The recycling industry has taken a battering this past year. Falling volumes and prices have pushed many recyclers to the wall, while the collapsing global market for recyclates has made it difficult for companies to comply with their packaging recovery targets through trading in PRNs.
The Advisory Committee on Packaging convened its Metals Protocol Taskforce to advice Defra on what could be done to mitigate the “likely challenges to compliance”, particularly in relation to the market for recycled steel. Letsrecycle.com reported on 14 August 2009 that Defra had decided to let the market correct itself, rather than intervening by tweaking PRNs or declaring an “obligations holiday”.
Author information: Dr Gev Eduljee is director of external affairs at SITA UK. He worked in hazardous waste treatment before spending 15 years as a consultant with ERM. He joined SITA in 2001, with oversight of the permitting, environmental, EMS and heath & safety functions. He has published widely on waste-related issues, especially on incineration and public health risk assessment.
Truth be told, there is very little Government can do – while there certainly is scope for reform of the PRN system, the present crisis is caused by the fact that the recycling industry has to operate with one arm tied behind its back. Price volatility is not new in the recycling industry; in that respect the market for recyclates is no different from the way in which the law of supply and demand operates on markets for raw materials and commodities.
However, what is different is the constraint under which recycling operates. The collection of recyclate is typically a legally binding obligation placed on local authorities and for some materials (as with packaging) on industry as well. The waste industry has to collect recyclates whatever the economic climate or the state of the end-market, and has to find outlets for its products – certainly PRNs cannot be issued otherwise.
This is in contrast to the way in which most markets for primary materials operate. Higher prices for raw materials such as oil, coal, metal ores, etc result in increased exploration and production. Conversely when prices are low, production slows, the resource is left in the ground waiting for more favourable economics.
The current economic crisis has exposed the fragility of markets in which recyclates are expected to compete. On the one hand recycling has become a statutory duty while on the other, the market for recycled products is heavily influenced by external forces which threaten to destroy the viability of the entire sector. The underlying weakness is that recycled products have to compete with virgin materials on unequal terms.
If we want to build a recycling society of lasting value, then we need to change the underlying structure and dynamics of the market for primary and secondary resources.
The first recommendation is that on environmental grounds, there should be a presumption in favour of sourcing raw materials from secondary sources, and only when that supply is exhausted, move to unextracted natural resources. We need to incentivise industry to accept recycled material over virgin materials via a mechanism for the rewarding climate change benefits of using recycled materials.
The second recommendation is that our focus should be on trading in the materials and energy end-markets, and therefore on product quality. It is significant that even in these difficult times, a market has generally been found for high quality recyclates.
The policies that we formulate should all have product quality as their goal. Although there is no one solution that applies to all circumstances, SITA has generally found that as a rule of thumb, product quality can best be achieved through separation at source.
The third recommendation is to examine whether our PRN system needs to be updated. Currently, the majority of certain obligated materials (glass, aluminium) comes from post-consumer waste, but there is no direct link between disbursement of PRN revenues, and local authority collections. The opportunity to optimise post-consumer collection is missed, which in turn ultimately impacts on product quality.
It is time we brought waste management right into the heart of the resource and consumer economy. Up to now we have tended to concentrate on the post-consumer part of the value chain. Now we have to start delivering right at the start of the value chain – by responsible stewardship of our natural resources.
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