PART 3: UNITED KINGDOM PERFORMANCE IN
MEETING 2001 TARGETS
28. In Part 3 we consider the growth in packaging
recovery and recycling over the period 1997 to 2001, where this
growth has occurred (by material and source), and how and where
it has been reprocessed. We do so in the light of how the United
Kingdom system is designed to stimulate growth through the PRN
mechanism.
Overall recovery
29. The overall target for recycling (25 per cent)
was met (43 per cent), as were the minimum 15 per cent recycling
levels for individual materials. However the United Kingdom fell
just below the 50 per cent overall recovery target, achieving
48 per cent. Data to this effect was released by DEFRA on May
23rd 2002.[23]
Packaging recovery increased by 1.46 million tonnes from an estimated
level of 3 million tonnes to 4.46 million tonnes. This was 200,000
tonnes below the Directive target (4.65 m tonnes).
Data quality
30. Before 1997 there was no need for collectors
or reprocessors separately to identify waste materials as packaging
or non-packaging. Figures for 1997 are, therefore, not considered
very reliable, and only the total amount has been estimated for
that year. A breakdown of the total by material type is available
from 1998 onwards.
31. There is also uncertainty about counting tonnages
processed in one year and brought forward to the next.[24]
Some witnesses[25]
suggest that the reprocessors may have included non-packaging
recovery and recycling in their returns. There is, however, no
proof that this was a substantial problem in 2001.
32. In spite of these uncertainties, we accept that
substantial net additional recovery was achieved between 1997
and 2001, but possibly less than the 1.46 million tonnes reported
by DEFRA. The figures for growth from 1998 to 2001—1.1 million
tonnes—are more reliable.
The Working of the PRN/PERN Market System: 1997
to 2001
33. The overall price level for PRNs has responded
to the interim recycling and recovery levels set by DEFRA each
year. When interim levels have been perceived to be challenging
and difficult, prices have risen. When it has become apparent
that the annual targets will be met, prices have fallen occasionally,
at year-end, to very low levels.
34. Prices for material-specific PRNs have also responded
to the minimum recycling levels set. Recycling levels for plastics
have been lower than the minima of the interim targets set by
DEFRA resulting in PRN prices for plastics being consistently
higher than for other materials.
35. One problem, based on evidence received,[26]
has been with the interim target setting by DEFRA. With hindsight,
interim targets set in the early years led to a "slack market".
Following an initial surge in PRN prices in 1998, the first year
the PRN system was operational, prices fell back sharply in 1999
and 2000 as experience demonstrated that recovery and processing
capacities could and were able to generate PRN/PERNs in excess
of interim target demand.
36. The market position changed in 2001. The interim
targets set during 1999 and 2000 had left a considerable gap to
be bridged in the final year. Moreover, the proportion of packaging
handled by non-obligated businesses (i.e. those businesses that
are not obliged to meet recovery and recycling targets[27])was
known to be significantly more than the 5 per cent originally
expected. This led to an increase in percentage target levels
on United Kingdom obligated business (i.e. those companies that
were obliged by the Regulations to recover and recycle packaging
and packaging waste)—in effect, the United Kingdom recovery
target increased from 52 per cent to 56 per cent.
37. PRN/PERN prices responded accordingly and rapid
progress in collection growth occurred. Much of the growth tonnage
however was exported rather than processed within the United Kingdom.
38. A major compliance scheme operator adopted a
route to compliance in 2001 that did not rely solely on PRN purchase
(see Box 1). It is argued that had they been active in the market,
PRN prices would have risen and pulled through the additional
tonnage needed.
| Box 1
Wastepack Ltd
On 15 April 2002 the Environment Minister, The Rt Hon Michael Meacher MP, expressed concern that the United Kingdom's second largest compliance operator had failed to meet its recovery and recycling obligations in 2001. The Regulatory Agency, the Scottish Environment Protection Agency (SEPA), announced that they were issuing a formal warning notice.
