Packaging Waste Regulations

Update 15 November 2011

Are you affected?
What must you do?
Summary
How it works
Scope and technical interpretations
Registration
How can you register directly with the Agency?
Data requirements
Targets
Fees
Reprocessors and Exporters
Current situation
Industry liaison with Defra and the Agencies
Contact details and further information

Are you affected?

In your last set of accounts, did your company total turnover – including any subsidiaries if you are a group - exceed £2m.
AND
Did your company – or group of companies that you own or are part of – handle more than 50 tonnes of packaging in the last calendar year.

‘Handle’ is packaging placed on the UK market that is owned by a business and includes the manufacture or conversion of packaging materials or packaging materials used by that business around products it supplies. It includes imports but excludes exports.

The definition of ‘Packaging’ is anything made of any materials for the containment, protection, handling, delivery and presentation of goods from the producer to the user or consumer.

If you answer ‘yes’ to 1 AND 2 above, you are obligated. If you answer ‘no’ to either, you are not obligated and can relax.

Our website shows recent prosecutions for companies that have failed to register.

The EA have now started to publish the list of those companies that have had Enforcement Undertakings approved for not having previously registered.

If you are uncertain as to whether you are obligated, 360 Environmental can help to determine your position and if necessary get you registered. 

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What must you do?

If you are obligated, you must register. Up to 7th April, you have the choice of registering direct with an environmental Agency or through a scheme. After 7th April, unless you suddenly become obligated – for instance, through acquisition – you will have committed an offence and be open to prosecution by the appropriate Agency. However, you may still register with an approved Compliance Scheme and as long as you do this, it is unlikely that action will be taken unless you have not registered in previous years when you should have done.

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Summary

The Producer Responsibility Obligations (Packaging Waste) Regulations first started in 1997. There are now approximately 6,800 companies (a total of 10,000 businesses including subsidiaries) registered through the Environment Agency (for England and Wales), the Scottish Environmental Protection Agency (for Scotland) and the Northern Ireland Environment Agency (for Northern Ireland). Nearly 6,300 of these are registered through Compliance Schemes with the remainder registered direct with the Agencies.

A number of amendments to the Regulations have been introduced for 2011. These have been listed on an Environment Agency factsheet.

There have been many prosecutions by the Agencies of companies that have not registered with the largest fine being over £270k. The Agencies have a duty to track down free-riders as well as monitor registered producers to make sure they are submitting data that is ‘as accurate as reasonably possible’.

The following illustrates the type of business that may therefore be a producer – assuming they meet the turnover threshold test.

1. A chain of off-licenses supplied by UK wholesalers are likely to sell products to consumers in more that 50 tonnes of glass, plastic and metal containers. They will therefore be obligated.
2. A trading company that imports products to sell to retailers might handle more than 50 tonnes in a year, taking account of the primary, secondary and tertiary packaging including pallets.
3. A food manufacturer might fill over 50 tonnes of plastic trays with cardboard outers in a year that is then supplied to wholesalers.
4. A pallet manufacturer may produce over 50 tonnes of pallets in a year.
5. If a business exports products, then the packaging around the products must be deducted to determine whether the 50 tonne threshold is met.

There are no up to date government Guidance documents covering all the recent amendments, but the most recent to be issued by Defra in 2006 covers most of the requirements. Strangely, it is not available on the Defra website but is available on BERR's.

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How it works

Where a business meets the threshold tests, they are required to meet annual recycling targets related to the packaging type and weight for which they are responsible. This is done by registering, either direct with the appropriate Agency (by phoning one of the numbers below) or through a compliance scheme. When registering, they must provide data for the weight of packaging handled in the previous year by material type. Government set targets are then applied to this to produce a set of tonnages for which the company must obtain ‘evidence’ that an equivalent weight has been recycled over the year. ‘Evidence’ is known as Packaging Recovery Notes (PRNs) and is obtained from accredited sites that reprocess material and is purchased at a price that relates to supply and demand. Packaging Export Recovery Notes (PERNs) are generated by accredited businesses that export material for recycling.

For example, business 1 above ends up with a target of 150 tonnes of glass, 5 tonnes of cans and 20 tonnes of plastic derived from the targets being applied to the weights of packaging it has sold to consumers. For glass, it would need to obtain evidence that 150 tonnes had been recycled. This ‘evidence’ would need to be purchased from a reprocessor of glass – a glass melt factory, for instance, that produces new bottles from the recycling of old bottles. The reprocessor can only sell evidence for the amount of glass it recycles. If the overall UK demand for evidence is significantly less than the amount available, the laws of supply and demand will mean the price for evidence will be low. If the market is tight, the price will rise and if it is expected that there will not be enough to meet demand, the price will shoot through the roof. For producers to comply with their obligations, they MUST have sufficient evidence to match their targets. The theory is that if there is a shortage, the high prices make it more worthwhile collecting and recycling waste and that should then produce enough for people to comply. That theory has yet to be fully tested as the targets have been met every year except in 2001 - the first EU target year. In that year, one scheme - Wastepack - elected not to purchase PRNs as the route to meeting targets and the UK ended up with insufficient evidence to demonstrate it had met the targets. However, the price of PRNs has fluctuated greatly over the years generally due to the perception of under supply rather than the reality. 

