UK PRN trading site launched
On the 25th of November, Europe's first environment trading floor, The OM Environment Exchange, went on-line.
A joint venture between Swedish company OM Gruppen AB and Edinburgh-based The Environment Exchange, the long-term aim is to develop a well-regulated and transparent marketplace for recyclable commodities, financial instruments in those commodities and other environment-related products, including emission rights.
Initially, trading in PRNs will be offered for the UK market, although OM, which is providing the expertise for exchange and clearing services, as well as R&D resources for environmental trading, sees market growth potential throughout Europe.
Over 2300 tonnes were traded in the first ten days of operation. Membership and trading are will be free during 1998, but the company plans to charge a commission of around 50p/tonne next year.
The creation of Packaging Recovery Notes (PRNs) is the result of a European Community Environmental Directive, requiring member states to recover between 50% and 65% of their waste packaging materials by 2001, and to recycle at least half that amount. In the UK – the first country in Europe to adopt the PRN system – the regulation applies to all businesses with sales in excess of £5 million and which handle more than 50 tonnes of packaging each year. By 2001, some 19,000 UK companies will be affected.
PRNs, issued by approved reprocessors, are tradable evidence of compliance. If obligated businesses exceed their obligations in delivering post-consumer separated packaging to a reprocessor, they can then sell the “evidence” of that excess to other companies – companies which may find meeting their obligations too difficult or expensive. The existence of such companies points to a demand for a market for trading PRNs, which have an inherent value that changes with, among other factors, the price of underlying commodities such as recycled paper, glass, plastic and metals.
“The market in commodities will allow reprocessors and waste handlers to access and dispose of recyclables at the best possible prices at a minimal cost to themselves,” says Macpherson. “It will provide much needed flexibility and availability.”
He is quick to point out that, far from negating the role of waste brokers, the Exchange will in fact enhance it, as well as making it easier for local authorities to reach their recycling targets.
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