10 July 2019 by Joshua Doherty

Wood sector voices opposition to PRN fee mechanism

The Wood Recyclers’ Association (WRA) has written a joint letter with the Wood Panels Industry Federation (WPIF) voicing their opposition to a “stability mechanism” being introduced in the PRN market.

The letter was written to John Dye, the wood sector’s representative on the government’s Advisory Committee on Packaging (ACP), raising concerns over the proposals for a mechanism, stating that it would risk a “collapse” of the market.

wood PRNs

The letter warned that any mechanism in the PRN markets could lead to a ‘collapse’

Last month, the ACP met to discuss a potential mechanism which could see schemes pay a fee for missing compliance targets, rather than being forced to buy PRNs at potentially high prices. This was in response to concerns over escalating PRN prices of plastic and aluminium PRNs.

However, the joint letter penned by the two waste wood associations dismissed this idea.

“As a general principle we are strongly opposed to market interference through the introduction of a stability mechanism,” the letter to Mr Dye read.

It added: “In our view it risks either collapsing the market or, as evidenced by the EU Emission Trading Scheme Market Stability Reserve mechanism, where the opposite has occurred and has dramatically driven up the price of allowances.”

Mechanism

The letter goes on to explain that in the opinion of the WPIF and the WRA, such mechanisms introduce a degree of market predictability that can then be “exploited by speculators”.

Both the WPIF and the WRA added that the wood market is functioning correctly and that the recent rise of wood PRNs earlier this year was short-lived, and drove up recycling targets, “which is what the PRN system is in place to do”.

“If Defra follows these recommendations there is a danger they will try to implement a ‘one size fits all’ scheme across different waste streams and in doing so, damage a system that is working well in the wood sector”.


Julia Turner
WRA

The letter concludes: “Because of the many competing markets for waste wood, we would be concerned to see the market collapse again and a return to perverse outcomes such as a reversal of the waste hierarchy.”

Commenting on the a potential mechanism, Alastair Kerr, director general of the WPIF, said: “We understand problems arise from time to time with the PRN system but these are invariably short term. Introducing some form of ‘stability mechanism’ for all materials could open a Pandora’s Box that risks damaging those markets that are relatively stable.”

Julia Turner, executive director of the WRA said: “If Defra follows these recommendations there is a danger they will try to implement a ‘one size fits all’ scheme across different waste streams and in doing so, damage a system that is working well in the wood sector. We hope both the ACP and Defra will take our concerns on board.”

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