Environment Exchange cuts fees after PRN price slump

For all packaging waste recovery notes (PRNs) sold at 5 per tonne or below on the Exchange, traders will now pay 25 pence per tonne to the Exchange.

” When we are beginning to look at these kind of prices in the January 2007 forward market, it shows there's not a lot of confidence in the market. “
– Angus Macpherson, Environment Exchange
Managing director Angus Macpherson told letsrecycle.com the Exchange was “sharing the pain” with the recycling industry over the depressed packaging waste recovery note (PRN) market.

But, as PRN prices sink towards the 5 per tonne mark, the previous 50 pence per tonne trading fee was becoming a more significant proportion of the cost of a PRN.

Prices for most material PRNs being sold by reprocessors to packaging producers as evidence of producer responsibility have now sunk to below 10 per tonne in most packaging materials.

Prices for wood and paper PRNs have dropped as low as 3 per tonne in many cases.

New new fees regime at the Environment Exchange came into effect yesterday (September 11). However, all those trading PRNs at less than 5 per tonne since September 1 will have their fee discount rebated, the company said.

“Fair”
Announcing the changes, Mr Macpherson explained: “This has been an extremely difficult decision to take but with the prospect of low value PRNs for the remainder of the year and possibly beyond we felt that it was only fair that we should share the pain with our participants by discounting their fees.”

Despite the changes to the packaging producer responsibility regulations proposed by Defra, and the Department's investigation into possible data inaccuracies, Mr Macpherson predicted that the current low PRN prices would continue into 2007.

He told letsrecycle.com: “I think there is every prospect that it could continue into next year. When we are beginning to look at these kind of prices in the January 2007 forward market, it shows there's not a lot of confidence in the market.”

Trading
In the Exchange's latest monthly market report, it revealed that 84,527 tonnes' worth of PRNs were traded through the website during August 2006, beating previous monthly records for the Exchange.

But, the report revealed that trading on the January 2007 forward market had reached only a 4.50 per tonne as a highest traded price.

Consultation
Commenting on Defra's consultation, the Environment Exchange managing director said there was no doubt in his mind that some parts of the proposed regulation changes would help tighten the PRN market. But, he indicated that the current consultation was unlikely to solve the whole problem, since “half a million tonnes of obligated packaging that does not seem to have been identified”.

As well as highlighting the need for stronger monitoring of data within the packaging producer responsibility system, Mr Macpherson highlighted the significance of Defra's proposal to give the Agencies more power to refuse accreditation to issue PRNs to any company that has been convicted of an environmental crime in the past.

He said tight rules needed to be in place – particularly concerning companies prosecuted for PRN fraud.

Grosvenor
Mr Macpherson observed that the Environment Agency's intention to prosecute Grosvenor Waste Management over transfrontier shipment (TFS) regulations for exporting waste including packaging (see letsrecycle.com story) could have greater implications for the PRN market as a result of Defra's new stance on past convictions.

He said: “Grosvenor – I don't know which way that prosecution is going to go, but the comments from John Viviani that it is a test case are quite relevant. I've never come across a case like this before. But, whether it is the TFS or if it is that a company has failed to meet its obligation, it could be significant.”

Mr Macpherson added that the need for exporters to identify reprocessors within their accreditation could also cause problems for the export of packaging waste.