Survey finds compliance schemes have won control of PRN market

Compliance schemes have won the battle to control the market for PRNs (packaging waste recovery notes), many accredited reprocessors believe. And, prices for the first quarter of 2001 look likely to be much lower than anticipated.

The reprocessors, who can issue PRNs on the material they recycle, consider that the compliance schemes will have the upper hand in 2001, three years after the current system started in January 1998.

Obligated companies, such as retailers and packer fillers, have to purchase PRNs to account for a specific level of recycling and usually do this through membership of compliance schemes.

A survey of reprocessors by letsrecycle.com found that nearly all considered that the PRN market had now matured and that PRNs should simply be seen as possible additional revenue alongside companies’ main activities.

Other reprocessors were concerned that if they did receive large sums of PRN money they might have trouble in accounting for it, if the Environment Agency cracked down on exactly how it was being spent.

One paper reprocessor said: “We are happy just to sell our PRNs. We don’t want them to be left over and they are not our core business.”

Another remarked: “They are important to us but I think we will have to accept the prices that the compliance schemes are offfering.”

Confirmation of this view came from one reprocessor in the north west who said: “The message is clear. The compliance schemes have managed to get the government to agree to lower targets this year and so we have little hope of securing the higher prices which we need.”

A similar view came from a reprocessor in the south of England. “The message to Michael Meacher is that the prices are those which existing compliance schemes are willing to pay and so he will not get the investment he needs. We will not see new capacity and not see real new tonnage.”

The survey – of 23 reprocessors – also found that nearly all considered prices for the first quarter were lower than anticipated.

The largest compliance scheme, Valpak, appears to have agreed prices for January to March at a low rate, with a review coming for the second quarter.

The key factor behind the depressed prices is thought to be a large volume of PRNs carried forward into January from December 2000 which will help the government to achieve a recovery and recycling level of 50% of the 8,485,765 tonnes of obligated packaging material in 2001. But, should some reprocessors decide to save December 2001 PRNs for use in January 2002, pressure could again be put on meeting the 2001 targets as less PRNs would be available this year.

For pricing information see PRN prices.

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