This will cover about 400 large supermarkets. We also welcome operators of other premises, such as mall operators and smaller retailers, to voluntarily set up return points. Based on experiences overseas, this can increase footfall to stores.

The scheme operator pays handling fees to return point operators, to reimburse the costs incurred. To build the return point network, NEA will work closely with the future scheme operator to identify and set up return points in suitable community and public spaces, such as Community Clubs, sports facilities and large, well-patronised hawker centres, to increase accessibility. Return point operators can choose manual over-the-counter return points or opt for automated reverse vending machines.

At food and beverage (F&B) premises, such as hawker centres, food courts and canteens, operators and stallholders have the flexibility to decide whether to collect the deposit and pass the beverage containers to their patrons. There is a wide range of such premises, from casual settings to more formal settings, and each would have its own preference. For example, stallholders could serve the customer the beverage with its container and charge the deposit, in which case, the customers can take away the empty beverage containers and return them at designated return points to claim the refund on their deposit. Alternatively, stallholders could pour the beverage into a cup before serving, in which case, they do not need to charge the deposit as the customer does not receive the beverage container. In this case, the stallholder can collect the empty beverage containers and claim the refund of the deposits on the containers. We expect the former to apply in more casual settings, such as coffee shops and hawker centres, as the shop owners would typically have their customers pay the deposit and then take the beverage container.

Operators of F&B premises, including hawker centres, food courts and canteens, could also consider setting up return points at their premises, where appropriate. NEA will work with the scheme operator to engage F&B premises operators, advise them on the scheme and prepare them for implementation.

We will continue to engage stakeholders as we develop the scheme. The ongoing REACH consultation will be open until 14 October this year and we encourage and welcome all stakeholders and members of the public, as well as Members in this House, to give their feedback.

Mr Speaker, I thank the Senior Minister of State. My supplementary question is in relation to continuing cost-benefit analysis for this scheme. In 2001, Israel introduced a deposit refund law for glass and plastic containers smaller than 1.5 litres. A cost-benefit analysis in 2010 was done and it concluded that the law had a positive impact, with total benefits exceeding total cost by around 35%. In the same vein, can the Senior Minister of State and the Ministry also consider a similar cost-benefit analysis, and a regular reporting can be done on the effectiveness of the scheme, including possible recommendations of expansion of the scheme, if that is beneficial?

I thank the Member for his question. I think it is, indeed, important that we do this. So, as I have noted, NEA has regulatory oversight over the scheme operator. So, it will require the scheme operator to regularly track as well as report on the scheme outcomes and related fees, for instance, the producer fees and the return targets. In fact, we will set a return target for the scheme operator, and we will work with the future scheme operator to evaluate the effectiveness of the scheme outcomes as well as further refinements to the scheme.

I thank the Senior Minister of State for the comprehensive reply. I have two supplementary questions.

Firstly, I would like to ask the Senior Minister of State, based on the experience of other countries that have implemented the same scheme, what are the challenges, especially the logistics challenges that these countries faced, as well as what is the estimated number of reverse vending machines and return points that are required if the scheme is implemented in full.

Secondly, I would like the Senior Minister of State to confirm whether the deposit or the refund will attract any GST.

I thank the Member for his questions, too. With regard to challenges, as I have alluded to, in order to facilitate return of the beverage containers, which is really the key objective of this scheme, that is, to nudge consumers' behaviour, nudge them to recycle the beverage containers, we will need to have an extensive network of return points to make it easily and conveniently accessible to the consumers, so that they can return and get back their deposit.

For a start, we are mandating the large supermarkets above 200 square metres to have these return points because our survey and engagements with the public have shown that that is one of the most popular return point locations. Of course, it is also the single largest sales channel for prepackaged beverages. About a third of the total sales volume of prepackaged beverages is through the supermarkets and there will be about 400 of them, which is about two-thirds of the number of supermarkets that we have in Singapore.

But beyond that, we will be looking at working with the future scheme operator and other stakeholders to have designated return points at other locations, publicly accessible locations, such as Community Centres, Residents' Networks (RNs), void decks, sports facilities, hawker centres which are well-patronised or even coffee shops. And, of course, some retailers, as is the experience in other countries do come forward to volunteer to have designated return points because that has been shown to increase footfall and, therefore, spending at the stores. So, we will implement this and then, monitor to see whether that is adequate and we can always refine this. I think that also answers the Member's question on return points, because this is one of the key issues.

Of course, the other thing is to keep the scheme cost low and we are doing this by encouraging the producers to come together to form a not-for-profit industry-led scheme operator, which means that they can actually tap on their existing logistics as well as distribution networks. So, for instance, when they send new stocks, they can take back the used beverage containers. In addition to that, it is really a strong incentive since they are paying producers' fees to keep scheme costs low. Then, the sale of the high-quality, high value recyclables will help to offset some of the costs.

With regard to GST, based on the intended scheme design, GST will not be chargeable on the deposit.