A number of factors have conspired against PRN demand in the last quarter of 2002, but fundamental blame has been attributed to the government's decision to keep packaging waste recovery targets the same in 2003 as in 2002.
Irony abounds in that reprocessors have been so successful in their recycling activities that there are more than enough PRNs to meet 2002 targets, so prices have dropped and so future investment in UK infrastructure is under threat. 2002 has also seen a large volume of export-PRNs (PERNs).
PRNs for glass have sunk from 26 – 33 per tonne to between 16 and 19 per tonne, for paper by a similar margin to around 15 – 19 per tonne and plastics PRNs have dropped to between 19 and 22 a tonne.
Mistake
Paul Dumpleton, general manager at SITA Recycling, said: “It is a huge mistake for Government not to increase the targets for 2003 and when you combine that with the lack of policing of the current system there must be some debate as to whether the PRN system can remain a credible mechanism to discharge the UK's obligations.”
Steel PRNs have fallen to between 14 and 18 a tonne, and as with many materials, looks set to slip further before the year is out, with some reprocessors fearing that the price might even stoop as low as 8 a tonne.
“It's very, very counter productive,” one reprocessor said to letsrecycle.com. “It will bring the whole thing to a stop – as a business, we've worked very hard with fluctuations in the PRN market to keep prices stable and increase our capacity. But this could threaten the whole PRN system.”
One compliance scheme warned: “The PRN system is meant to provide a market to put money into recycling. Without the demand side showing a steady growth it will never work.”
Problem
A loss in PRN investment is likely to have a significant affect on the growth of UK recycling infrastructure – a particular problem since packaging recovery targets will need sharp increases from 2004 in order to reach EU targets for 2006 or 2008.
One senior waste industry figure told letsrecycle.com: “A PRN price reduction of 10-15 per tonne across the board will see a huge reduction in collection, with some experts predicting up to 25%. If we look at the paper sector alone, it starts to open up the debate over the value of imports. With imported waste paper and board currently cheaper than UK tonnage, the argument is why bother with the PRN system at all?”
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