FAQ

It’s an agreement between a buyer and seller to purchase and sell PRNs at an agreed price and volume for immediate delivery and settlement.  

* If the First Listing Day or Expiration Date is not a London bank day, the subsequent London bank day will be used.

** If the Last Trading Day is not a London bank day, the previous London bank day will be used.

The VAT point on a spot contract is the Transaction Date. 

PRN Spot contracts allow:

• Buyers to receive the PRN documents resulting from their trading activity in their NPWD account within 7 Trading days from the Transaction Date.  
• Sellers to recive funds resulting from their trading activity within 7 Trading Days from the Transaction Date.

• t2e provides all participants with both live and historic PRN price data allowing buyers and sellers to benchmark their performance against the wider market.
• Market operators will always quote the best avaible or last traded price allowing particpants to trade with confidence, safe in the knowledge that the price on offer relates to completed transactions of a similar nature. 

• 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.
• Traders who default face, making good on the trade on the exchange run the risk of a fine of up to twice the value of the trade, public expulsion from t2e and ultimately being reported to the relevant Financial and Environmental Regulators.

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 28 calendar days after the initial Transaction Date.

 * If the First Listing Day, Expiration Date or Settlement Date is not a London bank day, the subsequent London bank day will be used.

** If the Last Trading Day is not a London bank day, the previous London bank day will be used.

The VAT point on a 28 Day Rolling contract is the Transaction Date. 

PRN 28 Day Rolling contracts allow:

• Reprocessors and exporters to secure their income stream by confirming the sale of their PRNs prior to generation.
• Buyers to manage cash flow and reduce exposure to price volatility.

• Prices in the 28 Day Rolling market are often comparable to the Spot market. The 28 Day Rolling market 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.

• 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.
• Traders who default face, making good on the trade on the exchange run the risk of a fine of up to twice the value of the trade, public expulsion from t2e and ultimately being reported to the relevant Financial and Environmental Regulators.

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.

* If the First Listing Day or Expiration Date is not a London bank day, the subsequent London bank day will be used.

** If the Last Trading Day is not a London bank day, the previous London bank day will be used.

The VAT Point on a Forward contract is the Expiration Date.

PRN forward contracts reduce risks by allowing:

• Reprocessors and exporters to secure their income stream by confirming the sale of their PRNs at a known price for a known volume for delivery on a known date in the future.
• Buyers to manage cash flow and reduce exposure to price volatility.

• 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 other markets to reflect the increased flexibility of the contract.

• 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 non-defaulting counter-party has the right to take delivery but not the obligation and applies only when deposits have not been paid.
• Traders who default face, making good on the trade on the exchange, run the risk of a fine of up to twice the value of the trade, loss of deposit and any interest that has accumulated on it, public expulsion from t2e and ultimately being reported to the relevant Financial and Environmental Regulators.

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 seventh trading day from the Transaction date as outlined below.

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 28 Day Rolling contracts by the fourth Trading Day from the Settlement Date as outlined below.

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 Forward contracts by the fourth Trading Day after the Settlement Date (shown on TCN).

∗ Interest on deposits paid at 0.5% below base

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.

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

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 current targets which have increased almost annually since they were first introduced in 1988:

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.

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:

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.

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.

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.

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.

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

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.

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

(a) If the business is registered in England or if the principle place of business is in England:

Telephone: 03708 506 506

(b) If the business is registered in Scotland or if the principle place of business is in Scotland:

Telephone: 01786 457 700

(c) If the business is registered in Northern Ireland or if the principle place of business is in Northern Ireland:

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.

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.

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.