www.tyrewise.co.nz | 0800 tyrewise (0800 897 394) | [email protected] 1 progressing towards end of...

www.tyrewise.co.nz | 0800 TYREWISE (0800 897 394) | [email protected] 1

Progressing towards End of Life Tyre Stewardship in NZ

Update for Environmental Protection Committee; 11 August 2015Adele Rose, CEO 3R Group LtdTyrewise Working Group Facilitators


The journey to dateJune 2011….


Situation NZ – Market Failure

Management and disposal of End of Life Tyres

• 3.5 million passenger tyres

• 400,000 commercial tyres

Some success – but need systematic nationwide approach

• Tyre piles (unmonitored, unconsented, flight risk)

• Poor disposal practice (illegal dumping, acceptance at landfill)

• Access & transport issues (Cook Strait)

Industry motivated to develop an accredited product stewardship programme• Provided it was mandatory

• Required legislative test


Breakthrough March 2012

Industry stakeholder coalition formed

• Recommendation to Minister for the Environment outlining process to develop PS for ELT

• Systematic approach required• 7 Milestones to be completed by August 2013 including Business Plan

and Cost Benefit Analysis/Financial Modelling for future scheme

• Looking for robust, evidence based, industry led solution that Government could support

• Local Government New Zealand• Central Government (Ministry for the Environment)

• Keen to draw on international experience• WBCSD• Canadian programmes & others


Objectives

Development of a PS Programme for the recovery & safe disposal of ELT• Benchmark against world best practice standards in support of:

• reduced waste & risk of environmental harm • support export trade

• Specific objectives for programme design:• Auditable process;

• independence between funders, managers & operators• Economic drivers;

• develop new markets from initial processing or value add & new recovery routes

• support research and development programs• Regulatory

• address local and central government legislative and environmental obligations (Local Government Act & Waste Minimisation Act 2008)

• proposal for robust regulation to prevent free-riders, longevity of ELT management, decreased cost of ELT stewardship


Where we landedAugust 2013 ….


Improving the value for end of life tyres in cost effective and environmentally sound ways

Tyrewise is a ……

• National mandatory product stewardship programme for end of life tyres (ELTs), enabling all New Zealanders access to safe and environmentally compliant recovery of ELTs.

• Advanced disposal fee placed on point on import (loose tyres) and first registration (vehicles)

• The programme • is more than just a recycling programme - the whole of the supply chain -

from tyre manufacturers and distributors, through to end use processors, are actively involved in the design of the programme, funding, marketing and operational elements

• reduces environmental harm by providing a sustainable alternative to ELTs entering landfills, and by removing the motivation for illegal dumping and stockpiling.

• incentivises efficient recovery of ELTs via a network of registered providers and supports industry to find alternative and beneficial uses for the collected materials.

• educates on responsible disposal of unwanted tyres

Supply Chain - Summary

8

Registered Tyre Importer Registered GeneratorConsumer Registered Collection Site

Registered Transporter Registered Processor Registered Manufacturer End use product

Preferred Advanced Disposal Fee Model

9

Product S

tewardship O

rganisation (PS

O)

Importer New Tyres Importer Used Tyres

Importer Used Vehicles

Tyre Retailer/Dealer

Customer Used Tyres Arise

Registered Collection

Points

Registered ELT Transporter

Importer New Vehicles

ProcessorRetreading

End UseCivil

Engineering

Registered ProcessorWhole Tyres

Crumb as additive in product

Crumb as Functional End

Use

End UseExport Whole

tyres for reuse

Preferred Model NZ ELT PS Scheme Year 0 – 3 Brand owner/first importer for loose tyres & at first registration for tyres on vehicles

