2020 April-May Analysis

How Georgia can solve its plastic bottle waste problem

Discussions concerning the last extended producer responsibility (EPR) bylaw on packaging waste, including plastic bottles, are ongoing. However, the general framework of how the system will work has been established. It remains to be seen to what extent the management of plastic bottle waste will be handled by municipalities in addition to producer responsibility organizations

Georgia’s National Waste Management Strategy for 2016-2030 calls for 80% of the country’s plastic waste to be recycled by 2030.

One of the most significant attempts to get the country on track to hit this target is the last remaining EPR (extended producer responsibility) bylaw on packaging waste, which has yet to be put forward to the government for approval, despite expectations it would be tabled in early January 2020.

EPR is a policy approach to waste management successfully implemented throughout Europe, per which producers and importers of products take on the responsibility of collecting and treating the waste they produce.

There are several models that can be implemented to recuperate plastic waste packaging, but stakeholders in Georgia seem to have settled on a deposit return scheme (DRS).

When Lithuania implemented such a system for plastic bottle collection back in 2016, within two years it had achieved a 92% recycling rate.

For Georgia, that rate has been set at 70% for the deposit system.

The approach is private sector-led, and would involve the formation of producer responsibility organizations (PROs) by local stakeholders and importers, who would be responsible for the creation of a plastic bottle deposit system that would cover the entire country.

Elsewhere, this generally results in the creation of one large PRO that serves the entire country, but any stakeholder that accounts for more than 10% of the waste produced will be able to form a PRO after receiving authorization from the Ministry of Environment.

The scheme in broad strokes: 20 tetri would be added to the price of goods packaged in plastic bottles on the retail end, which would then be redeemable via bottle deposit machines located at larger supermarkets and other key locations as well. Curbside collection bins will also be made available for the disposal of plastic bottles.

PROs will be responsible for investing in the creation of the system, installing and servicing it and facilitating the return of the deposit to those who bring bottles back via the host locations.

The collected waste will then either be sold on to local recyclers or exported abroad, and any profit made from this transaction will have to be redirected into the expansion and maintenance of the system.

There have been several hiccups along the way that have postponed the implementation of the scheme, and still several roadblocks remain, however consensus slowly seems to be forming.

20 tetri

There are several issues associated with the bottle deposit price.

One is the deposit amount itself; some producers are concerned a price bump could hurt sales.

Another issue is pointed out by Givi Kalandadze – the head of a group of producers that have banned together to look into the issues surrounding the implementation of the EPR: that of value-added tax being calculated by including the 20 tetri deposit fee in the total price of the product.

“We believe that VAT should not apply to the 20 tetri”, says Kalandadze, “as producers say that this will make it problematic for them to establish prices for their products.”

While in many countries with similar schemes VAT is calculated with the deposit fee, Deputy Head of Department of Waste Management at the Ministry of Environment Irma Gurguliani says the issue is still under discussion with the Ministry of Finance but that “we are trying our best for the VAT not to be applied to the deposit fee.”

It’s not all bad news though for producers, Gurguliani says: “When it comes to this 20 tetri fee, a number of bottles will still remain outside the system and will not be returned for various reasons. This money will then remain within the system of the PROs, and it can be put towards bolstering and strengthening the system.”

Gurguliani noted the importance of finding a sweet spot when it comes to establishing a deposit fee, noting that in Georgia, 20 tetri is not an insignificant amount:

“If it were 10 tetri, or five, then maybe it wouldn’t work so well. But in this case, it is definitely an incentive to return the bottles.

What works about this system is that even if I don’t do it, then my neighbor will. People will go out and look in bins, they will even retrieve them from nature”, Gurguliani says.

Public or private management?

One of the last issues remaining before the EPR by-law is put before the government for approval is that of the involvement of municipalities, given that regardless of the efficacy of the implementation of the EPR policy, some waste will still end up in municipal landfills.

“From the beginning, there seems to have been some overlap and confusion about where the responsibilities of PROs ends, and where that of municipalities begins”, Kalandadze says.

“Handling post-consumer waste is clearly a producer’s responsibility, and not that of public entities. Public money should not be spent on fulfilling what is a producer’s responsibility, especially when the private sector will be able to deal with this issue. The involvement of the public sector would also double the work of PROs”, Kalandadze notes.

Head of the Georgian Waste Management Association Giorgi Guliashvili says that international experience shows that such waste collection schemes work best when driven by the private sector.

“This is the classic private-public sector problem – if there is no monetary or business incentive to do your job better, it is likely to be less efficient and organized”, Guliashvili says.

Another issue, Guliashvili notes, is that if the capital’s plastic bottle waste is managed by municipalities, it would likely mean that regional cities would be responsible for organizing plastic bottle collection as well, since PROs would be rendered less effective given the reduced resources they would receive from collecting raw material to sell to recyclers, which otherwise would have been put to work in strengthening collection efforts.

“Cities already had the obligation to begin separate collection – this obligation existed even before the EPRs were formulated. However, this task has proved difficult for the public sector. The EPR will resolve this problem the best, because it is business oriented”, Guliashvili states.

Head of the Environmental Department of Tbilisi City Hall Giga Gigoshvili says internal discussions concerning the municipality’s participation in the management of plastic bottle waste are ongoing.