FAQ

Compliance options

  • What’s the process if you comply independently?

    Obligated companies that choose to comply independently must:

    • Register directly with relevant agency
    • Calculate and submit packaging data to agency
    • Procure PRN evidence
    • Submit certificate of compliance
  • What are the benefits of trading directly via t2e versus a third party procurement solution?
    t2eBroker / Consultant
    Transparent live market prices
    Fixed trading fee
    Opaque pricing
    Hidden costs
    Price leaders Price followers
    Wide range of buyers and sellers provides liquidity at all times, ensuring both the ability to trade at any time and prices that accurately reflect supply and demand Tend to use small number of sellers
    Fixed settlement period from time of trade in spot and 5 forward markets Undefined settlement period
    Participants provided with comprehensive market information and account management helping them make optimum purchasing decisions Only prices given
    All members protected by the t2e rulebook and stringent anti-default measures Limited contractual protection
    Funds ring fenced in the event of t2e or bank foreclosure Funds used as cash flow
  • What happens if you comply through a third party procurement solution?

    Producers that opt to join a compliance scheme must calculate and submit packaging data to them directly. The scheme manages the following on behalf of its members:

    • legal obligation
    • compliance administration
    • PRN procurement
  • What’s the difference between independent compliance with t2e, versus compliance through a scheme?
    t2eCompliance scheme
    Agency registration fee £776 Agency registration fee £564
    t2e participation fee - £100 (fully rebateable) + fixed trading fees (10p on PRNs < £1, 25p on PRNs <£5, 50p on PRNs >£5) Scheme registration/joining fee £250-£10,000 + depending on the size of the obligation
    Cost of PRNs - market price. All funds go direct to accredited reprocessor or exporter Cost of PRNs - compliance scheme price can include adminstration and handling costs
    Buy PRNs at a time and price that suits you Pay for PRNs as and when invoiced
    PRNs available in spot and 5 forward markets. All transactions secured in contracts using t2e rules Compliance scheme has responsibility for acquiring PRNs
    Daily, weekly, monthly and quarterly bulletins and the websites help keep you informed of market prices and trends Annual or quarterly newsletter
    Internal cost of administering compliance and data collection administration carried out by compliance scheme. Sometimes data collection at extra cost
  • What’s the ‘Bring Back’ option?

    A ‘Bring Back’ option is a clause within a compliance scheme contract that permits a scheme member to purchase PRNs on the open market and deliver them back into the scheme.

    This hybrid compliance option combines the administrative benefits of compliance scheme membership with the flexibility and cost saving of in-house PRN procurement with t2e.

    A ‘Bring Back’ option combined with t2e membership allows producers to benefit from:

    • Access to scheme packaging data collection and audit services
    • Outsourcing your legal obligation to the compliance scheme
    • Flexible purchasing - buy PRNs at a time and price that suit you
    • Better risk management – react faster to price volatility
    • More effective budget control – lock in PRN prices up to a year in advance
    • Unrivalled market information – optimise your procurement decisions
    • Full price transparency with access to t2e’s live market prices

     

    “t2e was launched in 1998, soon after the regulations were introduced. It is recognised by all buyers and sellers in the market as the source of PRN price information. In 2018 1.5 million tonnes were traded through it.”

Settlements

  • How is a trade settled?

    Once you have traded, you will receive an automatic Transaction Confirmation Notice (TCN) via email which explains the settlement process. If you have authorised a direct debit mandate the whole process will be managed by t2e. Otherwise you must initiate the transfer of funds to comply with the timetable on the TCN.

    t2e works to complete contracts in the spot market by the fifth business day from the trade date as outlined below.

