2017 Packaging Targets Consultation

By Ian Andrews*

DEFRA has recently released the latest consultation on Packaging Waste Recovery targets to run from 2018 – 2020.  This is a process which takes place at the end of every agreed target period with the current targets being in place until the end of 2017. Targets for future years are communicated in the spring budget statement so this is a means of doing the background work before targets are agreed. The latest consultation does not take into account targets for Glass and Plastic which have previously been agreed up to the end of 2020.

Defra

The potential targets set out fall into three separate options with some flexibility provided for respondents should they make reasoned arguments for their proposals. The first option suggests keeping the targets the same until the end of the period with Options 2 and 3 provided some growth in the categories, Paper, Wood, Steel & Aluminium. In addition, the overall Recycling and Recovery targets will also be agreed going forward.

Option 1 – The market does not benefit from static targets as all too often it leads to a period of oversupply. While this may seem a favourable position for UK business it will often lead to periods of undersupply as weaker PRN values will result in sellers leaving the market and supply contracting.

Option 2 – Given the results of the latest Paper & Wood pack flow reports whereby we have assumed greater recycling rates for the two materials than is now evident there is some merit in applying these larger target increases to bring us back in line with our previous assumptions. On the metal grades Steel has an ambitious growth applied with Aluminium a more gradual rise in their target.

Option 3 – As with option 2 only reversed with Paper, Wood and Steel seeing gradual rises and Aluminium tasked with a larger increase.

Given the state of the market over the last number of years and taking into account the changes in the claim allowances in Aluminium I would recommend some form of a mix of options 2 and 3. The issues of underreporting base information for Wood and Paper, along with the increased claim percentage being applied to mixed paper, I feel the supply is strong enough to support ambitious targets going forward.  With the recovery target for Wood having never changed from its introduction at 22% I believe an increased target will improve performance considerably and provide strong competition for the biomass sector which recently has provided competition for the material. In Steel the underlying material market has seen some substantial changes recently so would urge caution when setting overly ambitious targets. While supply for the PRNs has remained strong the market is becoming more exposed to export markets and given the uncertainly in the UK regarding Brexit & currency value fluctuations I feel it would be foolhardy to set overly ambitious targets at this stage. In Aluminium the ability to claim evidence notes from alternative sources has increased the supply considerably and I feel that this will continue in light of higher recovery targets.

In summary, I feel it is important to continually review our performance and look to set ambitious targets were necessary. I feel substantial increased targets for Recycling, Recovery, Paper, Wood and Aluminium should be considered with a smaller incremental increase being applied for Steel.

*Ian's comments do not necessarily reflect the position of the scheme.

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