PRN system needs “urgent” reform as packaging producers are “held ransom” says policy expert

27 May 2022 --- The UK’s Packaging Recovery Note (PRN) system, which provides evidence that businesses’ waste has been recycled into new materials, needs urgent and fundamental reform, according to producer compliance scheme Ecosurety.

The PRN system has undergone a consultation process recently in which stakeholders submitted recommendations for change. Currently, large businesses must buy PRNs from recyclers accredited by the UK Environment Agency whenever they recycle specific materials.

However, price fluctuations, instability, underreporting, and inferior materials hitting the market have resulted from the system in its current form.

Robbie Staniforth, Ecosurety’s innovation and policy director, tells PackagingInsights: “The PRN system needs urgent improvement. We have been waiting several years for an opportunity to address flaws and so welcome the consultation. While many issues are likely to be addressed through reforms, some areas will still not be resolved. For example, there is nothing in the proposals to create an attractive investment environment for reprocessing materials in the UK.”

Robbie Staniforth, innovation and policy director at Ecosurety.PRN problems
One of the biggest problems in the current PRN system is price volatility, caused by infrequent and late data reporting that makes budgeting difficult. In 2020, the PRN price for plastic (including flexible plastics) varied between £8 (US$11) – £250 (US$354) per ton.

Moreover, producers must buy PRNs to meet their legal obligations, which has occasionally caused inequality in price negotiations, explains Staniforth. “A small minority of reprocessors or exporters have held producers to ransom on price due, based on this one-sided necessity, which destabilized the whole system,” he says.

He continues that there is a lack of transparency on how PRN payments support reprocessors and exporters.

“Price instability, over both short-term (monthly) and long-term (annual) timescales, discourages reprocessor investment, and inferior quality material is easier and cheaper to export than reprocessing in the UK. The bar for proving material is actually eventually reprocessed is too low.”

Reforming the system
Following the recent government consultation, proposals were made to extend the compliance trading period, which is likely to smooth price fluctuations and reduce “cliff-edge” price negotiations.

“In extreme cases, having a backstop option for producers to pay a compliance fee, rather than not comply with the law or meet extortionate price demands, will discourage nefarious ransom pricing practices,” says Staniforth.

Extreme price volatility often means PRNs come at the detriment to the environment.Mandatory registration of reprocessors and exporters could ensure that all packaging material is caught in the system, and additional mandatory reporting requirements, accompanied by better enforcement of reporting deadlines, could improve the PRN supply data from which the market operates.

“Bi-annual producer reporting will allow better predictions on demand for PRNs, and PRNs for the recycling of beverage containers that the Deposit Return System does not capture should be financed by beverage-making producers,” says Staniforth.

PRN or EPR?
Staniforth asserts that while the PRN system can be significantly improved, the most profound and important changes will come in the form of Extended Producer Responsibility (EPR) schemes.

“The PRN market was artificially created by legislation and should not be considered a free market in any way, shape or form. Intervention to improve the system by the government is very welcome to combat the perverse outcomes that have accumulated over the last two decades of its existence.”

“However, the most significant environmental improvements will be triggered by the wider EPR legislation proposals, through much higher modulated fees causing more recyclable and reusable packaging to be used in future,” he concludes.

By Louis Gore-Langton

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