The coming year will bring three key changes in Poland: a significant increase in the required recycling level, decisions regarding the introduction of a deposit return system, and the implementation of the Extended Producer Responsibility (EPR). These changes will have a significant impact on communal waste management systems, and in particular on municipal waste sorting facilities.
Increasing recycling rates as an economic challenge for municipalities
The annually increasing required level of preparation for reuse and recycling of municipal waste is the most important and real challenge for municipalities, which are responsible for achieving it. In 2025, the required recycling rate will be 55%. Failing to achieve this target will result in penalties calculated as the product of the unit rate for the disposal of non-segregated (mixed) municipal waste in a landfill, which for 2025 is to be 382.54 PLN, and the missing mass of municipal waste expressed in Mg, required to achieve the appropriate level of recycling. Penalties for failing to achieve the recycling target will force municipalities to allocate their own funds for waste management. The 55% recycling level, which will increase by one percentage point each year (to 65% in 2035), will necessitate further improvement of selective collection of municipal waste and the technology for its processing and preparation for recycling. This may mean a further process of changing the morphology of waste entering processing in the facilities.
The deposit return system to deprive municipal waste sorting facilities of valuable raw material fractions
In 2025, Poland is set to introduce a deposit return system which will significantly deprive waste sorting facilities of PET bottles and aluminum cans. These are the most valuable raw material fractions contained in the waste stream. PET bottles and aluminum cans will be directed to a separate system, for which municipalities will not be responsible. This will limit the municipalities’ influence on meeting the requirements imposed on them. The facilities will lose their market source of income, derived from the sale of sorted PET bottles and aluminum cans. As a result, the facilities’ revenue from the sale of raw materials will drop by several dozen percent. Therefore, the deposit return system will strike at the economic foundations of the operation of municipal waste sorting facilities, significantly weakening them, especially in the face of growing required recycling levels. It will also significantly reduce the efficiency of planned investments. The costs of the introduced deposit return system, which will be incurred by waste sorting facilities, have been determined in the analysis contained in the article entitled “Economic consequences of introducing a deposit return system for municipal waste sorting plants”.
EPR: problems must be solved at the level at which they arise
To enable the achievement of growing waste management goals, along with the introduction of a deposit return system, it is necessary to implement a dedicated mechanism. This is an instrument that will restore the profitability of facilities, ensure economic stability, market financing, and motivation to recover every ton of waste for recycling. After all, problems must be solved at the level at which they arise. Given that the element of the system that will directly and primarily feel the economic and technological effects of the introduction of the deposit return system are precisely sorting facilities, where real processes of waste processing and preparation for recycling take place; it is precisely to them that the support mechanism should be directed first.
The aim of this article is to try to answer the following questions: What conditions must be met for facilities to remain on the path of achieving waste management goals after the introduction of the deposit return system? What actions can municipal waste sorting facilities themselves take to improve their situation after the changes that will occur as a result of the introduction of the deposit return system? Is compensating facilities for losses caused by the introduction of a deposit return system in the form of a subsidy for waste processing a sufficient solution?
The deposit return system is to change waste streams and cause technological consequences
How does the introduced deposit return system impact the technological dimension of municipal waste sorting facilities?
Assuming that as a result of the introduction of the deposit return system, the mass of PET bottles and aluminum beverage cans found in mixed municipal waste streams and selectively collected waste will be reduced by 80%. From a technological standpoint, we can talk about two direct effects of such a change for sorting plants. The first will be a decrease in the amount of waste directed for sorting. The second will be a change in its structure (morphology).
The decrease in the amount of waste directed for sorting will have a direct impact on economic effects and will mean a loss of part of the revenue from fees for accepting waste for processing. Moreover, due to the smaller mass of waste accepted for processing, the unit costs of the facility calculated per 1 Mg of processed waste will increase.
