Diverting 80% of PET and aluminium to deposit return could cut UK MRF material income over 30%, CIWM says

How a commingled MRF earns its money

A commingled MRF takes mixed recycling from council kerbside collections, separates it by material and sells the outputs to reprocessors. It earns from two lines: the gate fee councils pay per tonne delivered, and the sale of sorted materials. CIWM’s representative model puts that split at about 54% gate fee and 46% material sales².

Weight and value do not line up. In the report’s composition baseline, glass is 35.7% of inbound DMR, cardboard 33.9% and mixed paper 13.5%, so fibre and glass together are 83.1%. Plastic bottles are 10.6% and aluminium 1.7%, yet these two streams carry most of the value per tonne. The report’s executive summary makes the same point: weight, it says, is not the same as value.

The deposit scheme targets exactly those containers. Defra’s producer and retailer guidance says customers will pay a refundable deposit on single-use PET, aluminium and steel drinks containers from 150 ml to 3 litres from 1 October 2027 in England and Northern Ireland³. HDPE is excluded, and glass is out in England and Northern Ireland.

The scheme’s legal targets set the pace of diversion. Regulation 81 of SI 2025/67 requires 70% of refund items to come back in 2028, 80% in 2029 and 90% each year from 2030, as SPI Regulation Tracker record PR-GB-004 sets out¹⁰. Every container returned for a deposit is one an MRF no longer sells.

CIWM frames the five reforms as one redesign of material flows rather than separate policies, because each moves tonnage or value out of the same plants at roughly the same time.

What CIWM published on 26 October

The release. CIWM’s release of 26 October said the report uses real facility data to assess how material streams and operating costs will change under EPR, deposit return, Simpler Recycling, separate paper collections and the UK Emissions Trading Scheme¹. It names falling commodity income, unresolved misplaced material and harder handling of films and flexibles as the pressures.

The headline finding. At 80% diversion of PET and aluminium, the report says DMR tonnage could fall by almost 10% while material sales income could fall by more than 30%. SPI’s check against the report’s per 1,000 tonne example matches: 84.8 tonnes of PET and 13.6 tonnes of aluminium leave, or 98.4 tonnes, 9.8% of the stream, by SPI’s calculation.

The income mix. The report says the plant’s income balance would move from about 54% gate fee and 46% materials to about 60% and 40% after substantial PET and aluminium diversion, before reduced throughput is fully counted². The plant becomes more dependent on fees that, under many long-term contracts, move only with indexation.

The scenarios. Combining deposit return with separate fibre collections, the report models gross stream reductions of 10.1%, 19.9% and 30.1%. In the high case, fibre diversion of 40% removes 19.0 percentage points, more than the deposit scheme’s 11.1 points, so paper policy matters as much as bottles.

The conclusion. CIWM’s release summed up the report in one sentence.

The ask on timing. Recommendation 1 says deposit return implementation should be postponed until a reconciliation framework is agreed and tested with representative MRFs, leakage identification and accounting work for compacted and commingled containers, and DRS and EPR funding is integrated². The report proposes no new date, and its executive summary frames the same points as work to finish before 1 October 2027.

The ask on status. Recommendation 3 is headed “Recognise MRFs as Critical National Infrastructure”, and the executive summary calls for recognition as “critical national environmental infrastructure”. The release words it as critical environmental infrastructure, alongside integrated government modelling, risk sharing in long-term contracts and compensation for leakage materials.

The films date. The report’s timeline gives 1 April 2030 for mandatory films and flexibles collection in England and Northern Ireland, subject to amending legislation, with Wales and Scotland indicating 2027. WRAP’s comment of 17 July 2026 says the government wrote to local authorities deferring film collections to 1 April 2030⁶. Defra’s household guidance, last updated 13 May 2025, still shows 31 March 2027.

What the five reforms do to one plant

The report’s combined impact table sets out how each reform reaches the MRF. Its timeline starts with Simpler Recycling’s household core streams from 31 March 2026, with separate paper and card collection as the default, and ends with films and flexibles in 2030².

Separate fibre. Defra’s policy update of 29 November 2024 says paper and card should by default be collected separately from other dry materials, though councils may co-collect them where separate collection is impracticable, with a written assessment⁵. Fibre is 47.4% of inbound tonnage in CIWM’s baseline, and the report warns that commingled MRFs can lose value and volume at the same time.

Throughput. The report’s model plant runs at an optimum of about 18 tonnes per hour, a facility benchmark rather than a UK standard. Films and a weaker mix slow the line: at 16 tonnes per hour the same tonnage needs 12.5% more processing hours, at 15 tonnes 20% more and at 14 tonnes 28.6% more².

Contamination. Operator experience in the report puts the point at which contamination starts to hit throughput, rejects and labour at about 5% of inbound material. The original 2027 impact assessment estimated about 6 kg of plastic film per household a year, a figure the report says should be reviewed against the 2030 timing.

Aerosols. In the operator’s scenario, diverting 90% of drinks cans raises aerosols in the remaining aluminium output from about 2% to about 9%, because cans leave the denominator. The report says that share does not by itself make the stream hazardous waste, but asks the Environment Agency, SEPA and Natural Resources Wales for a coordinated statement on classification and permits.

Carbon. The report says the UK ETS will not expand to waste incineration in 2028, with no replacement date confirmed, while the EU has proposed 2031. It treats carbon cost on residues as an undated risk to model and price into contracts.

CIWM's eight recommendations

The report’s executive summary lists eight key recommendations, and its final section sets them out as eight numbered ones, several tied to the 1 October 2027 launch².

