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Extended producer responsibility for packaging waste is undergoing a transformation and Valpak’s proposed managed competition system is gaining ground among stakeholders.

In recent years, responsible retail has been at the forefront of new developments. Nowhere has this been more evident than for packaging design and recycling. At the advent of a new decade, we are on the brink of a transformation for packaging responsibility, but the details have yet to be finalised. Building on the four original options put forward by Government, an alternative, hybrid solution has been gaining widespread industry support.

Since 1997, the UK has implemented EU Packaging Regulations through a unique, market-led system. Producers report annually on the volume of packaging they place on the market, and most join a compliance scheme which buys recycling evidence in the form of packaging recovery notes (PRNs)g to demonstrate that the correct amount of recycling has taken place. Under this mechanism, recycling rates rose steadily, but as greater focus has been placed on resource use and environmental impacts for packaging – particularly plastics – modernisation is in the pipeline.

Many retailers have been addressing the environmental issues of packaging waste voluntarily, or through collaborative, industry-wide programmes such as the UK Plastic Pact. At the same time, the adoption by the EU of the latest Circular Economy Package has committed to more stringent demands on packaging producers. Under the new regime, which has also been agreed by the UK government, retailers will be tasked with funding 100 per cent of the net costs of collection and recycling of waste packaging. The goal is to raise UK packaging recycling from 66 per cent to at least 70 per cent by 2030.

Under our market-led system, retailers have already seen costs rise significantly over the past 18 months, but the new level of funding will see costs rise further still. The key to a successful new system is to find one that achieves the required level of funding for local authorities and recyclers, while also providing producers with greater transparency and a cost-effective service.

EPR reform

The government consultation on extended producer responsibility (EPR) for packaging is due to resume later this year. While the structure of the new model is uncertain, what is clear is that producers will be required to pay at least 80 per cent of the cost of collection and recycling, which could mean bills up to five times higher than even current levels.

Packflow Hybrid Model

Valpak’s Packflow Hybrid Model – An Enhanced Approach to EPR Reform is the result of months of research and modelling. It summarises the strengths and weaknesses of both the UK’s existing scheme, and of overseas systems. We are continuing to work on the details of this concept in association with a number of other key players.

After evaluating the four consultation models, Valpak introduced the idea of a hybrid approach that would combine and enhance the best qualities of the most popular two originally proposed systems. This new approach results in lower costs and greater transparency for producers, more consistent funding to local authorities and, importantly, it also includes funding for national and local recycling awareness campaigns.

A single, not-for-profit organisation or producer management board would set a modulated fee that covers the full net costs of packaging collection by local authorities and approximately 80 per cent of full net costs of recycling. The remaining, smaller portion would be managed through competing Packaging Recovery Organisations – similar to current compliance schemes but operating in a much more strategic fashion, to help to ensure that focus remains on meeting recycling targets and producing the necessary investment in real recycling activity.

For producers, the benefits are clear – as well as bringing efficiency and minimum cost, it would also give them a choice of service providers and the chance to be involved in innovative end market investments. Recyclers would have access to a higher quality of material, and support to make real strategic investment. Meanwhile, local authorities, which have previously largely missed out on PRN funding, would benefit from consistent, fair and stable funding, and also have a guaranteed outlet for the materials collected.

In the current climate, where everyone from local authorities to producers is calling for greater transparency and an increase in processing in the UK, linking the different stakeholders and giving each greater involvement in strategic planning can only help the UK system to perform better and expand our home-grown recycling industry.

UK reprocessing is seeing a surge which will help to secure markets and drive increased recycling capability in future years. At Valpak, we have seen an unprecedented number of new UK reprocessors coming onto the market in the last 12 months. This is good news for producers, local authorities and manufacturers. Not only will some of the pressure on PRNs be eased, but for local authorities and packaging producers keen to ensure that material is fully traceable and processed in a responsible way, UK markets are desirable.

Within the confines of necessary changes, the proposed managed competition model is capable of working to improve the situation for the entire supply chain and will also drive greater levels – and a better quality – of recycling.

We have a unique chance to reform the system in a way that will redefine the costs around collection and recycling, and transform the landscape for packaging. We must aim for a system that meets targets, facilitates constructive recycling, and drives the necessary incentives to enhance the position of all stakeholders; a system designed to meet – and exceed – the UK’s requirements.

ADRIAN HAWKES
Adrian.Hawkes@valpak.co.uk
01789 208754

To find out more about Valpak and the services they provide to the retail industry, click here. 

This article was originally published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.