The Department for Environment, Food and Rural Affairs looks set to abolish the existing PRN system from 2023, according to its consultation on Extended Producer Responsibility.
In the consultation, it instead proposes two alternatives that will be fully funded by producers.
These are either:
- A single administrator/management organisation that is responsible for administering and managing delivery of the packaging waste management (‘disposal cost’) cost requirements and producer compliance with packaging waste recycling targets, or
- Multiple compliance schemes with certain functions undertaken by a Scheme Administrator with the Scheme Administrator taking on functions that are better delivered UK-wide such as developing the approach to determining packaging waste management costs for household waste, setting the fee modulation mechanism and administering payments to local authorities. The compliance schemes would be primarily responsible for managing compliance with obligations in respect of non-household packaging waste.
It appears that Defra prefers the first of these options.
Producers will pay to cover the disposal costs of their packaging using modulated fees. Those that produce easily recyclable packaging will pay lower fees, while unrecyclable materials will pay the highest fees.
It seems likely that the Government-appointed Scheme Administrator will then provide these revenues to local authorities.
For business waste, the Government has proposed three options that do not include the current PRN/PERN system.
It said in the consultation document: “Government is working on the assumption that payments for business waste recycling will be introduced from 2024, but recognises that this will be dependent on the approach taken and the measures that may be necessary to ensure it can be implemented in a robust manner that minimises the risk of misreporting or fraud.
“Government has identified three payment mechanisms, broadly based around current waste collection practices. Retention of the current Packaging Recovery Note system for business packaging is not included as an option beyond any transitional arrangements as Government does not believe it would achieve the overarching incomes and objectives for the future packaging scheme.”
The three replacement options suggested by Defra are:
A Scheme Administrator led, producer funded, business packaging waste management cost rebate system (referred to by stakeholders as ‘the per tonne approach’. Under this approach, businesses disposing of packaging waste would receive a rebate from producers for recycling. This would result in a heavily discounted/free packaging waste collection service where businesses used it as intended, according to Defra. Waste management would compete for customers within the existing framework. The Scheme Administrator would set a per tonne rate, or multiple rates to reflect different ruralities, business types and sizes. This rate would broadly encompass the collection and sorting costs for mixed dry recyclables, net of material value. To ensure transparency and the transfer of producer payments, waste collectors would have to state the financial value of the rebate provided by producers on a business’ invoice.
A compliance scheme led, producer funded, business packaging waste management cost rebate system. Under this approach, the Scheme Administrator would set a per tonne rate, or multiple rates as above. However, this rate would reflect collection costs only, net of material value, with sorting costs being subject to an agreement between the compliance scheme and the first receiver. The compliance scheme would pay waste collectors this rebate, who would then be required to pass the rebate back to their customers detailing this on the invoice. The compliance scheme would then take responsibility for arranging any further sorting necessary before arranging the reprocessing to secure evidence to meet their members’ targets. Compliance schemes would be responsible for meeting their members’ or the system’s need for higher quality materials through their original sourcing of recyclate and subsequent investment in sorting and reprocessing. According to Defra, it might be possible for them to offer reprocessed materials ‘at cost’ to their members provided access to this material was equitable between members.
A compliance scheme led, producer funded, ‘free bin’ approach. Under this approach, all businesses would be entitled to free collection of packaging waste. Any waste collector offering a packaging waste collection service to a business would have to offer that business a ‘free service’ for all its packaging waste. It would be for individual waste collectors to specify the frequency, bin size and/or bin sharing requirements that may be necessary for them to offer a free service in any given area and to compete with other collectors on that basis. Businesses would then be able to choose to upgrade or enhance their service beyond what had been offered, for instance if they wanted a more frequent collection service than was on offer, or did not want to share a bin. Waste management companies would continue to be able to charge for the collection of non-packaging materials where co-collected. However, they would be required to state the proportion of packaging collected so that it was transparent to a business what proportion of their mixed dry recyclables service had been provided at no charge. Producers would have an obligation to fund this service. This would be met through compliance schemes entering into commercial arrangements with waste collectors to provide a collection service and in doing so would take ownership of the collected materials. The compliance scheme would be responsible for the onward management of the material, using it to meet its members’ targets and their members’ or system’s need for higher quality materials.
Longer-term, the Government is also looking at the idea of moving towards an integrated waste collection zoning/franchising approach for non-household municipal waste. This would allow local authorities or other organisations to issue contracts for the collection of commercial waste in a given region, reducing the number of vehicle movements and increasing efficiencies in the provision of collection arrangements for non-household municipal waste.
If the Government were to advocate this approach, it would look to do it in the late 2020s.
For exporters, the Government plans to consult separately on new regulations in 2022 for implementation in 2023 or 2024. These reforms are expected to include requirements on exporters such as:
to submit information on the waste they export in advance of shipment; to include completed Annex VII forms for ‘green list’ exports
to pay a fee to the regulators to meet the costs of compliance monitoring of non-hazardous waste shipments; at present the costs for most waste exports are met by the taxpayer, according to the consultation document
to have the financial resources necessary to meet the cost of repatriating waste shipments
to provide appropriate evidence of environmentally sound management at overseas sites; as there is no requirement currently on exporters to make evidence available to the regulators to enable this assessment to be made.
The consultation also proposes mandatory registration of exporters with regulators and that all registered exporters will need to submit fully completed Annex VII forms.
Regulators will also look at ways in which overseas inspections of recycling facilities can take place.
On quality, the consultation proposes that packaging will be labelled with the type of bin it will need to go into with separate collection of core materials. Food and beverage cartons, and foil trays and aluminium aerosols, will be included as core materials alongside paper, card, plastic bottles, plastic pots, tubs and trays, glass and steel and aluminium cans.
Plastic films may be included as core by 2026/27 when this labelling will have been fully rolled out.
Those businesses trading with local authorities, would need to work under a system where a local authority would receive income directly for the sale of that material. Local authorities contracting with MRFs would pay gate fees, with the value of the materials typically accounted for in the gate fee.
They would receive a per tonne reference payment set monthly or quarterly for the material that would be netted off the payment they receive when trading the material. Those that produce higher quality would be expected to receive higher values for their tradable recyclate.
The consultation can be viewed here and responses can be made until 4 June 2021.
Paul’s View
If we had a Labour Government right now, I would have been surprised that it had introduced a system that contains so much market intervention and the introduction of an all powerful Scheme Administrator.
The fact we have a Conservative Government currently, means I’m even more surprised that it has introduced proposals for an essentially Communist way of running the recycling system.
I’m concerned about the proposed introduction of the all-powerful Scheme Administrator, who we should now start to call Big Brother. It will effectively control the market, determining who owns the material and where it goes.
Big Brother will also potentially force businesses collecting commercial waste to provide that service for free and will set how much they get from the producer for the service.
I’m also concerned that there will be a lot of lobbying of Big Brother from various vested interests that will look to either reduce their fees or increase the income they receive.
This consultation also worries me in that it seems to provide no real support for small- or medium-sized recycling businesses, while local authorities could potentially get rich on the proceeds of Extended Producer Responsibility. Recycling and waste SMEs in particular seem to get little in this that will benefit them, but lots will be taken away. The zoning idea in particular is likely to benefit larger waste management companies.
There are some good things in this consultation, and the focus on getting producers to pay and making sure we have an industry based on high quality recyclate has to be a positive.
I’m just not sure whether the Big Brother approach is the right one, and perhaps there needs to be more emphasis on the free market.
