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Ideas to make the PRN system fit for purpose

Grumblings about the Packaging Recovery Note (PRN) system have been rumbling almost since their inception.

Yet most would agree that they have fulfilled the purpose of – at least initially – boosting recycling rates in England, Scotland and Wales.

Even those reticent to say anything good about the system would concede that they are an excellent way of demonstrating recycling levels to Europe. The biggest criticism of the PRN is that is has failed to encourage investment in infrastructure, which is a problem if the UK is serious about developing a domestic remanufacturing base and all the benefits that these bring.

Closed loop companies like Eco Plastics and Closed Loop Recycling in Dagenham appeared to have it all when they burst on to the scene. They were the bastions of hope for closed loop recycling and they had huge brands backing them, such as Coca-Cola and M&S along with support from WRAP. So how could they find themselves in such difficulties now?

Plastics recycling is going through a tough time and many companies are struggling. The British Plastics Federation (BPF) would not comment specifically on any individual company but it does have a view about PRNs and their role within the industry.

If there was a competition for the organisation that disliked PRNs the most, surely the BPF would win. It has been campaigning for years to get the system scrapped. Its biggest grumble, and it is in good company, is the claim that the system sets up exporters for an unfair advantage over UK re-processors.

To rehash the argument, this is because exporters can claim PRNs, called PERNs, for 100% of the feedstock, which disregards contamination. But UK reprocessors claim PRNs only for the plastic they actually recycle and after any contaminants have been removed.

“The system really favours exporters,” says the BPF’s senior industrial issues executive, Francisco Morcillo. “UK reprocessors have to compete with the exporters, which are able to use their PERN money to inflate the feedstock because they don’t need the money to invest – so the money is not being invested in infrastructure. We have been trying for real reforms of the PRN system because currently it is not fit for purpose.

“We have had meetings with Defra. It knows what the issues are and mainly it agrees – it’s about what to do with the current system and it is struggling to find a better alternative.”

Tony Hancock, chair of the Packaging Society’s environment and safety forum, also argues that the PRN system is not working and maintains it is “no use” to the UK recycling industry. He points to BPF statistics showing that around 70% of plastics recyclate is exported and that contaminants comprise around 20-30% of baled plastics.

Hancock says the PRN was “doomed” as soon as the PERN was introduced. The only light on the horizon, he believes, is that the Chinese market appears to be starting to insist on better quality plastics recyclate.

Levelling the playing field appears to have universal consensus, although there is some discrepancy as to what that might entail – with some arguing for the levelling to be reversed in favour of UK re-processors.

Jane Bickerstaffe, director of packaging industry trade body Incpen, is more sanguine about PRNs: “They did the job they were set out to do – to meet the Packaging Directive targets in the most economic and environmental sense. I am not 100% commenting that the PRN system is wonderful – it can be improved certainly by giving parity to the two [PERN and PRN]”.

While the PRN system may create an unfair interplay between UK processors and exporters, it has also been variously described as “volatile”, “unreliable” and “not a very specific tool”. Currently plastics prices are on the up, which is cause for celebration for Owen Franklin, general manager at Biffa Polymers. While he is currently happy, he describes the current system as having a long-term outlook of “feast or famine”.

Franklin agrees that the system is not very predictable and almost impossible to budget or plan long-term when plastics PRNs “were £2 two years ago and £68 18 months ago”. This undermines confidence in the industry and is off-putting for investors.

“At the moment, everyone is really happy with PRNs,” says Franklin. “For the past six weeks, they have almost doubled in value from £23-£24 to £45. The biggest impact is because China has almost shut up shop. People cannot export so there are fewer PRNs around and they are more valuable. It is quarter four and people wait later in the year to buy PRNs, hoping the price will be lower, but this probably isn’t going to happen this year and we may see a rush. There are rumours that new targets are coming out in October.”

Phil Conran, director of 360 Environmental, and chair of the Advisory Committee on Packaging (ACP), agrees that the PRN is a “short-term mechanism” to achieve recycling targets.

“People rely on quarterly data to make judgements on when to buy PRNs,” he says. “PRNs are like the stock market. The price will go up and down depending on market perceptions of supply and demand, and you can create an expectation.

“For recyclers, it is difficult to invest in infrastructure on the basis of a PRN, and for producers, it is difficult to budget. Look at aluminium this year. The UK is certainly not recycling less than it did last year, but unpredictable factors have seen the price quadruple. It is the uncertainty that is a problem and, as an investment tool, it is not easy to look at it beyond a year-by-year basis.”

