Jonathan Short explains the growing threat posed to UK recycling…
As we continue to expand the amount of recycled content in our packaging, the UK reprocessing industry faces two principal challenges – increasing the quality of material that it is recycled while also improving quantities. However, while the two objectives are linked, the Government’s decision to prioritise the second now looks to be coming at the expense of the first.
The UK – Government, industry and consumers – should be applauded for the huge steps that have been made to encourage domestic recycling over the last decade. In my own industry, plastics, we have increased the collection rate from a standing start of 24,000 tonnes of bottles in 2003, to 300,000 bottles in 2010, a rise of 1,150%.
The introduction of mandatory recycling targets a little over 18 months ago has further cemented that process, increasing the amount of packaged waste that must be reprocessed, from 32% in 2011 (now 37%) to 57% by 2017. The combination of facilitating both the push (improving consumer awareness of recycling) and the pull (introducing compulsory targets) has been a huge success.
Quality in the waste stream
Far less fruitful has been the Government’s second core objective for the industry, improving the quality of the waste stream. As Local Authorities have encouraged us to recycle more, there has been a disproportionate rise in the amount of contaminant which finds its way out of the waste bin and into the recycling pile.
The launch of a consultation on a Code of Practice for Materials Recycling Facilities (MRFs) earlier this year is a direct attempt to tackle the problem. Following near universal support from the industry it looks as if a compulsory code will be established. Compulsory confirmation of the quality of MRF output, enforcing transparent and auditable sampling regimes and implementing frequent but unscheduled testing by the Environment Agency, will make a genuine difference.
Packaging Recovery Notes
However, just as mandatory targets have only been part of the process in improving the recycling rate, more is needed to be done – specifically a root and branch upgrade of the Packaging Recovery Note (PRN) and Packaging Export Recovery Note (PERN) system.
The problem is that the current system for PRNs and PERNs does not provide a level playing field. UK plastic re-processors can only claim a credit based upon the input to their wash or extrusion process and subject to demonstrating a minimum yield of 75% of the desired output. By this point process losses of up to 30% non-plastic contamination from the original feedstock are typical.
No such requirement is needed to claim PERNs, with exporters realising 100% of the tonnage simply by shipping containers of unprocessed material. At present the expectation is that because material is being sent abroad it contains no contamination, which is clearly wishful thinking.
And while the present situation of inadvertently incentivising export ahead of domestic manufacturing is frustrating enough, it will become far worse as and when the cost of recovery notes spirals.
Threat to the industry
Of course all of this may seem like the self-interested complaints of a UK reprocessor, but there are very real difficulties that stem from the situation and which in turn pose a very real hazard to our industry.
First off, by failing to check the quality of the product that we send abroad there’s a danger that it will be lower quality. And as markets in the Far East become more selective about the materials they take, that means that our product will be the first to be cut, evidenced by the recent slow-down.
Worse, the current policy of encouraging export risks throttling the developing domestic industry. Not only are UK players at a commercial disadvantage, the lack of financial returns will hinder much-needed investment in reprocessing infrastructure. Furthermore, on-going uncertainty over crucial legislation, particularly export regulations, means that the finance community is highly unlikely to feel comfortable enough to provide the capital to fund further projects.
So at a time when the level of mixed plastics is increasing at home, and the Far East market for waste is steadily softening, witness China’s Green Fence policy, investment in our infrastructure is becoming increasingly problematic. If we do not invest in the creation of a comprehensive, 360 degree domestic infrastructure, the alternative is that we will be left with a mass of material that we can neither recycle nor export.
Significantly it will also derail the sustainability ambitions of many leading FMCG brands. With the effects of Courtauld Three now coming into force, more and more companies are looking to include recycled content in their packaging.
However, the stagnation in the creation of new recycling infrastructure means that domestic demand risks far outstripping supply. If the growth in appetite continues as it looks set to, it will mean that companies will be forced to look overseas for recyclate – damaging both economically and environmentally.
When raising the issue of PRNs, ECO Plastics has been advised by DEFRA that changing the system risks an anti-competitive ruling under EU laws. And yet it still appears to be okay to disadvantage UK manufacturing? In my view there are two simple alternatives to remedy the problem:
One, exporters (and I talk as an exporter of plastic scrap) should be required to follow the same stringent audit trails expected of the domestic re-processing industry and to demonstrate the quality of every load placed in a container.
Or two, allow domestic re-processors to claim on all UK tonnage (including the inherent contamination) at the start of the process.
The first is the better option as it will prevent companies from claiming PERNs on the non-plastic contamination present in any non-sorted material.
At the same time I believe that revenue from PRNs and PERNs must be used either for investment in reprocessing infrastructure or for consumer education programmes about exactly what can be recycled. Again with strict audit checks confirming that funds have been utilised correctly.
To further encourage ‘pull’ through the value chain we very much support the BPFRG proposal that companies which incorporate recycled content in their products should be allowed to offset the tonnage of recycled material used against their packaging obligation.
The latest noises from DEFRA that a consultation on Recovery Notes is imminent, is good news. We do need urgent action. The recycling industry is at a crossroads. If we continue on our current path of neglecting the domestic market and shipping our waste, it is only a matter of time before we are forced to re-open landfill sites – and that just as the Government’s tax is about to reach its zenith.
Reform of the PRN / PERN system is now one of the key requirements to encourage investment in domestic markets and ensuring the development of a self-sufficient recycling infrastructure. Encouragingly it does not require complex legislation, additional funds or widespread stakeholder engagement programmes to implement. But it does require action. The ball is very much in Government’s court.