Ten things I hate about PRNs

Foodservice businesses are among those calling for changes to the producer responsibility scheme for packaging waste. But reform needs to be bold, says Libby Peake.

Hatred is quite a strong emotion to feel for inanimate evidence notes intended to show that a company has paid towards recycling its packaging, but bear with me and I’ll explain what’s got me so wound up.

Back in 1997, the Packaging Recovery Note (PRN) scheme was devised as the way for the UK to meet EU packaging recycling targets. Businesses above a certain size that fill packaging or put products on the market, as well as raw material producers and converters, usually belong to compliance schemes that purchase PRNs from domestic recyclers or Packaging Export Recovery Notes (PERNs) from exporters to show that a proportion of the material they’ve put on the market has been recycled on their behalf.

The scheme has been a great success in allowing the UK to meet targets at minimal cost to producers, but it has been much less successful in some fundamental ways:

  1. Producers do not cover anything like the full cost of recycling. The idea behind producer responsibility is simple: those who create products and packaging – and can therefore control their design – should cover the full costs of environmental impacts throughout their lifetimes. However, a 2014 pan-European study estimated that producers contribute a derisory 10% to the UK PRN system.
  2. Local authorities (and, ultimately, taxpayers) are left to pick up the bill. Costs for recycling packaging, therefore, fall mainly on councils (which have no direct control over the amount of waste that’s produced) and ultimately on residents (regardless of whether they take steps to reduce their use of packaging). At a time of continued austerity, when councils’ budgets have been slashed by at least 26% since 2010, this is increasingly unreasonable.
  3. It gives businesses little incentive to design out waste. Producers should be rewarded for designing less wasteful packaging, using recycled materials and communicating with their customers about the right thing to do, but none of this is encouraged by the UK’s system. We could learn from France, where producers of hard-to-recycle packaging pay a 50% surcharge, while producers of unrecyclable packaging pay double.
  4. The system is not transparent. There is no obligation in the current regulations to track funding or provide any sort of financial audit trail, meaning among other things that it is impossible to know what PRN revenue is used for and making the system susceptible to manipulation.
  5. PRN prices are highly volatile. Graphs showing PRN prices over the past two decades look like physically impossible rollercoasters, with revenue fluctuating wildly depending on how easily targets are met in any given year. This is bad for businesses as well as local authorities, as it makes it impossible to plan for expected outgoings or revenue.
  6. There is no mechanism to address material price volatility. Unfortunately, it’s not just PRNs that fluctuate in price: material prices are also volatile, so the economics of recycling don’t stack up consistently. A better producer responsibility system could address this through a price stabiliser that would adjust depending on market conditions.
  7. It is unclear if the system will allow us to meet future targets. PRNs can be issued for either household or commercial packaging, but, as most commercial waste is already captured by the system, improvements must be on the household side. Given the well-documented flatlining of household waste recycling rates (now stuck at about 44%) and council funding cuts, this seems unlikely to happen.
  8. The system is difficult to regulate. In addition to questions of transparency, some have questioned whether the amount of packaging actually put on the market is higher than that reported. Moreover, the cash-strapped Environment Agency polices the system and, although it has sanctioned 240 retailers in the past six years, enforcement takes the form of voluntary arrangements where offending organisations are made to pay money to charity. This is not as strong a deterrent against fraud as criminal prosecution would be.
  9. The system favours export. Since PRNs were introduced in the late 90s, there has been a much greater increase in export than in the domestic reprocessing of recyclable material, including a fourfold surge in the first three years. The reason is simple: PRNs are issued at the point of reprocessing – at the very end of the recycling process – but PERNs are issued at the point of export, when material could still contain contaminants incorrectly counted as recycled.
  10. And that has drastically harmed domestic processors. UK reprocessors often struggle to obtain material of high enough quality, as collections of subpar material can’t be wiped out if export offers such an easy, lucrative outlet. This means UK businesses are saddled with contaminated materials, which affects their bottom line and has been implicated in the failure of several world-leading UK reprocessors.

In truth, hate probably is an exaggeration of how I actually feel about the PRN system. However, let’s not forget that all this has also left us vulnerable to chaos from China’s National Sword programme, which has cut off our main outlet for recyclate export. Until January this year, China took about half of the world’s paper and plastic waste, but it has now shut its doors to 24 types of “foreign garbage” including unsorted papers and all plastic. This is already leading to material stockpiles in the UK and there are concerns that this will have to be landfilled or burned because we do not have the domestic infrastructure to handle it, seeing as growth in the reprocessing industry has been anything but encouraged by the current PRN system.

If there’s anything good to be said about this list of shortcomings, it’s simply that they are being increasingly acknowledged. Some businesses and parts of government have joined local authorities, reprocessors and environmental organisations in calling for reform. The Foodservice Packaging Association is among those lobbying for the system to be redesigned, but how far will its members want to go?

As luck would have it, the consensus for change comes just when we have the perfect opportunity to change things in the government’s renewed resources and waste strategy, due this year. All these groups will be lining up to lobby the government but, as my list suggests, tinkering around the edges won’t suffice – reform of the PRN needs to be bold.

Libby Peake is senior policy adviser (resources) at Green Alliance.

 

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