1. Resolve deposit return interoperability before launch. Close the operational and financial gaps between the deposit scheme and kerbside systems, covering reconciliation, leakage identification and funding, with a published and tested delivery programme. This is the recommendation that says implementation should be postponed until those conditions are met.

2. Commission a new integrated impact assessment. Government should model composition, income, contamination, throughput, fibre, contracts and investment together, using limited, central and high scenarios like the report’s 10.1%, 19.9% and 30.1% cases, and finish before the deposit scheme starts.

3. Recognise MRFs as critical national infrastructure. Formal status would require policy to weigh sorting capacity, resilience and investment confidence when reforms are designed or timed.

4. Reassess separate fibre and commingled MRF economics. Model how the default of separate paper and card collection, in force for households since 31 March 2026, interacts with the loss of bottle and can value, again before the deposit launch.

5. Use the years to 2030 for a films and flexibles strategy. Build sorting, reprocessing, end markets and specifications, with a formal readiness assessment by 2028, two years before mandatory collection.

6. Develop an integrated national infrastructure strategy. Link collection design, MRF capacity, plastics and fibre markets, contamination, residual treatment and material flow modelling in one plan.

7. Align EPR funding and design incentives with MRF performance. Funding should reflect efficient sorting costs, backed by representative monitoring, and the interface between deposit return and EPR should be set up before 1 October 2027. The report adds that lighter packaging should not be assumed to be cheaper to sort.

8. Resolve aerosol classification and permitting. Defra and the devolved governments should require a coordinated statement from the Environment Agency, SEPA and Natural Resources Wales on post-deposit aluminium outputs, with named leads and a delivery programme before launch.

Who gains and who pays as value leaves the kerbside bin

MRF operators. The plant owners carry the first loss. On the report’s illustrative prices, PET and aluminium earn £38,200 per 1,000 tonnes of inbound DMR, and CIWM says that line is about 39% of material income, which puts total material income at roughly £98,000 per 1,000 tonnes, by SPI’s calculation from illustrative values².

Councils on long-term contracts. Many council DMR contracts move gate fees only by indexation, the report says, and indices do not reflect a structural loss caused by policy. Unless a contract has a change in law, composition or extraordinary review clause, the loss stays with the operator for the remaining term; at retender, bidders are expected to price in policy risk, which the report says means higher gate fees and rising costs for councils and, in the end, residents.

Producers paying packaging EPR fees. PackUK’s operational plan for 2026 to 2027, updated on 10 August, forecasts fee recovery of £1.558 billion, including £1.47 billion of disposal fees, with the initial notice of liability due by the end of November 2026⁹. The plan says council payments are allocated mainly through the LAPCAP model of local authority waste costs, and SPI’s PackUK year 1 story covered how year 1 notices raised £1.411 billion.

Drinks producers under deposit return. Exchange for Change’s stepped fees are 0p per container from October 2027 to December 2028, then an intended 0.6p per aluminium or steel container and 2.3p per PET container from January 2029 to December 2032, to be reconfirmed in May 2027⁸.

The operator’s contractors. SUEZ covers four English regions, CIRQLR three, Re.Group with Hargreaves Services Scotland, Bywaters London and Re-Gen Northern Ireland. The operator expects about 700 jobs and 400 vehicles, and three purpose-built plants at Ely, Knowsley and Avonmouth from October 2030⁷.

Aluminium reprocessors. Buyers of MRF aluminium bales face a different product once cans leave: the report’s scenario shows a 4.5-fold rise in aerosol share, and lists reprocessor acceptance and outlets as open questions.

The pinch point: containers that never come back

The report’s sharpest concern is what it calls the MRF gap: the unresolved evidence, reconciliation and compensation link for deposit containers that still arrive in kerbside, commercial, litter and residual streams. It ranks this as the most immediate unresolved threat to the integrity of the system².

The gap exists by design. A 90% return target from 2030 means up to one in ten in-scope containers can stay outside the deposit system and still meet the law, and in 2028 the target is 70%. Those containers reach MRFs crushed and mixed with other material, where proving that each was a deposit item is hard.

The report lists six parts of the problem: identifying containers after compaction, evidence and mass balance rules, who owns the material value, compensation for sorting cost, the interaction with EPR payments, and audit, fraud and disputes. It says no fully operational, tested and transparent national mechanism has yet been shown in public.

It also notes that producer funding of council costs gives MRF operators no direct entitlement to be paid. Government, PackUK and the deposit operator, it says, should set up an auditable payment and reconciliation route that avoids gaps and double counting, and Recommendation 7 wants that DRS and EPR interface in place before 1 October 2027.

How the UK's deposit design compares with Norway and its neighbours

The report’s international section draws on Norway, where return rates were above 92% for cans and plastic bottles in 2023, citing the Norwegian operator’s annual report. Its lesson is that high performing deposit systems pull containers into dedicated routes, so the UK should plan for the value that leaves commingled streams².

Exchange for Change cites an average return rate of 90% in European countries with a deposit scheme, the same level as the UK’s legal target from 2030. The four UK nations start on the same day, 1 October 2027, but with different scopes, as SPI’s deposit registration story set out: Wales includes glass, at a 0p deposit to 30 September 2031, while England, Northern Ireland and Scotland exclude it.

For MRFs, glass matters less than metals and PET. In CIWM’s baseline, glass is 35.7% of inbound weight with an illustrative value of £0 per tonne, so moving glass into a deposit system in Wales takes tonnage but little income from Welsh plants, by SPI’s reading of the report’s figures.

On EPR, the report finds lightweighting the clearest observed trend in European evidence and says fee modulation works only as strongly as its price signal. It finds no evidence yet that UK EPR has reduced MRF tonnage, and recommends a baseline of composition, item counts, capture and residue before the deposit scheme starts.