PRNs – What might or might not happen, or should happen in 2020? Angus Macpherson, managing director of the Environment Exchange (T2E)considers where the UK is with regard to PRNs (packaging waste recovery notes).
OPINION: Covid-19 has swept through the United Kingdom with significant impacts on everyone’s lives. Against this background it is hardly surprising that Government and businesses are beginning to ask whether producer responsibility will be able to deliver compliance in 2020 and, if not, what actions might be needed.
An initial glance at 2019 and the Q1 statistics reveal few concerns for compliance in 2020. Overall high prices for PRNs drew significant growth in 2019 with all materials, other than Aluminium, Glass and Plastic, generating sufficient PRNs to not only meet 2019 targets but also, if these levels are maintained, 2020 ones. There was the largest ever carry forward which has already met 6.23% of the 2020 recycling obligation. While Q1 has covered a further 25.35% of the obligation.PRN issuing in Q1 has increased by 22% year on year.
Tellingly, as businesses anticipated trouble, PRN issuing in Q1 has increased by 22% year on year.
For the eighth successive quarter over 2 million tonnes of packaging waste were recovered in Q1 2020. Aluminium and Plastic for many months the problem children of 2019 blossomed into successes with the former not only exceeding its target by 4.59% in 2019 but also showing year on year growth in Q1, predominantly in the export sector, by over fifty percent, while for the latter the figures are 3.18% and over 22%. Tellingly as businesses anticipated trouble, PRN issuing in Q1 has increased by 22% year on year.
Aluminium
This may have contributed to PRN prices reducing in 2020 with Aluminium dropping from the peaks of £520.00 per PRN tonne in 2019 to hovering around £100.00. Maybe a little uncomfortably given the torrid time Aluminium is having with a drop of car sales and every prospect that aircraft sales will follow. Plastic is currently pushing £250.00 but there are signs of upward pressure in all materials. Given the uncertainty of Q2 such pressure is hardly surprising.
April has been a disrupted month with commercial and industrial collections plummeting as businesses got to grips with social distancing and self-isolation but household collections have not only been maintained but in many cases increased over the same period, businesses are beginning slowly to creep back into action and markets for recovered materials are available and in short supply with secondary raw material prices improving.
GDP dropping
Angus Macpherson of the Environment Exchange
Economists are predicting GDP dropping by up to 40% in Q2 2020, if it did and packaging use was linked to GDP that would represent in a 10% annual drop in both generation and collection. However what the financial crisis of 2008 showed is that when GDP is falling, packaging does not follow the same downward trajectory.
Some even speculate that, with all the home deliveries, packaging put on the market may be increasing! At some stage that packaging must arrive into the waste stream. Maybe the opening of Household Waste Recycling Centres will release this pent up supply?
But what if it does not arrive in time to meet the 2020 targets? Should the current system be adjusted to create a release valve. Some have suggested a standard fee paid per tonne of shortfall. This has been tried without great success in the WEEE market. While it may have provided a cap on prices, it has also resulted in successive years of missed targets and takes funds out of the packaging recovery sector. Others have suggested a reduction in targets, which seems counter-intuitive.
Support
The strongest support is for allowing the 2020 compliance year to run into the 2021 one. Logical considering that the 2020 packaging placed on the market will become the 2021 obligation. To a certain extent this already happens in one direction with carry forward December tonnage but to date this has not been allied to the potential to carry back January tonnage. This would have the merit of smoothing the end of year pressure point on PRN prices and for 2020 it could potentially bring up to 8.25% of 2021 PRNs into the compliance year helping to maintain price stability in both years.
As of yet targets for 2021 onwards have not been agreed and until the full impact of Q2 2020 can be seen, any decision will be difficult. At a minimum a carry back approach would allow a maintenance of the current targets in 2021 with every prospect of increases in 2022 onwards.
AUTHOR: Angus Macpherson, managing director, The Environment Exchange (www.t2e.co.uk)
The post OPINION: PRNs – what may or should happen in 2020? appeared first on letsrecycle.com.
Source: letsrecycle.com Packaging
