Arnis Salnājs, CEO of SIA Nulles Depozīts: The Latvian bottle deposit system must be modern!

The deposit system operator applicant Nulles Depozīts in cooperation with the information technology companies WinGo Deposit, MobillyTX and Mappost is one of the applicants in the State Environmental Service tender, which applied with a solution that, using artificial intelligence, will accept and sort different types of beverage packaging - metal cans, PET and glass bottles, as well as flattened PET bottles. What does this deposit system mean, what are the ideas and advantages of Nulles Depozīts, all that in Neatkarīgā's interview with SIA Nulles Depozīts CEO Arnis Salnājs.

Why is the state building a deposit system?

In this way, the state will address the issue of environmental cleanliness. However, it is important to note whether it will be only on paper or whether it will really bring long-term environmental benefits.

If something is implemented, then it is important how modern will the implemented solution be - whether the deposit system is meant to work for years, or whether it is just for a checkmark, to report that something has been implemented.

What will the deposit system do for the environment?

Any packaging and goods that are not collected, including glass bottles, metal cans and plastic bottles, are harmful to the environment. There is a lot of this type of packaging in the environment. Another problem is that these containers end up in unsorted waste. The deposit system will make sense if more packaging is reused or recycled. This will already be a step towards a circular economy.

How to motivate people not to leave bottles wherever, not to pollute the environment, to sort waste?

The deposit system is designed just for this reason. The main "carrot" is 10 eurocents, which a person pays as a deposit when he buys a bottle of drink, but then gets it back when the bottle is handed over. But 10 eurocents is not everything - it needs to be convenient for people in every sense. It needs to be easy to reach, easy to deposit and easy to receive payment. But it will be convenient if the system is modern. Technology now also allows to receive flattened plastic packaging.

There are currently conceptual disputes over this. Our company believes that people should not keep uncompressed bottles and carry them around like that to deposit. It may have been different 30 years ago, but now technology allows the bottle to be recognized and accepted. Billing should also be convenient. 30 years ago, no one argued that it is normal to hand over a bottle, receive a paper check and then go to cash it out. But now it is archaic. Latvia does not need such a solution.

A flattened bottle is very important for environmental protection. If a flattened bottle is not accepted, where will it go? No one will have the motivation to collect it, it will often remain somewhere in nature - in the forest, on the river bank or in unsorted waste.

The reason why the state is introducing a deposit system at all is the environment. That should be the national idea.

There is no doubt that in the coming years there will be a course in Europe to expand the deposit system for all types of packaging. Once a person has collected the various things he would like to hand over, it is very important to offer him the chance for all of them to be handed over in one place - bottles, milk cartons, batteries and shampoo bottles.

Is there not a risk of a cartel forming between large producers?

There are such concerns. That is what our application to the Competition Council is about. This should be a concern for small Latvian producers who are interested in getting the empty bottles for reuse. To some extent, the deposit system already exists - there are recycling points, there are stores that take back bottles. It is quite important for producers to reduce the cost of production - they buy bottles back and refill with beer.

Currently, this market is unregulated, everyone talks to everyone, agrees on prices and ways of transporting bottles. This market is not controlled by the big beer brewers. If the big brewers, together with the big foreign producers of sweetened beverages, were to control this market too, it raises worries that some small producers may be gradually pushed out - they will no longer be present in the bottle deposit and receival business. The big producers will sit there and dictate the rules. They will decide what the tariffs and sales principles will be.

What is the current role of the state in creating a deposit system?

There is currently a tender for the establishment of a deposit system, which is in full swing. The Ministry of Environmental Protection and Regional Development and the State Environmental Service are curating this competition. There is an evaluation commission. The optimal time for this assessment to be completed is December 30.

