The Environment Agency (EA) has published the verified final packaging recycling figures for 2023, along with detailed information on how revenue from Packaging Recovery Note (PRN) sales were spent throughout the year. The release of the data found that 2023 achieved the highest PRN revenue since the system began.
It is important to consider the previous compliance years when analyzing PRN market data as the recycling obligation for the current year is based on packaging handled in the previous year. Due to this element, the market conditions of 2021 and 2022 heavily impacted the market conditions of 2023 due to the very low PRN surplus volumes.
In this article Clarity will explore this further and share how PRN revenues from 2023 were invested. For responsible businesses measuring the positive impact of their contribution to the recycling system these figures give context and accountability for your PRN spend.
Increased packaging use and shifting consumer behaviors during the 2021 lockdowns drove up PRN demand and prices, leading to a low surplus and increased obligation for 2022 due to increased consumption in 2021. In 2022 there were significant obstacles for various materials, especially Plastic, Glass, and Aluminium. The 2022 data showed an overall deficit in recycled material tonnage compared to ambitious annual targets.
The PRN system, however, effectively motivated increased recycling to meet compliance by year-end. This was done by using all surplus PRNs from December 2021 and nearly all PRNs generated in 2022.
In 2023, PRN revenue topped the previous year’s £489 million by an additional £106 million. Over the past seven years, both 2022 and 2023 stood out due to sustained high prices across various materials. Plastic, Glass, and Aluminium PRNs remained the grades most in need of subsidy, with Plastic accounting for over 50% of the total revenue due to its higher price point.
Paper and Glass also contributed significantly, driven by high recycling targets of 83% and 82%, respectively, necessitating a substantial number of PRNs to fulfill UK obligations. Over 3.5 million PRNs were required for paper in 2023, adding to the overall revenue despite a lower average PRN price compared to other materials.
UK reprocessors and exporters must report how PRN revenue is reinvested into the recycling system. Accurate reporting is crucial, as non-compliance or fraudulent reporting can lead to significant penalties from the regulators.
Reprocessors and exporters categorise their PRN revenue investments into areas such as:
- Infrastructure and capacity
- Funding collection
- Reducing prices and developing new markets
- Compliance costs
- Future investment reserves
- Communication strategies
The figures released by the Environment Agency show that the main investment categories are still ‘Infrastructure and capacity’, ‘Funding collection’, and ‘Reducing prices and developing new markets’. Despite the difficulties faced in 2023, the focus of PRN revenue investments back into UK recycling industry has remained consistent.
Reprocessors and exporters operate under different business models, resulting in varied investment strategies. Yet, both groups have consistently prioritised the same top three investment channels. Exporters generally emphasise ‘funding collection’, while UK reprocessors mainly invest in ‘infrastructure and capacity’. These investment areas are not only critical for the PRN system’s success, but they also facilitate innovation in technological developments in the recycling sector.
Overall, the EA’s comprehensive data highlights the PRN system’s effectiveness in overcoming recycling challenges and maintaining high investment levels in essential areas for the UK’s recycling infrastructure and capacity. Clarity welcomes greater transparency in PRN funding that we are expecting in the EPR review of reprocessing and export sectors so that reprocessors can get their much needed subsidy and producers are provided with the context for internal reporting.