According to DEFRA's news release, Wastepack had been required to carry out recovery of 415, 000 tonnes of packaging waste—the total of its members' obligations—and to demonstrate compliance with this obligation to SEPA. It discharged only 175,000 tonnes of its recovery obligation, leaving a shortfall of 240,000 tonnes.
Wastepack said that its compliance plan for 2001, which had been lodged with SEPA at the end of 2000, did not envisage meeting its compliance obligations exclusively through the provision of PRN/PERNs.
Wastepack's evidence and SEPA's evidence can be found on pages 81-103.
The Committee did not seek to judge compliance. Our concern was to see where responsibility for compliance lay, given that regulation is a devolved matter. The United Kingdom Government is held accountable by the European Commission. It was not clear to the Committee how or to what extent the devolved Regulatory Agencies were accountable to the United Kingdom Government (see para 113).
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39. Further concerns about the United Kingdom system
during this period have been expressed by the packaging industry[28]
and witnesses from other sectors. In the main they relate to administrative
burdens on industry, inspection and policing of the system, data
coverage and quality, data handling and timely release.
40. The United Kingdom system is a market-based system
and markets need timely information to work effectively. Many
of the above problems to which witnesses have drawn our attention
can be attributed to the relative novelty of the system and the
poor state of the data collection system. Most have been recognised
by the regulatory agencies and DEFRA.[29]
The Significance of Specific Materials to Overall
Growth
41. Evidence concerning the sources of these materials
indicates that, apart from glass and to a lesser extent metals,
past levels of waste recycling and new growth in collection have
come from industrial and commercial waste flows. Wood packaging
waste is dominated by old pallets and crates, packaging paper
by cardboard boxes, plastics packaging by shrink wrap, crates
and pallets. Although post-consumer cans (steel and aluminium)
recovery is progressing, the majority of steel packaging waste
is also from commercial sources (larger drums and strapping for
bales and pallets).
42.
43. The information needed to assess past growth
is given in table 4 below:
Table 4: Packaging Recycled 1998-2001(thousands
of tonnes)
| Packaging material | 1998
| 1999 | 20001
| 20011 | Growth 1998-2001
|
| Paper | 1894.1
| 1820.7 | 1880.4
| 2030.9 | 136.8
|
| Glass | 504.0
| 582.6 | 715.0
| 735.6 | 231.6
|
| Aluminium2 |
14.5 | 15.4
| 16.3 | 29.0
| 14.5 |
| Steel3 | 182.4
| 225.2 | 238.7
| 278.1 | 95.7
|
| Plastic | 125.5
| 198.5 | 204.4
| 270.0 | 144.5
|
| Wood4 | 170.04
| 94.04 | 296.4
| 574.0 | 444.04
|
| Total | 2890.5
| 2936.4 | 3351.2
| 3917.6 | 1067.1
|
1 Includes NI after 20002 Aluminium protocol introduced 20013
Steel protocol introduced 19994 Wood data uncertain, 98-01 growth
based on ~130kt (the average for 98/99)Source: DEFRA's supplementary
evidence[30] (minus energy
from waste figures).
44. Over 40 per cent of the measured growth in packaging recycling
has been contributed by wood packaging. DEFRA estimate ~ 130,000
tonnes was recycled pre-1998, and that 574,000 tonnes was recycled
in 2001, an increase of ~440,000 tonnes. This can be compared
with estimates of ~ 230,000 tonnes additional glass recovery,
and paper and plastic increases of ~ 140,000 tonnes and ~110,000
tonnes for metal packaging (mainly steel).
45. New United Kingdom reprocessing activity can be assessed from
the number of accredited reprocessors in the various sectors.
In 1998, no accredited reprocessors existed for wood, by 2001,
31 were registered. In the same period, glass has seen an increase
from 18 to 36, plastics from 72 to 92. No significant change has
been noted for paper, steel or aluminium. Overall the number of
United Kingdom accredited reprocessors rose from 190 to 266 with
29 of the new registrations in 2001. We received evidence of investment
in new United Kingdom glass reprocessing capacity, and plastics.[31]
Glass has developed new processes and markets, for example "Glassphalt"
for road surfacing.[32]
Progress has also been made in sorting and reprocessing capacity
for post-consumer can collection and sorting systems[33].