An ACP task force is looking at 2020 targets and whether the packaging regulations can help to meet them. In particular, it wants to know whether the PRN system could apply funds more directly where they are needed. In parallel, another task force is considering whether there could be more work done with councils around communication with the public.

Conran adds that the committee has a technical liaison group that is working with various agencies to develop protocols for scrap metal, paper and plastics. “We are trying to make the accreditation process simpler and level the playing field between processors and exporters,” says Conran. This has already seen changes to aluminium protocols and it is a case of wait and see what impact these, and further changes, make to the industry.

Paper recycling

Some quarters argue that the quality of recyclate, particularly plastics, is also an issue that is putting pressure on recycling viability and profitability. The European Commission’s outgoing director-general for environment, Karl Falkenberg, was reported at RWM as saying that EU member states reported that separate collections of waste worked best and the UK had a “very peculiar” approach resulting in lower recycling rates.

Many will jump to the defence of commingled collection systems as having boosted the amount of material captured, particularly plastics films and bottles. But Hancock makes an interesting point about how the commingled method has raised the cost of reprocessing. “What we really want is good material from the councils – they don’t collect it very well and it is highly contaminated. We need someone to make local authorities do it properly.”

Hancock was involved in a project 20 years ago to set up one of the country’s first MRFs in Milton Keynes. Plastics were washed and pelletised and he says the system was viable. Back then, Hancock says the recycled pellet cost £430 a tonne while virgin cost £500 a tonne. He asks the question why, when virgin material is now around £1,000, is it cheaper than recycled plastics?

He blames poor-quality recyclate resulting from commingled collections. “The process has not changed,” he says. “It’s just the way the local authorities are collecting. More are collecting commingled and someone has to ‘de-mingle’ it – it is passing the buck up the chain.”

He would also like to see manufacturers including a percentage of recycled material in their end product to support UK reprocessors: “Retailers pay lip service to the Courtauld Commitment, but they don’t include the material in their own packaging.”

Returning to the issue of collection system, Scotland is favouring separating out the main recyclates with its Zero Waste Regulations. But the country seems still to be on-board with the PRN idea. Back in May it published the results of research carried out by compliance scheme Valpak on its behalf, which recommended developing an improved Scottish PRN. One of the changes outlined was to make those collecting demonstrate the quality as well as the quantity of the materials.

While the climate in plastics reprocessing is currently difficult, Franklin says that employing lean manufacturing and six sigma practices (a set of techniques and tools for process improvement) can help companies to cut costs, improve efficiencies and help them weather difficult times. “OEE – overall equipment effectiveness – is understanding how your plant works and it costs very little to implement,” he says.

Another major criticism of the PRN is that while it contributes little to recycling infrastructure, it costs a lot to apply for. So much so that Simon Ellin, chief executive of the Recycling Association, reports that some of his members are not bothering to register to be accredited.

“For the past three years we have lost money from PRNs,” says Ellin. “Our money from PRNs is not covering the registration. It is something like £545 to register to issue up to 400 PRNs. If you want to issue above 400, it goes up to £2,600. Every year you have to produce a business plan saying how you are going to spend the money, so that’s a nonsense.”


Incpen has been concerned that the cost of registration is barring some smaller companies from doing so. It has put forward the suggestion, almost since PRNs came about, that smaller firms make an annual contribution of a few hundred pounds to belong to a compliance scheme and make their waste available for recycling.

Ellin is also critical of some of the specifics relating to paper, arguing that PRNs of 12.5% are issued for paper on mixed packaging, yet mixed packaging contains more paper than that, around 30-40%. “Unfortunately to prove that, we have got to do an in-depth sampling procedure and provide that information to the EA – when a PRN is worth 75p that’s no incentive,” he adds.

But some of these issues might finally be about to be tackled by Defra. Ellin, who is also on the ACP, says: “We are hoping to see some significant changes within the system that make it easier to register and make more PRNs available. And, hopefully, we will find mechanisms that will bump up the value of the PRN so its value can be invested to underpin the recycling infrastructure.

“That was the whole reason why it was brought in. Investment in infrastructure and new technology has ground to a halt. It provides statistics to Defra – that’s the only function of the PRN for paper. It is not doing anything else.”

But as Bickerstaffe adds: “We spend all this time focusing on household waste. But that’s just 9% of the total waste: commercial and industrial waste can be more easily recycled.”


Ideas to make the PRN system fit for purpose

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