Closing the Loop or Opening the Market? The Operationalization of Priority Access in Deposit-Return Systems

Deposit-return systems are expanding worldwide to raise the circularity of PET packaging, and recent regulation (e.g., the EU's Packaging and Packaging Waste Regulation) increasingly grants beverage producers “priority access” to recovered food-grade material for meeting recycled-content mandates. The beverage industry has lobbied hard for these rights, on the intuition that reserving the cleanest stream for bottle-to-bottle use advances closed-loop recycling and rewards the firms that fund collection. This talk examines the implications of how priority access is operationalized, a choice the regulation leaves under-specified. The setting is a model of the post-consumer bale market in which a concentrated, mandate-constrained beverage industry competes for clean feedstock against a price-taking fringe of downcycling buyers, while funding the collection system through a producer fee that is offset by bale-sale revenue. Clean feedstock can also be imported. Within this structure, we examine two operationalizations of priority access: a first claim at the market price and a quantity reservation that marks the price up against the downcycling sector. The talk develops this taxonomy and the mechanisms that distinguish the instruments, with particular attention to how the financial architecture of the system (who owns the bale stream and bears its residual cost) interacts with the access rule. The aim is to clarify when, and through what channels, priority access can be expected to deliver its intended circularity gains. This is work in progress, and the seminar is intended to surface discussion of the modeling choices.