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Product stewardship case study for end-of-life tyres

Acknowledgements

Executive Summary

1 Introduction

2 Tyre sector

3 Environmental and social issues arising from current disposal/end-uses

4 Alternative end-uses and barriers to these

5 Overseas review of TyreTrack

6 Overseas experience

7 Scheme alternatives and evaluation

8 Recommendations

9 Appendix A: case study methodology

10 Appendix B: TyreTrack participation and review

11 Appendix C: International research

12 Appendix D: Additional criteria used to evaluate tyre scheme options

13 Appendix E: Evaluation of different project stewardship alternatives

5 Overseas review of TyreTrack

5.1 Mechanics of the scheme

The TyreTrack scheme is managed by the MTA. It has been operating since July 2004 and was due to be reviewed before June 2006. The scheme objectives are to:

• ensure that a high proportion of EoL tyres are disposed of appropriately in sanitary landfills;
• improve rates of tyre recycling and reprocessing by providing good information about volumes of tyres available for disposal.

TyreTrack provides an on-line system to allow tyre retailers to find responsible ways of disposing of their waste tyres. When a retailer becomes a member of TyreTrack, they are given an individual login and password, which enables them to record the number of tyres they have available for disposal. They can then either choose a registered collector from the list or make the collection open to tender. The system informs the registered collectors about the new tyre supply. Collectors register interest by providing the price and information about how the waste tyres will be used. The retailer can choose from the collectors that have tendered for the tyre supply.

Registered collectors are obliged to record with TyreTrack in what way the tyres are disposed of, providing a landfill address or contact details for the end-use customer (eg, horse arena, farmers). (Note that TyreTrack does not require information on types of tyres. Estimates obtained during this study indicate these are 75% cars and 25% trucks/other.) Collectors are obliged to provide evidence of disposal in the form of weighbridge receipts, their monthly landfill account or other similar documents. Currently, e-mail reports are also accepted as evidence and are verified by the TyreTrack administrator through personal contact with landfills and end-users.

Some of the member retailers dispose of their tyres without using the registered collectors (eg, allowing farmers to pick them up or using a general waste management agent to take tyres to landfill). In that case they are still encouraged to register the tyres online in order to allow the scheme to track the overall movements of waste tyres in the economy. Similarly, the registered collectors report on the tyres collected from non-member retailers.

Where the tyre retailers or collectors don't have easy access to internet, they are able to send written records of tyres disposed and collected to the TyreTrack administrator, who enters the numbers into the system manually.

The scheme has some educational materials available to allow the retailers to inform their customers and non-registered waste tyre users about the scheme and the environmental hazards associated with waste tyres. This information has also been forwarded to polytechnics where training for tyre fitting is provided and to Auckland Regional Council's vehicle dismantling sites.

The TyreTrack website provides free space for tyre end-users to advertise their business and to look for tyre suppliers.

The scheme is jointly funded by the Ministry for the Environment and the MTA, with the MTA providing office space for the assigned administrator. The scheme is supported by a stakeholder group including tyre producers, importers, collectors, industry association and Local Government New Zealand representatives. The role of the stakeholder group is to provide ongoing advice and support; however, decision-making power lies with the Ministry for the Environment.

Based on anecdotal information from TyreTrack administrators, it was originally envisaged that a large proportion of tyre retailers would register with the scheme as it would address the difficulties experienced in obtaining reliable tyre collectors to transport tyres to landfill. Unfortunately, this has not proved to be the case and approximately only 30% of the existing tyre retailers in New Zealand participate in the scheme.

Currently, the majority of the tyres registered are not entered through the tendering process, but are simply a record of the routine transactions outside the system and are entered by the administrator manually.

At the end of 2005 an agreement was reached with a number of Auckland city councils to use TyreTrack for the enforcement of the tyre bylaws. TyreTrack is now reporting to North Shore City on the number of tyres entering and leaving its region.

5.2 Current registration and activity

Less than 400 tyre retailers are registered with the TyreTrack scheme, which is estimated as a third of the market. Over half of these retailers registered are those controlled by the tyre producers (that is, the "mainstream" Bridgestone and South Pacific Tyres retail facilities). A total of 43 collectors are registered with the scheme, but only 14 report tyre collection and disposal. The remainder are listed, and available for direct approach by the retailers. Last year 1.4 million tyres were recorded in the scheme. The majority of activity took place in the metropolitan areas with very little participation from remote or rural locations.