    Spot Trading Settlements Procedure
     
    Buyer
    Seller
    Trading day Order (bid) can be placed, withdrawn, modified or matched Order (offer) can be placed, withdrawn, modified or matched
    Order date Order is placed Order is placed
    Transaction date Bid matched Order matched
    Initiation of settlement process
    Transaction date + 1
    Buyer initiates electronic payment to settlements  
    Settlement day
    Transaction date + 3
    Cleared funds received by settlements Seller informed or end-user by settlements
    Seller emails unauthorised PRN to settlements. Once checked, the seller authorises the PRN which is again emailed to settlements
    Settlements inities electronic payment to seller
    Completion day
    Transaction date + 5
    Buyer notified that PRN is awaiting acceptance on NPWD Seller receives funds
  • How do I know I have bought a legitimate PRN?

    t2e carries out the following to ensure that PRNs or PERNs traded through t2e are valid:

    Pre-transaction:

    1. t2e ensures that all PRNs delivered on contracts are issued by exporters and reprocessors accredited to the correct level by the appropriate Environment Agency.
    2. A regular programme of seller visits is carried out to check legitimacy of the business.
    3. Reprocessors and exporters complete a survey to indicate the tonnage they intend to reprocess or export in the next 3 years and how they intend to spend their money.

     

    Post-transaction:

    1. Confirm the issuer is on the most recent list of accredited reprocessors and exporters published by the Agencies.
    2. Check that all boxes on the PRNs or PERNs have been completed correctly including the end receiver.

Forward trading

  • What is a forward contract?

    It’s an agreement between a buyer and seller to purchase and sell PRNs at a price and volume agreed today, but for settlement and delivery on an agreed date in the future. t2e operate five forward markets up to a year in advance with expiry dates in April, July, October, December and January*.

    *The January forward market is for the exclusive delivery of transitional (December) tonnage which gives the buyer the opportunity to select into which compliance year they take delivery.

    Forward Contract Specifications
    Deliverable Instrument PRN or PERN
    Minimum Trade Size 100 tonnes
    Minimum Price Movement £0.05 per tonne
    First Trading Date On the 8th April, July, October, December and January**
    Last Trading Date Quarterly on the 7th April, July, October, December and January*
    Lifetime (12 months minus 1 day) from First Trading Date to Last Trading Date
    Statement Date 1st April, July, October, December and January
    Expiration Date (D) 8th April, July, October, December and January, and a VAT invoice is sent to both buyer and seller*
    Settlement Date (VAT point) D + 3. Funds received from buyer at t2e. End receiver email sent to seller**
    Completion Date D + 7. Funds received by seller from t2e. PRN received by buyer
    Deposit 10% of the contract value payable by the 3rd London Bank Day after the Trading Date

    Expiration Date (D)8th April, July, October, December and January, and a VAT invoice is sent to both buyer and seller*Settlement Date (VAT point)D + 3. Funds received from buyer at t2e. End receiver email sent to seller**Completion DateD + 7. Funds received by seller from t2e. PRN received by buyerDeposit10% of the contract value payable by the 3rd London Bank Day after the Trading Date

    * If the last trading date or expiration date is not a London bank day, the previous London bank day will be used.

    ** If the first trading date or settlement date is not a London bank day, the subsequent London bank day will be used.

     

  • How will it benefit me to trade PRN forward contracts?

    PRN forward contracts reduce risks by allowing:

    • Reprocessors and exporters to secure their income stream by confirming the sale of their PRNs of generation
    • Buyers to manage cash flow and reduce exposure to price volatility
  • How do I price a forward market in comparison to the spot market?
    • Prices in the forward markets are often comparable to the spot market. Forward markets would expect to trade at a premium to the spot market to reflect the cost of carry and the increased risk of unexpected price movement over time.
    • Prices in the transitional forward markets often would expect to show an additional premium to the static markets to reflect the increased flexibility of the contract.
     
