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Markets & Potential
Where does Reverse Polymerization of scrap tires fit in the market?
- Is Reverse Polymerization a waste treatment technology?
- Is it an alternative energy technology?
- Is it a recycling technology?
- Is it a carbon black production technology?
In fact, Reverse Polymerization of scrap tires is all four and understanding the technology and understanding the markets are critical to understanding the significant potential of the process.
Potential revenues are generated from five sources:
- Sale of the recycled carbon black
- Power generation and/or sale of the hydrocarbons
- Tire tipping fee
- Sale of the recovered scrap steel
- Sale of greenhouse gas credits
Reverse Polymerization offers a profitable and environmentally responsible method to address the growing scrap tire problem. The process completely reuses/recycles 100% of the scrap tire feed. EWI believes that Reverse Polymerization is an integral part of sustainable development.
SCRAP TIRE SUPPLY
The estimated stockpile of tires in North America is between 500 million and 900 million, and this number is expected to grow at a rate of greater than 10% per year (www.rma.org). In 1998, there were approximately 2,800 individual stockpiles located throughout the United States. Other independent estimates put the number of scrap tires in stockpiles and landfills as high as 3 billion.
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Assuming status quo, there will be more than 1.5 billion scrap tires in North American stockpiles by 2010. For every person in the U.S. and Canada, one scrap tire per year is produced (approximately 300 million/year). This per capita scrap tire generation rate varies between nations but is generally typical for industrialized countries. In North America, about 65% of the 300 million produced annually are reused and the remaining tires (100 million per year) are added to the stockpiles. Typical uses include grinding for other applications (e.g. playgrounds); as a fuel in industry (e.g. cement kilns, pulp and paper mills, electric utilities); retreads; and cutting or punching for unique applications (e.g. barriers or fill material for construction projects).
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In Japan, where raw materials are at a premium and energy costs are high, approximately 51% of the 102 million scrap tires generated annually are used as tire derived fuel; however, Tire Derived Fuel (TDF) is simply incineration and this alternative is expected to come under scrutiny as Japan is pressured to reduce greenhouse gas emissions.
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In the EU, scrap tires uses vary. In Britain 65% of the scrap tire production, or 15 million scrap tires annually, are landfilled or left with scrapped vehicles.
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Solutions to dispose or reuse scrap tires have had some impact on reducing the number being added to the stockpiles; however, existing recycling solutions generally require either heavy government subsidization or yield unattractive returns to investors. Those solutions that are successful in eliminating tire stockpiles have tended to be programs uniquely designed to address local needs. To date, no technology exists that can address the scrap tire issue as effectively, as environmentally responsibly, and as profitably as EWI's Reverse Polymerization Process.
Utilizing scrap tires as an alternative fuel has been partly effective for addressing the problem; however, burning scrap tires can have adverse air emissions, contributes to greenhouse gas emissions, can result in higher emission control costs and does not recycle the valuable materials in scrap tires (carbon black and steel). Despite the high use of TDF in North America, 100 million scrap tires annually are added to the stockpiles.
CARBON BLACK
A TR-6000 tire reduction facility will produce greater than 15,000,000 lbs of carbon black per year (6,800,000 kg/year). World demand for carbon black is greater than 6,300,000 tonnes annually (6,900,000 tons/year) of which the tire industry uses approximately 67% of total production.
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Production is most heavily concentrated in locations where tires are produced and/or used (industrialized countries and Asia Pacific). The growth of carbon black production is projected to increase to approximately 8,700,000 tonnes by the year 2010, or an increase of approximately 40% (Source: International Carbon Black Directory and Sourcebook, 1997). The increase in carbon black use is despite the increased use of silica in tire production.
In virgin carbon black production, the main input and the majority of the variable cost of production is fuel used for the combustion process. With recent increases in world energy costs, virgin carbon black prices can be expected to rise. The virgin carbon black industry is also a significant greenhouse gas emitter and will come under increased pressure from governments and environmental groups as the emission reduction targets set out in the Kyoto Conference are implemented.
Reverse Polymerization of scrap tires can provide a valuable opportunity to world carbon black producers. Using Reverse Polymerization of scrap tires for part of their production, carbon black producers can realize the following benefits:
- Direct reduction of the cost of carbon black production.
