The warning comes in the wake of an unidentified company or a compliance scheme putting offers to buy PRNs (packaging waste recovery notes) on the Environment Exchange at 3.75 per tonne, inclusive of a 50p admin fee. The Exchange is declining to name the bidder or say whether it is a compliance scheme or individual company.
The issue is seen within packaging waste circles as being of considerable importance. This is because compliance schemes and companies generally have accepted that under the legislation they need to buy PRNs at or about the typical market price, which has been 20 or more. However, no-one has yet tested the legislation and it could be that the company or scheme looking to buy the PRNs at 3.25 intends to argue that it did try to buy PRNs and therefore was meeting the requirements of the legislation because it had “taken reasonable steps”. The company or scheme might also argue that it has carried out some investment work in recycling and so it had no reason to pay the higher price which would see money going into the coffers of reprocessors.
Watching
It is thought that the Department of the Environment, Food and Rural Affairs is watching the situation closely as is the Environment Agency and its Scottish counterpart. However, no official government view on the matter is expected until next month at the earliest because companies and compliance schemes will not have their evidence checked before the end of this month.
Angus Macpherson, who has substantial experience of PRN trading said: “As record levels of trading are achieved on The Environment Exchange, there has
been considerable speculation in the press that the PRN system is being
challenged.”
He noted that the Exchange told a review last autumn that it considers the present system to be working well. He said today: “Nothing that has happened subsequently would cause me to change this view. Furthermore the view that the market is stronger than any individual participant
and will continue is being endorsed by current activity on The Environment
Exchange where early trading in the subsequent compliance year (in this case
2002) PRNs to date has been considerably more active than in previous years. A
number of 2001 PRNs remain available and it is unlikely that any organisation
would be viewed to have taken reasonable steps to meet their 2001 obligation if
they had not attempted to purchase PRNs through The Environment Exchange at what
the market perceived to be a reasonable price.”
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