STATE OF THE ART OF THE END OF LIFE TYRES ... OF THE ART OF THE END OF LIFE TYRES RUBBER GRANULATES...

STATE OF THE ART OF THE END OF LIFE TYRES RUBBER

GRANULATES SECTOR IN FRANCE, EUROPE AND OTHER

COUNTRIES

June 2015

Study carried out for ADEME and the Ministry of Ecology, Sustainable Development and Energy (DGPR) by Philgea and Moringa

Contract n° 1402C0021

Technical coordination : Karine FILMON and Eric LECOINTRE - ADEME Angers – Circular Economy and Waste Division - Products and Material Efficiency Department

SUMMARY REPORT

June 2015

State of the art of the ELT granulation business 2

THANKS

We thank all the members of the Steering Committee (per alphabetical order):

Ariel CABANES, MICHELIN

Simon CADIO, Ministère de l’Economie, DGIS

Hervé DOMAS, ALIAPUR

Richard DURBIANO, ALIAPUR

Eric FABIEW, ALIAPUR

Karine FILMON, ADEME

Damien COLLET, COLLET ENVIRONNEMENT

Jean-Philippe FAURE, ALIAPUR

Alain GURDEBEKE, DELTA-GOM

Caroline LAVALLEE, Ministère de l’Ecologie, du Développement Durable et de l’Energie

Eric LECOINTRE, ADEME

Marie LEPERS, Groupe MOBIVIA

Richard LETT, ROLL-GOM

Bruno MURET, SNCP

Laura PECH, FRP

Tess POZZI, FEDEREC

Stéphane PETITRENAUD, ALIAPUR

Christian RENNER, HET

Franck RETAILLEAU, ALIAPUR

Nadia ZENNACHE, FRP

as well as the various other contributors to this study.

Any representation or reproduction of the contents herein, in whole or in part, without the consent of the author(s) or their assignees or successors, is illicit under the French Intellectual property Code (article L. 122-4) and constitutes an infringement of copyright subject to penal sanctions. Authorised copying (article L 122-5) is restricted to copies or reproductions for private use by the copier alone, excluding collective or group use, and to short citations and analyses integrated info works of a critical, pedagogical or informational nature, subject to compliance with stipulations of articles L 122-10 to L 122.12 inc. of the Intellectual Property Code as regards reproduction by reprographic means.

June 2015


TABLE OF CONTENTS

I. PRESENTATION OF THE STUDY ............................................................................................................. 4 I.1. CONTEXT .................................................................................................................................................4 I.2. OBJECTIVES OF THE STUDY .......................................................................................................................4 I.3. WORK CARRIED OUT .................................................................................................................................4

II. OVERVIEW OF THE ELTS GRANULATING SECTOR IN THE MAIN EUROPEAN COUNTRIES .......... 5

III. SITUATION IN A FEW NON-EUROPEAN COUNTRIES ........................................................................... 7

IV. STATUS OF THE MAIN R&D PROJECTS ................................................................................................ 8 IV.1. IN FRANCE ............................................................................................................................................8 IV.2. IN EUROPE ...........................................................................................................................................8

V. ECONOMIC ANALYSIS OF THE GRANULATION SECTOR.................................................................... 9 V.1. FACTORS DIRECTLY RELATED TO THE SECTOR ............................................................................................9 V.2. TRENDS OF CONCURRENT RAW MATERIALS AND WAYS OF RECYCLING TYRES ............................................ 13

VI. ENVIRONMENTAL ANALYSIS ................................................................................................................ 15 VI.1. OBJECTIVES OF THE ANALYSIS ............................................................................................................ 15 VI.2. MAIN RESULTS ................................................................................................................................... 15

VII. CONCLUSIONS AND RECOMMENDATIONS ........................................................................................ 17 VII.1. TRENDS OF THE MAIN MARKET OUTLETS IN EUROPE ............................................................................. 17 VII.2. NATIONAL SUPPORT MEASURES TO THE GRANULATION SECTOR ............................................................ 17 VII.3. DIAGNOSIS OF THE FRENCH TYRE GRANULATION INDUSTRY .................................................................. 19 VII.4. RECOMMENDATIONS FOR A NATIONAL ACTION PLAN STRATEGY ............................................................. 20

June 2015


I. PRESENTATION OF THE STUDY

I.1. CONTEXT

The granulating of used tyres is, to date, the main recycling route for non-reusable end-of-life tyres in Europe. In France, as in many other European, this sector of activity meets economic difficulties related to a decline of traditional product markets affected by a lack of public investments and a steeper European competition, resulting in a strong granulates prices fell over these last years. In France, the management of end of life tyres, created by order n° 2002-1563 of 24

th of December 2002

according to the producer responsibility principle reached very satisfactory results in terms of collection and recovery rates. However, material recovery and more specifically tyres granulating sector of activity face, since quite a few years, a continuous deterioration, contrary to energy recovery, increasing. According to the European frame Directive on wastes, the waste management hierarchy indicates an order of preference for material recycling, in priority to energy recovery Against this background, French authorities are in the process of modifying the legislation on end of life tyres management. The draft amending regulation will introduce more specific objectives, especially in terms of territorial coverage, with regards to recovery routes and key-players consultation.

