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Frustration over PRNs

2000 corrugated packaging

When would-be reporters apply for work at MRW Towers, they are typically asked to come armed with some research on a couple of ‘recycling’ topics. Typically, the waste hierarchy and Pack­aging Recovery Notes (PRNs) have fea­tured. The former is addressed quite happily; the latter is always a challenge.

The job applicants are not alone. It is a complicated system, and one where transparency is essential but not easily achieved. But that was the selling pitch from compliance specialist Ecosurety and its new Circularety offering. The company’s press release said the product:

  • Was the only platform that showed companies exactly where and how PRN money was being invested
  • Allowed obligated producers and reprocessors to invest in tangible recy­cling schemes
  • Enabled producers to account for PRN expenditure and publicise CSR and environmental credentials
  • Allowed reprocessors to showcase projects that producers can invest in

While the PRN system (see box) has helped the UK to increase recycling rates and meet packaging targets, Eco­surety managing director James Piper said producers and industry bodies were increasingly concerned about transparency, particularly in relation to what happens to their money once PRN obligations have been purchased.

“For the first time producers will be able to choose exactly where their PRN money is spent, and reprocessors will be able to put forward concrete investment projects that will benefit the recycling industry,” said Piper. “We anticipate that Circularety will remove price volatility from the system caused by uncertainty over PRN supply and demand.”

Critics of the current PRN arrangements include the Local Government Association, which represents councils. Last year it called for greater transparency on the flow of finance from obligated producers to reprocessors and collectors, along with a greater proportion of compliance costs channelled towards boosting the quality of council recycling collections.

In July, the Chartered Institution of Wastes Management considered, in a review of European methods, the extent to which PRNs encouraged recycling. It concluded that while the UK delivered the lowest cost compliance for waste producers, it performed less well in supporting the collection of household packaging waste and the development of domestic reprocessing capacity.

The operation of the PRN system is a regular concern for Defra’s Advisory Committee on Packaging, which identified PRN revenue transparency as a key priority 18 months ago when it set up a taskforce to consider the issue. Chair Phil Conran told MRW that anecdotal evidence suggested the reporting of PRN revenue, required of all accredited operators, was “fairly meaningless”.

“It is clear that, for the majority of operators, the PRN is considered a part of the value of the commodity and is not used as a separate funding stream. The conclusion of the taskforce was that ‘the precise use of PRN funds by reprocessors and exporters is difficult to quantify’. There is clearly frustration among some producers that their PRN charges are more of a tax than a tool for recycling growth.”

Conran believed it was difficult to see how accredited operators could be forced to provide more transparency without regulatory change: “Schemes and traders will sometimes receive more revenue per tonne than the reprocessor or exporter so, when we talk about transparency, we need to consider the whole revenue chain for PRNs.”

Duncan Simpson, marketing director of Valpak, welcomed any ideas which could benefit and improve the system, but added the caveat: “It will be important to ensure that it does not add extra administration burdens or costs to producers, and also does not restrict the ability of the system to be flexible and respond to changes in markets, technologies and targets.”

One source in the sector suggested that the market-based nature of PRNs would be an obstacle, with fluctuations in value straining contracts such as those suggested by Ecosurety. Similar initiatives had been tried before by Valpak and Wastepack, he added. One challenge was that recipients of PRN funds often needed them as income to cover operating costs rather than for investment.

Another source said: “I wish Ecosurety well with its ambition which may produce additional PRNs, will undoubtedly provide a greater degree of customer ownership and, if desired, at a consistent price. But I suspect this will be at a cost greater than the current system provides and at a risk of competing against their current PRN issuers.”

One suggestion for change was that PRN revenue be separately identified within a company’s accounts, with accredited companies declaring publicly on what they intend to have spend their revenue. Some sources told MRW that, without regulatory drivers, the Ecosurety scheme could only be an attractive marketing drive.

The proof will be the extent to which Circularety is adopted.

How does the PRN system work?

Packaging Recovery Notes (PRNs) are the evidence required by producers of packaging waste to comply with the Producer Responsibility (Packaging Waste) Regulations 2005 in the UK.

PRNs are issued by accredited reprocessors, and act as an incentive to recycle and as a means for businesses to offset the amount of packaging that they place into the UK market.

Packaging producers and handlers are obligated to purchase a number of PRNs every year based on the type of their business and the amount of packaging they handle.

The PRN market is an open market, allowing PRNs to be traded between accredited reprocessors and obligated companies that have a packaging obligation. As in any open market, prices go up and down.

 

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