ANALYSIS: Is it time for the axe to fall on PRNs?
While businesses remain divided over the prospect of higher packaging targets most agree that some degree of producer responsibility reform is needed, specifically around packaging waste recovery notes (PRNs).
Companies can currently fulfil their packaging compliance obligations by purchasing PRNs or packaging waste export recovery notes (PERNs). These notes have a price attached to them which can fluctuate, but in recent years with little market stimulus, values have flatlined.
As a result, many waste producers such as Marks & Spencer have turned away from buying back PRNs for their obligated tonnages as the administrative cost of complying with the system has far outweighed the financial benefit of it.
This means that any figures based on PRN data are undoubtedly skewed and won't represent the actual tonnage of packaging and packaging waste on the market. Recognising this, last year Coca-Cola Enterprises (CCE) called for the PRN system to be strengthened to help resolve the issue.
Momentum is now building for change around PRNs as the Government looks to set higher packaging targets over the next five years. Under its consultation, which closed last month, Defra outlined three target options, strongly endorsing the most ambitious of these which would be statutory, rather than voluntary.
Under this, targets would increase year-on-year until 2017 for aluminium, plastic, steel and glass by 3%, 5% and 1% respectively. Importantly, these targets affect only obligated tonnage - companies with a turnover of less than £2m would not be bound to meet these recovery levels.
However for the larger waste producers who will be affected, what can be done to make PRNs more attractive for them? It's a tricky one to answer and has dogged industry thinking for some time - in my experience, packaging experts tend to sigh heavily whenever the term 'PRN' is mentioned.
But there is optimism out there. Chris Dow, managing director of Closed Loop Recycling which produces food-grade recycled PET and HDPE for the likes of Coca Cola and Marks & Spencer, believes the PRN set-up is a "potentially wonderful system in need of reform".
Speaking yesterday (March 7) at an Associate Parliamentary Sustainable Resource Group (APSRG) meeting on packaging waste in London, Dow was upbeat about the prospect of higher packaging targets, saying they could trigger "an absolute revolution in our industry".
But with PRN values currently ranging between £5 to £10 a tonne for material, he admitted the levels were too low and not financially attractive for waste producers. That said, Dow maintained it was the role of business to ensure recyclability of materials and praised the work Marks & Spencer was doing to ensure long-term resource security under its Plan A commitments.
Along with other industry observers, Dow believes that higher packaging targets will hike up the value of PRNs. However uncertainty remains over what levels these targets need to increase by in order to achieve this.
According to Rick Hindley, executive director at aluminium packaging recycling body Alupro, PRN values remained at an all-time low last year despite the fact that 30% more aluminium packaging was sent for recycling in the UK compared to 2010.
With regard to the Government's packaging consultation, Hindley feels a long-term vision is needed to drive investment. "Any [packaging] targets set must also deliver sustainable PRN prices," he told delegates at the APSRG event.
While some are in favour of axing PRNs entirely, others worry that moving to an alternative system would be costly and that ultimately, obligated companies would end up passing any additional cost burden onto consumers.
Valpak runs its own packaging producer compliance scheme and Duncan Simpson, sales & marketing director, is keen to point out that PRNs were deliberately designed with a purpose in mind - to drive higher rates of packaging recovery.
"The system is not perfect, but let's not throw the baby out with the bathwater," he cautioned. "It has proved effective over the years - it has stimulated more collection of materials to meet statutory targets."
Another bugbear is the in-built incentive of the set-up to export recovered materials rather than reprocess them in the UK. Many feel any reform must level the playing field between domestic recyclers and the export market.
It's a particularly pertinent issue for Suzanne Baker, senior environment advisor at EEF, which represents British manufacturing. She raised concerns at the APSRG meeting that EEF members felt vulnerable in sourcing raw materials from China and would prefer to buy recovered feedstock from the UK - but the quality isn't there.
She said: "If we expect our manufacturers to use recycled material sourced from the UK, the quality needs to improve. I believe the demand would be there from our members for these materials."
From source to end-of-life, the journey of packaging is a complex one and any new legislation will have significant repercussions on all aspects of the value chain. With so much to play for, expect all eyes to be focussed on the Budget later this month when Defra is due to announce the outcomes of its consultation.