I.2. OBJECTIVES OF THE STUDY

In this respect, and with the idea of supporting public authorities in setting up targets between used tyres recovery routes (material versus energy), this study aims at clarifying national contexts and providing comparative tools on the national granulating situation of used tyres existing in various European countries and a few other major non-European countries.

I.3. WORK CARRIED OUT

The study was conducted between September 2014 and March 2015 and included the following tasks:

- A detailed state of the art of the ELT granulating situation in 11 European countries and a bibliographic analysis of the main R&D projects carried out both in France and Europe ;

- A more succinct summary of ELTs granulating sectors in 6 non-European countries (South-Africa, Brazil, Canada, United-States, Russia and Turkey) ;

- an economic analysis of ELTs granulating markets ;

- an environmental analysis based on a bibliographic review, in order to identify potential environmental strengths of material recovery and ELTs granulation against other competing recovery routes ;

- a comparative diagnosis of the French situation and ELTS granulating sector ;

- suggestion of recommendation for a national strategy

Altogether, over 80 experts were contacted and more than 50 interviews were carried out.

June 2015


II. OVERVIEW OF THE ELTS GRANULATING SECTOR IN THE MAIN

EUROPEAN COUNTRIES Chart 1 : key figures 2013 for the ELTs granulating activity in Europe Source for the outline map: ETRMA

Details on the methods and data used : according to the available sources of information, data on volumes of used tyres recovered and ELTs granulated sometimes significantly differ. In most cases, we have deliberately used national statistics in priority, except when recent consolidated national data were non-existent. In these latter cases, we used ETRMA data.

Furthermore, the material recovery rate definition tends to vary from one country to another, some integrating tyres reuse or retreading into the calculation of the material recovery rate. In order to allow data comparison on homogenous basis, recovery tonnages were recalculated so as to restrain the recovery rate of end of life tyres, only to energy recovery (in cement kilns, urban heating and electric utilities) and to material recovery (granulation and civil engineering).

Above all, the following charts and graphs aims at providing a general overview of the trends characterizing the granulation sector of different European countries.

Poland10

35 ktons

29 %

France4

79 ktons

22 %

United-Kingdom5

154 ktons

46 %

Portugal3

38 ktons

60 %

Spain12

91 ktons

48 %

Italy18

136 ktons

43 %

Germany10

190 ktons

45 %

Belgium1

44 ktons

80 %

Chart legend

Nb of granulation plants in the country

XX ktons tonnages of ELTs tyre granulated

XX% granulation share of the total ELTs recovered

Netherlands2

32 ktons

84 %Denmark2

36 ktons

95 %

Hungary26 ktons

76 %

June 2015


-

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500 000

Tonnages of ELTs recovered (2012)

Granulation

Other recovery routes (energy, civilengineering)

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ELTs recovered for granulation (in tons)

2010

2011

2012

2013

Figure 2 : Total recovered tonnages of tyres in 20121, amongst which granulation tonnages

Source: national data (or ETRMA data whenever national data are not available)

Figure 3 : evolution of the tonnages of tyres recovered to be granulated (in tons) Source: national data (or ETRMA data whenever national data are not available)

Comments : the analysis of the evolution of the tonnages recovered to be granulated (in absolute numbers) shows that these volumes are generally decreasing in most countries, except in Italy where the recently implemented producer responsibility system contributed to move forward increasing volumes of tyres towards material recovery, simultaneously to a sharp reduction of landfill disposal.

1 Data 2013 unavailable in several countries

June 2015


92%

81%

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ELTs recovered for granulation (in % of the total recovered)

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2013

Figure 4 : evolution of the share of granulation into the total tonnages recovered Source: national data (or ETRMA data whenever national data are not available)

The percentages showed on the chart correspond to the year 2012 (data for 2013 not being available for all countries).

Comments: compare to energy recovery and other routes of material recovery, granulation is relatively stable in countries such as Germany, United-Kingdom, Spain and Portugal whereas it is in continuous progression in Denmark, Italy, Belgium and the Netherlands.

If France is the 3rd

European country in terms of total volumes of tyres recovered and ranks 5th amongst the

10 European countries studied for the total volumes of tyres granulated, it is the last one in terms of granulation share (compared to energy recovery) with around 22 % of its tyres sent to be processed into crumbs in 2013, against a European average of 40 % in 2012 according to ETRMA (data for the year 2013 were not available).

III. SITUATION IN A FEW NON-EUROPEAN COUNTRIES Amongst the non-European countries studied, Canada is the most advanced for having expanded market access to its used tyres granulates: over 70 % of the total volume of used tyres recovered are dedicated to granulation and are given a second life as sports fields, ground covers under playgrounds, walk-ways, molded rubber products (cattle mats, vehicle mud flaps, delineator’ posts designed to block vehicle access from areas being prepared for paving, blasting mats, dock bumpers, etc. ) and mulch in landscape applications.

