Environment minister Michael Meacher announced on Thursday that he would not be putting packaging recovery targets up next year because of the uncertainty businesses were facing concerning European targets, and also because industry needed time to develop infrastructure to make use of the household waste stream (see letsrecycle.com story).
However, although packaging retailers and producers are happy with the decision in the short term, fears have been raised about the expected rise in targets for 2004 and the ability of the UK to meet European packaging targets for 2006.
A statement from Valpak, the UK's largest packaging waste compliance scheme, said: “The market system that operates for PRNs relies on steadily increasing annual targets in order to provide security to investors in the recovery and recycling industry that projects to increase future capacity will yield a sufficient return at acceptable risk. We caution that, with this announcement, this growth may well decline in the next 12 months.”
Although the target announcement means cheaper compliance in the short term for their members, Valpak warned that when targets and demand rise sharply after the 2003 period, the supply of PRNs could be unable to respond quickly enough after the decrease in PRN investment beforehand.
Prices
According to Phil Conran, recycling manager at Biffa Waste Services, the effect on PRN prices resulting from Mr Meacher's decision will be pronounced. However, Mr Conran said he didn't believe the PRN would collapse completely.
“It should depress PRN prices – although it will depend how we do this year,” Mr Conran said. “It's going to be tight this year, but supply will exceed demand, and with the target staying the same next year, we could see PRN prices in the lower 20s. It won't totally collapse, but prices will be lower. If reprocessors had any sense they'd; hold some of their PRNs back to stabilise prices, not flood the market early.”
The chief executive of the Packaging Federation, Ian Dent, told letsrecycle.com that it was a relief that the government had announced their intentions early this year, which would be a huge help in business planning. However, Mr Dent also warned about the long-term picture of the industry.
“This cannot be seen as a mandate to cut back on what we're already doing,” he said. “It cannot effect the investment being put into the recovery collection infrastructure. What is clear is that the achievement to date has relied largely on the commercial and industrial waste streams – but now it needs to come from the household waste stream.”
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