    Forward Trading Settlements Procedure
    Buyer
    Seller
    Trading day Order (bid) can be placed, withdrawn, modified or matched Order (offer) can be placed, withdrawn, modified or matched
    Order date Order is placed Order is placed
    Transaction date Bid matched Order matched
    Deposit delivery day
    Transaction date + 1
    Buyer initiates 10% deposit by electronic payment Seller initiates 10% deposit by electronic payment
    Deposit due day
    Transaction date + 3
    Settlements receives 10% deposit Settlements receives 10% deposit
    Initiation of settlement process
    Expiration date + 1
    Buyer initiates electronic payment of residual funds Seller informed of end-user by settlements
    Settlement day
    Expiration date + 3
    Settlements receives cleared residual funds Seller informed of end-user by settlements
    Seller emails unauthorised PRN to settlements. Once checked, the seller authorises the PRN which is again emailed to settlements
    Settlement initiates electronic payments of deposit interest Settlements initiates electronic payments of funds, including deposit and interest*
    Completion day
    Expiration date + 5
    Buyer notified that a PRN is awaiting acceptance Seller receives funds
    Buyer received deposit interest*

    ∗Interest on deposits paid at 0.5% below base

  • How do I know the contract will be honoured?
    • All traders will be expected to conform to t2e’s rules. Once a contract has been agreed, both parties are committed to fulfil their part of the bargain.
    • A deposit of 10% is required from both buyer and seller when a contract is made. Contracts are deemed to be made even if the deposit has not been received. If the counter party has not paid the deposit, the contract becomes an option contract. An option contract is one which the buyer has the right to take delivery but not the obligation and applies only when deposits have not been paid.
    • Traders who default face losing the deposit, making good on the trade on the exchange and the risk of a fine of not more than twice the value of the trade, public expulsion from t2e and ultimately being reported to the relevant Financial and Environmental Regulators.

The obligations

  • What is a PERN?

    Packaging Export Recovery Notes (PERNs) are evidence that packaging waste has been exported for reprocessing by an exporter than has been accredited by an Environment Agency. From a compliance perspective PERNs are the equivalent of PRNs.

  • What are the business targets in the UK?

    To make sure the UK meets the targets in the European Commission Directive, the UK sets business targets which are higher to cover for all those companies that do not meet the de minimis criteria. See below for the targets which have increased almost annually since they were first introduced in 1988:

    YearRecovery targetGeneral recycling targetMaterial specific recycling target
    1998 38% 19% 7%
    1999 43% 21.5% 10%
    2000 45% 22.5% 13%
    2001 56% 28% 17%
  • We’re obligated, what do we do now?

    Firstly, you need to either register with the relevant environment agency - for example Environment Agency (EA) or Scottish Environment Protection Agency (SEPA) - and/or Northern Ireland Environment Agency (NIEA) if you have an operational base in Northern Ireland.

    You will need to register annually by 7 April and ensure that an equivalent tonnage to your packaging obligation is either recovered or recycled by 31 December. In order to register you must supply data on the packaging you handled in the previous year.

    You can then either buy PRNs yourself or, if you are member of a compliance scheme, rely on them to do it on your behalf.

    If you use t2e you can either secure your PRNs through one of its forward markets, which mean that you do this up to one year in advance, or through the Spot market (for immediate trade). All markets are available every working day between 10.00 and 16.00.

  • How do I calculate my obligation?

    After you’ve identified the activity or activities you carry out, you then need to calculate how much packaging in tonnes you use in each activity. You then add the percentages of your activities together, and multiply it by the total weight of packaging by material type that you use.

    You then multiply this by the Material Specific targets for the relevant material to calculate your Material Specific obligation.

    To calculate your overall recovery obligation, you once again add together your packaging activities and multiply them by the total weight of packaging used, but this time you multiply it by the Recovery target.

    To calculate your overall General Recycling obligation, you multiply your overall Recovery obligation by the General Recycling target. Your Recovery obligation is the difference between your overall Recovery obligation and your overall General Recycling obligation.

    Your General Recycling obligation is the difference between your overall General Recycling Target and the total of your Material Specific obligations.

    Occasionally the total of your Material Specific obligations will exceed your General Recycling obligation, in which case your Material Specific obligations take precedence and the difference between them and your overall Recovery obligation, if one exists, becomes your revised Recovery obligation.

