If it isn't profitable to recycle, you can make it profitable by making the fee reclaimable when it's recycled.

It's quite possible that throwing all the used batteries in a dump now then digging them back out in the future once recycling tech has improved and raw resources become more scarce might be the best way to go. This cycle has already occurred with old electronics (companies are successfully mining garbage dumps for the gold connectors and traces).

The fact that there have been instances where this has occurred doesn't mean its a good plan. I agree that not all plans work out in retrospect, but neither does doing nothing. If we look at the balance of cases, we have done a lot more harm with a lack of environmental policies than we have with poor policies.

Overall the mechanism is solid enough. If a product has EOL issues, a recycling deposit builds the solution into the initial price. It doesn't even need to be recycling. Could be safe disposal.

A perfect example is ethanol. It's pretty clear especially by now that we would be better off investing in solar/wind and electric cars, but good luck getting rid of those ethanol subsidies and related legislation.

The recycling industry itself is another example. Now that China is no longer buying our recycling (due to the extreme air pollution generated when processing it), waste management companies don't know what to do with it and most are just dumping it in landfills. Of course we're still paying them to collect it and requiring everyone to continue sorting.