In South-Africa, 52 % of the used tyres recovered in 2014 were recycled via the granulation process, 32 % were intended for pyrolysis and 16 % were shredded to be used in cement kilns.

In Brasil and the United-States, cement factories are the main recovery process for used tyres.

In Russia, a system aiming at managing the collection and recovery of use dis just starting to be developed but has not progressed very far. The current recovery rate of used tyres is still below 10 %.

In Turkey, there is a willingness to develop both granulation and pyrolysis sectors but the organization responsible for end of life tyres, LASDER, was unable to supply data relative to the product markets and concerning the granulators profiles.

June 2015


IV. STATUS OF THE MAIN R&D PROJECTS

IV.1.IN FRANCE

In late 2002, the publication of the decree relative to the disposal of end of life tyres laid the foundations for the development of a structured and sustainable industry, but at this time, France was suffering from a large deficit of recovery capacities that required to be solved as soon as possible. It is in this context and in order to increase these tyres processing capacities that ADEME launched, in 2003, a first R&D call for tender concerning the recovery of used tyres, followed in 2004 by a second, in collaboration with Aliapur. The main objective was to bring out new ways or new recovery processes for both whole and shredded used tyres. A dozen of projects related to tyre granulates have been funded between 2003 and 2010 as part of these programs. These projects enabled to improve the characterisation of crumb rubber and thus promote their usage (environmental impact assessments, technical validations), develop co-products valorisation (steel and/or textile fibres) and identify new outlets (in the automotive industry, equestrian floors or public works). In 2010, the programme “Investissements d'Avenir », designed to support projects promoting innovation and creating employment that is not vulnerable to relocation in sectors with strong potential for the national economy has been launched. Within this framework, ADEME is funding thirteen large projects amongst which TREC project ("Tyre RECcycling") on the recovery of used tyres. Led by Michelin, in partnership with CEA, Proteus (PCAS Group) and SDTech, the project will run for a period of eight years and a total of € 51 million with € 13.3 million funded by ADEME. It is broken into two "sub-projects": 1. TREC Regeneration involves the regeneration of rubber compounds for the production of new tyres.

2. Alcohol TREC concerns the production of butadiene, a chemical intermediate necessary for the synthesis of raw materials used in the production of tyres.

IV.2.IN EUROPE

National R&D projects related to end of life tyres granulation are usually coordinated by a private industrial (eg Genan) or, to a lesser extent, by a national public body. In addition to France with projects funded by Aliapur and ADEME, the most active European countries in the field of R&D on the subject are Italy, Spain and the UK.

However, the situation is quite different with projects financially supported at European level, through the European Program "Eco-Innovation" or the programs of the ETRA (European Tyre Recycling Association), an independent European association 250 tyre recycling professionals in 43 countries.

Italy, Spain, and to a lesser extent, the United Kingdom and Germany are very present in these European projects. Conversely, it is surprising to note the absence of the French, Portuguese and Danish. Over the 17 projects identified, France is represented only in one, via the l’Ecole des Ponts et Chaussées (School of Civil Engineering).

Among the topics most regularly covered, it is interesting to note that, as in France, improving the use of used tyres aggregates in concrete or public works for roads as well as research concerning the use of co-products (steel and textile fibres) remain important. However, unlike French R&D projects, it is worth pointing out that several European projects seem to be more "market oriented", with specific tools and recommendation to support market penetration of crumbs products.

June 2015


-100 €

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50 €

100 €

150 €

200 €

250 €

Poland*** Belgium Denmark* GermanyNetherlands* France(Aliapur)

Portugal Spain** Italy

Gate fees paid to granulators (€/ton)

2004

2011

2014

* Denmark/Netherlands: gate fee paid by collectors to granulators (trade negociation - Source : confidential)** Spain : indicative amount provided by a Portuguese granulator (Signus was reluctant to communicate this data*** Poland : granulators now buy the tyres between 25 and 40 €/ton

V. ECONOMIC ANALYSIS OF THE GRANULATION SECTOR

V.1. FACTORS DIRECTLY RELATED TO THE SECTOR

V.1.1. Revenus generally declining

The end of life Eco-fee :

The vast majority of studied countries have an environmental fee system designated to finance the collection and recovery of end of life tyres. In 2014, amongst the countries with such a system, France, the Netherlands and Portugal are the ones with the lowest eco-fees. Figure 7 : Average amount of the eco-fee paid by the tyres manufacturers and importers in 2014 (in € HT/tyre of light vehicle) Source: National ELTs management companies/associations

A rather general decrease in gate fees and crumbs selling prices…

In several countries, granulators receive gate fees paid, either by the collectors or by the organization in charge of managing used tyres collection and recovery, to offset some of the costs. The average amounts of these gate fees vary from one country to another, but all are generally declining, while simultaneously and in all countries, the price of tyre granulates suffered a steady decline since 2009. Figure 9 : Evolution of the gate fees amounts paid to the granulators in main European countries Source: interviews with national organisations in charge of ELT management and granulators

June 2015


Figure 10 : Sales price evolution for granulates between 0.5 and 2.5 mm (in €/ton) Source: data provided by a French granulator

Numerous French granulators, but also British and even German and Danish are suffering because of this sale price decrease. However, since mid-2014, a few European contacts mentioned a slight upturn in granulates prices.

