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Spring Budget 2017: Further Challenging Packaging Target Set Through to 2020

8th March 2017

Melanie Harper

The government delivered its 2017 budget today (8/3/17) and within the finer details it unveiled its plans for packaging recycling targets for the years 2018, 2019 and 2020. This announcement is on the back of a consultation document that was published in December 2016. Glass and Plastic were not included in the Dec consultation as they had already been the subject of an earlier consultation and their recycling rates were confirmed in the 2016 budget (Plastic at 57% by 2020 and Glass 80% by 2020).

With this latest announcement we now have (although to be clear still yet to be passed into actual legislation) a full set of recycling targets for all materials through to and including 2020. It is fair to say that on the face of it, the targets are certainly challenging from 2018 right across all the material types. We could well see increased PRN price volatility and steep price spikes as we adjust to the new targets and the government will be hoping that much of the additional PRN monies will be invested in developing UK recycling infrastructure. For certain materials, such as Plastic, we are overly dependent on overseas recycling activity and this at times has made us very vulnerable.

The overall UK total packaging recycling rate is due to rise to 75.4% from the current level of approximately 65%. Remember though the targets we are talking about in the announcement today (often referred to as the business targets) are to be applied to the packaging handled by all register packaging producers in a given year and they are therefore at higher levels to compensate for companies outside the PRN system who fall below obligation threshold (£2m T/O and 50 tonnes of packaging handled). The Business Targets for overall packaging recycling will increase from 75.4% in 2016 to 82% by 2020.

The actual (business) target rates announced in the budget are;

The most surprising aspect of the announcement today is that the targets don’t reflect any of the Consultation Three Options proposed back in December. See Comply Direct news story here. However, what has happened is that the highest possible recycling rates from each of the combined three options has been taken up for each material.

Does this reflect a new ambition from the government towards the environment? Does it signal a plan to keep in line (or indeed be ahead) with EU Circular Economy Plans (to recycle 75% of packaging by 2030) despite Brexit? The answers are not clear but it is clear that the targets represent a challenge and that will be welcomed by the UK Waste Management sector. The new targets might not be so well received by obligated Packaging Producers who are potentially facing significantly higher costs than in recent years for their PRNs.

The new Wood targets of 48% by 2020 (up from just 22% in 2017) could be seen as a particular challenge given an awful lot of Wooden Packaging (pallets and crates) is currently sent for biomass and therefore is not being recycled. It might require a significantly higher Wood PRN price to ensure that biomass is not that attractive versus recycling Wood back into new product.

In summary, all very interesting and these targets will certainly keep us on our toes at Comply Direct over the coming years. If you have any questions about the packaging targets, please email packaging@complydirect.com.