The packaging recovery note (PRN) system is damaging the plastics recycling sector and should be abolished, according to Chase Plastics.
In a statement, its managing director Jessica Baker said that companies such as ECO Plastics and Closed Loop Recycling were struggling due to not making a profit.
But she added that as a small independent polythene film reprocessor, she has seen successive governments, Defra and the Environment Agency fail to understand the commercial reality of a commodity driven reprocessed polymer market, while the inequitable PRN/packaging export recovery note (PERN) system undermines UK-based reprocessing of plastic.
While supporting exports and the need to compete in a global marketplace, she said that there is a difference between the way in which PRNs or PERNs are issued.
She added: “To issue a PRN a final pellet or high purity washed regind must be produce, something from which a new product may then be produced.
“To issue a PERN a waste bale has to be ‘produced’, something from which a new produced cannot yet be produced and it must then be ‘exported’.
“The point to emphasise here is that these two processes of issuing evidence have totally different cost bases. To make a waste bale is only half the job and a fraction of the cost. Indeed, it is the overseas reprocessor who must subsequently pay to finish the job, and yet, despite these wildly differing cost bases, both the PRN and the PERN have identical values in the eyes of the UK regulators.”
She warned that a further result of this has been over time that the market has become dominated by waste management and export traders, who she said now control the waste market. This means that most UK-based reprocessors rely on these suppliers for material to process.
In addition, under the current system that relies on ‘weight evidence’ the quality of material has been driven down that means extra costs for domestic recyclers to sort the material.
She added: “In summary there are three things caused by the system alone, that contributes towards the lack of commercial viability of UK reprocessors:
- PRN income does not reflect the process cost of issuing a PRN, compared to the cost of using a PERN which represents only half the job. Currently, it is like paying two men the same, but then one of them only does half the job.
- UK reprocessors have to pay the value of their PRN to the holder of the waste to reimburse their lost PERN because the material has not been exported. This adds to already inflated feedstock prices.
- Totally unfair deductions are being applied to UK reprocessors for non-target material that are not being equally applied to exported material as the checks on output are impossible to complete.
“Finally, as to the fall in prime polymer price, this just throws these issues into sharp relief. You cannot incur huge costs trying to process poor quality material if these costs outweigh the price you can charge for your end product. The margins have been negative for many years due to the problems above, the current market is just the straw that broke the already maimed camel’s back.
“Abolish the current system, and make all reprocessors and exporters declare their returns of waste processed or exported as they do now, but as part of the permitting regime, not the producer responsibility one.
“Use this as the target evidence required under the Producer Responsibility Regulations and report this to Europe.
“Europe does not dictate how we monitor reprocessing activity, just that we do so.”