Legislation / Collection Schemes

When deciding to establish a tyre recycling (processing) facility it is important that national, regional and local legislation supports a proper environmental treatment of end of life tyres (ELTs).

The economy of a tyre recycling facility is based on two sources of income:

  1. A gate fee/tipping fee
  2. Sales proceeds from output products (high quality rubber powder and granulate, steel and fibre)

The gate fee/tipping fee is dependent on the local legislation. It is of paramount importance for the success of the tyre recycling plant that  local environmental legislation exists with regards to the processing of ELTs.

The three most common collection systems
are as follows:

Tax-based System

The Danish collection scheme is based on a system where a levy is eventually passed on to the consumer, the transactions are controlled by the tax authorities, which makes it the cheapest and least corrupt system.

The basics of the scheme are as follows:

  • At the time of import, tyre importers pay a fee per tyre to the taxation authorities
  • The tax authorities solely administer the collection of the fee and afterwards it is passed on to a special tyre fund
  • Importers pass the fee on to tyre dealers at the time of reselling and tyre dealers pass it further on to end-users
  • When the tyres are discarded (ELTs), end-users return them to tyre dealers, who pass the ELTs on to collectors
  • Neither end-users nor tyre dealers face any payment at this point
  • Collectors deliver the ELTs to recycling plants and pay a market-based price per tonne (a gate fee)
  • The recycling plant reports the quantity of tyres (by weight) from each collector to the special tyre fund

Payment from the tyre fund is distributed to the recycler who pays the collector a fee based on free market pricing

All tyre handlers have to be registered at the special tyre fund, which works on behalf of the Danish Ministry of Environment

Producer
Responsibility Scheme

The legislators require that the tyre manufactures and tyre importers take care of the ELTs.  This means that they are responsible for the treatment of the ELTs they have brought to market.

Typically the tyre manufactures establish an organisation to handle the ELTs. The manufactures pay a fee to the organisation, and the organisation makes arrangements with the parties involved in the treatment of the ELTs (collectors, processors, cement kilns etc.).

Since the tyre manufacturers basically own the organisation, the money is controlled by partial parties, and the authorities are not directly involved in controlling the system. There can be more than one collection organisation in each country.

Also, you cannot force a tyre importer to pay the tyre fee to the organisation, which may give rise to free riders.

Free market system

In the free market system, the legislators set the national objective, which typically says that ELTs must not be landfilled, but other than that the market must regulate what happens to the ELTs.

This means that nobody is specifically responsible for the collection or treatment of ELTs. The various players in the recovery chain are contracting under free market conditions.