Packaging recycling targets in 2009 easily met

The Environment Agency yesterday (March 31) published data showing that 7.1 million tonnes of packaging was reprocessed or exported overall for the year – far higher than the 6.8 million tonnes of producer obligations (see table below).

And, over 417,000 PRNs were carried forward into 2010 – up 50% compared to the 275,000 tonnes carried over the year before.

The strong performance is understood to stem from the fact that while recycling increased, due to a number of drivers including landfill tax, demand for PRNs fell last year because companies either put less packaging on the market in 2008, went bust or fell below the threshold which makes them obligated to pay towards packaging recycling. This is despite the packaging recycling targets, in percentage terms, going up.

Angus Macpherson, managing director of PRN trading platform, the Environment Exchange, said: “If the obligation last year had been where it was expected to be it would have been tight. But as the tonnage disappeared from the obligation there was by the end of the year quite a lot of slack, especially after Q3 production picked up, which is when the potential surplus became obvious.”

Figures

Looking more closely at the figures – which cover the fourth quarter of 2009 as well as updated data for the first three quarters – it is clear that all the material-specific targets were all met with what Mr Macpherson described as “some comfort” with large carry overs. (story continues below)

Recycling performance for steel, which had been a concern early last year, showed a particular recovery in Q4, with 124,000 tonnes reprocessed or exported, up from just 59,000 tonnes in Q1. Performance is thought to have been buoyed by the re-emergence of steel giant Corus onto the market.

For glass, recycling performance slipped in the fourth quarter compared to the rest of the year, reducing the carry over, but still was enough to easily meet the target.

As a result of the overall strong performance, many said they expected that packaging recycling targets for 2010 targets would also be easily met – potentially putting downward pressure on PRN prices, with Phil Conran, of consultancy 360 Environmental, commenting: “I think we are in for a relatively easy year.”

However, as PRN prices for materials such as paper, plastics and wood are already very low, Mr Conran said he expected them to remain at these levels. This is because if prices fall below a certain point, there is no incentive for reprocessors to issue them.

Glass

The only material for which some said they believed prices would remain relatively high or perhaps even stiffen this year is glass, because of its relatively poorer recycling performance in 2009.

However, Duncan Simpson, director of sales & marketing for packaging producer compliance scheme Valpak, said that he thought even a price rise here was unlikely due to factors such as the World Cup which was likely to see more bottled drinks consumed and therefore more glass recycled.

Overall, Mr Simpson welcomed the figures for showing that the PRN market had stabilised after a difficult period.

He said: “Considering the turbulence there has been in the last two years the figures are pretty good news. We will obviously keep an eye on the volatile materials such as aluminium steel and plastics. But generally the PRN system has done its job in getting us through troubled times and now the market will go back to a more balanced situation.”

Targets

Despite general positivity however, some concerns were raised over whether the targets for 2009 had been set at the right level.

Edward Cooke, director of packaging producer compliance scheme Compliance Link, said that the government set the targets “miles in advance” and so were “miles away” from getting a balance.

He said: “The figures show that we did enormously more recycling than we required. Recycling is growing and demand is collapsing. The targets have to be more closely set and have to be managed on a yearly basis.”

Mr Macpherson agreed that there needed to be a “greater degree of thought on the targets”, commenting: “They may need to be more ambitious and flexible, which could be achieved by not putting huge pressure on material-specific targets.”