Nulles Depozīts is a company that was set up for this competition. We are proud that all the solutions we use are created in Latvia - payment and accounting systems, logistics solution, bottle deposit machine that uses artificial intelligence. We have brought together companies and people who are leaders in their fields, and it is the combination of these competencies that creates a great offer. For example, MobillyTX creates a payment system for us, Mappost creates logistics solutions, and our member, Zaļā Josta, has many years of experience in packaging management. Latvian Traders Association is also our member, which helps us understand the interests of traders. We also have producers - Latvijas Balzams, beer producer Labietis, drinking water producers Zaķumuiža and Amrita Water Europe, as well as a producer of packaging machines Wingo Deposit. It is a great combination of Latvian companies to create the best and most modern service for the people of Latvia.

Nulles Depozīts’ offer is based on two pillars. The first is technology. This applies to both which bottles to accept and what the payment method is. Our technologies will be modern and convenient for consumers.

The second pillar is that all our technologies are created in Latvia. We are convinced that this will make a much greater contribution to our country's economy than technologies that have been developed somewhere abroad. The companies that have merged with SIA Nulles Depozīts are very strong - they will create a payment system, logistics and planning solutions, and everything else that is needed. We have created, combined a huge force of local entrepreneurs and specialists.

What is needed for the deposit system to work successfully?

It is necessary for this system to be convenient for consumers. And in the near future, it needs to be expanded so that it does not remain just a deposit point for specific bottles, so that a person can deposit different types of packaging.

Currently, the system does not include bottles of strong alcohol, wine, champagne. Only bottles with a maximum alcohol content of 6% are included. This creates an absurd situation where you can have two identical bottles, but one of them cannot be deposited. I understand that 6% limit is in the interest of beer producers. However, this is such a rather awkward step. Then there may be a situation where a person puts all kinds of bottles in his bag, goes to the machine, the machine takes some bottles for him, but throws others back. Where will he put the packaging that was rejected? Throw it out.

I don't see why all bottles can’t be included in this system. We will work on how to motivate people to use the deposit system - so that when a person comes to the machine, we take everything. If you can't get money for everything you deposited, then you might get some bonuses for those items.

Maybe 10 eurocents don't matter to someone, but there will always be some students or gatherers who will be happy to earn some money. Ten times ten eurocents is already one euro!

The big beer brewers believe that if they produce their own products, then those are their bottles, and then they are also obliged to maintain a deposit system. On the other hand, we believe that if it were already the case that these large producers are entitled to all the bottles and everything related to them, then the state would not hold a tender at all - then everything is already clear. However, the state considers that a tender should be held and the best applicant determined. It seems to me that a better solution will be for a neutral company to accept, gather and transfer packaging. It is from this neutrality that the state can gain more.

Lithuania and Estonia have a deposit system and bottle collecting machines. Should Latvia implement it by following our neighbors’ example?

We believe that Latvia needs a more modern system than Lithuania and Estonia. Our neighbors have a safe, 30-year-old system. The other applicant has said that he will introduce the Lithuanian model in Latvia. In Lithuania you can see their system - there is a machine which can print you a check. It's history. It's also a bit like cheating or making money at the expense of people who don't count pennies. If you print a check, you are already halfway on the road of never cashing it - the check may disappear, get wet, it may be forgotten. If we want to meet environmental requirements, then we must not do so absurdly by cutting down the trees from which paper checks are made. Nowadays, however, electronic payment has long been available in all areas of life. The deposit system must, of course, be such that the consumer throws a bottle into the machine and the money immediately enters his account. Such devices will cost more, but if we are building something new, then we must immediately make it modern. Since we are creating this technology in Latvia, it is cheaper for us than buying it abroad.

You said that Nulles Depozīts has gone to the Competition Council. What is the essence of your application?

I have already said that there are concerns about the establishment of a highly controlled system, in which small Latvian producers may have difficult times in the coming years. We may even be talking about the characteristics of a cartel.

But the tender rules also require applicants to indicate the number of their bottles in circulation. The one with the highest amount gets an extra 30 points. This is an unfair claim, it is obviously lobbied by the big beer brewers. The other applicant says that it brings together producers that control 80% of the beer market. This is contrary to free competition. It turns out that if you are already big and have more bottles, then you take the remaining market share. This is definitely not in the interests of Latvian society. We call for the creation of a modern and sustainable system that meets the interests of the state and society.