Wine and spirits companies are calling for immediate government intervention after the cost of mandatory glass recycling has skyrocketed and ruined the profits of some businesses.
Companies that use glass bottles can purchase so-called packaging waste recycling notes under a 25-year-old system aimed at allowing companies that make and use packaging to fund recycling. Legally required.
The scheme is designed to act as a marketplace similar to carbon credits, legally mandating companies in the packaging supply chain to purchase banknotes in proportion to the packages they handle.
But companies say the market is uncertain, the cost of paper money has risen in recent years, and there is little evidence of a corresponding increase in recycling.
A company called Kingsland Drinks has seen its bills for packaging waste recycling notes for glass increase nearly 10-fold since 2018, to an estimated £2.2 million, largely due to a steep rise in cost per note. said.
Barring a dramatic change in prices or government intervention, Kingsland faces an estimated £2.8m claim in 2022, along with other recycling costs, which will wipe out all its profits.
Accolade Wines, the UK’s largest wine supplier, is facing a £2m claim this year, chief supply chain officer Derek Nicol said. He said the banknote’s price was “more volatile than bitcoin” and that the system was “not fit for purpose.”
While the cost of recycling energy-intensive glass is rising, the beverage group says the price of banknotes has skyrocketed and unpredictable pricing is hampering business plans.
Beverage groups such as the Wine and Spirits Trade Association, the Scotch Whiskey Association and the British Beer and Pub Association have repeatedly called for urgent reforms to reduce volatility and increase transparency at the Ministry of Environment, Food and Rural Affairs this fall. I have sent a letter.
“The glass PRN market is in jeopardy. As a result, glass prices have skyrocketed to unrealistic, unrepresentative, and unaffordable heights for some,” said Miles, chief executive of the Wine and Spirits Trade Association. Biel said.
“If we don’t act now, businesses will be cornered and unable to comply, which will inevitably result in significantly higher costs for consumers.”
This note is issued by waste processors and exporters to provide evidence that recycling has taken place. They are often purchased through so-called compliance schemes that handle recycling obligations on behalf of companies.
One problem with the system, according to Kingsland’s managing director Ed Baker, is that only 20-30% of banknotes are traded on official exchanges, with the rest off-market. .
In a letter seen by the Financial Times, the beverage group asked Defra in October to ask the Competition and Markets Authority to investigate “potential market manipulation to drive up prices”. They said the department had not indicated to do so.
Others in the market suggest that the volatility is due to a sudden shift in package usage as Covid-19 restrictions were imposed and lifted over the past two years.
A report from consultancy Eunomia this year shows that the recycling rate for glass in the UK remains around 43%, compared with 61% in France and 77% in Germany.
Defra held talks on potential reforms this year, but postponed some proposals, such as compliance fees and changes to the timescales over which notes are traded, pending “further development and engagement with the sector.” did.
Other reforms were promised from 2024, along with a broader overhaul to introduce a system known as extended producer responsibility.
Defra says: [recycling notes]Price fluctuations are expected, but we consulted on modifications to the way the system operates. It said it would introduce changes “soon.”
UK waste management group Biffa said in its financial results for the year to March that it “benefited from higher prices for packaged collection notes”. He declined to comment further, but said in a recent update that reforms to the PRN system would help “strengthen compliance.”
George Atkinson, policy director at Valpak, which runs the UK’s largest compliance scheme, said the PRN system has helped make the recycling business commercially viable.
However, he added that it would benefit from “enhancements” to increase price transparency and ensure the funds are used to increase recycling within the UK.