Our response to ESA’s PRN/PERN reform report
24 October 2016
Vanden Recycling welcomes the Environmental Services Association (ESA) report into reform of the packaging producer responsibility system, but believe the detail of any of the proposals must be got right before implementation.
Last week the ESA published four different options on PRN reform, with a recommendation that the UK would be best served by a mix and match of different compliance schemes from across Europe along with the existing UK system.
Under the current system, accredited reprocessors issue a Packaging Recovery Note (PRN) or accredited exporters issue a Packaging Export Recovery Note (PERN) when they have recovered or exported for recovery a tonne of packaging material.
The accredited reprocessor or exporter then sells the PRN/PERN evidence note to packaging producers either directly or via a compliance scheme. These PRNs and PERNs can be traded on an open market in order to ensure that packaging producers meet their obligation to recycle a certain percentage of their material.The intention behind it is to provide investment in recycling infrastructure in the UK.
However, there have been calls for reform of the system with it viewed as no longer fit for purpose to meet higher recycling targets by some. A volatile market in terms of pricing and lack of transparency on how PRN revenue is used has led to criticism of the system.
However, the ESA has published a discussion document looking at possible reform of the existing packaging producer responsibility scheme to ensure it is fit for purpose.
Vanden Recycling managing director David Wilson said: “Initially these options look appealing. For example, options 1 and 2 put PERN revenue at the collection ‘coal face’ and that could be considered an increase in transparency.
“Options 3 and 4 link compliance schemes directly with collections and again that seems to be a good idea giving a more integrated approach between collections and compliance. There are parallels between what’s proposed and what happens in other EU countries where Producer Responsibility is linked with collections rather than reprocessing.
“However, there are some aspects of this which, we believe, require further thought.
“Options 1 and 2 may require a considerable expansion in the Accredited PRN supply base with not only reprocessors/exporters being accredited but also collectors.
“This could add considerably to the overall compliance cost, Agency audit responsibility and require a significant expansion in the functioning of the National Packaging Waste Database. I’m sure these hurdles are not insurmountable and may be avoidable altogether (although the increased policing requirement is a major concern).
“But options 1 and 2 would come with a high cost in order to make a fairly minimal shift in the operation of the PERN/PRN system. It’s still a market-based, tradeable note system with all the advantages and disadvantages that brings. ESA chief executive Jacob Hayler acknowledges this potential for increased cost.
“In options 3 and 4, compliance schemes would take on a range of collection responsibilities.
“In fact this happens already, except it’s often presented as waste collectors taking on the responsibility of compliance schemes with a considerable number of today’s compliance schemes being spinouts from waste management companies. Before implementation it would be worth closely examining the barriers that are preventing the widespread implementation of options 3 and 4.
“If there are operational and commercial advantages to integrated collection and compliance, what’s preventing them from being exploited right now?
“As the concept of Extended Producer Responsibility (EPR) takes hold it’s imperative on all of us involved in waste management and recycling that we do not lose focus on effective collection.
“While it’s fundamentally correct that producers bear responsibility, we cannot allow that to weaken the key relationship between a collector of waste and the holder of waste.
“By strongly emphasising the fiscal responsibility of the producer we risk losing collection efficiency. If the producer is picking up the tab, who cares what the collection and processing costs are?
“Of course, competition between collectors and between reprocessors will limit this effect but the ESA report itself recognises the vital nature of collection infrastructure. We must find ways to simultaneously exploit the benefits of EPR and maintain pressure to improve collection efficiency.”
The four options set out by the ESA are:
PRNs would continue to serve as evidence of recycling, but would no longer be the funding mechanism. PRNs/PERNs would be issued to collectors by accredited reprocessors and exporters when qualifying material is delivered to them. Accredited reprocessors and exporters would not sell PRNs/PERNs (or whatever the evidence is called in future) for a market price, but would be paid a small fee to cover their administrative costs. All reprocessors with the necessary operating licences would be automatically accredited. The Agencies would audit all reprocessors. Compliance schemes would contract with collectors of packaging waste for the PRNs they need to meet the targets.
As above, but with targets split between packaging waste from household and commercial/industrial sources. This would require schemes to acquire PRNs to cover the total recycling obligation, of which x% would have to be household PRNs.
For household packaging waste, compliance schemes would contract directly with local authorities, even where segregated collection is undertaken by a private collector that is appointed by the local authority. Schemes would fund a proportion of the collection cost, with conditions relating to the quality of the collected material.
Compliance schemes would take full operational and financial responsibility for the collection of packaging waste from household sources. Schemes would contract with operators to provide a segregated collection service for packaging waste. This would be separate from collection services for non-packaging waste such as residual waste and food waste.