Comparing notes

Earlier this year, the British Plastics Federation called for the packaging regulation system to be amended in favour of British reprocessing. Here, Malcolm Odlin shares his thoughts on why reform of the PRN system is necessary for the UK's green economy to thrive

Malcolm OdlinThe government has heavily promoted its ‘green economy’, providing investment through new initiatives such as the Green Investment Bank and setting ambitious targets for plastics recycling to prevent landfill. Yet despite these good intentions, UK recyclers have been prevented from delivering the increasing volumes needed to satisfy these targets. This is largely a result of a regulatory system that still favours the exporting of plastics waste over quality domestic recycling.

When the PRN (Packaging Recovery Note) system was launched back in the 1990s, it provided the necessary evidence producers needed to show that a tonne of packaging waste had been recycled. The initial recycling targets set by Defra however, were unfortunately too high for some domestic recyclers to meet. The answer was to allow shipping documents as evidence of overseas recycling – PERNs (Packaging Export Recovery Notes) – so providing the volumes required by EU targets.

Since that time, the quality and our access to the right type of feedstock from business and domestic usage has decreased, due to the price being paid for poor-quality waste. Also compounding this situation has been the increased adoption by local authorities of single-stream co-mingled waste strategies to achieve greater economies. This has unfortunately led to greater contamination, and overall it’s not in the best interests of UK plc.

But it’s the PRN system itself that’s been detrimental to UK growth – the exact opposite of the government’s original intention. When exporting plastics waste, whether it’s contaminated or not, exporters still gain their PERNs for every tonne at the point of export. So they stockpile material in anticipation of price increases in the knowledge that UK recyclers won’t be able to meet increasingly tight recycling targets set by the government.

A standard PRN can only be issued in the UK at thepoint of processing, so recyclers are disadvantaged compared to the trader who has the PERN advantage at the point of export. The cost of domestic recycling also rises due to increasing capital expenditure and process costs to remove contamination that wouldn’t be there if sorted at source. We have to justify each year how our PRN revenue will be reinvested to improve recycling, yet PERN revenue may at best improve collection infrastructure but does little else.

As a result, plastics recycling figures are down this year, while PRN prices are on the up, placing us at an even greater disadvantage. Compliance schemes have continued to maintain reasonable prices for PRNs, but our sector has been falling short. A drop in volumes collected by local authorities, falling commodity prices and falling export demand have all meant that recycling targets that are set to increase by five per cent every year until 2017 are simply not achievable, with the likely knock-on effect that PERN value will rise to allow export prices to become attractive again.

The government should seize the opportunity that PRN reform offers, by creating a fair market for UK recyclers that encourages job creation, infrastructure investment and greater success for its Green Investment Bank. We therefore support the British Plastics Federation in its call for separate targets for PRN and PERN, as this would place the focus on the manufacture of high-quality products from recycled materials, rather than on ‘quantity’ as it is now. But most importantly, it would provide the market with the right economic drivers to allow recyclers to compete with exporters while still supporting waste producers in satisfying their environmental goals.

Malcolm Odlin is Purchasing Manager for technical plastics reprocessor, Luxus.