Other effects will be caused by a change in the structure (morphology) of the waste delivered for sorting. They are related to technological solutions designed and made for sorting so-called 2D plastics (light, flat, such as foil) and 3D plastics (hard, rolling, such as PET, HDPE, etc.). As a result of the introduction of the deposit return system, there will be a change in the distribution of these two types of plastics. More advanced and automated sorting lines were designed for a specific capacity for 2D and 3D plastics, in proportions taking PET and aluminum cans (contained in mixed municipal waste streams or in selectively collected waste) into account. PET bottles currently have the highest share in 3D plastics. Therefore, limiting their mass by 80% will significantly reduce the 3D plastics stream and change its structure. The proportions between 2D and 3D plastics will change in favor of 2D. The unloaded 3D systems will therefore not be fully utilized. Previously made sorting lines, in most cases, will have a bottleneck in terms of sorting capacity for 2D plastics and for this reason will not be able to increase (or significantly increase) the amount of waste accepted, despite the fact that there will be a capacity reserve in 3D technological sections.
In connection with the planned changes, newly designed and built sorting lines should seriously consider the implications resulting from the change in the structure of 2D and 3D plastics. On the other hand, manual lines, where the focus is primarily on separating the most valuable and easily identifiable and relatively simple to sort PET bottles and aluminum cans, will limit their manual separation, possibly transferring part of the staff to separate other, less valuable, but also significantly more difficult to sort raw material fractions. However, due to the significant limitations of the manual sorting method, the desire to achieve higher efficiency in separating other, more difficult to manually sort raw material fractions will result in a decrease in throughput or the need to increase personnel. Each of these solutions will increase the cost of sorting per ton.
In summary, in addition to reducing the amount of waste delivered for sorting, the introduction of a deposit return system will first of all cause a change in the morphology of the waste delivered for sorting. This will disrupt the balance between the share of 2D and 3D plastics. The bottleneck in sorting technology will be sections designed for 2D plastics, which will limit the throughput of technological lines. Facilities will have to adjust the goals of the sorting process: limit the assortment of PET bottles separated to one or two products, and consider the possibility of separating other, less valuable raw materials that were not previously treated as a priority. The structure of the separated raw materials will thus change, and consequently the recovery levels achieved by the facilities, as well as the average price of the separated raw material fraction. These technological effects will lead to discussions about adapting technological lines in terms of increasing their throughput and adapting the technology to new conditions.
Three most important effects of implementing the deposit return system
A matter of high importance is the topic of the value of waste, or rather the value of raw material fractions. For example, in the previously mentioned article entitled “Economic consequences of introducing a deposit return system for municipal waste sorting plants”, the most important types of costs that facilities will incur as a result of the introduction of the deposit return system were presented. In that analysis, the value was determined by the loss of the facility’s revenue from the sale of PET bottles and aluminum cans, corresponding to their recycling certificates (DPR). The loss of revenue from the depletion of waste streams delivered to municipal waste sorting facilities and the increase in unit waste processing costs were also taken into account.
However, it is worth looking at this issue from a different perspective, combining technological and economic aspects, which allows a forward-looking view of the problem and may indicate areas for finding solutions for facilities. From this perspective, in the context of the analyzed topic, three most important efficiency factors can be presented:
- The mass of waste accepted for sorting within a specific time.
- The level of recovery of raw material fractions from waste streams delivered for sorting.
- The unit value of the raw material fraction separated for recycling.
To illustrate the mechanism of operation and the significance of these factors, let us use an example of a waste sorting facility to which selectively collected plastics are delivered. In the analysis, we will use a different type of value than the one that was adopted to determine the effects of the impact of the introduced deposit return system on municipal waste sorting facilities. For the purposes of this analysis, we will use the value generated by the waste sorting facility. This value is determined by the revenue from accepting waste for processing (gate fees plus any additional payments from the EPR system) and the value of the raw material fractions separated in the facility. This value is determined by the product of: the mass of waste accepted for sorting, the level of recovery of raw material fractions, and the value of each ton of recovered raw material. The value of each recovered ton consists of: the market price of the raw material fraction and the price of the DPR or subsidy from the EPR system.
