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Packaging review: 2022 FTD performance

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UK 2022 obligation

The 2022 UK obligation data published by the Environment Agency on 16th May 2022 provided some surprises. With many producers gradually reducing or replacing plastic packaging to achieve sustainability commitments and/or minimise Plastic Packaging Tax liabilities; the release of the obligation data was particularly anticipated as it would provide much needed information with respect to plastic packaging usage and also corresponding paper and aluminium replacement.

With the exception of wood, the UK recycling targets increased from 2021 to 2022 for every packaging material and most notably for paper and aluminium, which increased by 5.06% and 4.55%, respectively.

The chart below shows packaging handled against obligation for 2021 and 2022 for each material. For every packaging material except wood, the quantity handled in 2022 was lower than in 2021 and furthermore, despite the 2022 target increases, the UK 2022 obligation is currently lower that the 2021 obligation for every material except wood and paper.

The reduction in packaging handled is likely to be attributable to a range of factors, including replacement of plastic by other packaging materials and a change in consumer behaviour. The decline in glass, steel and aluminium packaging seems a likely consequence of a reduction in the home drinks sales that occurred in the first year of the pandemic. Plastic and paper also appear to have reduced perhaps due to the apparent reduction in online shopping which may have affected the consumption of cardboard postal packaging. Wooden packaging, usually predominantly used for building materials, was significantly reduced in 2020 due to the pandemic. The increase in 2021 appears to be indicative of a return to normal business activities and indeed, the quantity of wood handled in 2021 differed from that in 2019 by only 0.01%.

2022 UK Recycling

Increases in the cost-of-living and changes to consumer shopping behaviours, appear to be impacting on recycling which is lower in Quarter One 2022 when compared with the same period in 2021; indicating that there is less packaging waste being generated. With the exception of wood and aluminium, the quantity of each packaging material recycled in Quarter One 2022 was also lower than that in Quarter Four 2021. As is always the case, there are numerous factors affecting recycling, high energy costs affect recycling; both positively and negatively depending on the packaging material, and the war in Ukraine may potentially impact on recycling of materials such as paper and steel.

The UK has achieved its 2022 obligation pro-rated in Quarter One 2022 for wood, aluminium and glass, (which interestingly includes re-melt). Achievement of the 2022 glass re-melt obligation pro-rated is worthy of note since the UK only achieved its 2021 glass re-melt obligation through use of 2020 PRNs that were carried forward into 2021 (i.e. the quantity of 2021 in-year glass recycling through remelt was lower than the UK’s 2021 obligation). Glass re-melt appears to be performing well in 2022, with the lack of restrictions affecting the hospitality sector generating a good supply of cullet and the high energy prices stimulating the demand for this. The reduction in steel recycling, whilst generally applying across all grades and for both UK and export markets, is particularly notable in UK steel can recycling, despite its current high material value. A significant reason for this appears to be that a major UK reprocessor was not accredited until Quarter Two 2022, so will have been unable to issue PRNs in Quarter One 2022. We expect the steel position to improve during the course of 2022.

Whilst achievement of the 2022 UK obligation may appear uncertain and perhaps indicative of high PRN prices for the remainder of 2022, it is important to note that if 2021 PRNs carried forward into 2022 are considered on a pro-rated basis, the UK would have achieved its 2022 obligation pro-rated for overall recycling and every packaging material except steel.

In general, both material prices and PRN prices are relatively high, so at this stage in the compliance year there is significant opportunity for collections to increase, the UK obligation to be achieved comfortably and for prices to stabilise. The Quarter Two UK data, which is due to be published on 26th August 2022 will allow for further assessment of this.

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