The forecast of rising costs – because of the increased costs of PRNs and investment in increasing recycling – is echoed by other compliance schemes, including Biffpack and Wastepack in light of a likely increase in packaging waste recovery targets to about 60% for next year.
Consultation closes next week on the packaging waste targets for 2002 with the government having put forward a 61% target. But the Department of the Environment, Food and Rural Affairs is expected to be told in responses that this figure is too high. And importantly its advisory committee has recommended a target of between 58-60%.
In the interim, Valpak has written to its saying members that it is advising them to budget for the 61% target (which includes a recycling element of 20%) “as a good working estimate until the final recommendations are made”.
Demand outstrips supply
The scheme had told its members that this year it had forecast that as a direct result of the increase in overall recovery targets to 56% for 2001, there would be a tightening of the PRN market as demand came to outstrip supply for the first time. “We said this would increase costs by between two and four times. In practice the average increase has been nearer two, however prices are ending the year at significantly higher levels as the tightness in the market begins to impact on costs.”
Graeme Carus, Valpak director contracts, told letsrecycle.com that 2002 “will be a step into unchartered territory for us all. We still don't know what targets will be set by the government for next year.”
DEFRA decision
Phil Conran of Biffpack said that the decision made by DEFRA on the targets was critical to the way the packaging waste market developed next year. “We are predicting costs of between 30-35 per tonne next year, depending on the targets. It all depends on the gap between this year's targets and the next.”
And, Mr Conran said that a large increase in targets would be particularly unfair on all the companies who have paid for meeting compliance so far and for those already carrying out a lot of recycling.
Mike Beard of Wastepack said: “It seems almost certain that supply in the market this year cannot match the UK target in the directive. When the UK increases its target next year the gap will be even greater as there is little evidence of investment in infrastructure to increase capacity. This all moves us towards a significant increase in costs in 2002.”
The precise figure decided upon for 2002 is critical to determining costs and activity in the marketplace next year. Every percentage point increase in the target is equivalent to 80,000 tonnes of material which includes the recycling of aluminium, steel, paper, plastics as well as wood recovery/recycling and energy recovery.
Of even more importance is the fact that under the current regulations, PRNs generated in December can be used the following year. So this year's figures will be helped by a carry over from last year which could have been as much as 200,000 tonnes or 200,000 PRNs. But, if December 2001 PRNs are swallowed up by the need to meet 2001 targets there will be little left to be carried over to next year.
Continued on page 2
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