So How Does the PRN System Work (in brief!)?

 

To show you have met your legal obligation to recycle and recover packaging waste, packaging compliance schemes, on behalf of Producers, are required to purchase evidence in the form of Packaging Waste Recovery Notes (PRNs) and Packaging Waste Export Recovery Notes (PERNs).

 

These evidence notes are issued by accredited packaging waste reprocessors and exporters respectively. An accredited reprocessor/exporter can issue PRNs/PERNs to the amount of waste reprocessed (e.g. 500 tonnes of cardboard reprocessed allows the reprocessor to sell 500 PRNs in paper/cardboard). Revenue from the sale to producers are intended to finance improvements in the collection and reprocessing infrastructure across the UK.

 

The evidence notes have two functions. Firstly, they are a 'counting to' for the amount of recovery/recycling undertaken on the behalf of producers. Secondly, they are a way to channel producer funding to recovery/recycling operations, where producers do not do their own recycling.

 

PRNs/PERNs have a market value which depends on relative supply and demand (and perceptions of scarcity). The value of PRNs/PERNs is not proportional to the value of material. The total economic value of a tonne of material in this context is the combination of the intrinsic value of the material plus the PRN value at the prevailing rate based upon supply or demand

 

Therefore, a low value material may be collected because it is subsidised by the added value of the PRN, in order to meet the targets. Equally, a high value material may be collected for its own worth even if recycling targets have been met (e.g. aluminium and high value polymers). If there is insufficient packaging recycling to achieve the targets, the PRN price will increase, thereby making more recycling happen at an economic rate for the operators.

 

The more difficult or expensive materials are to collect and recycle, then the smaller the quantity that gets recycled, and therefore the more expensive the PRN/PERN.

 

Similarly, the more limited the available reprocessing capacity or the demand for the material, then the smaller the quantity that gets recycled and therefore the more expensive the PRN/PERN.

 

Figure 1: Illustration of materials (red) and financial (blue) flows in the packaging chain, household stream only.

Source: DEFRA 2010