PRN ‘crisis’ as UK could miss packaging recycling targets

A group of compliance schemes has warned of a ‘looming’ crisis in the packaging recycling industry, with the price of Packaging Recovery Notes (PRNs) for plastic and auminium rising substantially with no increase in recycling.

The notes, which packaging producers are required to purchase, either themselves or through a compliance scheme, to prove they have met their recycling obligations, are in short supply due to tightening standards for materials leading to shrinking markets at home and overseas.

The Packaging Scheme Forum (PSF) has penned a letter to Thérèse Coffey, Parliamentary Under-Secretary at the Department for Environment, Food and Rural Affairs (Defra), outlining its concerns that the UK will fail to meet its 2019 packaging recycling targets as a result of an insufficient supply of PRNs.

Read more: PRNs – Stick or twist on packaging responsibility?

Shipping containers on board at a portChanging markets for plastic waste

There has been growing alarm in the past months over the increasing price of PRNs, with Resource hearing that some plastic PRNs reached a price of £370 per tonne last week. This has been triggered in part by the changing export markets for packaging waste; 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.

As a result, the UK industry was sent scrambling to find new export destinations, with the domestic market lacking the capacity to process all of the UK’s waste. Since China’s ban, a number of other export destinations – including Malaysia, Vietnam and Thailand – have followed suit with restrictions of their own, after struggling to deal with the influx of often low-quality recyclate being imported from developed countries. In addition, there are growing concerns that material being sent abroad for recycling may not end up being recycled when it reaches its destination – Packaging Export Recovery Notes (PERNs) are produced when the waste is sent abroad, not when it is actually processed.

The PSF, which represents 93 per cent of registered producers in the UK, notes in its letter to Coffey that in 2018, exports accounted for 63 per cent of PRNs. But with more export destinations closing their doors, the number of markets available to take material from the UK has shrunk, leading to a drop in the UK’s plastic packaging recycling rate – down 7.6 per cent in the latter half of 2018 compared to the first half of the year. The PSF writes: ‘In 2019, it is very probable that there will be insufficient plastic PRNs for compliance schemes and producers to meet their obligations. Aluminium may face the same situation where there is insufficient evidence.’

There is also concern that the high price of PRNs, combined with the relative glut of plastic material that currently exists in the UK due to the lack of adequate end markets, could incentivise criminal activity in the recycling industry, with exporters possible encouraged to move material without a decent end market in order to procure a PRN/PERN.

Read more: Flawed monitoring could lead to overestimation of UK packaging recycling, says NAO

Baled plastic bottle wasteCompliance fees: a short term solution

The PSF is therefore urging Defra to consider introducing a compliance fee for packaging as a ‘fall-back’ measure to ‘ensure a level of reassurance should the UK fail to meet its recycling targets’. This would also ‘offer a solution for producers and compliance schemes that, despite their best efforts, may simply not be able to acquire enough evidence because it isn’t available.’

The compliance fee would be based on the scheme for recycling 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. The money collected then goes towards projects aiming to boost recycling in years to come.

Robbie Staniforth, Chair of the PSF and Head of Policy at compliance scheme Ecosurety, explained that this would reduce the need for the Environment Agency to take action against non-compliant companies: “While introducing a change mid-year goes against normal practice, the PSF [is] urging government to recognise the extraordinary circumstances surrounding the PRN market for plastic and aluminium at the moment. Without significant tweaks being made to stabilise the current PRN system, we run the risk of large-scale producer non-compliance at the end of 2019. This would be a costly situation for Defra to deal with – both at a reputational and financial level.”

Robbie Staniforth
While a fee would arguably help to stabilise the system in the short term and ensure companies remain compliant, Staniforth does not see an annual compliance fee (as with WEEE recycling) as a long-term solution. “I see the compliance fee as an interim measure that would be in place until the complete system overhaul at the end of 2022,” he told Resource. The government is currently considering reform to the packaging producer responsibility system, with a view to implementing a ‘full net cost recovery’ model by the end of 2022. In this reformed system, packaging producers would pay 100 per cent of the cost of dealing with waste packaging. This would see a greater investment in UK reprocessing infrastructure to boost domestic markets for secondary materials.

As it stands, the system today “is too short-termist”, Staniforth added. “The current complaint from many reprocessors is that they are having to embed the high PRN price into their bid-price to waste holders for their plastic bales. Therefore, the money goes down the chain as ‘price support’, rather than being retained to be invested to increase reprocessing capacity thus alleviating the problem for future years. Ultimately, these issues are indicative of the need for more broad changes required, as highlighted by the government’s recent consultations.”

However, in the short term, Staniforth said: “It is vital that producers have a means of complying that ensures their funds are used to improve collection/reprocessing of the specific material that is poorly performing.” The PSF is asking for support from Defra to introduce a mid-year compliance fee for packaging.

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