Pressure on packaging waste finance as targets get tougher

As the government reviews its waste strategy, and appears to drag its feet over addressing possible fraud in the recycled paper sector, there is uncertainty about how higher European Union (EU) recovery targets will be financed.

Facing 2008 targets such as 60% for paper and board, the different materials sectors are having to confront the challenge of recovering more packaging from the domestic rather than commercial/industrial waste stream. "The costs are going to go up, and the question is, who's going to pay?" says Jane Bickerstaffe, director of the Industry Council for Packaging and the Environment (Incpen).

The type of Green Dot levy system used by many other EU member states was rejected by UK ministers and industry over a decade ago. A spokesman for the Department for Environment, Food and Rural Affairs (DEFRA) says: "[Ours] is a market-based system which keeps costs lower than they might otherwise have been. It is not the right time to move away from this system, since we have to meet the next Directive targets in two years' time."

But according to Incpen, these lower costs have been possible precisely because the emphasis in the UK has up to now fallen on the commercial/industrial waste stream.

Another option, which seems equally unpopular with ministers, is variable charging of household waste. Here, some see the potential for a fly-tipping nightmare, and government is fearful of a 'stealth tax' outcry. But Incpen is among those groups calling for local authority trials to be allowed.

The current financing system is based on tradable Packaging Recovery Notes (PRNs), and PERNs, the waste export equivalent. The credibility of this system has been undermined by DEFRA enquiries first into irregularities in the plastics sector, and currently into apparent discrepancies in the paper/board sector. DEFRA is due to report back on this latest enquiry this month.

According to the Confederation of Paper Industries (CPI), over 200,000t of paper packaging waste was declared for export in 2005 above the calculated availability. "This would reduce the value and availability of PRNs and PERNS to be bought by obligated companies," says recovered paper sector manager Peter Seggie. He adds: "All parties need to believe that the system is working effectively."

The CPI has criticised DEFRA for taking a year to respond to its concerns. DEFRA claims that a move to online submission of data and electronic PRNs this year will help to reduce the possibility of fraud.