    Example

    So If we assume that in 2016 you are a shop owner with a turnover in 2016 of £10 million who used 100,000 cardboard boxes, each of which weighed 1kg, which were stapled with steel pins - 10g per box - to package your perfume, which was wrapped in tissue paper (25g per box) and put in a glass bottle (200g) with a plastic top (50g).

    You meet the criteria because your turnover is greater than £2 million, and you handle more that 50 tonnes of packaging (100,000 x 1 kg = 100 tonnes of paper packaging)

    The activities that you conduct are packer/filler and seller on the box, including the staples and the tissue paper.

    The activities you conduct on the perfume bottle are seller and potentially packer/filler if you make the perfume on site, or have someone else make up the perfume on your behalf.

    If you buy the perfume from another company, then they will have the packer/filler obligation.

    If that company operates outside the UK, you are the importer of the perfume, and you have not only the packer/filler obligation but also the ‘rolled-up’ raw material manufacturer and convertor obligations on not only the perfume but also any packaging in which that perfume may have been delivered in.

    Let’s say that you bought the perfume from another company from within the UK. In this case that company will have the packer/filler obligation on the packaging around the perfume, and the seller obligation on any packaging in which that perfume was delivered.

    So to calculate the material specific obligations:

    You have a packer/filler and seller obligation on the box (37% + 48% = 85%) which is then multiplied by the weight of packaging that you have used in the year. The paper in each box is 1kg of box and 25g of tissue paper making a total of 1.025 multiplied by the number of boxes sold comes to 102.5 tonnes of paper. The steel in each box is 10g multiplied by the number of boxes comes to 1 tonne. Once multiplied by the packaging activities these become 87.125 tonnes and 0.85 tonnes of paper and steel respectively.

    You have a seller obligation on the perfume bottle (48%) which is then multiplied by the weight of the packaging that you have used in the year 200g of glass and 50g of plastic comes to 20 tonnes of glass and 5 tonnes of plastic. Once multiplied by the activity they become 9.6 tonnes and 2.4 tonnes of glass and plastic respectively.

    In 2017 the Material Specific targets were: Paper 69.5%; Steel 76%; Glass 77%; Plastic 51%. So these are multiplied by the figures calculated to date and rounded down to make the material specific obligations so:

    Paper = 102.5 x 0.85 = 87.125 x 0.695 = 60.551875 = 60 tonnes

    Steel = 1 x 0.85 = 0.85 x 0.76 = 0.646 = 0 tonnes

    Glass = 20 x 0.48 = 9.6 x 0.77 = 7.392 (of this a minimum of 67% must come from re-melt) x 0.67 = 4.95264 tonnes. This must be rounded up otherwise the minimum would not be reached so the obligation becomes 5 tonnes Glass Re-melt and 2 tonnes of Glass Other, which can be met with Glass Re-melt tonnage.

    Plastic = 5 x 0.48 = 2.4 x 0.51 = 1.224 = 1 tonne

    In 2017 the Overall Recovery target was 79% and the Overall General Recycling target was 92% so to calculate the Recovery and General Recycling obligations you take the tonnage of packaging handled multiplied it by the activity obligations and then multiply it by the overall Recovery target as follows:

    Paper = 102.5 x 0.85 = 87.125 x 0.79 = 68,82875

    Steel = 1 x 0.85 = 0.85 x 0.79 = 0.6715

    Glass = 20 x 0.48 = 9.6 x 0.79 = 7.584

    Plastic = 5 x 0.48 = 2.4 x 0.79 = 1.896

    You then total these up to get the total Recovery obligation = 78.98025

    To get the General Recycling obligation you then multiply this figure by the General Recycling target = 78.98025 x 0.92 = 72.66183 which is then deducted from the total recovery obligation to get the Recovery specific obligation = 6.31842 which is rounded down to 6 tonnes. Meanwhile the General Recycling figure is rounded up to ensure the minimum is reached =73 tonnes.