…Partially offset by a growth in steel valorisation and prices:

Figure 11 : selling prices of steel fibres originating from ELT’s granulation Source: data provided by a French granulator

Co-products valorisation, and more specifically the exploitation of the steel content of tyres, contributes to increase granulators’ revenue. Most European granulators are now equipped with steel purification units. On the other hand, textile fibres are not valued as well, a major share being redirected for incineration.

V.1.2. Production costs impacting the profitability of the granulation business

There are four main kinds of financial burdens affecting granulators profit:

1. Investment costs : According to Josef Hösl, CEO of the German granulation Group Estato, you have to count around 2,5 million euros for acquisition of a process line with a production capacity of 4 tons/hour of crumb sized between 1 and 4 mm. These investment costs weight heavily on those granulators, newly active on the market and smaller than the average, as they feel difficulties in defraying their costs. More experienced granulators (in particular, German, Danish, Dutch or even a few British) who have started to produce granulates over twelve years ago, have already amortized most their investment and now enjoy an incontestable competitive advantage, all the more important that their bigger production capacities also allows them to automate their process in order to reduce labour costs. 2. Energy costs : The granulation process is very energy consuming (between 220 à 230 kWh/ ton of tyres). Depending on the electricity costs existing in various countries, energy can amount up to 20 % of the total costs of production. This burden therefore encourages granulators to optimize their electricity consumption, while reducing, as far as possible, their seasonal or weekly shut-downs. Eldan, one of the main European equipment and machinery supplier for granulation confirms: “Electricity invoices for a production line operated on day and evening shift may reach up to 200 k€/year”. Based on Eurostat data, electricity costs are generally increasing all over Europe. However, situations are contrasted between the main European countries: prices charges to industrial users increased by almost 75 % in Portugal but decreased by 3 % in the Netherlands, 7 % in Hungary and 17 % in Poland.

150 €

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230 €

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Price trends of used tyre of 0,5 to 2,5 mm (in €/ton)

20 €

60 €

100 €

140 €

180 €

220 €

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Sales price evolution for steel fibers

June 2015


In France, despite a growth of 53 % between 2007 and 2014, the industrial electricity rates remain today amongst the lowest in Europe, with a lower cost of approximately 34 % to the average European cost.

Figure 14: Electricity prices (levies and taxes included) on the 1st

half of 2014 for industrial consumers (500 MWh < conso < 2000 MWh) - Source : Eurostat

3. Labour costs :

The cost of work time is relatively similar in Belgium, Denmark, Germany, France and the Netherlands, in the range of € 35-43 / hour. Italy, Spain and the United Kingdom have costs from 22 to 28 € / hour, while Portugal and the countries of Eastern Europe have even lower labour costs, in the order of 11 € / hour.

Figure 16 : cost for one hour of work in the manufacturing sector (€) - Companies ≥ 10 employees Source : Coe-Rexecode – Following up of the survey ECMO with labour costs indices - march 2015

4. costs of road freight transport.:

According to the various granulators interviewed, transportation costs account for around 20 % of the crumb price (i.e.: ~ 30 €/ton) but may strongly fluctuate according to the considered distances and tonnages. This cost primarily depends on fuel cost, labour cost as well as corporate taxes and burdens.

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June 2015


Figure 17 : typical diesel fuel cost per 1 000 litres by Member State (January 2014) Source: Market Observatory Oil Bulletin, 2014, European Commission, GD Energy

Across the European Union, fuel costs kept pace with crude oil prices on international markets. Costs of diesel fuel are the highest in United Kingdom and Italy.

Figure 18 : net corporate charges paid per vehicle-kilometre (domestic freight transportation, 2012). Source: «Road Haulage Charges and Taxes. Summary analysis and data tables 1998-2012», OCDE 2013.

All in all, the April 2014 report of the European Commission related to the situation of road transport within the European Union concluded that: “costs structures between countries throughout the freight road haulage sector, tend to converge”.

June 2015


V.2. TRENDS OF CONCURRENT RAW MATERIALS AND WAYS OF

RECYCLING TYRES

V.2.1. Natural rubber and EDPM prices

Figure 19: Evolution of natural rubber prices (in cents the kilo CIF (Cost, Insurance & Freight – RSS3) Source: SNCP-Reuters

Figure 20 : Price indices for rubber mixtures containing EDPM (Base 100 at 1

st January 2009)

Source : SNCP-Reuters

As noted by both the European Innovation Partnership (EIP) for raw materials and the Dutch organization responsible for End of life tyres management, Recybem, 100 % of natural rubber is imported from non-European countries. Europe is therefore completely dependent on this virgin material imports and price changes.

