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NERF meeting – The PRN system

NERF meeting – The PRN system. 19 th March 2013. Agenda. Introductions and purpose of the meeting UK system Original design intentions Market dynamics Cost comparisons with other countries Questions for discussion. UK system operation. Introduction.

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NERF meeting – The PRN system

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  1. NERF meeting – The PRN system 19th March 2013

  2. Agenda • Introductions and purpose of the meeting • UK system • Original design intentions • Market dynamics • Cost comparisons with other countries • Questions for discussion

  3. UK system operation

  4. Introduction • UK system designed in close consultation with industry in mid 1990’s • Key principles: • Market based, using and incentivising existing infrastructure • Competing schemes • Shared responsibility • Includes both household and commercial packaging to meet targets • Designed to meet national targets at minimum long term cost to producers • Refinements gradually introduced to improve operation and legislation: • On line NPWD system • 5 year target visibility (apart from 2010, 2011) • Improved enforcement

  5. The UK system for packaging • Packaging recycling has always occurred to the extent it is economically viable C+I Material Packaging Waste Reprocessors and Exporters • Finished Goods • Packaging • Other products L.A. Material W.M.C.s

  6. Legal responsibility for increasing rates passed to producers The UK system for packaging Recycling Obligations UK Business 1997 Packaging Waste Regs. C+I Material Packaging Waste Reprocessors and Exporters • Finished Goods • Packaging • Other products L.A. Material W.M.C.s

  7. Additional funding injected to provide impetus The UK system for packaging Recycling Obligations UK Business 1997 Packaging Waste Regs. Recycling Obligations (Data and £££) Data and Evidence Compliance Schemes Recycling Evidence (PRNs) £££ C+I Material Packaging Waste Reprocessors and Exporters • Finished Goods • Packaging • Other products L.A. Material W.M.C.s

  8. Increasing activity at each stage of the chain The UK system for packaging Recycling Obligations UK Business 1997 Packaging Waste Regs. Recycling Obligations (Data and £££) Data and Evidence Compliance Schemes Recycling Evidence (PRNs) £££ C+I Material Packaging Waste Reprocessors and Exporters • Finished Goods • Packaging • Other products L.A. Material W.M.C.s £ material price £ collection processing £ end markets

  9. System operation: the market balance Tightening of market due to higher targets or market bottlenecks Low cost PRNs Less investment in recycling Surplus of PRNs Equilibrium helped by -long term target visibility -long term contracts More investment in recycling Shortage of PRNs High cost PRNs • PRN prices are NOT directly related to the cost of recycling • Focus on lowest cost sources of extra marginal tonnage • System has met targets every year

  10. PRN market dynamics Shortage Surplus £200 Potential for rapid rises if perceived shortfall PRN price “In balance” material specific price £20 General recycling price £5 +5% -5% 0% • Cost of PRNs driven by • Net collection and recycling cost • PRN supply & demand

  11. Europe: Comparing the Costs of Compliance

  12. Multi-Material Scenario Obligated company importsand sells to the general public: 800,000 steel cans of tomatoes (av. 34g) 500,000 aluminium cans of soft drinks (av. 20g) 150,000 bottles of wine (av. 370g) 19,250 cardboard boxes (av. 240g)

  13. How do the Costs Compare? (2012) Average

  14. Multi-Material Summary • In this scenario the average cost for meeting recycling/recovery obligations in Europe is £6,050.43 • Complying in the UK in 2012 costs just £2,445 • Making the UK nearly 2.5x cheaper than the average • In 2012 the prices for glass and steel recycling evidence in the UK were much higher than normal • Assumed average 2012 price • Glass = £40/tonne • Steel = £15/tonne • On an average year the UK costs would be around £1,330

  15. Glass Cost Comparison: 200g beer bottle (pence)

  16. New Targets (%)

  17. Plastics Challenge • Total plastic collected in 2017 needs to be 330kT more than 2012 • Plastic is highly diverse • Need to collect 25% of the untapped resources, including:

  18. Scale of the Challenge

  19. How This Will Affect You

  20. Glass: Packaging on to the Market (Estimates) 2,823 Kt 2,795 Kt 2,767 Kt 2,740 Kt 2,713Kt 2,686 Kt * Estimate assumes 1% growth per annum

  21. Glass Reprocessing 2012

  22. Glass Cullet Prices: 2012 (£)

  23. Duncan Simpson Director of Sales and Marketing Duncan.Simpson@valpak.co.uk 01259 725355

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