The future of Scotland’s flagship drinks recycling scheme has been thrown into doubt after all three SNP leadership contenders said they would review it if they become First Minister.
The UK Government is also understood to be preparing to reject any request from Holyrood ministers for an exemption to trading laws, which could fatally undermine the project.
It means that the Deposit Return Scheme (DRS), which is supposed to launch across Scotland on 16 August, is now likely to be paused and may end up not going ahead at all.
The scheme is intended to boost recycling rates by charging customers an extra 20p for single-use drinks bottles and cans made of plastic, glass and tin.
People can then recoup the money by taking their empty drinks containers to “reverse vending machines”, which are already being prepared by major supermarkets.
Businesses are required to register for the scheme by the end of Tuesday, with those that fail to sign up risking being banned from selling their products in Scotland.
Speaking at a brewery in Aviemore on Monday, SNP leadership contender Kate Forbes warned that the scheme could cause “economic carnage” for firms.
She said she would pause the rollout of the scheme if she wins the contest and order a review to give businesses some “breathing space” following Covid and the cost of living crisis.
“The Deposit Return Scheme is an example of a good idea badly executed,” she said. “If we want a stronger economy, we need to get better at delivering good ideas well.”
Ash Regan, meanwhile, said on Monday that she would go further and cancel the scheme entirely, saying the policy “needs to be returned and deposited in the bin”.
In order for the DRS to work effectively, the Scottish Government also needs to request an exemption from the UK’s Internal Markets Act, something it has yet to do.
Without such an exemption, drinks produced elsewhere in the UK would not be subject to the DRS regulations, putting Scottish firms at a massive disadvantage.
The issue could give rise to the bizarre prospect of water bottled in Scotland costing far more for shoppers to buy than water bottled just south of the border.
A UK Government source told i: “It is crystal clear the scheme is already in deep trouble even before the UK Government have been asked to relax laws protecting cross-border trade.”
The Scottish Greens said the UK Government refusing to grant an exemption would “undermine devolution”.
“To veto this scheme three years after it was approved by Parliament and after businesses have invested hundreds of millions of pounds would not just be bad for the environment, it would destroy jobs and be devastating for those who have invested and got ready,” said the party’s climate spokesman Mark Ruskell.
A Scottish Government spokesman said: “Scotland’s deposit return scheme goes live on 16 August this year and will make producers responsible for recycling the bottles and cans they put on the market.
“Similar schemes are common in other European countries and have been shown to be very effective in improving recycling rates and tackling littering.
“The regulations that established Scotland’s deposit return scheme were based on these schemes and passed with cross-party support in 2020.
“Any producers with concerns about meeting their obligations should get in contact with the relevant organisations.
“We have always said we will take a pragmatic approach to implementation, to ensure that as many businesses as possible can be part of Scotland’s Deposit Return Scheme and can continue to sell in Scotland after the 16 August.”