    So this company’s obligation is:

    Recovery 6 tonnes which can be met with any PRN
    General Recycling 73 tonnes
    Of which:  
    Paper is 60 tonnes
    Glass is 7 tonnes of which 5 tonnes must be Re-melt
    Plastic is 1 tonne
    The remainder of 5 tonnes can be met with any material specific recycling PRN
  • How do I prove I have met my obligations?

    Proof is in the form of evidence such as a weighbridge ticket that packaging material has been delivered to and accepted by a reprocessor. If the reprocessor is accredited by the Environment Agencies it will issue PRNs. In the event that the tonnage of a PRN has to be split the PRN needs to be returned to the original issuer for substitute PRNs to be issued. The original issuer may charge a fee for this service. Proof needs to be retained for four years after the relevant year is complete in case of inspection by the agencies.

  • What happens if I fail to comply?

    If any business which has an obligation fails to comply with the Regulations or is fraudulent with its compliance it is guilty of a criminal offence. Penalties range from a fine not exceeding the statutory maximum, currently £5,000, in a Magistrates Court to an unlimited fine for a case heard in the Crown Court. Guidance has indicated that this could be as great as 3% of gross turnover.

Packaging

  • Do these Regulations apply to all packaging materials?

    Yes

    Packaging materials are subdivided into glass, aluminium, steel, paper/fibreboard, plastic, wood and "other" packaging materials such as textiles, cork and wax.

    From 2000 packaging obligations apply to wood and other packaging materials  and have a recovery obligation but no material specific recycling obligation.

  • Do these Regulations expect me to take back my own packaging for recycling?

    No.

    The Regulations expect businesses or a third party on their behalf to recover and recycle an equivalent tonnage of packaging waste to their obligation. That packaging waste can be packaging that the business has taken off on which it has no obligation, such as the packaging removed by a publisher or printer on newsprint sourced from a UK based mill. Any recycling activity conducted on this waste is encouraged and can be used to off-set a business's obligation.
    The third party could be either a waste handler such as local authority or a waste management company or a compliance scheme.

  • I have no idea what weight of packaging I handle how can I find out?

    In calculating tonnages of packaging handled a business may use its own information or any ready reckoner or guidance published by or in association with the Environment Agencies. This report fulfils those criteria.
    Three possible options for the initial calculation of data are:

    1. Weigh a cross-section of the packaging that you handle. Then pro-rata that packaging data to reflect total sales throughput of that and equivalent packaging for your business.
    2. Ask the person who supplies the packaging to you.
    3. The Department of the Environment has produced a ready reckoner. This contains weights of various specifications of packaging. This and further information on the Regulations are available from:

    The Department of the Environment, Transport and the Regions
    Publications Despatch Centre
    Blackhorse Road
    London SE99 6TT
    Fax: 0181 694 8776

    Quoting:

    • Code Pack 1: The Regulations
    • Code Pack 2: User's Guide
    • Code Pack 3: Ready Reckoner
  • Are there any packaging materials that might give me a lower cost of compliance?

    Reused packaging materials give the lowest compliance cost because they have no obligation. For materials on first use, this is an extremely difficult question to answer. Current indications are that compliance costs are lower per tonne for paper/fibreboard, steel and glass than the other materials and plastic and aluminium are the most expensive per tonne. The long term aim of this legislation is that compliance costs for all materials should reduce to zero.

    One thing is clear that the easier your packaging material is to segregate post consumer, such as single material packaging not plastic with paper sticky labels attached, the lower the overall cost of compliance will be.

Troubleshooting

  • What are the Agency Addresses for Registration?

    The Agencies are the Government Regulators for these Regulations. Their addresses are:

    (a) If the business is registered in England or Wales or if the principle place of business is in England or Wales:
    Environment Agency (EA)
    Producer Responsibility Unit
    Wah Kwong House
    20 Albert Embankment
    London SE1 7TJ
    Fax: 0171 840 6147

    (b) If the business is registered in Scotland or if the principle place of business is in Scotland:
    Scottish Environment Protection Agency (SEPA)
    Producer Responsibility Unit
    Erskine Court
    The Castle Business Park
    Stirling FK9 4TR
    Fax: 01786 446885

  • If I register myself with EA/SEPA do I need to demonstrate how I plan to meet my obligations?