Registered ProcessorShred/Crumb

Vehicle Dealer

End Usewhole

tyres for on farm

use

End UseExport whole

tyres for Fuel or Material

Recovery

Waste

Importer Casings for Retread

Crumb in Secondary

Process

Rubber AsphaltMoulded Products

Roof tilesGarden productsAcoustic Screens

Garden MulchLawn

Equestrian ArenaLandfill

Engineering

Crumb in Destructive

Process

Tyre BalesDrainage material

Retaining wallsErosion control

Sub base roadingMarinas

EmbankmentsNoise barriers

Tyre Derived Fuel(TDF)Mining

Pyrolysis

AdhesivesPlayground Surfaces

Artificial turfCarpet Underlay

Mats Flooring

Report Sales Tyre Derived Products

Receive Transport incentive

Report Sales of Tyre derived products

Receive Processing Incentive

Receive Manufacturing

Incentive

Report Tyres transported

NZTAVehicle Registration

Report Tyres Collected

Receive Collection Site allowance

Report Tyres on 1st Registered Vehicles and Collect Fee on

behalf of Vehicle importers

Other future uses that may be approved by the PSO

Grey oval denotes participants in PS Scheme

Denotes cash flows and

reporting obligations

KEY

Customs Report Tyres Imported and collect and remit Fee on

behalf of tyre importers

Registered Generators


Improving the value for end of life tyres in cost effective and environmentally sound ways

A co-regulatory approach; the best outcomes include legislative and regulatory support

• Using regulatory tools under the WMA2008 – priority product or product regulation

• Landfill bans or restrictions on tyre disposal be enacted as tyre processing infrastructure improves

• Procurement policies that enable or incentivise use of tyre-derived product with comparable performance and cost to virgin materials

• Development of NES


MfE Waste Tyre Economic Research; Intervention options to promote investment in on-shore waste tyres recycling

Authored by KPMG, 3R as partner to enable access to Tyrewise data

• Built on the Tyrewise work – the scope for Tyrewise did not cover in detail the propensity for investment in ELT processing

• The KPMG report covered the economic drivers and barriers to investment in detail

• Identified and evaluated potential government interventions to address these barriers

• Recommended strategies to implement suggested interventions

• Did not bring forward any new data or previouslyy undiscovered options


Overview of Findings

Barriers to investment

• Limited addressable end use market size

• Business models require scale

• Insufficient funding



Future drivers and enablers of investment

• Expand waste tyre collection nationwide

• Increase utilisation of existing processing capacity and establish capacity in SI

• Invest in scalable new manufacturing options (end uses)

• Develop an effective funding mechanism that covers the full cost of collection, processing and manufacturing



Intervention Options

• Key Levers;

• Additional Regulation and Enforcement

• Market Organisation

• New Funding Model

• Investment and Risk Mitigation

• Option Evaluation

• Enhanced Status Quo – Quick Wins, enforcement of current legislation

• Free market with further regulatory protections – disposal limitations, reporting, market led

• Mandatory Product Stewardship – Co-regulatory approach “Tyrewise Model”


Cost Benefit AnalysisKPMG Report

www.tyrewise.co.nz | 0800 TYREWISE (0800 897 394) | [email protected]

Assumption Type Base Case (ref page 7)

Preferred Scenario(ref page 8)

Alternative Scenario(ref page 9)

General Base year for data collection 2011

Evaluation period 10 years 10 years 10 years

Discount Rate 3.91% 3.91% 3.91%

Projections(Per annum)

Quantities of ELTs generated 62,000 tonnes, reducing by 1% annually

62,000 tonnes, reducing by 1% annually

62,000 tonnes, reducing by 1% annually

Recycling Rates 18,000 tonnes/yr29%

51,000 tonnes/yr 95% (Year 5)

29,000 tonnes/yr 58% (Year 5)

Land filling/Export: 38,000 tonnes 3,000 tonnes 21,000 tonnes

Illegal Dumping. 3,000 tonnes 0 tonnes 300 tonnes

Tyre Fires 4 fires per year 3 fires per year 3 fires per year

Tyrewise Fee/Advance disposal fee

$23 million $43 million (Yr1) to $14 million (Yr10)

$32 million (Yr1) to $14 million (Yr10)

Cost Assumptions (over 10 years of CBA Analysis)

Government Costs $0 $3.2 million $4.8 million

Business Cost (compliance + capital investment)

$0 $47 million $69 million

Illegal Dumping(orphan tyres)

