15 July 2019

A packaging compliance fee – creating a mechanism to please all

OPINION: With increased debate about the achievability of packaging targets, Robbie Staniforth, head of policy at Ecosurety, argues that the government can play an enhanced role in ensuring a compliance fee is only used when and where it is essential.


The philosophical dilemma of the chicken and egg has never been more relevant to our sector than in the context of a compliance fee for packaging.

Advocates do not want to invest time in designing the specific mechanism, with the potentially complex algebraic equations it would entail, before the government has signalled their intention to make the minor legislative changes needed to enable a fee to be granted.

Given the amount of thought put into the compliance fee methodology for WEEE, and the plethora of other issues affecting those involved in packaging recycling, you can have some sympathy for those not wanting to exert effort and time that could ultimately prove to be wasted.

Robbie Staniforth, head of policy at Ecosurety

On the other side, the sceptics want to know exactly how it will work before even considering the possibility of government making the regulatory amendments. The fear of unintended consequences for their business, sector or material is understandable given that calls for the fee have primarily been driven by a lack of plastic reprocessing capacity and aluminium marketplace issues. The differing PRN markets, which are only linked by the “general recycling” PRN that can come from any material (usually the lowest cost), all have their particular foibles that a well-designed compliance fee will need to take into account.

Process

Both sides appear to be starting to understand the dilemma. However, deciding on whether the fee methodology (chicken) or the enabling powers (egg) comes first is not the central issue. In creating a fall-back mechanism to improve the functioning of the PRN market, it is most important to understand the likely process, including the checks and measures that would negate any adverse effects for specific interest groups.

While industry might not be comfortable with giving the government this enhanced role in the PRN system, it is hard to find a more obviously impartial party.

Robbie Staniforth

Using the reference point of the WEEE fee may not be transferable in terms of the specific market effects or methodology but is useful in understanding policy and process. In the WEEE Regulations 2013, the Secretary of State has the power to approve a methodology for the calculation of the compliance fee and may appoint a third party to oversee its administration. There is a specific reference to “consultation with such persons or bodies as appear to him representative of the interests concerned”. Setting the unfortunate androcentrism aside, what it basically tells us is that on an annual basis, and following representations, the government may choose to grant a compliance fee. Importantly, it deliberately implies that they may also choose not to do so. In the example of PRNs being freely available for specific materials, it is possible that one may not be granted.#

Reprocessors

This is particularly pertinent given the concerns of UK reprocessors at the risk of their markets for physical material being undermined by a compliance fee. Yet when one looks PRNs across all materials, the risk of low-quality exports undermining domestic reprocessing expansion because of uncertain prices is equally as concerning, if not more. The fact that the Secretary of State could simply not grant a fee or ensure the fee considers the needs of each material, including whether PRNs/PERNs were available, should some give some security to the concerned.

The high prices for PRNs has led to much debate about the current system

While industry might not be comfortable with giving the government this enhanced role in the PRN system, it is hard to find a more obviously impartial party. The PRN system has many fundamental flaws – simply choosing to wait until 2023 for fundamental system change would be a passive approach that does not adequately respond to the concerns of citizens. Businesses will look on with interest to see whether this year’s fluctuating PRN prices, including historic highs, has led to more reprocessing in the UK and less export of low-quality material. While a compliance fee is not the only option for addressing this issue, it is difficult to envisage any of the other options being as impactful.

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