OPINION: ‘Price of recovered materials could cost our environment’

Griff Palmer, economist at climate action NGO WRAP, explores how some enterprises may backtrack on recycled content commitments and slow the UK’s progress towards a circular material economy due to increasing financial pressures.


The United Kingdom is currently experiencing a cost-of-living crisis. UK consumer price inflation (CPI) increased from 3.2% in August 2021 to 9.9% in August 2022[1], according to ONS figures.

As well as increased food and motor fuel costs, electricity, gas and other fuels have been a key driver of the increases seen in the CPI rate over the last year. This trend of increasing CPI is expected to continue with the Bank of England forecasting as of 23 September that inflation will peak at 11% in October and then remain above 10% for a few months[2].

Griff Palmer is an economist at WRAP

Increased electricity, gas and motor fuel prices affect not just consumers, but also many organisations working in the recovered materials sector. Increases to crew salaries, driven in part by recruitment and retention challenges as well as increased diesel prices are pushing up the cost of running collection services.

Whilst elevated electricity and gas prices are causing rising costs at material recycling facilities (MRFs) and reprocessors, along with enhanced staffing costs and restrictions on the use of red diesel. These factors may lead to increases in the gate fees charged at MRFs.

Many packaging recovery notes (PRNs) are also at high values, with the PRN value for glass aggregate increasing to over £100 for the first time in August[3], according to letsrecycle.com. The inflationary pressures are leading to, in some cases, historically high prices for recycled materials.

Materials pricing report

At the start of October 2022, WRAP’s materials pricing report (MPR), which tracks the price of a wide range of key recovered materials including many plastics, highlighted high costs for almost all materials.

News & PAMS had a midpoint price of £152.50 in September 2022 compared to £132.50 in 2021 and £52.50 in 2020. Clear PET has a midpoint price of £575 in September 2022 compared to £300 in 2021. Many other grades have also seen increases over the past year.

These increases, many of which have been ongoing since early 2020, have significantly increased the cost of recovered materials.

Recovered materials

The large increase in the cost of recovered materials is impacting the companies who use these materials, including those using them to replace virgin material such as in plastic packaging.

Plastic recycling
The price of recycled plastic has risen “consistently” since mid-2020, WRAP says (picture: Shutterstock)

WRAP’s ‘Plastic Market Situation Report 2021’[4] indicated that as far back as mid-2020 the high prices of recycled plastics, especially food-grade, was leading some sectors to move away from the use of recycled plastics and back towards virgin material.

With the price of recycled plastic consistently increasing since mid-2020, it is being speculated that more organisations may move back towards the use of virgin plastic or reduce their commitments on the use of recycled plastics.

High prices are affecting not just recycled plastics but also other materials such as glass. Glass has also experienced significant increases in PRN prices, with letsrecycle.com reporting an instance of a producer refusing to pay the increased PRN price.[5]

Pressures

High electricity and gas prices along with other inflationary pressures such as wages and motor fuels are leading to very high prices for recovered materials across many grades.

There is currently a risk that some enterprises may backtrack on recycled content commitments and slow the UK’s progress towards a circular material economy due to the increasing financial pressure.


[1] Consumer price inflation, UK: August 2022
[2] When will inflation in the UK come down?
[3] Glass price inches up as PRN value jumps
[4] Plastics Market Situation Report 2021
[5] Agency highlights scale of 2021 PRN non-compliance

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