OPINION: When I wrote about the political risks of record PRN prices before the government’s announcement, the central concern was straightforward: if producers faced exceptionally high costs yet still could not obtain enough evidence to comply, ministers would eventually have to respond. That point has now arrived. The Regulatory Position Statements for plastic, steel and wood are the mitigating measures the market had increasingly come to expect.
Most industry experts recognised that 2026 was going to be difficult. Changes to accreditation, export rules and reporting were always likely to constrain evidence supply, and many believed the targets had been set too high for such a disrupted year. What nobody could know with confidence was the scale of the impact. That became clearer only as recycling levels and evidence issuance emerged during the first half of the year.
That distinction matters when judging both the market response and the government’s decision. Unlike Extended Producer Responsibility (EPR), the PRN system is not a tax. It is a market mechanism linking producer obligations to evidence of accredited recycling. Prices rise when evidence is scarce and fall when supply improves. The mechanism depends on credible targets, robust accreditation and regulators being able to distinguish a genuine recycling shortfall from a temporary gap in reported evidence.
The public data is important, but it is necessarily incomplete. Defra and the Environment Agency now have information that the rest of us do not. They know which reprocessors and exporters are seeking accreditation, how far individual applications have progressed and, crucially, how likely applicants are to satisfy the requirements. That gives them a much richer picture of potential evidence supply than published returns or market forecasts can provide.
They also have a good sense of whether an operator may be able to back-date evidence once accreditation is approved and the magnitude of such evidence, given their historic and year-to-date output. The Environment Agency has made clear that this is considered on a case-by-case basis. That is the right approach. Automatic back-dating could weaken assurance and enable market manipulation, while refusing it in every circumstance could exclude legitimate recycling activity merely because a careful accreditation process took time.
This insight is particularly important in wood and steel, where the estimates have been affected significantly by a small number of large operators being outside the accredited system for different reasons. In relatively concentrated material markets, one operator can make a substantial difference to the apparent national position. A published dataset showing no evidence from that operator does not necessarily mean the recycling has not happened. It may mean the evidence cannot yet be issued.
Informal consultation with material sector experts will have confirmed to Government officials that accreditation has been delayed due to various extenuating circumstances. These are not guarantees, but they supported the regulators’ understanding that familiar, substantial businesses had not simply disappeared from the recycling market.
Without the Environment Agency’s current estimates, there would still be every reason to be worried. On the face of the public figures, wood and steel looked materially exposed, while changes to accreditation, exports and reporting created uncertainty across the evidence market. Producers and compliance schemes can only plan against what they can see. Therefore, high prices reflect rational caution as much as an assessment of the recycling actually taking place.
The Regulatory Position Statements for plastic, steel and wood should therefore be read as the government mitigating that risk through a proportionate response. The measures do not abolish the market mechanism or pretend that the legal obligations were wrong when set. Instead, the enforcement thresholds recognise that the combined effects of the 2026 changes proved more severe once measurable, while leaving the underlying legal obligations formally in place.
There is a positive lesson here for the future. Better assurance will sometimes make the market look worse before it looks better. Tighter accreditation, stronger checks and more disciplined evidence issuing can expose timing problems that older arrangements masked. If government responds transparently and proportionately, that disruption is a sign of a system becoming more credible, not less.
The next step should be to narrow the information gap between regulators and the market without compromising live accreditation decisions. Defra and the agencies could publish more aggregated information about application volumes, potential capacity and the treatment of back-dating. That would help producers, schemes and traders form more informed expectations, reducing unnecessary price pressure while preserving regulatory independence. With another round of PRN improvements on the horizon, hopefully this lower order of magnitude suggestion won’t get lost in the mix.
We were right to worry that the targets were too high for the conditions of 2026, and the evidence now confirms that mitigation was necessary. We should also acknowledge the limits of what could have been known when those targets were set. The regulators did not then know who would accredit, who would succeed or how much evidence might later be issued. They have much clearer intelligence now.
While it may feel uncomfortable for market participants to simply trust that the thresholds are set correctly, it would also be naïve to think that Defra would go through all this work with regulators, only to still leave a shortfall in PRNs for producers. We may not like it but, for now, we must have confidence that significant PRNs for wood and steel are just around the corner in the publicly available data.
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