When Defra decided that extended producer responsibility (EPR) for packaging should initially apply only to waste from households, it meant that the UK’s current system of producer responsibility would need to be kept going alongside it. However, the interaction between the two appears set to be problematic, especially for producers.
The introduction of EPR will mark a huge change in how producers contribute to the costs of managing packaging waste. Under the current system, producers must buy – directly or through a compliance scheme – evidence that a certain amount of packaging has been recycled, based on how much packaging they issue. If you placed 1,000 tonnes of plastic packaging on the market in 2022, you would have to acquire evidence that 610 tonnes had been recycled, as the recycling target for plastic packaging that year was 61%.
The evidence is created by registered reprocessors and exporters of recyclable material, in the form of packaging recovery notes (PRNs) and packaging export recovery notes (PERNs), which they generate when they reprocess material or export it for reprocessing. The recovery notes are sold at a market rate. When evidence is plentiful, the price is low – as it has usually been, because the efforts made by local authorities and businesses to recycle have generally been sufficient to exceed the targets. Producers have therefore not needed to take responsibility for much of the cost of managing packaging waste. According to Defra’s 2019 consultation on EPR:
“At most around 10% of costs are covered; but our analysis indicates that less than 7% of the costs of managing household packaging waste are covered by producers.”
PRNs clearly make only a minor contribution to household packaging costs, which is practically invisible to local authorities as it is wrapped up in material prices. Further, because PRN prices vary, they don’t provide a long-term incentive to change services. EPR, by contrast, is intended to ensure that producers contribute a sum roughly equal to the costs of managing in-scope packaging waste, while making sure that higher recycling targets are met.