Recovery PRNs drop as EfW plants receive R1 status

Recovery packaging recovery notes (PRNs) have dropped in price as a result of an increase in the number of incineration facilities given R1 status.

Seven operational plants applied for the energy efficiency status in 2015, taking the total number of facilities that have successfully applied or gained the accreditation to 23. Of these, 10 are currently operating with R1 status. The increase of facilities applying for R1 status came in response to a ruling that allows only registered energy from waste plants to issue packaging recovery notes (PRNs).

The R1 formula

The R1 formula is designed to incentivise municipal solid waste incinerators to improve their energy recovery performance. In order for an incineration facility that processes municipal solid waste to be classified as recovery (as an EfW plant), the operator must first apply to the Environment Agency (if in England) or Natural Resources Wales (if in Wales) for R1 status. Achieving the accreditation means that energy from waste plants can be classed as a ‘recovery’ rather than a ‘disposal’ process for the treatment of waste.

It is not compulsory for operators of UK facilities to obtain R1 status, but a ruling that came into force last year under the Producer Responsibility Obligations (Packaging Waste) Regulations 2007 , means that only those energy from waste facilities that are R1 compliant are able to issue packaging recovery notes (PRNs). This resulted in soaring prices of recovery PRNs.

Chris Taylor, Clarity Environmental’s Commercial Manager, said: “As a result of the ruling last year, only seven operational energy from waste plants in England were able to issue PRNs. This very quickly led to a shortfall in recovery PRNs, with just half of the 500,000 tonne obligation fulfilled. With so little available, producers were having to buy paper and wood PRNs to cover their recovery obligation and meet the expected shortfall, and as a result prices soared.

“With PRNs increasing revenue for plants, it is in the interest of facilities to apply for R1 status, so we fully expect more operators to apply. Whether this will end with new applicants receiving the higher PRN prices will remain to be seen, as a large influx of recovery PRNs into the 2015 market in December and January has caused the higher prices to fall away.”

The criteria for achieving R1 status is set out in the EU Waste Framework Directive and acts as a performance indicator for the level of energy recovered from waste. It is based on factors that include the energy produced by a plant and the energy contained in the waste. Where the value of R1 is calculated as being greater than 0.65, the process can be classed as a recovery rather than a disposal operation, placing it higher up the waste hierarchy. There are 29 energy from waste plants in operation or under construction that are said to be likely to qualify if they applied.

Consultation to update UK laws

Defra has launched a consultation to get views on plans to update UK laws to adjust the energy efficiency formula used by energy from waste plants seeking recovery status. Differences in climate across the EU mean that it is technically more difficult for energy from waste plants to produce electricity from waste in warmer climates. The amendment will allow operators of plants in these climates to obtain R1 status more easily.

Defra is holding a short four-week consultation and has asked for views on the proposed changes, which are planned to come into force by 31 July 2016. The changes are said to have little or no impact to producers and operators in England and Wales.

Contact us

Clarity provides waste to fuel solutions you can trust, facilitating the diversion of waste from landfill to energy from waste plants (EfW). If you are a waste producer or an energy from waste facility, contact us on 0845 129 7177 to hear about our expanding network, and discover how we can help.

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