1. NERF meeting – The PRN system 19 th March 2013

2. © Valpak All Rights Reserved Agenda Introductions and purpose of the meeting UK system Original design intentions Market dynamics Cost comparisons with other countries Questions for discussion

3. UK system operation

4. © Valpak All Rights Reserved Introduction UK system designed in close consultation with industry in mid 1990’s Key principles: Market based, using and incentivising existing infrastructure Competing schemes Shared responsibility Includes both household and commercial packaging to meet targets Designed to meet national targets at minimum long term cost to producers Refinements gradually introduced to improve operation and legislation: On line NPWD system 5 year target visibility (apart from 2010, 2011) Improved enforcement

5. © Valpak All Rights Reserved The UK system for packaging Finished Goods - Packaging - Other products Reprocessors and Exporters W.M.C.s C+I Material L.A. Material Packaging Waste Packaging recycling has always occurred to the extent it is economically viable

6. © Valpak All Rights Reserved The UK system for packaging Legal responsibility for increasing rates passed to producers Finished Goods - Packaging - Other products Reprocessors and Exporters W.M.C.s C+I Material L.A. Material Packaging Waste Recycling Obligations 1997 Packaging Waste Regs. UK Business

7. © Valpak All Rights Reserved The UK system for packaging Additional funding injected to provide impetus Finished Goods - Packaging - Other products Reprocessors and Exporters W.M.C.s C+I Material L.A. Material Packaging Waste Recycling Obligations Recycling Obligations (Data and £££) Data and Evidence 1997 Packaging Waste Regs. UK Business £££ Recycling Evidence (PRNs) Compliance Schemes

8. © Valpak All Rights Reserved The UK system for packaging Increasing activity at each stage of the chain Finished Goods - Packaging - Other products Reprocessors and Exporters W.M.C.s C+I Material L.A. Material Packaging Waste Recycling Obligations Recycling Obligations (Data and £££) Recycling Evidence (PRNs) Data and Evidence 1997 Packaging Waste Regs. UK Business £££ £ end markets £ collection processing £ material price Compliance Schemes

9. © Valpak All Rights Reserved System operation: the market balance Equilibrium helped by -long term target visibility -long term contracts Low cost PRNs Less investment in recycling Shortage of PRNs High cost PRNs More investment in recycling Surplus of PRNs Tightening of market due to higher targets or market bottlenecks PRN prices are NOT directly related to the cost of recycling Focus on lowest cost sources of extra marginal tonnage System has met targets every year

10. © Valpak All Rights Reserved PRN market dynamics SurplusShortage +5% £20 £5 0%-5% £200 “In balance” material specific price PRN price General recycling price Potential for rapid rises if perceived shortfall Cost of PRNs driven by Net collection and recycling cost PRN supply & demand

11. Europe: Comparing the Costs of Compliance

12. © Valpak All Rights Reserved Multi-Material Scenario Obligated company imports and sells to the general public: 800,000 steel cans of tomatoes (av. 34g) 500,000 aluminium cans of soft drinks (av. 20g) 150,000 bottles of wine (av. 370g) 19,250 cardboard boxes (av. 240g)

13. © Valpak All Rights Reserved How do the Costs Compare? (2012) Average

14. © Valpak All Rights Reserved Multi-Material Summary In this scenario the average cost for meeting recycling/recovery obligations in Europe is £6,050.43 Complying in the UK in 2012 costs just £2,445 Making the UK nearly 2.5x cheaper than the average In 2012 the prices for glass and steel recycling evidence in the UK were much higher than normal Assumed average 2012 price Glass = £40/tonne Steel = £15/tonne On an average year the UK costs would be around £1,330

15. © Valpak All Rights Reserved Glass Cost Comparison: 200g beer bottle (pence)

16. © Valpak All Rights Reserved New Targets (%) 201220132014201520162017 Paper 69.5 Glass 81 Aluminium 404346495255 Steel 717273747576 Plastic 323742475257 Wood 22 Total Recycling 68.16969.970.871.872.7 Total Recovery 747576777879

17. © Valpak All Rights Reserved Plastics Challenge Total plastic collected in 2017 needs to be 330kT more than 2012 Plastic is highly diverse Need to collect 25% of the untapped resources, including:

18. © Valpak All Rights Reserved Scale of the Challenge

19. © Valpak All Rights Reserved How This Will Affect You

20. © Valpak All Rights Reserved Glass: Packaging on to the Market (Estimates) * Estimate assumes 1% growth per annum 2,686 Kt 2,767 Kt 2,740 Kt 2,713 Kt 2,795 Kt 2,823 Kt

21. © Valpak All Rights Reserved Glass Reprocessing 2012

22. © Valpak All Rights Reserved Glass Cullet Prices: 2012 (£)

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