$16 million $0 $0

Tyre Fires $12 million See benefit assumption See benefit assumption

Landfill stability leachate issues

Not quantified Not quantified Not quantified

Public Health (mosquito borne disease)

Not quantified Not quantified Not quantified

NZ 100% Pure Brand

$122 million (0.1% drop) brand maintained brand maintained

Market value of resources

$40 million $83 million $55 million

New industry and employment

$0 $207 million $162 million

Benefit Assumptions (over 10 years of CBA Analysis)

Benefits of tyre derived fuel

$0TDF not in use

$42 million $42 million

Benefits of rubber asphalt

$0Rubber roads not in use

$3.2 million Further benefits tbc by new project

$3.2 million per yrFurther benefits tbc by new project

Avoided costs illegal dumping

n/a $16 million $14 million

Avoided costs tyre fires n/a $3 million $3 million

Avoided landfills operating cost

n/a $24 million $5 million

Avoided cost public health liability – legacy tyres

n/a Not quantified Not quantified

Avoided cost to NZ’s brand, tourism and export industries

n/a

NET PRESENT VALUE -$89 million $36 million -$18 million

Tyrewise CBA


TWG Meeting with Minister for Environment, July 29th

In summary mandatory stewardship won’t progressBarriers to implementation are:

• KPMG CBA shows NPV for mandatory stewardship is $16M & Tyrewise CBA shows NPV for mandatory stewardship is $36M

• Scope for Tyrewise was different to scope for KPMG

• Has discredited the Tyrewise CBA• Minister has suggested if the TWG wish they can come back with an explanation for the

variances

• Insufficient data on the real cost to consumer should the fee be collected at point of import as opposed to the retailer who takes off the tyre

• What will those retailers do with loss of profit?• Minister has suggested if the TWG wish they can come back with a detailed impact of

the cost to consumers beyond stating that consumers are currently paying a disposal fee and that an advanced disposal fee would replace this fee


Cont.

In summary mandatory stewardship won’t progress; barriers to implementation• Unconvinced that markets for end use will develop; ELTs will always have

negative value

• Awaiting feedback from NZTA about rubber in roading applications• This requires significant technology investment AND a change in Government procurement

drivers to incentivise the use of rubber emulsifiers – roads are more expensive & last longer

• Opened up WMF Round in October targeting development opportunities for ELT’s

Specifically the round will look for applications for end-of-life tyre projects to demonstrate:• How the project will grow markets for end-of-life tyres, which could include research or

trials; or,• That the supply of tyres and associated end markets are confirmed.

• Remains to be convinced that benefits to NZ exceed the cost of the scheme

• Data from 48 landfills that collect the $10/tonne levy show small volumes actually to landfill (MfE informal survey)

• Small minority of tyres being illegally dumped or stored – no data to prove its not the case

• Not actually a significant environmental problem


Cont.

In summary mandatory stewardship won’t progress; barriers to implementation• Has advised he is not closed to the idea of mandatory stewardship, and the

answer is not yet a no, however based on information currently before him it will not progress;

• He will review TWG feedback and come to a conclusion fairly quickly so as not to leave everyone hanging

• Water and Auckland housing are priority issues


So where to from here?

• Industry remain committed to mandatory stewardship however no funding now to continue working with a current Government who does not appear to support the industry model; for any scheme to be successful it requires co-regulatory support

• Tyrewise working group remains intact representing all industry sectors including Local Government (Brent Aitken, Taupō District Council)

• 3R continue to support industry and affected parties by maintaining the Tyrewise website and Comms portal (560 registered parties)

• 3R working on tyre tracking software “Treadmarks” which will provide data from collection to disposal; bringing a pilot group together over the next 12 months

• Have offered to draft an NES for Tyres (would need funding, project headed by Darren Patterson)

• Supporting applicants to the WMF with data

• Maintaining dialogue

www.tyrewise.co.nz | 0800 tyrewise (0800 897 394) | [email protected] 1 progressing towards end of...

Documents

end of life tyres elts

disposal of end

ps programme

programme design

recycling programme

end of life tyre stewardship

passenger tyres

commercial tyres