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Trade bodies warn wood PRN market does not need stability mechanism

Wood Recyclers Association

THE Wood Panels Industry Federation (WPIF) and the Wood Recyclers’ Association (WRA) have written a joint letter outlining their opposition to a “stability mechanism” being introduced for the wood PRN market.

In a letter to John Dye, the wood sector’s representative on the government’s Advisory Committee on Packaging (ACP), the two trade bodies have raised concerns over the ACP’s proposal to DEFRA to introduce a mechanism that would “restrict excessive pricing” of PRNs.

The letter states: “As a general principle we are strongly opposed to market interference through the introduction of a stability mechanism, as in our view it risks either collapsing the market or, as evidenced by the EU Emission Trading Scheme Market Stability Reserve mechanism, where the opposite has occurred and has dramatically driven up the price of allowances.”

The letter goes onto explain that in the opinion of the WPIF and the WRA, such mechanisms introduce a degree of market predictability that can then be exploited by speculators. 

Both the WPIF and the WRA believe the wood market is functioning correctly and that the recent rise of wood PRNs earlier this year was short-lived, as predicted, and drove up recycling targets, which is what the PRN system is in place to do.

The letter concludes: “Because of the many competing markets for waste wood, we would be concerned to see the market collapse again and a return to perverse outcomes such as a reversal of the waste hierarchy.”

Alastair Kerr, Director General of the WPIF, said: “We understand problems arise from time to time with the PRN system but these are invariably short term. Introducing some form of ‘stability mechanism’ for all materials could open a Pandora’s Box that risks damaging those markets that are relatively stable.”

Julia Turner, Executive Director of the WRA said: “If DEFRA follows these recommendations there is a danger they will try to implement a “one size fits all” scheme across different waste streams and in doing so, damage a system that is working well in the wood sector. We hope both the ACP and DEFRA will take our concerns on board.”