The Q3 2013 packaging recycling and recovery data was published by the Environment Agency (EA) to the National Waste producer Database (NPWD) this morning (22.10.2013). Packaging producer compliance schemes and obligated packaging producers have been eagerly awaiting the release of the data as solid recycling figures could see reductions in the costs of packaging recovery notes (PRNs) for the rest of 2013 as well as informing the market in preparation for the 2014 compliance year.
The data has been received by the industry as encouraging with the Plastic material category showing the most improvement on Q1 and Q2 as the recorded handled tonnage has significantly increased. The improvement is derived mainly from an increase in Plastic packaging exports throughout the quarter with 121KT exported in Q3 compared to 97KT in Q1 and 94KT in Q2.
UK Plastic reprocessing data has been confirmed as 74KT and, combined with the 121KT of the Q3 exported plastic figure, the total tonnage of Plastic recycled in Q3 is 195KT. This is a significant figure as the UK is required to recycle approximately 175KT of Plastic per quarter in order to meet its overall annual target (not including carry-in). With the 40KT of carry in from the 2012 compliance year in addition to the current total figures, achievement of the 2013 Plastic target now looks very likely for the UK.
The improvement in Plastic recycling tonnages can also be attributed to new end markets opening up for export; issues of quality regarding materials exported to China under operation Green Fence are improving; and, UK reprocessing levels have improved as a result of increased investment (a possible result of recent high Plastic PRN prices).
There are indications that the Q3 Plastic figures do not currently include the exported mixed Plastic bottles tonnages with high contamination levels and such materials are possibly still in storage in the UK. If this is the case, then the Plastic figures currently look strong enough to achieve compliance even without the contaminated plastics being taken into account which in previous compliance years would potentially have been heavily relied upon. The figures released today indicate an encouraging 2014 for Plastic, despite the 5% increase in the Plastic recycling target.
Gareth Roberts, Managing Director of producer compliance scheme Comply Direct said of the Plastic recycling figures: “The data shows that higher Plastic PRN prices have stimulated a growth in the supply of PRNs via greater investment in the capacity and infrastructure to recycle more Plastic packaging waste in the UK and overseas. This is the PRN system working well based on demand and supply of PRNs and with such strong Plastic data we should now see the Plastic PRN price steadily drop towards the end of 2013.”
A problematic material throughout 2012 and 2013, the Glass situation continues to be less encouraging in terms of possible reductions in the price of Glass PRNs for the remainder of 2013. The Q3 packaging recycled tonnages for Glass are 265.5KT (Re-melt) and 149.8KT (Other). These figures are an improvement on the previous two quarters but the UK is still not certain to meet its recycling targets for Glass in 2013.
Glass re-melt is on track to meet this target, Glass Other still has a 50KT shortfall which now must be made up in Q4. The target is achievable - the Q4 2012 boom in glass recycling is an example of a late target achievement - but unlike late 2012 there may not be the surplus of stock levels of contaminated Glass available to feed into the aggregate or re-melt markets in Q4 2013. The tight Glass data published today indicates that for the rest of 2013 Glass Other PRN prices are likely to increase and come more in line with the current Glass re-melt PRN prices as buyers have few options in a market that is in short supply.
The current issues being experienced in Glass demonstrates the potential operational difficulties of the PRN system in that despite prolonged high Glass PRN prices we have not seen much of an increase in Glass recycling levels. This may simply be down to a lack of Glass containers being available to recycle.
The short supply of Glass PRNs in the UK market potentially stems from the overestimation of the amount of Glass “placed on the market” data which has previously been used by Defra to set the 81% Glass recycling targets for 2013 through to 2017. The prolonged high price of Glass PRNs and increasing pressure from large obligated Glass producers has since encouraged Defra to consult on amending the Glass packaging business recycling targets for the compliance years 2014 to 2017.
If the Glass recycling targets are lowered for 2014 then this will reduce the overall Glass PRN obligation (demand) and could alleviate some of the pressure on Glass PRN prices which would reduce the PRN costs for obligated packaging producers with a Glass obligation. There is, however, likely to be little respite for the remainder of 2013 for obligated Glass producers.
Q4 and 2014
Gareth Roberts commented further on the Q3 data publication: “The Q3 published packaging recycling data overall looks promising, especially on Plastic and it appears that the Plastic 2013 target will ultimately be met and with as a bonus some potentially significant PRN carry over into next year which will help towards the further 5% increase in the recycling Plastic target for 2014.”
“Glass is the one packaging material which still has a question mark in terms of the UK hitting its material specific 2013 targets. There does appear to still be some data still to be submitted by certain reprocessors and exporters relating to Q3 tonnages handled which might improve the total numbers but overall it is likely to remain tight on Glass throughout the remainder of 2013. However, with a likely increase in the Glass Other (i.e. aggregate) PRN price we might see some stronger tonnages going to aggregate in Q4 but unfortunately this could also be countered as there does appear to be increasing logistics issues (delays) with sending UK exported Glass to Portugal which is a key export destination and this could hinder increased Glass export activity for the remainder of 2013”.
The rest of the materials which the Environment Agency has published recycled data on: Paper, Wood, Steel and Aluminium etc. all look set to meet the rest of the UK’s 2013 recycling targets. To demonstrate this, the graph shows the current position for each packaging material at this 3/4 point of the year against UK overall targets and includes any available carry-in from the 2012 compliance period. The significant surpluses in Paper and Wood PRNs being generated will now be used to meet the 2013 General Recycling obligation of approximately 840KT.
To view the EA Q3 published packaging data via the NPWD, please click here.
Comply Direct will be communicating to its packaging members the estimated PRN levies for 2014 in the coming weeks.
Comply Direct welcome contact from packaging producers still undecided about their chosen route of compliance for 2014 and can be contacted through this form.