OPINION: It is tough being a recycling business right now.
Markets are challenging across materials, energy and labour costs are high, and the PRN/PERN market is closed in January through no fault of their own, which is hitting cashflow.
In the days leading up to Christmas, an email was sent out from Defra to tell recyclers and exporters that the new Report Packaging Data (RPD) system would not be ready and so it would not be possible to register PRN and PERN trades in January. The old National Packaging Waste Database is barely usable now I’m told, and so couldn’t be revived even for a month.
While it is permitted to trade this month, the market is effectively closed as without a system to register your PRNs and PERNs, it isn’t possible to extract the PRN and PERN cash. Without these registered trades, it also makes it very difficult, perhaps even impossible, to benchmark the market price of the PRNs and PERNs.
For some materials that were in low price markets, such as paper and cardboard, most are coping and trade is carrying on as normal. But for markets such as plastics and glass, which are reliant on the PRN and PERN support to enable recycling of these materials, this is a massive blow at a time when companies are under severe pressure. We saw last year a number of UK plastic recyclers close down, despite the support of the PRN.
Of course, these companies will be able to claim back the PRNs and PERNs at some point in the future, but anybody who has ever run a business will know that cashflow is king. To take away that cash even for a month, at a time of year that is typically busy after Christmas, could prove fatal for companies that are struggling already.
This follows a period when reprocessors and exporters have had to pay whacked up fees to get registration and accreditation, which have typically been five figure sums. These aren’t necessarily huge multi-national businesses paying these fees, but SMEs and family businesses where every penny can count.
In the same email sent when many had already started their Christmas break, it also noted that reprocessor and export companies would receive an invitation to use the new RPD system on a staggered basis based on when they received their accreditation determination. Under the new Packaging Extended Producer Responsibility regulations, reprocessors and exporters had to get new registration and accreditation by 1 January 2026. Many of our members at The Recycling Association got their determinations before Christmas, but some of those in England are still going through the process and may not get approval until 26 January.
The Environment Agency in particular out of the UK regulators hasn’t been able to cope with the poorly designed systems, open-ended questions on the applications, and staff that were seconded in from flood defences and river management without the experience required to understand the recycling industry and PRN/PERN system.
Despite the statutory deadline being missed, and new rules rushed into place that allows businesses yet to receive their determination to continue operating until they receive it, the whole process has been chaotic. To add to that chaos, some of those businesses that are yet to be approved may have to wait to an indeterminate point in the future to get their invitation to register their PRNs and PERNs.
With the new rules requiring exporters to change their point of claiming the PERN from point of export to point of receipt at the end destination, this was always likely to be a year where markets were truncated. If you are exporting cardboard back to state-of-the-art mills in South East Asia where some of it may have been manufactured in the first place, it could be two, three or even more months before you can claim the PERN. Of course, at the end of the year, material may not arrive until the 2027 compliance year so will not be included in 2026.
This means data is going to look very strange this year, and closing the market in January will make it even worse. We may potentially only have a real market from Spring to Autumn and that will have a distortionary effect on markets and PRN and PERN prices.
Businesses prefer certainty as they can plan ahead. At a time when there is so much uncertainty around, throwing even greater amounts of it into the mix over the Christmas period and into early 2026, shows that there isn’t enough understanding of the implications of that in those who govern and regulate our industry.
At The Recycling Association, we are fighting on behalf of our Members to try and get Government and regulators to understand that we need a better regulatory environment. You can’t keep increasing costs, bringing in new charges, and increasing bureaucracy and expect business to cope, especially when we face cheap imports of recycled materials from abroad. You can’t get officers to hassle legitimate businesses, and refuse to look at how they can prove legitimacy, while ignoring the illegal waste sites down the road.
UK recycling and export businesses are understandably angry as they want to support the UK economy, create jobs and sustainably reprocess and recycle valuable materials, but feel they are being prevented from doing so. They deserve better and I hope lessons can be learned from the chaos of the last few months that creates a more benign environment for recycling companies.
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