Yet, it is interesting to observe that there seems to be no direct correlation between the evolution of natural rubber market prices and granulate prices made from recycled tyres (Cf. chart 10): thus, the prices peak of natural rubber, registered in January 2011, does not correspond with the price spike of granulates made from ELT’s (that were on a declining trend from 2009).

According to several big consumers of granulates made from used tyres, even if crumbed rubber may encounter occasional weaknesses such as quality, odour issues or concerns regarding their potential toxicity, their prices, compared to natural rubber, remain one of their main assets. While EDPM and virgin thermoplastics cost between 1300 à 1400 €/tonne, the price of granulates is 5 to 6 times lower.

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V.2.2. Re-use of tyres in cement plants

For nearly 40 years, the cement industry has become a major market for many wastes, including used tyres. End of life tyres used in cement plants represent a double interest in terms of industrial ecology: the combustible fraction consisting of polymer hydrocarbons, carbon black and textile fibres, provide energy to the cement process. Moreover, the mineral fraction, mainly composed of steel, is a contribution of material that replaces materials originating from quarries. In addition, the steel contained in the tyres allows cement plants to limit or even avoid, the addition of iron ore required for clinker production.

Transport costs of used tyres being significant, of the range of € 10 / ton / 100 km for shredded tyres and 15 € / t / 100 km for whole tyres, it is important to think with a logic of proximity. And this is precisely one of the difficulties for cement plants, sometimes located relatively far from granulators and / or shredding platforms.

To date, despite making contact with Lafarge and Vicat Group (leading cement manufacturers in France using ELT’s), and Aliapur, it was not been possible to get the average prices of tyres used in cement plants, because of commercial confidentiality. However, a significant change was confirmed: while in the recent past, cement facilities were paid to "eliminate" non-reusable tyres, now, most of the time, they must pay to benefit from this high calorific alternative fuel

2.

.

2 Nevertheless, it may still happen, on rare occasions, that cement plants benefit without paying or even with small

financial participation of the holder, from used tyres.

June 2015


VI. ENVIRONMENTAL ANALYSIS

VI.1.OBJECTIVES OF THE ANALYSIS

The objective of the environmental analysis phase was to identify life cycle assessment studies (LCA) allowing to compare the environmental performances of different recycling routes of used tyres in order to address the following questions:

- Do the studies show significant differences in terms of environmental benefits for the different recovery routes for used tyres?

- If yes, what are the recycling routes offering the best environmental benefits?

- What are the factors that could cause actual results to differ?

- As for granulation, what are the applications offering the best environmental benefits over traditional solutions used in place of end of life tyres?

VI.2.MAIN RESULTS

Few life cycle assessments (LCA) were conducted on recycling options for used tyres, but even less on the various applications of granulates made from ELTs.

Five LCA and two simplified environmental assessments were analyzed.

Although the calculation assumptions vary from one study to another, some common conclusions emerge:

- Regarding the recycling routes of non-reusable waste tyres, recycling is the recovery method which generally offers the best environmental benefits, although recovery in cement plant also has good performance in some studies (such as when tyres are used as an alternative fuel to coal);

- Only two studies evaluated in detail the performance of different applications of tyre granulates (Aliapur 2010 study and study SDAB

3 2007); in both cases the use of granulates for filling the synthetic grass appears as a

particularly interesting sector from an environmental point of view.

However, there are contradictions on the environmental benefits of the use of tyres in rubber asphalt:

- According to studies carried out for Genan, rubber asphalt has very superior environmental benefits compared to the recovery in cement plants or to the use of used tyres in civil engineering;

- Whereas, according to the Swedish study of SDAB, rubber asphalt is instead the only recovery route having a negative environmental footprint compared to the traditional solution (gravel and sand + unmodified bitumen).

Assumptions used in both these studies are however, quite different: Genan compares the use of rubber powder from used tyres to the production of modified asphalt integrating synthetic rubber, instead of classical asphalt in SDAB study.

Lastly, the new recovery routes such as pyrolysis and devulcanization have not yet been assessed through published life cycle analysis, although Recybem and ARN, in the Netherlands indicated having carried out a first assessment, on theoretical basis, that holds out the prospect of environmental gains, much more important than with current “classical” recovery routes.

