PRNs – the next big challenge for UK recycling

Jonathan Short, Managing Director of Lincolnshire-based ECO Plastics, writes for BP&R on how changes made to recycling targets in the UK need to be mirrored by the introduction of other regulatory amendments, including a review of the Packaging Recovery Notes (PRN) and Packaging Export Recovery Notes (PERN) regime.

In March 2012 DEFRA made the necessary move of introducing mandatory recycling targets. As a result the UK expects to recycle 57 percent of its packaging waste by 2017. ECO Plastics and other leading players in the market welcomed the announcement as a step forward for both the reprocessing industry and the wider green economy. However, we were very clear that the targets would not deliver the necessary changes for a thriving domestic sector on their own. They must be accompanied by other regulatory amendments, most importantly a review of the Packaging Recovery Notes (PRN) and Packaging Export Recovery Notes (PERN) regime.

The current system for PRNs and PERNs does not provide a level playing field. UK plastic reprocessors can only claim a credit after their feedstock has completed the wash phase, or in extreme cases the melt phase.  Process losses of up to 30 percent of the original feedstock through the removal of dirt, moisture and other contamination can be expected through these stages. No such requirement is needed to claim PERNs, with exporters realising 100 percent of the tonnage simply by exporting containers of unprocessed material - feedstock that contains waste paper, dirt, glass, liquid and organic residue.

As it stands the Government’s approach is clearly encouraging the export of waste plastic at the expense of domestic processors. Not only are UK players at a commercial disadvantage, but more importantly, the lack of financial returns will hinder much-needed investment in domestic reprocessing infrastructure. With increased levels of mixed plastics at home and the Far East market for plastic waste steadily softening, investment in our own supply chains must be the priority. The alternative is that we will be left with a mass of material that we can neither recycle nor export.

We are advised by DEFRA that revising the PRN/PERN system to allow for these anomalies risks being ruled as anti-competitive under EU laws, yet it still appears to be okay to disadvantage UK manufacturing. In my view there are two simple alternative solutions to acknowledge the contamination levels in the price of PERNs:

Firstly, exporters should be required to follow the same stringent audit trails expected by the EA of the domestic reprocessing industry and to clearly demonstrate the quality of every load placed in a container

Secondly, perhaps an easier answer is to allow domestic re-processors to claim on all UK tonnage (including the inherent contamination).

Additionally, the revenue from PRNs and PERNs must be utilised exclusively for inward investment in reprocessing technology and infrastructure, or for consumer education programmes. Again, with strict audit checks on how the PRN/PERN funds have been utilised.

Although there has been previous engagement with manufacturers on how to manage packaging waste through the Courtauld agreement, these targets are the first set of mandatory regulations and will undoubtedly drive up the value of PRNs. The higher the value the more disadvantaged the domestic reprocessing sector becomes.

There are other challenges facing the sector, but changing the PRN/PERN system is the easiest issue to tackle, with simple legislation and no need for additional funds, widespread stakeholder engagement or campaigns. Naturally there must be desire to make the change and I see little evidence of that desire.

The UK recycling industry is now at a crossroads. If we continue on our current path of neglecting the domestic market and shipping our waste, it is only a matter of time before we are forced to reopen landfill sites. The reform of the PRN/PERN system is key to encouraging investment in domestic markets and ensuring the development of a self-sufficient recycling infrastructure.