Paper PRN prices have recently seen a five fold increase to around £5 per tonne.
The reason for this is due to producers and compliance schemes rushing to meet their recovery obligation before the end of the year.
There is an estimated 500,000 tonne recovery obligation to achieve for 2015, less than half of which has been met currently, and the spike in demand in paper comes after a year of seeing the recovery obligation struggle to be met, quarter after quarter.
R1 accreditation impact
Some within the industry have blamed this on the R1 accreditation required by Energy-from-Waste (EfW) facilities, introduced in January by the Environment Agency.
Reprocessors have claimed the cost of becoming R1 compliant far outweighs the financial benefit of becoming accredited and issuing the much-needed recovery evidence the UK needs, with costs estimated between £500,000 and £1million to modernize a facility to R1 standard.
The result is the scarcity of recovery PRNs we have seen this year, with producers and compliance schemes purchasing a surplus of paper to fill this gap. The knock-on-effect is that this has created a large increase in the demand of paper, and has pushed the price up.
The price we are currently seeing for PRNs is the highest it’s been since 2009. This demand has also rippled into the wood market, which has seen its price rise to nearly double figures in recent weeks.
Responsible PRN purchasing
ecosurety has taken steps to avoid being affected by this increase for the current compliance year by purchasing responsibly throughout the year, however it is important to note the possibility that these high prices may continue into 2016 due to the expectation that EfW will fall short again.
“There have been many factors influencing the PRN market in 2015, from economic to legislative, with the only material coming through unscathed being glass. We consistently and regularly get updates from our recycling partners in collaboration with our own industry knowledge to ensure our members’ compliance is both secure and cost effective" commented James Piper, commercial director.
"PRNs are open to many influences, but as we have seen historically it is a self-correcting market which ultimately finds a level that is viable for producers and incentivising for recyclers. We will continue to work with and update our members into 2016, to make certain they have all the information they need to make assured compliance decisions.”
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