No PRN compliance fee before 2020, says ACP
The Advisory Committee on Packaging (ACP) has stated that some form of packaging compliance fee could be introduced in 2020 following an emergency meeting last week to discuss the rapid escalation in Packaging Recovery Note (PRN) prices for plastic packaging.
Following the meeting held last Wednesday (19 June) in the face of spiralling PRN prices, the ACP, an expert committee set up to advise the government on packaging policy, stated that regulatory change was needed to prevent ‘excessive volatility’ in PRN prices going forward.
The committee recommended that the Department for Environment, Food and Rural Affairs (Defra) give ‘strong consideration’ to ‘a mechanism that should restrict excessive pricing whilst still enabling the markets to work as intended and which will also provide a compliance option should future years see target shortfalls’.
Such a compliance fee mechanism is used for the producer responsibility scheme that governs the recycling of waste electrical and electronic equipment (WEEE), whereby a fee is paid to the government by obligated producers and compliance schemes that do not fulfil their targets, and was also recommended last week by the Packaging Scheme Forum (PSF).
While the ACP had considered recommending this be introduced in 2019, the statement recognised that the legislative process and timetable would make this ‘extremely difficult’ and had the potential to undermine existing compliance programmes by being introduced part way through the year. While the ACP’s discussion centred on plastic packaging, it asserts that ‘any material could be similarly affected’ – the price for aluminium has been high in recent times, though that is not judged to be due to the same pressures as those affecting plastic.
Despite the ACP’s recommendation that a compliance fee should be considered, the statement asserts that the ‘unprecedented’ surge in PRN prices ‘does not properly reflect the current recycling situation’, with market reports suggesting strong levels of packaging recycling for the second quarter of 2019, largely owing to more scrutiny from businesses on waste packaging reprocessing. It expects this recycling performance to lead to a market correction and stabilize prices.
The ACP’s recommendation comes after the Packaging Scheme Forum (PSF) last week called for the Department for Environment, Food and Rural Affairs (Defra) to immediately introduce a compliance fee for producers as a ‘fall-back’ measure for ‘producers and compliance schemes that, despite their best efforts, may simply not be able to acquire enough evidence because it isn’t available.’
Robbie Staniforth, Chair of the PSF, told Resource that a compliance fee would avoid large-scale non-compliance at the end of the year by companies that had been unable to purchase sufficient PRNs, though this should only be an “interim measure” until the overhaul of the packaging producer responsibility system that the government expects to complete by 2023.
The price of PRNs, which packaging producers are required to purchase, either themselves or through a compliance scheme, to prove they have met their recycling obligations, has seen a marked increase in recent months, with Resource learning that some PRNs for plastic packaging reached highs of £370 per tonne two weeks ago, without an accompanying increase in recycling.
Tightening of the PRN market, particularly for plastic packaging, has largely been blamed on the closure of export routes for packaging. Prior to 2018, much of the UK’s plastic packaging waste was exported to China, but in January 2018 the Chinese Government implemented heavy restrictions on the material that it would accept. 24 grades of solid waste were banned, including post-consumer plastic, while an extremely tight contamination limit of 0.5 per cent was implemented on all other imported materials.
Alternative destinations were sought, but a number of other countries – most notably Malaysia, VIetnam and Thailand – have also begun to close their doors after struggling to deal with the flood of displaced low-quality material that previously went to China.
The PSF, which represents 93 per cent of registered packaging producers in the UK, noted in a letter to Resources Minister Thérèse Coffey that exports accounted for 63 per cent of PRNs in 2018, but that the closure of export routes has affected recycling rates, with the UK’s plastic packaging recycling rate down by 7.6 per cent in the second half of 2018 compared to the first.