    Yes

    If your turnover is in excess of 35 million you will have to produce a compliance plan showing how you will meet your obligations.

  • What happens if I take over or sell off another business in the course of the year?

    To be confirmed, but it is assumed if the packaging supplied by each of the businesses can be separated from the previous year's obligations then the separate businesses should take with them their separate obligations. If this takes either business below the obligation thresholds then between them they must meet the obligations for the year of separation.

  • How do I fill the data form?

    For all Tables a business should give reasonable estimates to the nearest tonne. Composite packaging should be included according to the predominant material by total weight.

    In Table 1 a business should include all packaging that they carried out a packaging activity on in the preceding year. This includes packaging that was subsequently exported or had been imported. But it should only show the activities up to the last activity conducted prior to export and the first and subsequent activities after import. Transit packaging should be included according to the activities performed on it.

    In Table 2a a business should include all packaging that it exported in the preceding year showing all the activities it carried out on that packaging. Transit packaging should be included according to the activities performed on it.

    In Table 2b a business should include all packaging that it knows a third party exported in the preceding year showing all the activities it carried out on that packaging. These figures need to be supported with documentary evidence.

    In Table 3 a business should include all packaging that it imported showing the activity for which it was imported even if that activity was not conducted on that import by the business. In table 3 there is a special category for all transit packaging that is imported when the importer becomes the secondary provider.

    From 1 January 1999 onwards a business will have to show its obligation for the current year based on the data of the previous year in Table 4. This can be done by:

    1. Subtracting the contents of Tables 2a and 2b from the contents of Table 1 box by box and multiplying the product by the appropriate packaging activity percentage (e.g. if 1000 tonnes of paper are pack/filled and 200 of those tonnes are subsequently exported then multiply 1000 - 200 = 800 x 36% = 288)
    2. Multiplying the contents of Table 3 by the rolled-up obligations (e.g. if 100 tonnes of plastic transit packaging are imported there will be a rolled up obligation of 100% = 100)
    3. Total paragraphs 1 and 2 by material and in aggregate. Multiply the aggregate total by the recovery target, 38% in 1998, and the individual material totals by the material specific recycling target, 7% in 1998.(e.g. 288 + 100 = 388 x 38% = 147 tonnes recovery obligation to the nearest tonne, 288 x 7% = 20 tonnes paper recycling obligation to the nearest tonne, 100 x 7% = 7 tonnes plastic recycling obligation to the nearest tonne)

     

    Tables 5 to 7 are optional and should be filled in to the best of your ability. Table 7 will be used by the Agencies to make an estimate of the levels of recovery and recycling in 1996 and 1997.

    In section 4 basis of assessment you should state how you managed to reach your figures. This report may be used as guidance from your trade association.

  • How long does a business need to keep certification and data forms and the supporting information such as PRNs?

    An obligated business or compliance scheme needs to keep data forms, certifications and supporting PRNs or other forms of evidence for four years after submission. Hence all information submitted to the Agencies for 2001 by 31 January 2002 will have to be retained for possible inspection by the Agencies until 31 January 2006.

    For a non-obligated business PRNs have no value after 31 January in the subsequent year.

Contact us


The Environment Exchange
Hudson House
8 Albany Street
EDINBURGH
EH1 3QB
United Kingdom

General enquiries

Phone: +44 (0) 131 473 2330
e-mail: info@t2e.co.uk

Trading

Phone: 0844 800 9943
Fax: +44 (0) 131 473 2326

To join

Phone: +44 (0)131 473 2330
Fax: +44 (0) 131 473 2326

Settlement

Phone: +44 (0)131 473 2327

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