Tableau 5: main life cycle analysis relative to the recovery methods for used tyres

3 In Sweden

June 2015


Study title Authors Year Geographical area

Compared recovery processes

Comparative Life Cycle Assessment of Two Options For Scrap Tyre Treatment: Material Recycling vs. Tyre-Derived Fuel Combustion

Franklin Associates for Genan

2010 United-States Granulation (75% asphalt rubber / 25% artificial turf) and energy recovery in cement plants

Comparative life cycle assessment of two options for waste tyre treatment: material recycling in asphalt and artificial turf vs. civil engineering application for drainage layers in landfills

FORCE Technology, Copenhagen Resource Institute, Institut für Energie- und Umweltforschung Heidelberg GmbH for Genan

2009 Europe Granulation (75% asphalt rubber / 25% artificial turf) and civil engineering recovery as draining under-layer

Comparative life cycle assessment of two options for waste tyre treatment: material recycling vs.co-incineration in cement kilns

FORCE Technology, Copenhagen Resource Institute, Institut für Energie- und Umweltforschung Heidelberg GmbH for Genan

2009 Europe Granulation (75% asphalt rubber / 25% artificial turf) and energy recovery in cement plants

Life Cycle Assessment for 9 different recovery routes of end of life tyres

PWC for Aliapur 2010 Europe ➢ 2 recovery routes in

Building sites and public works

• Retention ponds • Infiltration basins

➢ 2 energy recovery routes

• in cement plants • Urban heating plants

➢ 5 material recycling routes

• Steel plant • Foundry • Molded products • Synthetic flooring • Equestrian floors

LCA of the utilisation of used tyres

VL Swedish Environmental Research Institute Ltd / SDAB

2007 Sweden • 2 energy recovery routes : in cement / heating plants • 2 material recycling routes : granulates used to fill artificial turf football fields / production of rubber asphalt • 2 scenarios of reuse : as drainage material in landfills / for bank stabilization

Ecotest Recybem, ARN 2011 Netherlands Retreading, export for second use, recycling, cement kiln, combined heat and power plants

Ecopneus sustainability report 2013

Ecopneus, ENEA 2013 Italy recycling, energy recovery in cement plants, energy recovery in power plants

June 2015


VII. CONCLUSIONS AND RECOMMENDATIONS

VII.1. TRENDS OF THE MAIN MARKET OUTLETS IN EUROPE

Beyond the specificities of each country, there are many similarities in the evolution of the main markets outlets of tyre granulates and powders. As fairly unanimously reported, experts contacted in the various countries highlighted the current difficulties of the granulation sector of tyre waste, facing a tough competition and a stagnation of traditional market outlets, which, combined, have led to a sharp fall in prices of granulates since 2011.

The majority of stakeholders interviewed believes that the future of the industry lies in the high value-added applications (industrial mixing, auto parts, tyre industry) still emerging or even at the stage of R & D.

Many consider that in the short term, the difficulties will persist but that the actors who will manage to remain on the market will then have access to potentially very significant opportunities (especially the tyre industry).

VII.2. NATIONAL SUPPORT MEASURES TO THE GRANULATION SECTOR

Contrary to the ideas expressed by several French players, very few European countries have developed specific public support measures for the granulation sector (domestic subsidies, export aid or investment). The identified support measures concern either:

- the existence of entry fees (gate fees) paid to granulators;

- the existence of regulatory objectives imposing a material recovery rate of tyre waste or a certain percentage of granulate content in several sectors;

- the political will to deliberately promote material recycling (versus energy recovery) for environmental reasons (case of Denmark, the Netherlands and, to a lesser extent, Belgium).

There was a general consensus among respondents that the regulatory objectives imposing a material recovery rates can only be effective if they are accompanied by a national policy stimulating demand for tyre granulates.

June 2015


Table 7 : overview of the support measures existing in the various European countries studied

Country Gate fees paid to granulators

Regulatory objectives Other specific national support measures

Germany (≈ 40 €/t)

Belgium (≈ 85 €/t)

maximum of 45 % of energy recovery

Denmark (≈ 30 €/t) Subsidy paid to companies in charge of collecting ELTS under the condition that tyres are delivered to granulation plants

Spain

(ND)

55% of material recycling (rubber recycling of 45% in the asphalt mixes ; steel recycling of 100% )

Obligation for highway authorities to favour the usage of ELTs granulates into the asphalt mixes « wherever technically and economically practicable.»

France

(≈ 55 €/t)

Italy

(≈ 107 €/t)

Green Public Policy theoretically encouraging the use of recycled material, but implementation decrees still to be published

Netherlands at least 20 % of tyres collected must be either reused or material recycled

Poland At least 15% of recycling

National football fields construction program in synthetic turf, plus, renovation of schools and playgrounds.

Portugal

(≈ 75 €/t)

69% of recycling (period 2009-2014)

No support measure but several granulators benefited from European subsidies.

United-Kingdom

According to the agreement signed in December 2014, tyre-derived shred or rubber granulate may be deemed non-waste if the manufacturing process, record-keeping and product labelling comply with the Tyre Derived Rubber Material Quality Protocol and with PAS 107.