Case study analysis: an initial situation of a facility in Poland
In the analyzed case, before the introduction of the deposit return system, an annual stream of 10,000 Mg of selectively collected plastic waste enters the sorting process at the facility. The gate fee is 400 PLN/Mg of accepted waste. It is easy to calculate that the annual revenue from accepting waste for processing is 4 million PLN.
As a result of the sorting process, approximately 46% of raw materials are separated from the waste.
The average market selling price of one ton of raw material fraction for this facility is approximately 735 PLN. The average price of the Recycling Certificate (DPR) after deducting impurities is 400 PLN/Mg. The unit value of the raw material fraction is therefore 1135 PLN and includes: the market selling price of the raw material fraction and the price of the DPR.
The calculated value of the separated raw material fractions sorted at the facility is 5.25 million PLN. It is the product of the mass of waste accepted for sorting, the level of raw material recovery, and the unit value of the raw material fraction. The annual value generated by the sorting facility is the sum of the revenue from accepting waste for processing and the value of the separated raw material fractions: 4 million + 5.25 million = 9.25 million PLN.
How does the deposit return system affect the value generated by the facility?
The introduction of a deposit return system is going to negatively impact all of the factors mentioned above, which determine the value generated by the facility. The system causes:
- A decrease in the mass of waste accepted for sorting (a loss of PET bottles and aluminum cans in the stream).
- A decrease in the recovery level of raw material fractions.
- A decrease in the weighted average unit value of the raw material fraction (due to the loss of most PET bottles and aluminum cans, that is, the most valuable raw materials, in the product structure).
In the analyzed example, as a result of the introduction of the deposit return system, the annual stream of waste accepted for sorting is going to decrease from 10,000 to 9,060 Mg/year. We assume that the gate fee remains unchanged and is 400 PLN/Mg of accepted waste. In this situation, the annual revenue from accepting waste for processing is approximately 3.62 million PLN and is lower than the original one, that is, before the introduction of the deposit return system, by 0.4 million PLN (i.e., 10%).
As a result of changes in the morphology of waste (a loss of 80% of PET bottles and aluminum cans), the recovery level is going to decrease from 46% to below 41%. The average selling price of one ton of raw material fraction is also going to decrease from 735 PLN to 460 PLN. This is most likely the effect of losing the most valuable material fractions in terms of sales. We assume that the price of the DPR remains unchanged. Therefore, the unit value of the raw material fraction is 860 PLN. The value of the raw material fractions separated at the facility is therefore 3.16 million PLN and is lower than the original by approximately 2.1 million PLN (40%).
After the introduction of the deposit return system, with other assumptions remaining unchanged, the facility generates a total annual value, which is the sum of the revenue from accepting waste for processing and the value of the separated raw material fractions. This value is: 3.62 million + 3.16 million = 6.78 million PLN. It is lower than the original by 2.47 million PLN, about 27%.
This is the real loss of the facility in the analyzed case as a result of the introduction of the deposit return system, taking into account the revenue side. The cumulative and significant impact of the introduced deposit return system on the economic situation of municipal waste sorting facilities results from the fact that it affects every factor of the product determining the value generated by the waste sorting facility: the mass of waste for sorting, the recovery level of raw material fractions, and the unit, average value of the separated raw material fraction.
It is essential to introduce a mechanism that will restore profitability and stability: EPR Funds for Facilities
The aim of the introduced changes and new solutions in the waste management system should be to achieve better results. First and foremost, in the perspective of the goal set for waste management and the required level of preparation for the reuse and recycling of municipal waste. The currently achieved recycling level in Poland is approximately 27% (for 2022), and facilities are key elements of the waste management system, responsible for the processes and levels of recovery and preparation of waste for recycling. Moreover, the achievement of waste management goals must be seen in the perspective of a deficit of waste processing facilities, including municipal waste sorting facilities, which technological advancement in relation to needs In Poland is at the level of 20-30%. The economic consequences of the implemented deposit return system will cause significant disturbances for the operation of sorting facilities and their further development. Thus, on the one hand, there are growing demands in terms of recycling levels, and on the other hand, with the introduction of the deposit return system, the economic conditions of operation of facilities deteriorate and it is going to become more difficult to achieve the goals that are set for them.
