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Producers of waste packaging have an obligation under UK law and EU regulations to recover and recycle a proportion of what they supply. But how does this work in practice? After all, it’s difficult for many producers or retailers of products to gather the waste packaging discarded by their customers.

The regulations affect larger producers and packers of packaging, together with the companies who sell the packaged goods to end users, who handle over 50 tonnes of packaging supplied to UK markets and with an annual turnover in excess of £2 million in their last audited accounts. Imported packaging is also captured by this obligation.

In reality, the waste is collected by waste management companies and evidence issued in the form of Packaging Recovery Notes (PRNs) by accredited reprocessors. These act as an incentive to recycle and as a means for businesses to offset the amount of packaging that they place into the UK market. Packaging producers and handlers are obligated to purchase a number of PRNs every year based on the type of their business and the amount of packaging they handle.

In its simplest form, PRNs are issued by accredited packaging waste reprocessors and exporters to the amount of waste reprocessed (e.g. 500 tonnes of cardboard reprocessed allows the reprocessor to issue 500 PRNs in paper/cardboard).

The evidence notes have two functions. First, they are a way of counting the amount of recovery/recycling undertaken on the behalf of producers. Secondly, they channel producer funding to recovery/recycling operations, improving the collection and reprocessing infrastructure across the UK.

PRNs have a market value that depends on relative supply and demand, and perceptions of scarcity. An interesting fact is that these documents can be traded in a similar way to other commodities. Their value is not proportional to the value of material. The total economic value of a tonne of material in this context is the combination of the intrinsic value of the material plus the PRN value at the prevailing rate based upon supply or demand.

Therefore, a low value material may be collected because it is subsidised by the added value of the PRN, in order to meet the targets. Equally, a high value material may be collected for its own worth even if recycling targets have been met (e.g. aluminium and high value polymers). If there is insufficient packaging recycling to achieve the targets, the PRN price will increase, thereby making it likely that more recycling will happen at an economic rate for the operators.

The more difficult or expensive materials are to collect and recycle, the smaller the quantity that gets recycled and therefore the more expensive the PRN. Similarly, the more limited available reprocessing capacity or demand for the material, the smaller the quantity that gets recycled and therefore the more expensive the PRN.

A current example of the potential volatility of PRN pricing is plastics. Whilst many waste materials have relatively stable pricing, plastic packaging PRNs have more than doubled since the start of the year, from around £25.00 per tonne to in excess of £60.00. This is attributed to several factors, not the least being a clampdown by China’s Customs department on the smuggling of foreign waste and policy of rejecting contaminated waste. Increasing government targets for the recycling of waste plastic packaging also has an impact.

It’s these increasing targets that hint at the main driver behind the PRN system –  to reduce waste to landfill, encourage recovery and recycling, and generate some revenue to support the collection, sorting and reprossessing of waste packaging.

Illustration of materials (red) and financial (blue) flows in the packaging chain, household stream only [source DEFRA 2014]

The PRN Packaging Chain