End of life tyre scheme for industry

Source: Autofile – Issue 14, 11 August 2011

With New Zealand marketing itself to the world as ‘100 % pure’, it’s a good thing that our treatment of tyres doesn’t feature in glossy tourist brochures, with most ending up in rubbish tips around the country.

That could soon come to an end, with industry agreement around an end of life tyre (ELT) scheme.

The Motor Trade Association’s Advocacy and Training General Manager, Dougal Morrison, says that there is support from the major tyre companies, the industry associations, MIA, IMVIA, AA, Scrap Metal Recycling Association and Local Government New Zealand, to get a product stewardship scheme up and running.

Funding is currently being sought under the Waste Minimisation Fund for the design phase, and the hope is to get it up and running within 12 months.

Morrison says that there is inherent value in tyres, but that accessing this value requires the certainty of a continual stream of tyres, before a processing company will invest in processing facilities.

The plan is to have an advanced disposal fee that is collected as the tyres come across the border, in order to facilitate collection. Morrison says that there’s no amount yet specified. “Nominally we’ve talked about $5 per tyre, but that needs to be worked through.”

However consumers may already be paying he says.

“Currently, a number of tyre shops will put a disposal fee on, and in fact they might charge $5 or $7 and it might cost them less to get it disposed of.”

Motor Industry Association Chief Executive Officer Perry Kerr says that they’re happy to participate, but believes that tyres brought in on vehicles – whether passenger vehicles, motorbikes or tractors – should be exempt.

“One of our conditions of participation is the same as the IMVIA: we believe that the levy should be collected as the tyres come across the wharf, it should be a mandatory levy payable by all participants, but rather than charge it on tyres on vehicles, we believe it should only apply to tyres themselves, not to tyres on vehicles.

“Our rationale for that is that you’re going to cut down significantly on the number of participants, you’re going to only have around 10-15 companies paying, as opposed to thousands if you’re doing it on importers. From the administration costs’ point of view that would certainly up the ante.

“For us it doesn’t matter that it isn’t collected on the first tyre imported, it’s certainly going to be collected on the replacement tyres. My understanding is that all tyres are imported, so you’re going to have all tyres captured.”

The company doing much of the work is 3R, who design, implement and manage Product Stewardship programmes in New Zealand, such as the PaintWise scheme at Resene Paints, where surplus paint is collected.

Executive Director Graeme Norton says that they’re at the cross-roads of a number of interested groups, including MTA and tyre companies.

“We’re leaders in this space in New Zealand, and motor industry waste issues are frequent targets for product stewardship-type solutions elsewhere in the world.

“Used oil has been tackled in the past, and has been around in various forms. But so far in New Zealand there hasn’t been anything systematically in tyres.

“We’re trying to do something about that. It’s not an initiative that was kicked off by us, but we were brought into the process as a result of people knowing who we were and what we got up to.”

He says that the primary drive has come from the major tyre companies such as Goodyear, Michelin, Bridgestone, Yokohama. The major companies have a road map of how to handle end of life tyres that is worldwide.
Norton says that the current scheme is advanced, and perhaps most importantly, is finding support in Wellington.

“Government seems to have recognised that wherever else in the world tyres are tackled systematically, especially in the OECD, government is a participant in the process.

“It varies as to what sort of participant they are. In New Zealand there’s an indication from government that provided the stakeholders come together and can develop a viable outcome, they’re prepared to look at it, and the Minister understands that the proposal is likely to contain some rule making. This is different from where it has been previously.”

The scheme is likely to be treated under the Waste Minimisation Act.

“The product stewardship elements of that Act enable government to get involved in what they call priority products. And this is the likely pathway for tyres.

“If tyres were declared a priority product there would be some form of registration process that would mean that everybody who brings tyres into New Zealand would have to meet a certain set of standards.”