In such a situation, there are two alternative solutions for facilities. The first: facilities will present municipalities with a larger bill for achieving higher recycling levels with a depleted waste stream that is delivered to them. The second: a market mechanism will be applied that will motivate the recovery of every ton of raw material fraction and its direction for recycling within the EPR system. The Extended Producer Responsibility system should support the waste management system in achieving its goals. In relation to waste sorting facilities, the EPR system could, for example, promote increasing the capacity to accept and effectively sort larger amounts of waste. It could also motivate the recovery of every recyclable ton of waste and ensure long-term profitability.
It is precisely stability, predictability of operation, and profitability, based on market conditions rather than a system of commands and penalties, that can be the driving force behind achieving waste management goals, including investments in the construction and modernization of facilities.
Proposed solutions for Polish facilities within the EPR system remain unknown
Unfortunately, as of the publication date of this article (November 20, 2024), the Polish Ministry of Climate and Environment’s proposal regarding the EPR system is unknown. Therefore, we do not know the proposed financing mechanism for facilities within this system. So, will the prospect of penalties remain the only financial motivation for achieving recycling targets?
The financing mechanism of the EPR supporting facilities in the Czech Republic
Let’s return to the analyzed example and see how the situation of the discussed facility would look after the introduction of a financing mechanism that operates in the Czech Republic.
The financing system for facilities within the Czech EPR, firstly, promotes the very acceptance of selectively collected waste for processing. For plastics, the supplement for acceptance for processing in 2024 is 1100 Kč/t (approx. 190 PLN). In practice, 20% is deducted from this amount due to impurities contained in selectively collected plastics.
Secondly, facilities are motivated to recover every ton of raw materials. The amount of the supplement depends on the type of raw material and the structure of the sorted products. For example, the supplement for each ton of separated PET is currently 1700 Kč/t (approx. 290 PLN), and for each ton of separated colored film 13900 Kč/t (approx. 2350 PLN). Such a supplement is applied when the share of the separated film in the product structure is less than 10%. The supplement is lower when the share of the separated film in the product structure is greater than 10%. Such differentiation of supplements motivates facilities not only to recover every next ton of a given raw material fraction, but also to increase the diversity of products, i.e., to separate a wide spectrum of raw materials.
The third mechanism of supplements promotes the production of RDF fuel from sorting residues in the amount of 2400 Kč/t (approx. 420 PLN). However, the condition of achieving a raw material fraction recovery level of at least 42% at the facility is applied here. After the introduction of the deposit return system, the condition of achieving a recovery level of raw material fractions above 25% was applied. With a lower level of raw material fraction recovery, this supplement is 220 Kč/t (approx. 37 PLN). It is worth noting, however, that the level of supplements for facilities within the Czech EPR model is not fixed.
Case study analysis: the facility situation after implementing the deposit return system and Czech EPR financing model
In the calculations for the analyzed facility example, we consider the reduced mass of waste directed for sorting after the loss of PET and aluminum: 9,060 Mg. We also take into account the reduced recovery level, which is below 41%. The gate price remains unchanged. The average market price of the raw material fraction, which is 460 PLN, also remains unchanged.
We exclude the sale of DPR from the calculations. Instead, we introduce financing from the Czech EPR. The facility for accepting 9,060 Mg of waste in a year would receive a supplement of 150 PLN/Mg, which amounts to approximately 1.36 million PLN. As a result, the annual revenue from accepting waste for processing increases to 4.98 million PLN and is higher than the initial state, i.e., before the introduction of the deposit return system, by approximately 1 million PLN (i.e., by 25%).
Secondly, the average supplement for separating and directing one ton of raw material fraction for recycling, according to the current rates, for the analyzed example is approximately 1300 PLN. Thus, the unit value of the raw material fraction increases to the level of 1757 PLN. The value of the raw material fractions separated at the facility is therefore 6.46 million PLN and is higher than the original, i.e., before the introduction of the deposit return system, by approximately 1.2 million PLN.