Appendix B provides quantitative information on the number of TyreTrack retailers and collectors per region in January 2006, as well as the total number of tenders and tyres registered in 2005. The data shows that the bulk of the tyres registered (nearly 1 million of the 1.4 million) are from the Auckland region. Using the anecdotal rule of thumb - one EoL tyre generated per person per year - these results indicate that TyreTrack includes information on the majority of Auckland tyres. For the remainder of the country (about 3.7 million people and only 400,000 tyres registered) TyreTrack therefore accounts for approximately only 10% of used tyre movements.

The TyreTrack website received over 600 visits in February 2006.

There is no target in regard to the volume of tyres diverted from landfill.

5.3 Review against objectives

To the extent that TyreTrack covers the used tyre sector (30%), it performs well against its stated objectives. Figure 5-1 provides an evaluation of tyres recorded with TyreTrack since June 2004.

Figure 5-1: Number of tyres

Source: Waste Awareness.

The TyreTrack objectives are evaluated as follows:

• Ensure that a high proportion of EoL tyres are disposed of appropriately in sanitary landfills or are recycled.

TyreTrack enables better transparency of tyre movements, which encourages the participants to dispose of them in an appropriate way. At the same time, there are no mechanisms that would ensure total tyre figures are provided and that the scheme constrains those wishing to dispose of the tyres in an irresponsible way.

No evidence has been found during this study to show that illegal tyre dumping has diminished as a result of TyreTrack. This information would be exceedingly difficult to obtain as we do not know the numbers of tyres that are being dumped illegally in New Zealand, and therefore are not able to predict TyreTrack's influence on these. Presumably, for the 30% of tyres registered with TyreTrack, there is less risk that these will be disposed of illegally.

• Improve rates of tyre recycling and reprocessing by providing would-be recyclers with good information about volumes of tyres becoming available for disposal by region.

TyreTrack provides good, regionally based information for a third of waste tyres in New Zealand. It performs better in metropolitan areas, while coverage in rural areas is minimal. The effect of this information on development of the end-use market cannot be reliably estimated at this time. Based on anecdotal feedback obtained during this study, both retailers and collectors signed up to TyreTrack do not report movements of all of their tyres. Therefore, although there is more information on tyre movements throughout the country, TyreTrack does not explicitly provide an incentive to improve either recycling or reprocessing.

TyreTrack is, however, widely supported in the sector and provides a potential platform (with some reconfiguring and additional government support) for supporting alternative tyre recycling and reprocessing initiatives by supplying information on waste tyre supply flows. Perhaps, more importantly, TyreTrack has raised the profile of the illegal tyre dumping issue in New Zealand and provided a government-supported scheme for retailers, small garages and collectors who choose to take a responsible approach to tyre disposal.

5.4 Potential to expand with no further government intervention

TyreTrack has a stated objective to double the number of tyres registered every year, requiring two million tyres registered by the end of 2006.

The potential for TyreTrack to continue to expand under the current policy regime (some support from the Ministry for the Environment for administering the scheme but no further direct intervention) has been canvassed with a range of stakeholders during this study. The responses are mixed and are summarised as follows:

• TyreTrack has reached capacity numbers as the larger operators (arguably the low-lying fruit) have already registered with the scheme and there is no incentive for other retailers or collectors to do so;
• the number of tyres tracked through TyreTrack will continue to rise as the scheme continues to raise its profile throughout the tyre sector and as the demand for tyres to fulfil alternative "one-off" uses (such covering for silage heaps on farms) lessens.

The conclusion that TyreTrack has reached an upper growth limit (say, in the range of 1.5 million tyres per year) is based on the lack of incentives for smaller retailers and garages to sign up to TyreTrack. These businesses do not need the available tendering system and, if anything, there is a downside to registering (increased administrative costs and additional disposal costs if these are currently "subsidised" or free through illegal dumping activity). These smaller businesses are also unlikely to be government suppliers and therefore will not be incentivised by any preferential buying of TyreTrack-registered tyres by government departments. With increased communication efforts, TyreTrack could perhaps reach two million tyres by the end of next year (an internal target).

There are also other compounding influences on either a retailer or collector's decision to sign up to TyreTrack. One major collector has advised during this study that his company's preference is for retailers and repair yards (his customers) not to sign up to TyreTrack, as this means other, competing, collectors could then offer their services to them.

In support of the second view (continued growth in TyreTrack numbers), a recent article [Waste Awareness, April-May 2006, pp 17-18 "ResourceRecovery@WasteMINZ - TyreTrack".] in the "Waste Awareness" (the official, bi-monthly magazine for the Waste Management Institute) agreed that the number of tyres registered with TyreTrack will reach the two million mark by the end of 2006. It is likely that some of this predicted growth will come from the Bridgestone and South Pacific Tyres retailers who have not registered to date, but now are becoming more aware of the scheme. It is also likely that a greater number of tyres will be reported from the registered, larger companies as the individual "shop floor" managers become more aware of TyreTrack reporting requirements.