- Incorporation of recycled material into their product mix to meet future requirements (e.g. EU mandate on percentage recycling)
- Reduction in greenhouse gas emissions.
- Reduction of fuel costs for virgin carbon black production by using the hydrocarbons generated for Reverse Polymerization.
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HYDROCARBONS AND ENERGY PRODUCTION
A Model TR-6000 produces over 10,300 tons/year (9,300 tonnes/year) of gaseous hydrocarbons and oil with a total heating value of greater than 377 billion BTU (greater than 397 billion kJ). These hydrocarbons can be used to generate power at the site or sold as fuel or other feedstocks. For example the oil is similar to a synthetic crude oil and can be sent for refining. The gaseous hydrocarbons consist of methane, ethane, propane and butane, which can be separated and sold. If onsite power generation is selected, the hydrocarbons from a Model TR-6000 will provide sufficient energy to drive a 6 MW steam turbine. The TR-6000 uses 3 MW, leaving 3 MW net for sale to the grid.
The return to investors from energy sales from a scrap tire Reverse Polymerization facility will only continue to increase in the future. Potential investors need only examine recent and significant increases in all energy costs to confirm the future potential. While natural gas prices remained relatively flat through most of the 1990's in the range of $2 US to $3 US per million BTU, spot prices increased dramatically during 2000 and peaked at $10 US per million BTU near the end of 2000
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Natural gas prices experienced a 400% increase from the low point in the latter half of 1998 to the end of 2000. During the second half of 2000, natural gas prices experienced a 150% increase. While spot prices have recently declined and may continue to drop through the summer of 2001, prices are expected to stay well above the historically low prices of the 1990's and rise in the future.
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Crude oil prices have also experienced significant price increases although less severe than natural gas increases. Crude prices, which were relatively stable through most of the 1990's, actually dropped to an all time historical low in 1998 when corrected for inflation. Since 1998, crude prices increased 250% to a peak of $35/barrel in late 2000.
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The recent power crisis in California is a possible preview of future shortages and significantly higher prices. World demand for energy continues to increase while fossil fuel supplies decrease. Higher energy prices in the future are predicted making Reverse Polymerization of scrap tires even more attractive.
For more energy information and predictions try www.wtrg.com/#Crude or www.doe.gov.
CARBON CREDITS
The Kyoto Protocol (http://www.unfccc.int/resource/docs/convkp/kpeng.html) has created renewed interest in the reduction of greenhouse gas emissions and efforts to reduce such emissions. Combustion of fossil fuels is the largest single source of these emissions. Greenhouse gases include:
- Carbon Dioxide (CO2)
- Methane (CH4)
- Nitrous Oxide (N2O)
- Hydrofluorocarbons (HFCs)
- Perfluorocarbons (PFCs)
- Sulfur hexaflouride (SF6)
Reductions (or increases) set under the Protocol are a percentage of the base year (1990) and are to be achieved by 2012. Selected targets include:
- European community 92%
- Canada 94%
- Russia 100%
- USA 93%
In addition the United States accounts for approximately 22% of all emissions. To achieve these targets many countries will need to take major reduction steps or purchase greenhouse gas credits.
 Reverse Polymerization offers environmental benefits over tire derived fuels that will result in increased value to investors through greenhouse gas credits. These credits will have an increasing commercial value over the next decade. A TR-6000 facility fixes a minimum of 6,800 tonnes (7,500 tons) of carbon per year compared to tire derived fuel use. This assumes the hydrocarbons are burned to generate power and not used as production feedstocks. The reduction in carbon emissions is equal to 25,000 tonnes of CO2 or 27,500 tons per year. This does not include the significant reduction in greenhouse gas emissions that will be realized by replacing the production of virgin carbon black with recycled carbon black. Also 88% of the sulfur is fixed or removed rather then being emitted into the atmosphere, contributing to acid rain.
The market for trading carbon credits is still in its infancy and the value of carbon credits is currently in the $5 US to $10 US per ton per year range; however, market analysts have predicted the price of carbon credits may rise to $20 US to $50 US per ton per year in the next few years.
SUMMARY
Clearly the market potential for Reverse Polymerization is significant even where the use of TDF is well established. Reverse Polymerization offers a significant advancement in reuse and recycling of scrap tires and production of recycled carbon black. As world energy prices continue to increase and environmental regulations are tightened, Reverse Polymerization will become an even more attractive solution.
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