The facility after the introduction of the deposit return system, but also after the introduction of the financing mechanism from the EPR, according to the Czech model, generates a total annual value of: 4.98 million PLN + 6.46 million PLN = 11.44 million PLN, which is higher than the original, before the introduction of the deposit return system, by approximately 2.2 million PLN, i.e., by 24%. It is also higher than the value generated after the introduction of the deposit return system with unchanged DPRs by 4.65 million PLN, i.e., by as much as 69%.
In the financing mechanism introduced in the Czech Republic for sorting facilities from the EPR system, a very important factor operates. This is a factor that motivates facilities to increase the amount of waste processed, to recover every ton of raw material fraction contained in the waste, and to separate a wide spectrum of raw materials. It also encourages the production of fuel for energy recovery from sorting residues. In this way, the built financing system is consistent with the goals of waste management and in a market-based manner encourages facilities to implement them. It is also simple and transparent and creates appropriate economic conditions for preparing the modernization and construction of waste processing infrastructure throughout the country.
How can municipal waste sorting facilities respond to the introduction of the deposit return system?
What actions can facilities take to achieve higher recovery rates and improve their economic condition? Firstly, each facility can assess the impact of the introduced deposit return system on its economic condition. The goal of such an analysis is to understand the potential scale of the problem.
Next, it is possible to determine the technological consequences for each facility. Such an analysis will be the basis for seeking individual solutions, as the effects of introducing the deposit return system will vary for each facility.
The next step should be an analysis of the proposed solutions for facilities within the proposed Polish EPR. It is the mechanism of the EPR that will be key to how facilities react. It will condition their actions and further decisions. Solutions within the EPR will change the economic conditions of the operation of facilities, which must be taken into account when searching for effective solutions.
The final element of preparing the facility’s response should be an analysis aimed at increasing operational efficiency through the three factors specified in this article:
- The annual mass of waste accepted for sorting. In this area, it should be considered whether it is possible to accept more waste streams for sorting. The second question is: what technological changes are essential to increase the throughput of the sorting line.
- The level of recovery of raw material fractions from waste streams delivered for sorting. Within this point, it is necessary to verify the raw material potential that is in the streams after the sorting process and to check what technological solutions are possible to recover such raw materials and direct them for recycling. The solution lies in increasing the intensity of the sorting process and consists in increasing the level of recovery of raw material fractions directed for recycling.
- The average market selling price of the raw material fraction per 1 Mg. This factor will primarily be determined by the system of supplements after the introduction of the EPR. However, within the facility, it can be considered whether it would be justified, for example, to sort more deeply or to clean the raw material fractions better and thus create opportunities to obtain higher selling prices for raw materials.
It follows that facilities are facing another stage of adaptation, i.e., modernization. However, it will not always be purposeful or profitable, and the solutions in each case will be an individual matter, resulting from the specifics of a given facility. In some cases, however, optimizing waste sorting processes without the need for additional investment costs may be sufficient.
Municipalities will pay for unmet recycling requirements
The key factor determining whether facilities will remain on the path of achieving waste management goals will be the solutions within the EPR model. The financial mechanism directed at municipal waste sorting facilities will be particularly important here. The actions that facilities can take will depend significantly on the EPR model and what behaviors it will promote. The ultimate indicators of the system’s efficiency will be the achieved recycling levels and the fees for accepting waste for processing.
Is compensating facilities for losses caused by the introduction of the deposit return system in the form of a processing fee supplement a sufficient solution? No. This is merely a compensatory mechanism that offsets the costs incurred. It may motivate the acceptance of a larger mass of waste for processing, but it will no longer motivate the achievement of higher recovery levels, i.e., to sort better, to be more efficient. Therefore, solutions are also needed that promote such behaviors and actions that lead to effects consistent with the goals of waste management policy.
Municipalities will bear the greatest economic costs not directly as a result of the introduction of the deposit return system. This is because the introduced deposit return system will first hit municipal waste sorting facilities. It is these facilities that will pass their costs on to municipalities. Additionally, the economic weakening of facilities will make it difficult to achieve their goals. And then municipalities will pay a second price – for not achieving recycling levels.
