The packaging recovery notes, which are issued by reprocessors or exporters to producers to show they are meeting their packaging recycling obligations, have risen from around 85p to £5 per tonne.
The spike in the paper PRN price, the largest since prices peaked at £10 per tonne in early 2009, comes as producers race to meet the estimated 500,000 tonne recovery obligation.
Paper PRNs can be purchased to cover both the recovery and general PRN requirements of producers, though unprecedented demand in the last month has stretched supply to the limit.
Less than half of the annual obligation for recovery PRNs has been met so far this year – an undersupply producers, reprocessors and compliance schemes are blaming on protocol changes at the start of 2015.
R1
Under Environment Agency rules launched in January, energy from waste facilities must now be R1 compliant in order to issue recovery PRNs. At the time of the rules coming into effect, a Freedom of Information request was published revealing just three operational incinerators in England had achieved compliance status (see letsrecycle.com story).
The Agency predicted that revenue from generating recovery PRNs would be enough to ‘drive up’ the number of operators to register their EfW plants to acquire R1 status.
One industry source told letsrecycle.com it could cost between £500,000 and £1 million to retrofit an estimated 80,000 tonne capacity incinerator to comply with R1 – while the additional expense accumulated through maintenance shutdowns could also run “into the millions”.
In light of this, they predicted it would take an EfW operator “two hundred years” to recoup the losses made on upgrading an incinerator from PRN revenue alone.
On top of application fees, other accreditation issues include reprocessors only being able to claim recovery PRNs on the municipal throughput at EfW sites, with commercial and industrial waste subject to individual inspection and tests by the Agency.
However, with a number of new R1 compliant energy from waste plants coming online between now and 2019 – and the price of recovery PRNs now also between £3-5 per tonne, there is hope more reprocessors will apply for accreditation in 2016.
Contracts
It is expected that the higher values currently being achieved in this year’s markets will result in an increase of accreditation levels for 2016 and a subsequent rise in tonnage available to the market
Ian Andrews
T2E
Ian Andrews, of the Environment Exchange, said: “Recovery has been behind all year. A lot of these facilities would need to be shut down in order to get R1 accreditation sign off. The EfW facilities are run on dual contracts where local authorities see the benefits of any PRN revenue that is generated. As the facility operators do not see any benefit from the PRN, there is a dispute as to which party should cover the increased costs of accreditation and this has resulted in the downturn in supply”.
He added: “It is expected that the higher values currently being achieved in this year’s markets will result in an increase of accreditation levels for 2016 and a subsequent rise in tonnage available to the market.
“The current pressure in this year’s market is a result of a lack financial support for the lower value prn materials in previous years. Paper prices have consistently traded at below £1.00 in value for the last number of years and at those levels, it does little to convince sellers to continue to register to sell.”
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