PKG0043
Written evidence submitted by the Environment Agency
Background
The Packaging Regulations place recovery and recycling obligations on those businesses who play a part in placing packaging onto the UK market. These producers have to meet statutory recovery and recycling targets each year, by ensuring that packaging waste is recovered and recycled on their behalf.
Waste companies that recycle or recover packaging waste (reprocessors) provide evidence to show it’s been done. This evidence is called Packaging Recovery Notes (PRNs) or Packaging Export Recovery Notes (PERNs). Producers ‘purchase’ this evidence to demonstrate they have met their recovery and recycling obligation.
Regulatory Role
The Environment Agency is responsible for regulating the Packaging Regulations in England. This includes:
The Environment Agency also maintain a public register and publish accurate data on recovery and recycling in the UK.
Revenue associated with the Packaging Regulations
There are 3 distinct forms of revenue associated with the Packaging Regulations. These are:
The EA recovers the cost of its regulatory duties through a range of charges paid by those it regulates. For the Packing Regulations, this generates about £4.1M a year and is used solely for the purpose of funding the EA’s regulatory activity.
Only reprocessors and exporters, or schemes operating on their behalf, who have been accredited by the EA are able to issue PRN/PERNs to Producers.
The amount they issue is based on the amount of packaging waste they have recovered or recycled, or exported for recovery and recycling. This system operates on a market basis and the supply and demand for PRNs/PERNs dictate the market price. Reprocessors and exporters operate in a competitive market, by offering PRN/PERNs to producers which is broadly reflective of the costs associated with the collection and recovery/recycling of packaging waste.
The PRN system was built around the concept that the funds raised through the sale of PRN/PERNs would assist the recovery and recycling sector to extract more packaging waste from the waste stream and support its demand in the recyclate markets.
Each year reprocessors and exporters have a duty to report to the EA the amount of PRN/PERN revenue they have raised in the previous compliance period. The total PRN revenues reported for the UK for the last 3 full compliance periods are:
2014 = £63.8M 2015 = £64.2M 2016 = £50.2M
As part of this reporting process, the revenue has to be reported against 6 specified categories in terms of how the revenue has been used. Annex 1 provides a 2016 summary table of the PRN revenue reports, which highlights the 6 categories and the breakdown of revenues by material type.
The EA has no specific regulatory control over how the PRN/PERN revenues are used. The market based approach allows the reprocessors and exporters to decide for themselves where the funds should be directed to achieve the best outcomes, provided that it is within the constraints of the 6 specified categories.
A producer does not comply with the Regulations when it fails to register and/or fails to meet to meet its specific recovery and recycling targets.
Rather than face prosecution, the company can opt for a civil sanction by offering an Enforcement Undertaking (EU). This avoids taking a case through the courts and criminalising the offender, as well as avoiding the litigation costs on both sides.
Under an EU the offender seeks to offset the financial benefits they gained through non-compliance. They can nominate a charitable cause, with environmental outcomes, to which the funds will be paid.
The EA must first determine if an EU is the most appropriate enforcement sanction or whether criminal sanctions should be applied. The EA then assesses the enforcement undertaking to ensure the charitable concern is eligible and that a plan is in place to avoid future non-compliance.
The company must also pay the EA the costs incurred for assessing the enforcement undertaking.
November 2017
Annex 1 - PRN/PERN spending categories by type of packaging material
Material | Spending Category | Total | |||||
Infrastructure and capacity | Funding collection | Reduction in price and developing new markets | Costs of complying with the regulations | Retained for future investment | Developing communication strategies | ||
Aluminium Rep | £568,707 | £0 | £1,738 | £28,488 | £183,739 | £335,189 | £1,117,860 |
Alum Exp | £303,685 | £268,597 | £42,638 | £56,695 | £254,704 | £5,154 | £931,473 |
EfW Rep & Exp | £244,741 | £10,242 | £6,748 | £60,786 | £4,000 | £11,154 | £337,671 |
Glass Other Rep & Exp | £2,470,988 | £1,856,338 | £1,328,309 | £170,510 | £293,013 | £158,823 | £6,277,982 |
Glass Re-melt Rep | £3,306,136 | £2,548,276 | £5,256,148 | £210,114 | £4,275 | £192,783 | £11,517,733 |
Glass Re-melt Exp | £1,456,197 | £1,928,429 | £1,044,315 | £120,080 | £119,924 | £68,005 | £4,736,951 |
Paper/Board Rep | £851,844 | £243,810 | £18,235 | £52,986 | £223,206 | £0 | £1,390,081 |
Paper/Board Exp | £34,926 | £1,193,713 | £1,230,628 | £39,848 | £64,399 | £15,975 | £2,579,489 |
Plastic Rep | £4,374,804 | £2,886,393 | £1,974,253 | £184,358 | £486,425 | £151,546 | £10,057,779 |
Plastic Exp | £4,453,365 | £4,241,910 | £7,381,826 | £632,936 | £2,513,134 | £401,716 | £19,624,887 |
Steel Rep | £698 | £38,514 | £1,156,984 | £206,352 | -£1,548 | £53,203 | £1,454,203 |
Steel Exp | £1,483,420 | £409,631 | £550,368 | £57,276 | £583,811 | £147,564 | £3,232,070 |
Wood Rep | £769,297 | £193,500 | £7,900 | £16,150 | £3,734 | £614 | £991,195 |
Wood Exp | £0 | £0 | £0 | £0 | £0 | £0 | £0 |
Total | £20,318,809 | £15,819,354 | £20,000,088 | £1,836,579 | £4,732,817 | £1,541,726 | £64,249,373 |
Exp = Export
Rep = Reprocessing