Jeff Cooper, who is producer responsibility policy manager at the Environment Agency, said that although the PRN system has provided low-cost compliance, “fiercely competing compliance schemes” have been unable to provide the long-term investment needed to reach the targets of the EU Packaging Directive.
” While the UK's PRN system and fiercely competing compliance schemes have provided low cost compliance for UK packaging businesses it has not provided a framework for longer term planning. “
– Jeff Cooper
Mr Cooper said: “Unfortunately, while the UK's PRN system and fiercely competing compliance schemes have provided low cost compliance for UK packaging businesses it has not provided a framework for longer term planning to reach the 2008 targets.”
The PRN system sees packaging producers carrying out their Directive obligations to recycle packaging waste by purchasing PRNs – evidence of recovery or recycling being carried out – from accredited reprocessors. Most producers carry out this obligation by joining compliance schemes, which purchase enough PRNs on their behalf.
Money paid for PRNs to reprocessors is then theoretically supposed to fund the development of additional reprocessing capacity, in order to reach recovery and recycling targets set by Europe for 2008.
Long-term
Mr Cooper, who was expressing his personal opinion in the latest quarterly report from the Environment Exchange, suggested that in order to establish more long-term investment, producers could be required to join compliance schemes for three year periods. This would give compliance schemes the membership stability to work towards increasing recycling capacity in the longer term, he said.
Although Mr Cooper's article did not reflect the views of the Environment Agency, it was also the first time an Agency official has stated on record that along with a number of companies carrying out their obligations individually, “several compliance schemes” failed to comply with their legal obligations to buy PRNs in 2004.
The official line from the Environment Agency itself has been that four schemes have not yet had their 2004 compliance assessment completed (see letsrecycle.com story). Two schemes registered with Scottish regulatory body SEPA are also yet to have their 2004 compliance confirmed publicly (see letsrecycle.com story).
But Mr Cooper said: “At the end of 2004 individual registrants – afflicted by key employee desertions, illnesses and incapacity, among a range of excuses for failure to comply – were joined for the first time by several compliance schemes.”
Shortage
This “failure” by compliance schemes and individually-registered packaging producers to purchase sufficient PRNs was caused because of a market shortage of certain types of PRNs – notably those relating to plastic, aluminium and steel packaging waste.
This may have been partly because of insufficient long-term investment in the system, but Mr Cooper also said the PRN shortages had been caused by the decision by Defra to cut the amount of recovery – energy-from-waste – PRNs that can be used towards overall recovery obligations.
Although half of compliance could be carried out through recovery PRNs in 2003, Defra decided that only 5% of compliance could be through this route from 2004.
Mr Cooper said that a phased reduction in recovery PRN usage may have prevented the market difficulties experienced last year. He said: “A cushion of energy recovery provision, phasing from 25% in 2004 to 5% in 2008 could have been made.”
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Security
Commenting in the same quarterly report, the managing director of online PRN trading platform the Environment Exchange, Angus Macpherson, noted his surprise that PRN traders were not making more use of forward contracts to provide long-term security in PRN procurement.
Mr Macpherson said: “While short term price inflation may appear advantageous to (PRN) sellers, it is unsustainable in the long term for the market, as excessive supply based on excessive price is generated with a consequent price crash.”
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