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Scope and technical interpretations

Whilst in theory, packaging should be fairly easy to define, in practice, there are many areas where there will be a number of interpretations of what is obligated and who should take responsibility. For instance, where packaging is formed and filled on the same production line, there are some who will argue the supplier to the production line should take the convertor obligation and others who believe - as a strict interpretation of the Regulations would suggest - it should be the production line. The Agencies have formed a view on many of these grey areas that have now been published in an Agreed Positions and Technical Interpretations (v8 updated 21 Dec 2011) document.
 
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Registration

Producers have to register. However, they have a choice of how to register. The legal deadline for registration is 7th April for direct registrants and 15th April for Compliance Schemes each year. As detailed below, producers can register direct with one of the three environmental Agencies – EA for England and Wales, SEPA for Scotland and NIEA for Northern Ireland – or through an approved compliance scheme. At the last count, there were 22 separate operators who all tend to operate to slightly different models but who all have to deliver the same thing – compliance on behalf of their members. A scheme takes on the legal liabilities for its members and therefore if they fail to comply, it is the scheme that gets prosecuted not the member. Schemes must ensure that their members supply accurate data which they then also register with whichever Agency they themselves are registered with. Schemes then have to meet the aggregated targets of their members and at the end of the year, demonstrate they have purchased sufficient evidence. Changes to the Regulations for 2011 mean that a Producer is not considered a regsitered member of a scheme unless that have paid the Scheme's membership fee and the Agency fee and have supplied data for registration.

From a producer point of view, there are pros and cons for each option. To register direct with an Agency, the producer has to complete a table relating to the packaging placed on the market and send it to the Agency with a fee by 7th April. The Agencies have comprehensive guidance on registration. To register with a scheme, a producer must supply similar data to the scheme although the scheme will generally help to translate data into the necessary table format. The scheme will then register the member by 7th April. However, most schemes have a cut off data for data and fee payment of around the end of February to enable them to check and put together the aggregated data for the Agency.

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How can you register directly with the Agency?

The Regulations allow producers to register directly. This means that they retain full legal liability - unlike joining a scheme where that liability passes to the scheme. To register, they must:

• Complete the registration process by 7th April
• Pay a registration fee to the Agency that MUST be with the Agency before 7th April
• If their obligation is greater 500 tonnes, they must complete an Operational Plan
• During the compliance period, purchase the necessary evidence to meet their targets
• Submit a Certificate of Compliance to the Agency by 31 January in the year following a compliance period

Direct registration is carried out through the National Packaging Waste Database (NPWD). To start the registration process, a producer must contact the Agency relative to their location (EA for England and Wales, Sepa for Scotland and the NIEA for Northern Ireland) to get a login. WITHOUT THIS, YOU CANNOT REGISTER DIRECT.
Their contact details are as follows:

• In England and Wales: 08708 506 506 or email
• In Scotland: 01786 457700 or email 
• In Northern Ireland: 028 9056 9338

They will need the following details to issue a login:

• Name
• Position within company
• Telephone Number
• Fax number
• E-mail address
• Company address
• Companies House registration no (if applicable)

Once you have the login, you can go to the NPWD site, login and download or complete the forms.

The Agencies have issued a comprehensive Guidance document for registration.

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Data requirements

The data that has to be provided relates to the supply chain and is divided into 4 activities:

• The Raw Material Manufacturer that produces the material that packaging is made from eg a paper mill producing corrugated cardboard.
• The Convertor that turns the material into packaging eg a cardboard box manufacturer
• The Pack-filler that places products into packaging eg a food manufacturer
• The Seller who passes the packaged product onto the end user who then discards that packaging eg a supermarket

These four activities share 100% of the responsibility for the packaging. The Raw Material Manufacturer takes 6%, the convertor takes 9%, the packfiller takes 37% and the seller takes 48%. Basically, therefore, each bit of packaging that ends up in the UK dustbin will have had 100% responsibility applied through the supply chain.
So if a manufacturer of baked beans (with a turnover above £2m in the previous financial year) fills 100 tonnes of steel cans, they would be obligated under these regulations (as it has handled more than 50 tonnes of packaging that has gone onto the market). But when it reports its data, it will only have targets applied to 37 tonnes of that because they are a packfiller and pass the cans onto someone else who sells them to the final consumer.

Targets for recycling and recovery are set for each year by Defra to ensure initially, that the UK met EU targets for 2008. Although the EU has not increased targets beyond 2008, Defra has chosen to continue to increase them up until 2010.
The Regulations apply to nearly all packaging although there are some exceptions. For instance, there has to be ‘deemed supply’ where the packaging is passed from one part of the chain to the next. If it is used only for internal supply eg as transit packaging between warehouses belonging to the same company, then that company does not have to report it.