June 2015


VII.3. DIAGNOSIS OF THE FRENCH TYRE GRANULATION INDUSTRY

Both the comparative study of granulation industries in major European countries and interviews with experts highlight a number of weaknesses of the French sector:

Production capacities individually and globally too low: with a theoretical total capacity of 90 000 to 100 000 tons (taking into account the new factory HET) and an individual capacity varying between 10 000 and 30 000 tons per granulation site, the French sector can currently handle only relatively low volumes compared to its European neighbours, including Germany, which, in comparison, has a total capacity of over 400 000 tons. Some French granulators do not have sufficient equipment to granulate the volumes of tyres that Aliapur provide them to process and must therefore either export a portion of these volumes to German or Dutch granulators, or alternatively, transfer them to French processors shredders for a final valuation in cement plants. In the opinion of most experts interviewed, a capacity of 15 000 to 20 000 tonnes is a minimum to ensure profitability of granulation site. The biggest German granulators such as Genan and Estato have unit production capacities of more than 60 000 tons, they produce 6 to 7 days a week and 24 hours a day (especially at peak times in the summer) with reduced staff and adapted production lines in order to satisfy customer demand and be able to produce 10 different dimensions of aggregates simultaneously, where French granulators are often able to offer no more than 4. It is therefore essential to help the French granulators continue investing to increase their production capacities, provided that sufficient demand and outlets are demonstrated on short to medium terms in order to prevent stocks of unsold granulates.

Insufficient territorial coverage: beyond the small number of granulation facilities in France, which poses a problem, is their poor geographical distribution: granulation sites are all located in the North-East quarter of France. With the closure of the Montauban site, the South of France is left without any granulation unit which causes problems both for the upstream chain (FRP network especially does not have granulation site close to its main consolidation shredding platforms based in the Rhone Valley or in the West of France) for access to certain markets (synthetic turf manufacturers preferring, for construction sites in the South of France, buying granulates from Spain or Italy, geographically closer and more attractive in terms of prices).

A relatively low level of support: the continuing decline in the amount of gate fees paid to granulators combined with a difficult access to public aid for investment have contributed to weakening and putting at risk the French industry of tyres granulation facing, as in all European countries, a strong drop in sales prices of granulates that could only be partially offset by an improved valorization of co-products, especially steel. The French granulators are thus "squeezed" between, on one side, German and Danish granulators who have much higher production capacities allowing them to obtain economies of scale, and on the other, granulators from southern Europe (Spain, Italy, Portugal) of equivalent size but benefiting from higher gate fees (75-100 €/ton against about € 50/ton in France) and sometimes easier access to investment aid. Difficult in these conditions to offer competitive prices without compromising the profitability of their business

A best value ratio that can be improved: few years ago, if the French industry could boast a quality of tyres granulates superior to that of Spanish or Italian granulators, these two have made great progress and according to the experts interviewed, today they provide equivalent quality to that of French granulators, often at a lower price.

However, France has also a few assets :

A highly competitive energy

France has the lowest energy cost in Europe: an important advantage given that the granulation processes are energy intensive (about 220 to 230 kWh/ton of tyres) and that the energy accounts for almost 20 % of the production costs.

An efficient functioning of the ELTs management system

The French organisation for managing end of life tyres is considered, for a majority of experts contacted, particularly efficient and professional, and long-term contracts allow granulators to have the necessary guarantees in terms of supply, while in other countries such as Germany and Poland, granulators may encounter difficulties in getting the necessary quantities of tyres or strong price fluctuations.

June 2015


A technical support from national agencies

Continuing efforts of R & D, specifically provided by ADEME and Aliapur, allowed the granulation sector to benefit from substantial technical expertise. Aliapur ensures technical and operational support to the granulator to help them optimize their production processes and the quality of theirs granulates.

A concentrated industry

The small number of French granulators, often presented as a weakness, also has positive aspects: the national competition is in fact limited, and France is probably a few years ahead of an inevitable concentration movement than other countries such as Italy or Spain, with a large number of small granulation sites may have soon to face.

A central position within Europe

The central position of France in Europe is also an advantage compared to other more peripheral countries such as Portugal, and Poland.

VII.4. RECOMMENDATIONS FOR A NATIONAL ACTION PLAN STRATEGY

If the granulation of used tyres has some obvious environmental benefits compared to other recycling routes, its economic sustainability in the current context seems difficult without a proactive national policy support.

The French granulation industry has particularly suffered in recent years from lower combined price and gate fees and a hardening international competition. Six types of actions therefore appear necessary to support the sector.

1. Stimulating public demand

At present, the majority of tyre granulates market outlets are related to public procurement in particular those of local authorities. In the opinion of many experts interviewed, a “green procurement” policy favoring recycled products is essential to develop markets. Several measures could be implemented separately or together, in order to quickly and massively increase domestic demand:

- Require, by regulation, the communities to favour products made from recycled tyre granulates in their tenders (or more generally, to promote recycled products when there are a technically equivalent solution to existing traditional solutions) as did Spain in 2007 by adopting a circular requiring highways authorities to promote the use of scrap tyres granulates in asphalt mixtures "in all cases where technically and economically feasible";

- Introduce tax incentives, such as reduced VAT on recycled products including products made from recycled tyres;

- Use part of the funds collected through eco-fees to subsidize community projects, drawing on what is being done in Canada

4 to encourage local authorities to opt for solutions incorporating granulates made

from used tyres.

