The report, published by CIWM’s Infrastructure, Services and Operations Specialist Expert Group, examined how packaging reforms including Extended Producer Responsibility (EPR), DRS and Simpler Recycling could affect MRFs’ material streams, operating costs and financial viability.
The report warned that the loss of high-value materials could have a disproportionate effect on MRF revenues, even where the reduction in overall tonnage is more limited.
It concluded that MRFs can remain viable, but argued that the commercial and policy framework must adapt to the combined effects of the reforms.
These concerns echo the call from the Local Authority Recycling Advisory Committee (LARAC) and MRF operators for an urgent review of the impact of DRS on councils and MRFs.
DRS could reduce high-value material income
The report identified DRS as a particular concern because plastic drinks bottles and aluminium cans are among the more valuable materials recovered from commingled recycling.
As these items move into dedicated deposit return routes, MRFs could lose a significant source of commodity income while retaining many of the costs associated with operating their facilities.
In one illustrative scenario, PET plastic bottles and aluminium account for around 12% of incoming material by weight but approximately 39% of material-sale income.
The report estimated that if DRS diverts 80% of the relevant PET and aluminium from the commingled stream, a representative MRF could see its incoming volume fall by almost 10%, while material-sale income falls by more than 30%.
The report also highlighted uncertainty over how containers eligible for DRS but mistakenly placed in kerbside recycling collections will be accounted for.
With the DRS expected to launch on 1 October 2027, the report suggested that a transparent mechanism is needed to identify, reconcile and compensate for these materials.
Without a clear process, MRF operators could face uncertainty over ownership of the material and whether they will be compensated for handling containers that should have entered the deposit return system.
It called for the Environment Agency, the Scottish Environment Protection Agency and Natural Resources Wales to provide a coordinated position on how these outputs should be managed.
Wider packaging reforms add to pressure
Alongside DRS, the report examined how separate paper and card collections could further reduce the volume of material handled by commingled MRFs.
It warned that changes to collection systems could affect plant utilisation and the economics of existing facilities, particularly where operators have long-term contracts based on assumptions about incoming tonnage and material revenues.
EPR could also change the composition of packaging entering MRFs. While lighter packaging may reduce the weight of material placed on the market, the report cautioned that lightweighting does not necessarily translate into lower sorting costs.
More individual items may need to be handled for each tonne processed, while packaging that is technically recyclable may not always be easy to identify and sort using existing equipment.
The introduction of mandatory collections for plastic films and flexible packaging is another potential operational challenge.
The requirement for English local authorities to collect these materials at the kerbside has been delayed from March 2027 to 1 April 2030, following concerns over available processing capacity and end markets.
The report said the additional time should be used to prepare collection and sorting infrastructure, develop viable markets and assess facility readiness ahead of implementation.
The report argued that the combined effects of the reforms need to be assessed together, rather than as separate policy changes.
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