No specific evidence for industry support for increased packaging
or paper-making capacity suited to making use of paper packaging
was received. Most of the growth in collection during the period
1998-2001 has been exported.
The Significance of Exports of Unprocessed Packaging
Waste
46. Data from DEFRA indicates that 460,000 tonnes
of packaging waste was exported in 2001, a four-fold rise from
1998 when the total was estimated to be ~ 115,000 tonnes. Major
increases were due to additional export of paper packaging (~179,000
tonnes), plastics (~ 56,000 tonnes) and metals (~ 105,000 tonnes).
Conversely, export of glass fell over the period by ~30,000 tonnes
(although increases on 1998 levels occurred in 1999 and 2000).
No wood packaging was exported during this period.
47. This suggests that little additional waste packaging
reprocessing capacity in the United Kingdom has been created for
paper and steel in 2001 compared to 1998 and possibly less reprocessing
of it. Growth in United Kingdom reprocessing of plastics is also
significantly lower than collection growth. Only wood and glass
have seen collection growth matched or exceeded by reprocessing
within the United Kingdom.
48. The figures for steel and paper does not necessarily
mean that the collected packaging could not have been reprocessed
in the United Kingdom, it may simply be the case that it was more
cost effective to rely on overseas reprocessing capacity.
49. In order to be able to assess what the finance
raised by industry through the PRN system has delivered, and the
future security of markets for reprocessing United Kingdom packaging
waste, we need to differentiate between packaging processed in
the United Kingdom compared to exported flows.
50. United Kingdom registrations can be compared
with the number of accredited exporters. Over the same period
the number rose from 4 to 64. Thirty two of the new registrations
occurred in 2001. Registrations by material are consistent with
the rise in export volumes. Steel rose from 2 to 13, plastics
from 1 to 30, paper from 0 to 13 and aluminium 0 to 6. Accredited
glass exporters, in contrast, only rose from 1 to 2.
Possible Distortion of the Market
51. Increased recycling will, in many cases, distort
existing markets. Evidence from Timcon,[34]
for example, suggests that wood packaging is now the major source
of wood chips in the production of processed board products (i.e.
chipboard) The wood packaging waste has replaced by-products and
waste from the (non-packaging) timber industry. Timcon claims
that the PRN revenues for packaging wood waste have affected the
viability of the timber industry as it can no longer sell timber
waste. Investment (storage, chipping and handling systems) will
have been necessary to accommodate this change but is unlikely
to be major given the rapidity of the switch-over from timber
waste to packaging wood waste. PRN revenues for wood only became
available in 2000.
52. It is clear that simple extrapolation from past
growth in terms of overall packaging collected and reprocessed
does not provide a sound basis for meeting future targets, and
we return to this point in Part 4.
23 See supplementary evidence from DEFRA, pp 159-171. Back
24
See the further memorandum from Wastepack, pp 94-95. Back
25
See written evidence from Timcon, pp 231-235; and Biffpack p48,
paras 8 & 9. Back
26
QQ 4, 15, 19, & 383. Back
27
Companies whose turnover is less than two million pounds a year,
or who put fewer than 50 tonnes of packaging on the market each
year are exempted from the obligation to meet existing targets
under the 1994 Directive. This is known as the de minimis
rule. Back
28
Q 4; written evidence from Biffpack, p 49, para 11; Q 240; written
evidence from INCPEN, pp 16-17. Back
29
See the Environment Agency's supplementary memorandum, p 113,
para 3.7. Back
30
See pp 159-187. Back
31
Q 15; Q 200; Q 219; Q 453; and supplementary evidence from DEFRA,
p 164. Back
32
Q 213. Back
33
See written evidence from Alupro, pp 203-204 and from Corus, pp
208-210. Back
34
See evidence from Timcon, pp 231-235. Back
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