2. Providing financial support to granulators

Facilitating access to investment :

Although it was not possible to confirm that German or Dutch granulators had received investment aid, granulators from other countries, including Portugal or Poland, reported having benefited national or European investment aid, sometimes with substantial amounts of up to over 50% of the total investment cost.

In France, national designed investment aid schemes are complex and poorly adapted to the kind of facilities existing in the French granulation sector, often with very small sizes and with investment projects not meeting the required criteria to receive funding (notably in terms of jobs creation).

At least during the first five years of installation, a first step could consist in facilitating access to aid for investment or innovation to French granulators, proposing loans at subsidized rates in order to support them in investing and achieving the critical mass to benefit from economies of scale. More flexibility for the criteria used for assigning state aid to facilities belonging to the recycling sector could thus be envisaged.

4 For example, the province of Alberta spent $ 8.7 million to support 470 community projects using waste tyres (ie an average of $ 18,500

per project).

June 2015


Adjusting the amount of gate fees according to the price fluctuation of granulates : Although the continuing decline in the amount of the eco-contribution is a sign of an organization increasingly efficient of used tyres management sector, this has also resulted in a continuous reduction of compensation (gate fees) paid to granulators, including in the recent period of falling prices of granulates. We therefore suggest considering the possibility that in a period of falling prices, a gate fee modulation system makes it possible to at least partially compensate losses made by granulators. In the present state of things and as long as the granulate sale price are not increasing again, it seems essential to stop a minimum to reduce the amount of gate fees paid by Aliapur or even reduce them to an amount closer the European average.

In return, tighter controls of the fate of granulates could be considered to ensure that the granulators are actually really granulating tyres (and not exporting or reusing them), as does Valorpneu in Portugal, who pays compensation in two stages:

- The first part on receipt of the tyres on the granulation site

- The second part when granulates are sold.

3. Developping R&D on tyre granulates new applications and market outlets

Analysis of R & D projects related to granulation of used tyres shows that Italy, Spain, and to a lesser extent, the United Kingdom and Germany are very present and active in European research projects. Conversely, France is notable by its absence in these large international R & D programs, and more broadly in the annual conferences organized by ETRA.

Certainly, R & D efforts by ADEME and Aliapur are important and helped to significantly improve some issues, such as co-product valorisation or validation of the use of tyre granulates in concrete or equestrian grounds. Now R & D needs to identify and develop new applications, new markets and ways to efficiently increase the commercial penetration of granulates on markets.

Measures to develop R & D in this direction (for example, by launching new calls for proposals for innovative applications of granulates) could benefit the whole sector.

4. Conduct market surveys to better understand the characteristics of the main current and future outlets

Besides the R & D studies aiming at identifying possible new applications, it is also and above all necessary to improve the poor current knowledge of current existing markets by conducting prospective studies of short-medium term (2020/2025) to determine the number of sports fields, km of roads, car bumpers or acoustic barriers potentially achievable in France and identify large buyers at both national and European level.

5. Strengthen communication to local authorities and to the public

The results of the perception survey of French local authorities show that public buyers are waiting for better information on products produced from the tyre granulates as well as an improved communication with the general public to raise some reservations.

A collective representation of the granulation industry during major environmental events and shows such as Pollutec or during the Local Mayors and Communities Exhibition (salon des Maires et des Collectivités Locales), or the more regular renewal of events such as the national technical day organized in 2007 by ADEME and Aliapur on new applications of used tyres, could well contribute to a better awareness and acceptance of products from tyre granulates and facilitate their marketing.

6. Reassure industrial buyers concerning the future of the french tyre granulation industry

When interfacing with French and international key-players of the tyre waste industry, we were struck by the number of counterparts with the idea of a French industry "neglected, forgotten, almost non-existent"!

The closure of several granulation sites, the price and gate fee failure, the increasing orientation of used tyres flows to the cement industry are probably at the origin of this pessimism and a certain distrust with respect to the French granulation industry.

There is a real risk that industrial buyers turn away from French granulators considering that the sector is doomed to disappear, in favour of relations with countries showing a real will to develop the material recycling route.

It therefore seems urgent to demonstrate a clear political will to support the granulation industry, both by governments and by the national agencies responsible for managing end of life tyres, to reassure industrial buyers on the sustainability of the French sector.

June 2015


ABOUT ADEME

The French Environment and Energy

Management Agency (ADEME) is active in the

implementation of public policy in the areas of

the environment, energy and sustainable

development. The Agency provides expertise

and advisory services to businesses, local

authorities and communities, government

bodies and the public at large, to enable them

to establish and consolidate their environmental

action. As part of this work ADEME helps

finance projects, from research to

implementation, in the areas of waste

management, soil conservation, energy

efficiency and renewable energy, air quality and

noise abatement.

ADEME is a public agency under the joint

authority of the Ministry for Ecology,

Sustainable Development and Energy, and the

Ministry for Education, Higher Education and

Research.

STATE OF THE ART OF THE END OF LIFE TYRES ... OF THE ART OF THE END OF LIFE TYRES RUBBER GRANULATES...

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