Packaging Recovery Notes (PRNs)
A Packaging Recovery Note (PRN) is a certificate to prove that one tonne of packaging waste in a certain material has been recycled.
PRNs are required to offset your obligation
and the money paid for them is used to fund the recycling of packaging waste within the
UK (similar to carbon off-setting).
The number of PRNs you are obligated for is calculated from the total weight of packaging you handled in the previous year and the “activities”
performed on this packaging.
As your Compliance Scheme Kite takes on your PRN obligation and obtains the PRNs you require to cover your registration.
Kite has established relationships with preferred reprocessors to ensure the validity of the PRNs purchased.
Kite’s financial strength ensures security of supply, which in
turn protects you.
Click here to find out about Kite's Packaging Compliance Scheme.
How does the PRN system work?
In response to an EU Directive on Packaging and Packaging Waste in 1994, the UK Government developed the PRN system in order to meet
the recycling target for Packaging Waste set by the Directive.
The Government’s approach was to go to existing reprocessors of material waste (such as commercial and construction waste) and give
them an incentive to recycle Packaging Waste. If the reprocessor became licenced with the Government and started to recycle packaging
waste in conjunction with its other activities, then for every tonne of packaging waste recycled in a given material the reprocessor
would be able to issue a Packaging Recovery Note (PRN). This PRN would be evidence that one tonne of Packaging Waste had been
recycled in the UK. The reprocessor could then sell this evidence on the open market for whatever value they can obtain for it,
with the caveat that they must re-invest all the money from the sale of PRNs back into their business, in order to increase their
capacity to recycle Packaging Waste.
This creates the supply of PRNs, however, who would want to buy a PRN?
The Government then needed to create a demand for PRNs so they went to industry and said to obligated companies, those with a turnover
above £2million and handling more than 50 tonnes of packaging, that they would have to recycle a proportion of the packaging that they
placed onto the UK market during the course of their business activities. They could not however do the recycling themselves,
but instead they were required to obtain evidence of recycling, and the only evidence accepted would be Packaging Recovery Notes (PRNs).
This was effectively a green “packaging tax” on companies that was then used to fund recycling of packaging waste within the UK.
As a Compliance Scheme we help our members comply with the whole process. In order to complete a packaging tax return you need to
assess the packaging that a company has handled in the previous calendar year, subject to a number of conditions.
To help companies, at Kite we undertake an initial assessment of your obligation, provide a bespoke data collection template, complete your
company’s calculations and finalise your data or packaging tax return. Kite then submits this to Government on behalf of your company and
obtains the necessary PRNs to offset the obligation.
Reprocessors are companies who reprocess waste material that they collect or purchase. They then sell the resulting raw materials to
a variety of manufacturers that use it to create new products.
Under the Packaging Regulations, for each tonne of Packaging Waste (rather than general material waste) that is collected and
reprocessed a PRN, or Packaging Recovery Note, can be produced by the reprocessor.
These PRNs can then be sold by the waste reprocessors and are designed to act as a secondary revenue stream, providing the waste
reprocessor with the resource to increase their recycling and collection capacity in future years.
Packaging Recovery Notes come in a variety of material types and are used by Producers (companies obligated under the Packaging
Regulations) to offset their obligations. The PRN material that Producers require to offset their obligation depends on the
breakdown of packaging materials that they handle in a given year, and the number of PRNs they require reflects the volume of
packaging handled. Find out if you may be obligated.
The number of PRNs that a reprocessor produces in a given year depends on the volume of material that a waste reprocessor collects
or purchases in that year, coupled with their production capacity. Whether they can sell their PRNs depends on the volume of
demand by Producers for that particular material.
The cost of PRNs can fluctuate quite widely in a given year, with some materials being more volatile than others. Kite has
long term relationships with reprocessors to ensure the PRNs used to offset Members obligations are not fraudulent.
Over 90% of companies comply with the Packaging Regulations via a compliance scheme like Kite’s. A compliance scheme takes on the
legal obligation of its Members and in so doing, it is the compliance scheme that is required to purchase the Packaging Recovery
Notes (PRNs) to cover its aggregated scheme obligation. Clearly PRNs have a cost, and this PRN cost is recharged by compliance
schemes to their member companies to cover their individual PRN obligation. So if you are a member of a compliance scheme, the
scheme will purchase PRNs for you, so you don’t need to worry about this.
What are PRNs? PRNs, also referred to as Packaging Waste Recovery Notes are evidence that one tonne of packaging waste has been
reprocessed for re-use within the UK. They can only be issued by accredited reprocessors who are doing the reprocessing activity
and cannot be obtained from by companies getting their packaging waste collected.
What drives PRN cost? Unlike many commodities, where prices are driven by wider macroeconomics, the PRN market is a “market within
a market”. The simple drivers of supply and demand within this market determine the price of PRNs or their export equivalent PERNs:
The demand = the obligations of registered companies to buy PRNs.
The supply = the total recycling of packaging waste being done by all the accredited reprocessors.
Accordingly, PRN prices act in a similar way to shares on the stock exchange and the cost of PRNs can vary on an hour-by-hour,
If PRN prices fall too much, reprocessors will not seek re-accreditation, which means the supply of PRNs reduces. This in turn
pushes PRN prices back up, which makes being an accredited reprocessor more attractive, which then increases supply. Other factors
affecting the market include: the quality of waste generated and what is acceptable for export markets and chaos, namely where a
large reprocessor is taken out of the market due to an unexpected event, e.g. a fire.
If you need to purchase PRNs as you are not in a compliance scheme, please contact us on 02476 420 080 and we’ll help you.
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