OPINION: ‘The PERN system isn’t working. Two small changes would let export do its job in 2026’

OPINION: Two changes to the operation of exporter accreditation in 2026 have materially altered how and when compliant exporters can contribute to the year’s recycling obligation:

1. End users must be fully registered, approved to an exporter’s accreditation and an ORS ID issued before any PERNable material can be exported. In previous years, an exporter could ship in advance of the final reprocessor approval being granted and consider the PERN value against those shipments, carrying the commercial risk itself if permission was subsequently refused.
2. Material can only be added to an exporter’s waste balance once proof has been received that it has reached the end processor and been recycled. This supersedes the previous position, under which PERNs could be generated at the point of export.

Both measures were introduced to restrict fraud, and we support that objective. But the combined effect on compliant operators is a significant change in operational timing and a real reduction in the volume of material that can be exported and evidenced within the compliance year.

We are asking for two narrowly drawn, low-risk adjustments that would preserve the anti-fraud intent of the changes while allowing export to bridge the gap between the producer-obligation and UK domestic capacity for the remainder of 2026.

The system is finally working as intended

It is worth starting with what has gone right. The tightening of accreditation and evidencing has driven bad actors out of the market. The supply of PRNs now represents something much closer to the true capacity of the UK recycling industry and the price reflects that. A price that reflects genuine scarcity is exactly the signal needed to attract investment into domestic reprocessing over the coming years.

That is the long-term fix. The short-term consequence is a capacity gap between what UK producers are obliged to recycle and what the UK can physically process. The PERN exists precisely to bridge that gap: to give exporters access to a wider range of recyclers and increase the total volume of UK packaging that gets recycled. A higher PERN value means the UK has more options abroad for material it cannot hope to process at home.

Our concern is that the two changes described above, however well intentioned, are now suppressing the very mechanism that could close the gap.

Problem one: The onboarding ‘blackout’.

In order to receive your accreditation for the start of the new compliance year, no amendments can be made during the 12-week determination period, otherwise this re-sets the determination date which could result in a gap in the approval between each compliance year. At a practical level, registration of new overseas reprocessing sites is in effect blocked during the accreditation determination period. In practice, this meant that between October and December 2025 no new customer could be onboarded or approved. When the compliance year reopened at the start of 2026, a further three months elapsed before newly approved sites could be served.

That is six months in which no new routes to market could be established, at exactly the point in the cycle when exporters should have been building the capacity to absorb the domestic shortfall.

The same ‘blackout’ now applies again. From the end of September 2026, no new end user can be onboarded. Any new outlet identified between now and the year end, however capable and however well qualified, cannot contribute a single tonne to the 2026 obligation. Those options will sit idle until the start of 2027 before they can begin receiving material.

Problem two: The evidence lag and the year-end cliff edge.

Under the new evidencing requirement, material only enters the waste balance once proof of receipt at the end processor is in hand. From the point of collection, that typically takes between fourteen days and several months.

The longer end of that range applies to interim sites: operators who process material before sending it on for final recycling. This is a step where the UK has lost significant capacity over the past three years, so it is disproportionately the route we need to be using.

The consequence is a hard cut-off before 31st December. From the end of September, material moving to customers with longer evidencing lead times will, in practice, land in the 2027 waste balance rather than 2026, notwithstanding that the export itself, and the obligation it was intended to serve, both fall in 2026.

The compounding effect

Taken together, these two changes mean that from the end of September 2026 the export route is effectively closed for the purposes of the 2026 obligation. No new outlets can be added, and material sent to existing outlets with normal lead times may not be evidenced in time to count.

This matters right now. Orders being fulfilled in September are generating forecast completion dates for PERN sales well into December. That is the period when overseas demand is at its highest, driven by the very PERN value that signals the domestic shortfall. The market is sending the correct signal and the supply chain is responding, but the administrative calendar prevents the response from landing.

What we are asking for:

1. Permit export to sites during October to December ahead of formal approval on the accreditation.

The commercial risk of a site not subsequently being approved would remain entirely with the exporter. If approval is not granted, no PERN can be raised against that material and the exporter bears the loss. This is precisely the position that applied in the previous compliance year and it worked without difficulty for compliant operators.

2. Introduce a transitional evidencing period running to the end of March 2027.

Where material has been exported within the 2026 compliance year and that export can be evidenced, proof of recycling received up to 31 March 2027 should allow the tonnage to be added to the exporter’s waste balance and applied against either the 2026 or the 2027 obligation, at the exporter’s election.

Why these asks do not reopen the door to fraud

Neither request weakens the controls that have improved the market.

The introduction of the summary log and the requirement for monthly reporting provides a live assessment of an exporter’s performance against their compliance obligations. Only those that have maintained good working practices, through timely submission of data reporting, could be eligible to participate in this transitional market.

Once authorised for participation the fact that no PERN would be issued without formal approval of the end user. The approval requirement, and the regulator’s power to refuse it, remain fully intact; all that changes, is the sequencing, with the risk sitting on the exporter rather than the system.

Equally, the requirement to evidence receipt at the end processor is retained in full. Nothing can enter a waste balance without proof. That requirement is what protects the market from a short-term spike in fraudulent PERNs, and it stays exactly where it is. The transitional period does not remove the evidence test; it simply allows the evidence to arrive on a realistic timescale without the tonnage falling out of the year in which it was exported.

A final thought

The market is working. Export can do its job and close the capacity gap created by the shortage of domestic recycling. Two low-risk, time-limited adjustments would allow it to contribute for the remainder of the year and would do so without conceding any ground on fraud.

The window is closing fast. Without these changes, the 2026 shortfall is likely to be larger than currently expected, and the material that could have addressed it will simply not move.