The problem with PRNs

Written by: Jimmy Dorrell | Published:
Image credit: Adobe stock

Packaging waste recycling has faced a volatile year so far, with the release of the quarter two PRN analysis last month showcasing a brighter future for UK plastics reprocessing but a lot of work that needs to be done to get there.

Packaging Recovery Notes (PRNs) are issued by accredited reprocessors and exporters on packaging waste to prove that they’ve recycled one tonne of material. Issued per tonne, PRNs offer an insight into the volume of material being recycled in the UK.

Each quarter the Environment Agency issues data through the National Packaging Waste Database, giving the industry an insight into the likelihood of the UK hitting its recycling targets at the end of the year.

The data from quarter two, released on 22 July, shows there has been an increase in the UK’s plastic reprocessing but a decrease in the amount of waste that’s being exported.

The volatility comes in a number of ways and for a variety of different reasons. Firstly, plastic PRNs have hit historic levels – £450 a tonne in mid-June, which is an increase of 750% from last year. This has understandably left producers concerned about the rising costs of compliance for their businesses.

To understand the reasons for this enormous price hike it’s important to consider the vast import restrictions introduced by China last year, and the limited capacity to recycle our plastic waste at home.

With China no longer a destination for much of the UK’s plastic packaging waste finding an alternative home for this material has an obvious impact. Other export destinations have since closed their doors or become more stringent in rejecting material, resulting in uncertainty about where the UK’s estimated 600,000 tonnes of waste to export can go.

Questions have been raised, as a result, about how feasible it is for the UK to meet its plastic packaging recycling target this year.

It’s also important to consider the spotlight the BBC’s War on Plastic programme has placed on recycling this year, highlighting the impact of our exports to countries in Asia. The BBC programme highlighted that UK plastic packaging can end up polluting the natural environment in places such as Malaysia and Indonesia, rather than being recycled as was intended. Responding to these rising levels of concern Environment Agency inspections of sites exporting packaging waste for recycling have now increased, with two bales being checked within each container heading for Malaysia.

Lack of transparency in the PRN system

In theory this year’s higher prices when supply is short show a PRN system doing the job it was intended to do. It’s an important tool that enables the industry to invest in the nation’s recycling, driving the circular economy and supporting the growth of responsible packaging recycling. By design the money generated from PRNs should be used to increase reprocessing and export, helping the UK to meet its recycling obligations each year.

But the PRN system has long been criticised for its lack of transparency, with concerns that it is unclear how and where the funding paid into the system is used and the outcomes it is achieving. In particular complaints have arisen this year that, despite the dramatically rising costs, there is a lack of evidence for how the money will improve recycling infrastructure.

It is clear that the system is not sufficiently transparent to ensure that the plastics from which the PRN is issued are not ending up in unsuitable locations. And without this transparency of material and PRN volumes we risk undermining the integrity of the system, leaving the market to panic that supply will not meet demand.

Addressing transparency is one of the underpinning principles for reform of the packaging regulations. The Extended Producer Responsibility (EPR) summary of responses states the need for measures to be put in place to ensure the new system is transparent, and that the money raised through producer fees is used to support effective services and additional recycling capacity. It further states that new legislation ‘will ensure producers pay the full costs of managing the disposal of their products’. With higher levels of revenue entering the system visibility becomes even more important.

It should be noted here that innovative reprocessing projects are taking place across the UK, funded by the PRN system, which are helping to support the UK’s drive for a circular economy. But if there were more transparency in packaging waste recycling there could be far more accountability to ensuring that all money generated from PRNs is going towards strengthening the country’s industry.

It is essential to break down these transparency barriers and start linking producers and reprocessors to show businesses the projects that they are supporting. With the requirement of producers to pay full net costs from 2023, a greater level of transparency will also help businesses to feel more confident in the system they are paying into.

Is a compliance fee a good idea?

While the government debates the future of EPR, this year’s volatility has also led to calls for a compliance fee. This would provide an alternative to enforcement action for businesses that fail to meet their obligations. The argument is that compliance schemes or producers who do not meet their targets would still contribute financially, with the funds ring-fenced and allocated to initiatives that improve UK recycling infrastructure.

While Defra has indicated that the introduction of a compliance fee is not an option for 2019, discussions remain about a potential ‘stability mechanism’ for 2020. But question marks hover over whether this is the best route.

A compliance fee could leave the market with a great deal of uncertainty. And unless it is always substantially more expensive than compliance there is a risk that schemes and producers who comply year after year would be at a commercial disadvantage.

The current rules dictate a ‘must buy’ system among producers and schemes. Could we look to introducing a ‘must sell’ system to balance it out? Would mandatory monthly reporting of data, full live data releases, or an expiry date on the upload of PRNs to the NPWD increase transparency and reduce volatility? These are all options that could be considered.

The PRN system may be out of balance but it is not broken. There are certainly enhancements that should be made to the system, but it is vital a measured approach is taken that considers all areas of the sector.

Focusing on reform of the PRN system, rather than a revolution, is arguably the most efficient way to ensure that money already being paid into the industry is being spent in the right places.

But it’s also time to discuss, challenge and innovate to meet both consumer and legislative demands in reducing unnecessary packaging. Organisations need to futureproof their packaging and make positive changes for their business, their consumers, and of course for the environment.

There’s an exciting and more sustainable future ahead but, as we can see through the volatility of PRNs, there’s a lot of building that’s needed. And failure to do so will leave businesses to pick up the bill without necessarily getting the service.

Jimmy Dorrell is head of sustainable business at Clarity Environmental

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