For imported products, the company taking ownership when it comes through customs is considered the producer and must take the rolled up obligation for the activities that happened prior to import into the UK. For exported products, the packaging must be reported but it does not have the targets applied.
Different recycling targets are applied to different materials and producers must therefore report under 7 material types:

• Paper/card eg cartons, labels of certain types, layerboard, paper bags
• Glass eg bottles, jars
• Aluminium eg cans, aerosols, foil trays
• Steel eg cans, drums
• Plastic eg bottles, pallet wrap, bags
• Wood eg pallets, dunnage
• ‘Other’ which includes things like jute and cork.

The recycling and recovery targets applied to the activity percentage (packfiller, seller etc) applied to the tonnage of packaging placed on the market by a company determines what a company’s tonnage obligation is.

360 have produced an Obligation Calculator which can be downloaded as an Excel spreadsheet. There are also notes available to help understand how to complete the table.

If a producer’s turnover is between £2m and £5m turnover have the option of registering as a ‘small producer’. This entitles them to calculate data more simply than full producers through a government set tonnage multiplied by their turnover in millions of pounds. For 2011 and 2012, the figure is set at 29 tonnes per million pounds of turnover. Therefore, a company that had a turnover of £3.458m in their last accounts would have an obligation of 100.28 tonnes rounded down to 100. This would be in the predominant packaging material handled by the company. Whilst this clearly offers administrative benefits, it is nevertheless an option that companies only tend to use if it gives them a lower obligation than they would get using the full producer method of calculation.

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Targets

Defra normally try and set targets at least three years in advance. Each time it wishes to change or add to the targets, it must go through a consultation process that can take up to 6 months. Since the Regulations started, the targets have effectively delivered a doubling of recycling and recovery.

The targets for 2011 and 2012 have now been set with increases only in steel and plastic above the 2010 levels. These are the targets applied to the obligated tonnage for each business. A compliance scheme will therefore have to procure PRNs/PERNs for the sum total of all its members obligations.

Each material has its own individual recycling target. In addition, an overall recycling target will be set that will generally be larger than the sum of the material recycling targets. The difference can be made up with evidence from any material – normally the cheapest. There is also an even higher overall recovery target and the difference between this and the overall recycling target can be made up with evidence from either material recycling or recovery. Recovery evidence is generally where waste containing an element of packaging goes through an energy recovery process eg incineration with energy recovery.

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Fees

Regardless of whether a producer registers direct or through a scheme, they have to pay a fee that goes to the Agency.

The Agencies also charge a £110 fee for late registrations and £220 for re-submissions where producers have to recalculate data because of errors.

Schemes charge a variety of fees in addition to the Agency fee. Some charge a low membership fee of £300-500 but then add on costs through additional services – visits etc – and a margin on the PRNs whilst others charge a high fee that covers everything in relation to scheme membership.

Producers also have to remember that regardless of which route they take, they must pay for the cost of PRNs needed to satisfy their obligation. There is little transparency on these costs and it is difficult for a producer to compare between schemes, let alone know whether they are paying a competitive price if they are a direct registrant. Indicators like t2e and letsrecycle give a picture of sorts, but they do not necessarily paint a true picture as they will be dictated by varying circumstances. But 360 Environmental can help Producers to decide which route to take and to provide independent advice on which scheme might best suit them.

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Reprocessors and exporters

Evidence can only be issued by approved UK reprocessors or exporters in the form of PRNs and PERNs.

For each compliance year, reprocessors and exporters have to submit applications for approval by September 30th in the previous year. The latest Guidance document GN01v7 includes information on the registration of facilities operating under the End of Waste Regulations. They then have to provide quarterly returns showing the amount of material they have received and the amount of PRNs they have issued. This data is published on NPWD normally on the 22nd of the month following a quarter except for Q4 which is not published until the end of March.

There are two types of approval. For those issuing less than 400tonnes of evidence a year, they must pay a fee of £505. For those issuing more than 400 tonnes, they must pay £2,616 for approval. Reprocessors and exporters no longer have to submit an annual independent audit of their processes.

The table below shows the number of UK and Export accreditations for each year as of 26 April 2011.

Current situation

New EU End of Waste Regulations for iron, steel and aluminium come into force on 7 October 2011. Defra is currently looking at changes in the point at which PRNs can be issued to take account of these Regulations.

Industry liaison with Defra and the Agencies

The majority of industry/Government liaison on the Packaging Regulations is conducted through the Advisory Committee on Packaging although from 31st March, it will be designated an Expert Committee rather than a Non-Departmental Public Body.

The Agency Industry Packaging Liaison Group is a more tactical body that considers ongoing technical issues. It is run by the EA with representatives from all the Agencies and from a very small number of schemes, direct registrants and reprocessors. It publishes its minutes here.

Contact details and further information

Environment Agency - 08708 506 506 or email

EA Data

SEPA – 01786 457700 or email

NIEA - 028 90 546 408

DEFRA

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