In a meeting earlier this week, the minister aired concerns about the pressures on the sector and noted the recent challenges for plastics recycling in light of oil prices which are continuing to fall.
The meeting comes ahead of a Waste and Resource Management Forum to be chaired by Marcus Gover of the Waste & Resources Action Programme (WRAP) next week.
The core topic discussed by Mr Rogerson and his audience is believed to have centred on how to encourage plastics recycling without distorting the free market. One concern is that companies, such as retailers and bottling firms, may decide to switch to using virgin polymers rather than recycled material because of the drop in the oil price. And, there are also questions about whether manufacturers and retailers are now backing away from producer pledges, such as the Courtauld Agreement and the Dairy Roadmap, to cut costs in light of the oil price collapse.
Defra is seen as having little room for manoeuvre in terms of taking firm action in the current marketplace although it is expected to draw up some suggested measures including encouraging retailers and producers to hold to their CSR pledges. The Department is further hampered by the fact that the General Election is due in May and little policy action will take place before then.
In the wake of the meeting retailers told letsrecycle.com that they are “aware of difficulties in the recycling industry and are supportive of the principles of recycled content in packaging and products.”
A spokesperson for the British Retail Consortium said that the organisation’s members were signed up to a number of commitments regarding the use of recycled content.
However, they added: “There is a wider challenge to be considered and that is the state of the UK recycling industry in general and the EU’s agenda to continue to push for increased recycling targets that do not have the infrastructure or commercial models in place to achieve these targets. The recent fall in oil price is a good example of what can happen when the model becomes stressed. The recycling process has to be commercial and, to ensure this, consideration should be given to whether anything be done to improve the quality and the quantity of the material that is collected for recovery.”
The BRC also noted that a significant barrier to the use of recycled materials is “the inconsistency of materials collected by local authorities and the resulting complexity of recycling for consumers.” The organisation advocated greater consistency of collection policies which would provide:
Facilitation of clear and consistent customer communication, which will improve recycling rates;
A more consistent feedstock for reprocessing;
Stimulation for development of reprocessing infrastructure due to increased market security.
Barry Turner CEO of PAFA (UK Packaging and Films Association) said that tremendous progress has been made by the UK plastic recycling industry over recent years although no one could have foreseen the way raw material prices have fallen and the indirect effect of these on operating margins of re-processors.
Mr Turner went on to warn how business models may need to be changed “and business efficiency levels may need to move up a gear, for one thing is certain, no one can assume that these sort of market shocks won’t happen again in the future.”
The PAFA chief said that in terms of what could be done to help the present market right now this could take a number of forms but for those that need immediate help, government and other stakeholders could step in to provide temporary breathing space whilst the necessary changes are made.
Mr Turner continued: “However a number of structural issues then need to be addressed and these seem to include the need for brands and retailers to consider how committed they are to the inclusion of recycled content in food and drink applications and more importantly on what terms. Also, one has to wonder whether the present type of contracts typical in some parts of the market that dictate the price paid by reprocessors for feedstock, and the price they can then sell reprocessed materials on, are truly robust and sustainable.
“Reprocessors need certainty that they can obtain feedstock at a known price and quality level and equally can then sell this on once processed at a price that will allow them to operate and grow.”
The oil price pressures on the recycling sector have also been highlighted by Philip Law, director-general of the British Plastics Federation who said that “areas of plastics recycling are becoming uncompetitive and this is threatening not only the viability of businesses but also, potentially, the recycling record of the whole supply chain.”
Mr Law said that the BPF is calling on companies in the downstream supply chain, when considering their materials selection policies, to keep to the fore the fact that high recycling targets have to be met under the Packaging Waste (Producer Responsibility) Regulations and that many individual corporate social responsibility programmes support increased recycling levels.
And, he added: “Plastics recycling is an essential component of the whole chain’s sustainability message and we should not allow our record to regress.”
The waste management sector has also been involved in the talks. Steve Lee, chief executive of the Chartered Institution of Wastes Management said he had no comment to make on the commodities markets for recycling.
A spokesperson for the Environmental Services Association said: “The whole recycling sector is clearly facing severe challenges at the moment, caused by a combination of factors that are steadily decreasing prices for recyclates. Particularly damaging for plastics recycling is the dramatic drop in oil prices, which makes virgin plastics less expensive at a time when local authorities have less and less money to spend on things like communications to households.”
The association added: “We welcome that Defra now seems to take the problems for plastics recycling seriously, but the risk is that purdah, and the upcoming elections, postpones any actions from the government, which would mean that we lose precious time.
“Immediate interventions from the government to help the industry get through the short-term pain would of course be welcomed by the industry. But we also need a long term strategy to ensure more certainty and stability for recycling in the UK. ESA is actively involved in discussions with the rest of the plastics recycling industry to identify possible solutions.”
The Resource Association is also thought to have attended the meeting. In a pre-election message to the political parties, the association’s chief executive, Ray Georgeson, has highlighted the need for economic incentives to development the resource management and circular economy. The association is arguing for the expansion of the market for reused and recycled products and materials by reforming government procurement rules, putting appropriate economic incentives in place, and placing a sustained emphasis on public communication and engagement.