01 Aug 2017 14:03 (London Time)

Next steps for PRNs in the UK

Peter Clayson, External Affairs Manager at DS Smith, discusses the recent Defra review into packaging recovery notes (PRNs) and their future in the UK.

A recent review by Defra into UK Packaging Recovery Notes (PRNs) and the packaging recycling system concluded with a vote in favour of retaining the current system. In their existing form, PRNs are required by all businesses that place packaging into the packaging supply chain and are large enough to be covered by the producer responsibility requirements of the Packaging Waste Regulations.

PRNs serve as proof that businesses have met their obligations and have, either directly or indirectly, recycled waste packaging material into a new product. This forms a key part of the Producer Responsibility Obligations Regulations (Great Britain), which came into force in 1997.

The findings of Defra’s most recent Post-Implementation Review (PIR), conducted every few years, concluded that the PRN system should remain the national method for proving and reporting reprocessing rates. The report concluded that the current scheme has helped the UK to meet its recycling targets at a relatively low cost for businesses.

PRNs in the political arena

When compared to a number of similar European compliance mechanisms, PRNs offer considerable value for money for the UK business community. This view was supported by compliance scheme Valpak’s research into business costs per tonne of packaging waste recycled.*

According to the information produced by Valpak and reproduced in Defra’s report, the UK’s system is is by far the lowest cost among the main EU countries. However, Valpak also recognised the pressures for funding. In the PackFlow 2025 report, it proposed a number of necessary modifications to the current system if PRNs are to continue to help meet recycling targets beyond 2020.

The conclusion of the PIR suggests that, while PRNs are likely to remain the preferred system for now, this only applies until 2020 – that is, until after the 2019 negotiation deadline for Brexit. Indications from the government suggest that, although the Repeal Bill will take over environmental legislation in UK law, the true scale and impact of the translation will not be known until negotiations with the EU are complete. As such, further reviews to the system are likely beyond 2020.

PRNs on the political agenda

At DS Smith, we agree that while not perfect, to date the system has met its intended targets but think that PRNs as a system could benefit from some small reforms now in order to see us through to 2020. But the broader issue is seeing the PRN system in the context of being part of a whole approach to achieving improved targets and delivering a more circular UK economy.

Although the UK has voted to leave the EU, the UK will still be required to work towards wider European targets, such as reducing landfill usage by 50% by 2020 and increasing municipal waste recycling to 65% by 2030. If we are to remain on track to meet these goals, close monitoring of reprocessing rates is essential to ensure precise capturing of outputs.

— Peter Clayson

One criticism of the current PRN system is that it does not provide enough incentive for reprocessors to ensure accuracy is treated as an absolute priority. This issue spans the entire recycling spectrum, from paper and cardboard to aluminium packaging. This ‘accuracy gap’ makes little difference when the UK is consistently meeting targets, but it could become problematic if not tackled in the future.

Costs of compliance

Some quarters of the waste management sector have voiced concerns that the system appears to overlook costs incurred by local authorities, while simultaneously delivering low costs for obligated businesses.

We must reconcile how we generate the financial framework, to ensure that local authorities can provide the collection infrastructure needed to cope with the increased recycling. Amendments to the current system may be able to square that circle.

One proposed idea for generating further monies for the packaging recycling system is to reduce the de minimis level applicable for the Regulations.

Currently, the Packaging Regulations apply to all businesses with a turnover of more than £2 million and who handle more than 50 tonnes of packaging per year. According to recommendations outlined within the Producer Responsibility Review, the £2 million threshold could be increased. This would eliminate the requirement to register and report data for smaller companies, which would actually reduce the tonnage of packaging to which the Regulations apply – and reduce funding of the system.

Defra may be seeking to cut red tape where possible, but switching to a completely hands-off approach to current recycling systems is likely to prove counterproductive.

Compliance in collections

Another much-discussed reform of our current recycling system is to adopt collection templates with more separation of recyclables. The benefits of these frameworks have been demonstrated in Scotland and Wales, and by WRAP in their well-received Framework for Greater Consistency for Household Recycling in England.

Charging for residual waste could also drive improved recycling, but seems to be a subject that regulators do not want to discuss – and both of these initiatives would require central coordination and direction.

Models for 2020 and after

What about the potential grey area for PRNs that exists beyond 2020? In its PackFlow 2025 report, published earlier this year, Valpak outlined four possible ways ahead.

Model one – Keeping the system in its current form.
Model two – Enhancing the current UK system by making better use of existing initiatives. This would include a compliance fee to avoid large spikes and reduced de minimis.
Model three – Employing a more strategic UK system. This would also include a more stable investment platform for businesses and encourage more direct control of material, by material organisations.
Model four – The introduction of a completely new system. Based on a European-style full net cost method, this new approach – the Direct Control System – would include a levy on household material placed on the market and regular household collections funded via local authorities.

A look to the future

Looking ahead, I believe there is still time to make improvements to the PRN system as it currently stands. One example could be reviewing the process of plastic PERN production to level the playing field for domestic plastic reprocessors, which would be a real positive step forward.

As an industry, it’s crucial that we always have one eye on the future, and that future should allow for not only increased recycling but also better recycling. It should ensure that reprocessors are provided with quality raw materials for their production operators. The government should be planning now for more consistent collections, as well as the creation of conditions needed to allow trials of ‘pay-as-you-throw’ systems.

Rather than shy away from change, we should recognise the opportunity provided in terms of setting our own waste agenda. It gives us the chance to implement systems and processes that will work most effectively for the UK.

As waste producers, collectors and recyclers, we all want to recycle more. To achieve this, we must positively embrace change by taking what is good now, and also realise opportunities to provide the right environment for even better recycling, and meet the UK’s wider circular economy aspirations.