Government will ‘continue to monitor’ glass remelt PRN prices
Responding to questions put forward by Labour MP Neil Coyle, Parliamentary Under-Secretary of the Department for Environment, Food and Rural Affairs (Defra) Jo Churchill MP stated that the office would ‘continue to monitor’ the rising price of Glass Remelt Packaging Recovery Notes (PRNs).
Between December 2020 and December 2021, the price of Glass Remelt PRNs increased from £9.75 to £190. In several questions to the Defra Secretary of State, Coyle asked what the Department believed the factors behind the rise to be, and whether it would be supporting obligated businesses experiencing a significant rise in costs for the PRNs.
Churchill responded: “We know recent prices increases for glass remelt PRNs have caused challenges for some businesses and have had discussions with both industry and regulators, including the Environment Agency, to understand the causes behind them.
“In the past year, as a result of closures related to the pandemic, we have seen less glass collection from hospitality businesses, which is usually higher quality because it is collected separately. Instead, there have been higher collections from households, which often requires additional sorting to make it suitable for remelt, incurring additional cost.
“These restrictions on supply will inherently raise the cost of the PRNs under the UK’s market-based system, alongside the end of year compliance pressures.
“The Government cannot intervene in the market, but we will continue to monitor the situation and have asked the regulator to keep us informed.”
Commenting on the price increases, Tim Gent, director of glass reprocessor Recresco, told Resource: “I believe the high prices are a result of exceptionally high tonnage in 2020 following increased alcohol consumption at home during lockdown. Obligation is based on the previous year so the knock-on effect of this sharp increase in tonnage led to increased annual recycling obligation for 2021.
“There are enough PRNs for everyone to comply and the vast majority are doing so however it’s possible that some companies or compliance schemes didn’t buy enough PRNs throughout the year and are now left with a disproportionate amount of buying to do. If the government does intervene it should be to remind these organisations of their legal responsibility.
“PRN revenue is desperately needed due to the low cost of compliance in previous years and the resulting lack of investment. Of course, the government feels strongly that this investment in infrastructure should come from the producers through the PRN system and that is exactly what is happening.”
Speaking to Resource, Sandeep Attwal, Procurement Manager at Ecosurety, similarly attributed PRN prices to an increase in the purchase of glass bottles from supermarkets: "Due to the national lockdowns in 2020, there was an increase in sales of glass packaging from supermarkets and other retailers as pubs and clubs were closed. This created a higher demand for glass PRNs in 2021. The increase in the glass recycling target, plus a change in the remelt v. aggregate split put further pressure on glass remelt target.
"For the first 9 months of 2021, the glass remelt PRN price was too low to create the extra supply of glass reprocessing required to meet the in-year demand. This led to a short time period of high prices of glass remelt PRNs in the final quarter of 2021. This could have been avoided had producers supported the glass remelter earlier in the year.
"The glass PRN market will return to a more stable position in 2022 without the need for government intervention."
Angus Macpherson, Managing Director of The Environment Exchange, told Resource that this was an example of the PRN market working to deliver compliance: “The Glass Remelt 2021 PRN price rise is in response to a shortage of supply of Glass Remelt PRNs, which the data has been predicting since the beginning of the year. Demand has increased both because of increased consumption during Covid and a marked increase in the Remelt obligation.
"Buyers have been slow to come forward in the first three quarters giving a false impression of demand. This discrepancy became clear once the third quarter data was published on 26 November 2021 after which buying built into a frenzy. Prices rose rapidly to reach a peak on 2 December 2021. They have subsequently fallen back significantly. A case of action, or as the case might be inaction, and reaction. The average Remelt Glass 2021 PRN price on t2e has been £45.31, which while higher than previous years reflects the challenges that the Glass remelt industry has faced this year.
This an example of the PRN Market working to deliver compliance. It has done so efficiently and at a lower cost to industry than any of the costs proposed by the Government for Extended Producer Responsibility post-2023.”