It is likely that these two opposing "trend factors" will cancel each other out and, assuming the status quo remains, then the number of tyres being tracked with TyreTrack will remain at around the 1-1.5 million per annum mark, primarily stemming from the larger-scale retailers such as Bridgestone and South Pacific Tyres complying.

Preferential procurement of tyres from TyreTrack registered suppliers is one form of government intervention that would be relatively easily to apply and has the potential to make a significant difference. If through, for example, the Govt³ programme all government departments only purchased tyres from TyreTrack suppliers there would be a significant incentive for retailers to sign up. However, it could equally be argued the suppliers likely to be bidding for the large-scale government department tyre contracts would be the large retailers such as South Pacific Tyres and Bridgestone. Both of these are already signed up to TyreTrack.

In general, based on discussions held with the tyre sector group during preparation of this report, registration with TyreTrack is not expected to increase significantly without some change in government policy and support. Existing scheme administrators and registrants advise it is unlikely TyreTrack would evolve beyond the current participation levels without a significant change, for example, mandatory registration.

As a result of limited participation in TyreTrack, there are currently a majority of, primarily small, tyre retailers "free-riding" on the system. Based on discussions with MTA administrators, the most effective way of addressing this issue is to legislate to make membership mandatory for both retailers and collectors. This approach would, however, be very difficult to enforce due to the large number of small garages and tyre sales outlets scattered throughout small towns and cities in New Zealand. Also, the number of tyres recorded in the system may need to be separately checked. Under the current arrangements a retailer or collector registers with TyreTrack but does not necessarily record all tyres that are handled.

5.5 Review against broader government policy objectives

As part of the project brief, the Ministry for the Environment requires TyreTrack to be reviewed against broader government policy objectives. These are listed as follows:

• leads to environmental gains;
• is effective and efficient;
• contains publicly reported, challenging, performance measures, quantifiable where possible;
• is transparent;
• does not reduce market competition;
• sets safe standards for collection and handling;
• provides a forum for communication/industry-wide discussion to address any issues;
• includes public information and education components;
• includes provision for monitoring and reporting on effectiveness;
• compares favourably with international best practice;
• is compliant with international trade agreements;
• cost of enforcement and management of "free riders";
• internalises waste management costs.

In addition to the above, the benefits of any regulatory aspects supporting the schemes should outweigh the costs.

As part of the requirement for schemes to be "effective and efficient", the Government needs to ensure that:

• the schemes are stable and there is widespread uptake by the private sector;
• the risks are minimised;
• the scheme benefits outweigh the costs - considering a raft of dimensions including the nature of the waste (how much and its geographical spread), how it is currently managed (waste tracking mechanisms and other waste minimisation programmes) and other major impacts arising from product manufacture, use and disposal (ie, whether product disposal is a significant impact from the entire life cycle);
• there is potential for scheme improvement (considering, for example, improved waste minimisation, green design or alternative waste uses);
• requirements for company and public maintenance and participation.

Administrative costs must also be taken into account, including costs of enforcement and management of free riders.

A detailed review of TyreTrack against government product stewardship policy objectives has been completed and is included in Appendix B. The review provides an expected outcome given that TyreTrack was not designed to meet specific tracking objectives, not the broad product stewardship policy objectives listed above. As a result, the scheme falls well short of meeting these more general objectives. The evaluation is, however, useful in that it highlights more specifically where the gaps, which could be potentially filled by an expanded scheme, are. In summary, these are listed as follows:

• the scheme doesn't, on its own, create a mechanism to divert tyres from landfill or encourage alternative end-uses;
• the scheme deals only with the EoL, while ignoring design and life use stages;
• lack of enforcement and free riders create competitive pressures for members;
• the scheme doesn't provide enough support to collectors and end-users.

It is difficult to speculate further on whether TyreTrack is helping to prevent illegal dumping and stockpiling in support of general government objectives. Awareness of the tyre disposal issue has certainly been raised, but there is currently no requirement for even the registered TyreTrack participants to report movements for all of the tyres they are handling.

In summary, TyreTrack is assisting in the exchange of information, and therefore assumedly the legal disposal of tyres at landfill, for 30% of the market. Given this situation, it can not be expected to be completely fulfilling originally developed specific objectives, or broader-based government policy objectives. Nonetheless, TyreTrack forms an excellent established basis for an active industry forum and there is strong industry support to expand its operations and enforce membership.

Given the above conclusions, that TyreTrack is not currently meeting all of its intended objectives and is not fulfilling proposed government policy objectives, what are the options for expanding the current arrangements? The answers to these are canvassed further in Section 7.0 which evaluates different alternative options.