Gev Eduljee, non-executive director at Resource Futures, reflects on the recent National Audit Office report on PRNs and asks why the Packaging Essential Requirements covering design, weren’t properly taken into account by the NAO.
OPINION: The National Audit Office (NAO) has delivered an impressive and insightful assessment of the UK’s PRN system. With regard to issues such as data reliability, the contribution of producers to local authority costs, transparency of revenue spend, and enforcement, the report echoes the concerns of many in the packaging waste management chain, and need not detain us here.
More interesting is the call for the PRN system to extend its remit to influence the design and deployment of packaging. This is implied in the NAO’s statement that “the government has no evidence on whether the system has encouraged companies to minimise packaging or make packaging easy to recycle.” Is this a fair accusation to level at PRNs, and are PRNs best suited to achieve these objectives?
A glance at the Producer Responsibility Obligations (Packaging Waste) Regulations 1997, the year the PRN system was first introduced, indicates that for an obligated producer, the purpose of so-called “certificates of compliance” was solely to demonstrate “compliance in respect of his recovery and recycling obligations”.
Indeed, Schedule 3(6) of the Regulations emphasises that “The recovery and recycling obligations of producers are to enable the United Kingdom to attain the recovery and recycling targets for Member States set out in Article 6(1) of Directive 94/62/EC”. No mention of expecting the PRN system to minimise packaging or making packaging easier to recycle.
The reason why minimising packaging and ease of recycling were not intended as outcomes of the PRN system is because they are referred to under separate legislation – The Packaging (Essential Requirements) Regulations 1998. These Regulations, transposing Article 9 (Essential Requirements) and Annex II of Directive 94/62/EC, explicitly require that “Packaging … volume and weight be limited to the minimum adequate amount to maintain the necessary level of safety …” and furthermore, that “Packaging shall be designed, produced and commercialized in such a way as to permit its reuse or recovery, including recycling, and to minimize its impact on the environment” on disposal.
Given the single-minded focus of the Producer Responsibility Regulations, criticising the PRN system for not doing what it was not designed to do is rather like criticising a sow’s ear for not being a silk purse.
Although these Regulations are listed in Figure 2 of the NAO report (The Policy Landscape) they are not referred to again or assessed. Has Article 9/Annex II been effectively applied in the UK? Have Trading Standards been diligent in enforcing the Regulations? Are they the best competent authority to apply the Regulations? The NAO report refers to “the system” failing to address considerations wider than hitting Article 6 targets but omits any consideration of the legislative element of “the system” pertaining to the required attributes of packaging material. Given the single-minded focus of the Producer Responsibility Regulations, criticising the PRN system for not doing what it was not designed to do is rather like criticising a sow’s ear for not being a silk purse.
The call for the PRN system to influence packaging design and the uptake of recycled material is not new. In 2013 the British Plastics Federation proposed an offset to the PRN obligation proportional to the extent to which UK producers incorporated recycled plastics into their products. Article 8a of the revised Waste Framework Directive requires that fees paid by producers “are modulated on the basis of the real end-of-life cost … taking into account [the product’s] re-usability and recyclability”.
Many European jurisdictions apply differential up-front fees on, for example, different types of plastic packaging. A bonus-malus system (where good is rewarded and bad is penalised) which has modulating (varying) fees according to attributes such as recyclability is much less common – the Italian CONAI scheme and France’s Eco-Emballages/CITEO schemes being two examples. The latter offers a bonus/reduction of up to 24% in fees for ecodesign considerations, and a malus/penalty of up to 100% for “disruptors” such as non-recyclable packaging.
Fee modulation is a far simpler proposition for producer responsibility systems based on up-front fees (as for the above examples) than with a pure market-based trading system such as the UK’s PRN regime, other than by developing a base cost for end-of-life management of different packaging types, and apply that as a floor price which producers must cover through up-front fees – which of course destroys the market-based rationale of PRNs.
Since it costs as much to collect a 100% recyclable container as it does a non-recyclable one, operational collection costs will need to be covered irrespective of the ecodesign attributes of the packaging. Offsets or penalties would then relate to downstream considerations such as availability and cost of processing, and avoidance of externalities such as environmental and social costs.
Whether a scheme applied at the end-of-life will have a significant effect on the design phase of packaging is a moot point, and indeed the evidence to date suggests that the impact of EPR on product/packaging design has been extremely limited, even with modulated fees. For it to be so, the quantum of the bonus or malus will need to be substantial, which in turn means that rather like landfill tax, that element could most likely far exceed the actual cost associated with management of the material. Consideration must also be given to the administrative costs of pronouncing on and enforcing vague attributes such as recyclability or durability.
‘Defra – caution’
On balance, Defra are urged to proceed with caution. While it is tempting to merge the Producer Responsibility and Essential Requirements Regulations such that the PRN system in effect addresses both, we simply do not have the evidence to proceed down this path with any confidence that the PRN system reformed in this way will significantly influence product design, and that the environmental outcomes will be delivered cost-effectively.
A better solution, it is suggested, would be to retain EPR as a financial scheme covering post-consumer operational costs, and to address design issues separately, either through more robust application of the Essential Requirements Regulations, or by subsuming the latter into what in effect would become a “Product Directive” defining how manufacture and deployment of products (including packaging) should be informed by principles of ecodesign and resource efficiency.
The upcoming Resources and Waste Strategy, together with the Industrial Strategy, are the ideal vehicles for such an approach.