Packaging waste opens up revenue opportunities for local authorities

Local authorities could be missing out on an opportunity to generate considerable revenues. This is the message from Angus Macpherson, Managing Director of the OM Environment Exchange, which provides an internetÐbased marketplace for a range of packaging waste commodities for reprocessors or organisations obligated by Government legislation to recycle their waste, in this exclusive article for LAWE

In a recent survey, some 85% of recycling officers at local authorities appeared to be unaware that their authorities have an opportunity to receive revenue through PRNs (packaging recovery notes). In simple terms, Producer Responsibility Obligations (Packaging Waste) Regulations 1997 is a statutory instrument created as a result of the EC’s Directive on Packaging which came into force in 1994. The Directive required member states, including the UK, to introduce legislation designed to achieve various waste packaging recovery targets.

In the UK, the targets are currently – recovery 56%, recycling 28%, with a minimum material specific recycling level of 18%. However, the recovery target may rise to as much as 75% cent over the next five years.

The concept behind the Regulations is to minimise the quantity of packaging entering the waste stream by encouraging businesses, to reduce the quantity of packaging used, to either re-use or recover packaging or get a third party to do it and to spread the responsibility of meeting these objectives through the packaging chain.

The Regulations also stipulate those who have an obligation, what that obligation is in terms of a percentage of the packaging that business handles and introduces a method of monitoring compliance of the regulations.

How the PRN system works

Proof is in the form of evidence such as a weighbridge ticket that packaging material has been delivered to and accepted by a reprocessor. If the reprocessor is accredited by the environment agencies (EA in England and SEPA in Scotland), it will issue PRNs, which remain the property of the agencies and evidence for obligated companies that the accredited reprocessor has received a certain number of tonnes of packaging waste that they intend to reprocess.

Those that deliver packaging waste to the reprocessor have first option to claim the PRN. In the event that the tonnage of a PRN has to be split, the PRN needs to be returned to the original issuer for substitute PRNs to be issued. The original issuer may charge a fee for this service. Proof needs to be retained by both obligated companies and reprocessors for four years after the relevant year is complete (i.e. 2005 for proof issued in 2001) in case of inspection by the agencies.

As part of the accreditation procedure, the agencies require that the reprocessors produce an auditable trail showing that the material received has been reprocessed and a product has been created. Also the reprocessor has to demonstrate that the revenue earned by the sale of PRNs has been spent on developing end markets for the products, reprocessing capacity and the collection infrastructure. So far some 230 reprocessors have been accredited.

A similar process applies for exporters, except for them it is Packaging Export Recovery Notes (PERNs) that are issued rather than PRNs and the exporter has to show an auditable trail to the overseas reprocessor and that the packaging waste has been reprocessed. To all extent and purposes PERNs have the same value as PRNs. Currently, values for PRNs vary between £5 and £15 per tonne with plastic PRNs at between £20 and £30 per tonne.

Traded prices can be seen on a daily basis on the OM Environment Exchange website or indicative prices are quoted in a number of environment publications.

Benefits for local authorities

First, local authorities could establish reprocessing facilities themselves. Sheffield is a good example, while Dundee Council has what is effectively a joint venture. Although these both have waste to energy plants, opportunities exist for those developing compost and/or export schemes.

Second, local authorities could supply PRNs that they obtain from delivering secondary raw materials to accredited reprocessors to their customers. These might be either small and medium sized business from which they collect the waste or the local authority itself that might have an obligation. Local authorities would then have the opportunity of charging a handling fee.

Third, if local authorities do not wish to become involved in the vagaries of the PRN market then they might wish to forfeit their right to a PRN and claim some form of compensation from the reprocessor. An inventive scheme recently introduced by Berryman’s offers local authorities the opportunity to share the price that Berryman’s receive from the sale of their PRNs. Equally, a number of compliance schemes (Wastepack and Cleanapack are examples), are looking for partnerships with local authorities as the recycling and recovery targets become more and more demanding.

So there are opportunities for local authorities to benefit from Regulations but if they fail to explore the possibilities, either through ignorance (the 85%) or inertia, and they fail to grasp the opportunities, they will have nobody else to blame but themselves. Furthermore the failure to take advantage of these recycling opportunities will make it that much more harder for them to reach their landfill diversion targets.

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