Recycling is an emotive issue so the suggestion that the UK's current policies might not be achieving a great deal is bound to stir up strong feelings. The fact that the UK's second largest recycling compliance scheme Wastepack failed to meet last year's targets might suggest there are problems, particularly when the government seems to be doing little to take it to task. The recycling system is a complicated beast with various organisations responsible for recovering and recycling different amounts of packaging, with the UK's current targets set at recovering 50% of all packaging waste. However the main burden lies with the retailers; any company with a turnover of more than £2m is obliged to recover 48% of this 50%, in terms of the packaging that leaves their stores. But rather than root through their customers' bins, the UK has implemented a special trading system to allow obligated groups to do their duty. Reprocessing companies issue special vouchers, packaging recycling notes (PRNs) to represent the amount of waste that has been recycled. Organisations like retailers can then buy these notes which prove to government that they have fulfilled their obligation by effectively funding so much recycling. Where compliance organisations like Wastepack come in is by acting almost as a broker on behalf of retailers and other obligated organisations. They pay a membership fee to join and let the compliance scheme buy the PRNs on their behalf. Still with me? Wastepack, which has companies such as Somerfield and Heinz as members, was obliged to recover 415,000 tonnes of packaging waste on behalf of its members last year, yet only managed to obtain PRNs for 180,000 tonnes ­ less than half. The company is registered with the Scottish Environment Protection Agency, which said in a statement: "SEPA has concluded that Wastepack, in 2001, has failed to take reasonable steps' to recover and recycle packaging waste. However, in the circumstances, SEPA considers that this failure is not enough to warrant exercising its powers to give notice of deregistration. A formal warning letter will be issued." This decision has been greeted with outrage. John Webb-Jenkins, chief executive of the Institute of Packaging, says: "All they've received is a slap on the wrist, it's pathetic. If people aren't going to be brought to book over things like this then it's all a bit silly. It undermines the system's credibility." And those views are being echoed across the industry. SEPA says its decision is justified and won't take any further action against Wastepack. However others have pointed out that the agency receives a regular income from Wastepack, about £400 for each member. As Jane Bickerstaffe, of the Industry Council for Packaging and the Environment, says: "If SEPA delisted them they would be shooting themselves in the foot because they would be losing a portion of their income." However a spokesman for the agency denies this is an issue: "That did not even enter into our decision in anyway. Would you say the same about other organisations like Ofwat or Ofgem? There has never been any suggestion of any form of impropriety, I can't refute that strongly enough." Wastepack has refused to comment on the issue or why it failed to reach its targets, but did put out the following statement: "We welcome the pragmatic approach adopted by SEPA in reviewing our 2001 compliance activities. We look forward to working with SEPA to ensure that the objectives of the packaging waste regulations are met in the future." It is still possible that the Scottish ministers can overrule SEPA's decision and impose harsher penalties on the company, but as yet there has been no indication that it will and, as a result, many companies doubt that the regulations have any bite. The UK's leading compliance scheme Valpack is currently making strong representation to SEPA over the issue. But is it such a black and white situation? Wastepack says it hasn't simply pocketed the cash, so is there method behind its apparent refusal to comply? Its lack of comment does not help its position but it has published a document of amendments to the system in which it says obligated parties should have the option of investing in the collection or recycling infrastructure, rather than simply buying PRNs to fulfil regulation requirements. The Co-operative Group is one of Wastepack's members and doesn't have an issue with the group's activities. Duncan Bowdler, trade liaison manager, says he thinks the company was trying to point out the flaws in the PRN system. "As far as I'm concerned we have complied, we've paid our money and done our part. Wastepack have made the case that they have been investing the money from members in getting waste directly from the waste stream, rather than going through the reprocessors. "I certainly don't think they've been duping their members and taking the money. I think people are using this as a smokescreen to cover up their own shortcomings." Whichever way you look at it, it's clear that the situation with Wastepack is a symptom of a system that is sitting uneasily with the UK's retail industry. Bowdler says the main issue is what exactly is happening to the revenue generated by the PRNs? "There has been considerable investment of around £250m, but where has that money gone? Why isn't there more recycling taking place?" He says there is a lack of openness which makes it difficult to see what investments are being made by the reprocessors in recycling. "It may be wrong to tar them all with the same brush, but you only have to look at the figures to see that well over £250m has been paid in and what have we got for it? Not much as far as I can see." INCPEN's Bickerstaffe agrees with him: "We think the Environment Agency must be much more open about what the reprocessors are doing with the revenue. For all we know they could simply be going on holiday with it rather than investing it in recycling. The whole point of the PRN systems was to raise money from industry to fund increased recycling." But of course, not everyone is actually paying up, according to Nigel Smith, associate director of environmental policy with the British Retail Consortium. He says the Environment Agency needs to do more to address the problem of free riders ­ companies that are blatantly ignoring the regulations. "There's only a minimal number of prosecutions. And when there is, it's often a company that hasn't complied for five years and the fine is only around £5,000, which effectively makes it more economical for them than if they had joined a compliance scheme. "There's not enough being done about it and in the meantime it's the obligated members who are paying for them." A big problem for all retailers is the sheer scale of the bureaucracy of the regulations. The Co-operative Group's Bowdler estimates the society's costs, simply in terms of measuring what level of packaging it is responsible for, at around £50,000 - and that does not include the personnel costs in working out that obligation. "The way the regulations are structured is that you have to do a lot of work simply to work out your obligation and that does not help the environment in any way." David Catton, Sainsbury's packaging optimisation manager, says the company considers the costs as another tax. "It's not an insignificant sum and it's increasing all the time." However, Sainsbury has managed to reduce its costs in this area by recycling as much packaging as possible internally. It is also considering making individual departments responsible for a portion of the costs, with funds coming out of their budgets in an effort to make the entire organisation think more carefully about recycling. However, instore recycling is all well and good for the big supermarkets, as James Lowman, public affairs manager of the ACS, point out, but when it comes to the smaller operators, size becomes an issue. He says they haven't got the facilities to deal with their own waste in the same way as the supermarkets, and there's no encouragement for them to do so. Smaller retailers still have to calculate exactly how much waste they are responsible for and that can be a considerable cost, says Lowman: "For one of the smallest businesses that are compliant, it can cost 4.5% of their net profit." That of course doesn't take into account the time and effort put into actually working out exactly how much packaging they were obligated for. And for those who hire someone else to do the work for them, the absurdity of paying a consultant £4,000 to tell them they're obliged to recover £400 worth of packaging is clear for all to see. And with Europe revising packaging directives, targets are set to rise, making increased recycling a necessity if the UK is to hit those targets. And of course with increased targets comes increased costs which, if the regulations remain the same, will be born by industry, and retailers in particular. But one of the main challenges facing recycling is to close the loop and create an end market for recycled products, something the PRN system has so far failed to do. Gareth Morton, director of environmental campaigners Save Waste and Prosper, says it needs to be a sustainable industry: "If we're going to reach the holy grail of sustainable waste management, you've got to have four things in place: legislation, infrastructure, a market place and public participation." One of the main criticisms of the current system is that there is no encouragement to use recycled products in packaging. According to Nigel Smith of the BRC, recycled products weigh more than new ones and because the PRN system works on weight, that is a problem. "Because it weighs more, there's no incentive to use recycled products in packaging because it's going to cost them more." However some retailers are finding ways to make use of recycled goods. The Co-operative Group, for example, recently won awards for recycling all its office waste paper into toilet paper and kitchen towels to be sold in its stores. Lack of incentive is just one of many flaws in the system. But not everyone thinks the regulations should be written off. Jonson Cox, chief executive of the UK's leading compliance scheme Valpack, says: "It's not a bad system and it's delivered compliance for the last five years." He agrees the regulations have flaws, but points out the scheme is running at a third of the cost of some other compliance schemes in Europe. Many retailers have adopted a philosophical attitude to the regulations, as Asda's environmental manager Ian Bowles says. "I think the general perception is that it's an ill-conceived piece of legislation, but at the end of the day it's both a challenge and an opportunity to reduce waste. We're getting on with it and we'll achieve our targets." Even those opposed to the regulations acknowledge it would be a difficult, if not impossible task to start again with a new system, although critics point out that all of the problems were clear at the beginning. The Co-operative Group's Bowdler says: "None of these problems were unforeseen, the government was warned from the start. But I can't see an easy way out of it now." Cox, meanwhile, says Valpack wants the government to address flaws in a joined up fashion, consulting all groups involved. A spokesman for Defra insists the ministry will look at the regulations in the light of the failure of Wastepack but that "it is too early to say whether any changes are likely to be made". But at the end of the day, despite all the arguments and costs involved, are we making a waste mountain out of a mole hill? After all, packaging only accounts for about 7% of the total waste stream. Bearing in mind that Europe is set to introduce directives on the recycling of electrical products and cars, is the focus on packaging out of proportion? The Institute of Packaging's Webb-Jenkins is cynical. "It's become a political football. Packaging is much more visible and equals litter, and that makes it a political issue," he says. And INCPEN's Bickerstaffe believes there needs to be a more balanced view, that we should be focusing on resource efficiency rather than simply recycling for recycling's sake. She says: "If a household chooses a regular family saloon car that does 40 miles to a gallon, instead of a 4-wheel drive that does only 20 miles to a gallon, the energy it would save in one year is the same as recycling all its glass bottles for 400 years. "We need to get a proper perspective on it all. We need to take the emotion out of recycling."n {{COVER FEATURE }}