Producer Responsibility packaging waste regulations
These regulations affect any company with a UK turnover of £2 million a year or more that provides packaged goods to customers. Obligations arise only if you meet the financial threshold AND handle 50 tonnes or more of packaging a year. This latter threshold causes a great deal of uncertainty and may be behind the fact that despite the regulations having been in place for nearly twenty years, less than 7,000 companies are currently registered as producers. Since statistics suggest that this figure should be in the tens of thousands, there are clearly a large number of non-compliant companies operating, many of whom do not believe the regulations apply to them.
What does ‘handle’ mean?
Contrary to popular belief, ‘handle’ does not mean dispose of, but means pass on to someone else in the supply chain. Most of the packaging you pass on will count towards your obligation, as will any packaging you import. Therefore, in order to calculate how much packaging you handle, you need to look at three levels of packaging:
Primary packaging is the packaging immediately around the product as it is bought by the end user. So, for a packet of cornflakes, it would be the inner plastic liner and the outer cardboard box. For a bottle of wine, it would normally be the glass bottle, the cap or cork (and perhaps a wire cage for sparkling wines), any labels and any foils or other closure coverings. For a takeaway pizza, it would be the pizza box.
A packaging manufacturer is the organisation that makes the packaging material – not necessarily the packaging itself. Accordingly, a paper mill may be classed as a manufacturer because it produces cardboard that is later made into boxes.
An organisation that takes the cardboard made by the paper mill and turns it into boxes is termed the convertor. The activity also applies to companies that shred packaging and other materials to make filler and to some companies that add air to products to make them into fillers – plastic ‘pillows’ for example.
The packer/filler is the organisation that puts product into the box for sale purposes. It is important to note that, under these regulations, ‘sales’ do not necessarily require a financial transaction to take place. The passing of packaged goods from one person to another, on some form of commercial basis – including marketing and promotional activities – creates a ‘deemed’ supply or sale.
The person who provides the packaged goods to the person who will dispose of the packaging. If you consider the packaging levels above, you can see that there may be more than one seller of packaging for a product. To stick with the cornflake example, the manufacturer will probably be the seller of the tertiary packaging when they supply to the wholesaler or direct to the retailer supermarket – if the latter, they may also be the seller of any secondary packaging.
Types of ‘Seller’
Supermarkets and other retailers are generally responsible for the selling obligation on primary packaging and may also have packer/filler and seller obligations on added packaging such as containers for ‘deli’ products and carrier bags. It is important to note that the latter may change with the implementation in October this year of charges for single use carrier bags.
Importers, exporters and re-exporters
Importers have a ‘rolled-up’ obligation. That means that they pick up the obligation for all stages up to and including their own. Therefore a wholesaler who imports goods sold to retailers will pick up the manufacturer, converter and packer/filler obligations on all primary packaging and all obligations on secondary and tertiary packaging.
However, where goods are exported, or imported and then re-exported, they do not count towards your obligation as the packaging will not end up in the UK waste stream.
What are the obligations?
- You must register as a producer with the government before 7th April every year;
- You must calculate ‘as accurately as reasonably possible’ the amount of packaging you handled in the prior calendar year; and
- You must pay levies to support the recycling industry according to the amount of packaging, split into seven materials, you handled.The materials are: paper, glass, wood, aluminium, steel, plastic and other.
The obligation you have to fund is calculated in tonnes and depends on your activities and targets set by the government. The chart opposite shows the obligation percentage applying to each activity. These obligations are cumulative, therefore, if you manufacture, convert and pack/fill (or import for selling) then you will have to fund recycling of a minimum 52% of the packaging you placed on the market. If you placed 100 tonnes of paper on the market, your activity obligation is for 52 tonnes, but the current government target for paper is 69.5%, so you would need to support the recycling of 70 tonnes of paper.
It is important to note that the levies do not go to the government – although there are some registration fees that are used to support enforcement – but directly to people involved in the recycling industry. Accordingly, the levies buy evidence – termed PRNs (Packaging Recovery Notes) or PERNs (Packaging Export Recovery Notes) – and evidence costs are market driven. Where there are plenty of buyers and plenty of PRNs, prices will be stable; where there are plenty of buyers, but few PRNs, prices will be high; where there are plenty of PRNs, but few buyers, prices will fall.