“The stage that we’re at the moment is the Minister for the Environment [Nick Smith] has invited the industry to put forward a proposal to fund the next phase, which is really the design-phase, and bringing the stakeholders together and thrashing out a deal.

“Then once that has been put together it will go into a process that will include public consultation. Assuming all of that happens then there will be some kind of systematic process brought in, I would say at this stage, next year.”

Norton says that while it’s clear that there won’t be a tax on tyres, registration of tyres as a priority product would result in some kind of front-end charge, potentially levied by customs, though this again is something to be worked out.

However it’s hoped that any impost would be temporary.

“The way to design these programmes is to make sure that if the end value rises, either through the inherent values of the materials, or the use to which they’re put becomes better in value, that the economic outcome translates up to the front-end, reducing or eliminating any need for an impost.

“One of the mistakes programmes often make is to lose control over the end value. If you lose control over the end value, or don’t have some mechanism by which you can differentiate, you end up just putting on a ‘forever-tax’ on the front end, which is distorting.

“I think the best example for that would be end of life vehicles (ELV) in Germany, where say 20 years ago there might have been 100 Deutschmarks at the front end, but there isn’t any more, because the value of the end game means that we don’t need to put any impost on the car at the front.”

A number of options exist for processing of tyres including turning into bitumen, shredding for dressage arenas, making rubber mats, pyrolysis – a method of contained incineration yielding oil and carbon, or burning for fuel in high temperature burners as a substitute for coal.

Norton says it’s not his position to have a preference, but to build a plan that stakeholders can sign off on. Whichever companies wish to process the tyres, having an auditable trail of the chain of custody of the material will be important.

“You might want to incentivise people to do something with the tyre that creates a value for it, a much stronger value for it than burning it. But that’s for the future, for the design phase, and for us to understand what’s working best internationally.

Norton says also that it makes sense for the motor industry to get proactive in this space.

“One of the things that is apparent to me is that there is increasing pressure on New Zealand to have rules that are consistent with its trading partners, and this is an example of where we should get in and design our own outcomes before they get imposed.”

Norton believes that with harmonisation of trade laws globally, New Zealand will be forced to follow in step with international best practice.

“I think from a motoring point of view, ELVs [end of life vehicles] are a natural follow on from this.”

“In Europe they have an ELV directive, in China, Korea, and Japan, they have a very similar directive, which is harmonised with the European one. You wouldn’t have to be a rocket scientist to work out that New Zealand will have to harmonise its way of doing things with its major trading partners.

“At the moment, my understanding is that approximately 70% by weight of a car is recovered, and the rest goes to the tip, while the latest European ELV position from next year is that 95% is recovered. There is a substantial volume of waste thrown into the tip each year, that is the nonferrous portion of cars. That would not be allowed in Europe, and is increasingly not being allowed in China, Japan, or Korea. It’s only a matter of time before we have to front up to that issue.”

“I think that we have to get over the idea that somehow we’re different. We’re asking our trading partners to dismantle their points of difference to allow our goods in, and have common rules to us, it’s a reasonable expectation that it occurs in reverse.”

Perry Kerr doesn’t believe a levy at the boarder would be an appropriate solution to end of live vehicles.

“Our view on end of life vehicles is that we believe that the more appropriate collection mechanism for vehicles would be on re-registration of the vehicle, and you then have a smaller fee payable by all vehicle owners through the life of the vehicle.

“Instead of having the importer pay up upfront, as the owners are using the vehicle, they then pay $10-15 a year to fund the vehicles, and we believe that is fairer, bearing in mind then length in age of ownership in the New Zealand market, so you’re spreading it across the total fleet, rather than focusing only on vehicles as they’re coming across the border.”

Whether some type of charge is necessary for ELVs depends on the type of scheme envisaged says Kerr.

“But if you want environmentally sensible removal of say the oils and the airbags and all of the other things, the Japanese have found that you need to fund it somehow.”

Source: Autofile, Issue 14, 11 August 2011

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