TIRE DERIVED FUEL –PAST, PRESENT AND FUTURE

BYTERRY GRAY

TETRA TECH CONSULTING TEAM

COLORADO’S 2015 WASTE TIRE CONFERENCE

DENVER, COLORADO

JUNE 25, 2015

PAST• TDF has been used in the U.S., Europe and Japan since

1970’s

• Goodyear installed a Lucas Furnace using waste tires as fuel in early 1970s

• GM experimented with TDF in a power boiler in the mid-1970s

• Mike Rouse experimented with rubber buffing dust to replace scarce oil for a waste wood boiler at his Georgia Pacific paper mill in the Pacific Northwest in 1974, explored available shredding equipment and initiated tire processing in conjunction with a landfill owner in Portland, OR

PAST (CONTINUED)

• Waste Recovery was formed in early 1980s to help Mike Rouse develop tire processing and TDF markets.

• Oxford Energy was formed in the mid-1980s to develop dedicated tire burning power generation facilities using 5-10 million tires per year in each facility.

• TDF became the first major market for waste tires.

TDF’S RECENT ROLE

2144.642484.36

2084.75

1427.03

2120.29

552.51

789.091354.17

1093.50

975.00

639.99

561.56 284.92

294.99

172.00

132.58130.00

54.29

49.17111.99

102.08102.10

302.48

245.84

27.761.92

30.0018.88

27.14

27.10

65.55

65.5647.59

7.13

7.10

7.10

7.10

100.51

1.85

1.90

1.90

1.90

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2005 2007 2009 2011 2013

Thou

sand

s of

Ton

s

Tire-Derived Fuel Ground Rubber Used Tires* Civil Engineering Reclamation Projects

Exported Baled Tires/market Electric Arc Furnace Agricultural Punched/ Stamped

Total = 3,616.11

Total = 4,105.79 Total = 4,391.05

Total = 3,248.76

Total = 3,666.85

Source: Rubber Manufacturers Association

RECENT TDF FLUCTUATIONS

802.0 669.1604.0

305.4

726.0

539.3 1066.9716.0

593.1

716.3

373.3 343.8

326.3

160.0

576.3

290.4 200.6

235.0

165.0

139.6 203.5

203.5

203.5

101.8

0.4

0

500

1000

1500

2000

2500

3000

2005 2007 2009 2011 2013

Thou

sand

s of

Ton

s

Cement kilns Pulp and paper millsElectric utility boilers Industrial boilersDedicated scrap tires to energy Lime kilns

Total = 1,427.0

Total = 2,120.3Total = 2,084.8

Total = 2,484.4

Total = 2,144.6

Source: Rubber Manufacturers Association

PRESENT• TDF is the one of the largest end use

markets for waste tires in most industrialized countries.

• TDF is the cornerstone of state waste tire management programs with appropriate facilities.

• TDF has not prevented development of other markets as demonstrated by current market diversity

MAJOR TDF MARKETS - 2013

Cement kilns34%

Pulp and paper mills34%

Electric utility

boilers27%

Industrial boilers

0%Dedicated scrap tires to energy

5%

Source: Rubber Manufacturers Association

CEMENT INDUSTRY

• Current Position

– Many kilns use TDF - 39 plants in13 states– Others unlikely – public perception, logistics– Industry is rebounding from recession– Specific industry impact – oil/gas– Economics are shifting

CEMENT (continued)

• Projections

– TDF usage dependent on production levels at existing kilns

– TDF cost will be controlled by other alternative fuels, including fluff

– Industry consolidation may impact some kilns and TDF usage

– More use of shreds to maximize TDF usage– Future TDF consumption likely to be cyclical

CEMENT INDUSTRY IN COLORADO

• Cement Manufacturing Facilities• Holcim• GCC• CEMEX

• Historical and future cornerstone of expanded market growth, especially for use of at least one monofill

• Important, but not to the exclusion of market diversity

NON-HAZARDOUS SECONDARY MATERIALS RULE

• Defines which secondary material are, and are not solid wastes when burned for energy recovery

• Impacts application of CAA Section 112 regulations if NHSM or more rigorous CAA Section 129 solid waste incinerator regulations if solid waste.

PRACTICAL IMPACT

• Tires collected from on-going generation or from some managed amnesty programs are not a solid waste

• Tires that have been abandoned in stockpiles or monofills are solid waste unless processed with some reinforcing wire removal (even limited free wire liberated during shredding)

• This definition was upheld in court judgment issued about two weeks ago

PULP AND PAPER INDUSTRY

• Current Position

– Many mills use TDF - 21 plants in15 states– Industry has adjusted capacity to reflect

mature US market with white paper and boxboard only strengths

– Industry rebounding from recession, investing for future viability of mills

– Regulatory impact from Boiler MACT and Clean Water rule implementation

PULP & PAPER (continued)

• Projections

– Some gains and some losses from regulatory change– TDF pricing will be controlled by other fuels, with low

gas and oil pricing impacting some regions– Smaller mills remain vulnerable to economic

conditions and continuing market trends– Future TDF consumption likely to cycle at some mills

as they adjust to regulatory changes.

PULP & PAPER INDUSTRYIN COLORADO

• NONE

POWER GENERATION• Current Position

– Very small % of power boilers use TDF- 25 facilities in 8 states– The market segments are diverse and are being impacted

differently by regulatory and economic changes– Major gains include a large CFB boiler in Kentucky (up to 5

million tires/year) and several other potential major users– Major losses include the Oxford facility (10 million tires/year in

Sterling, CT), biomass facilities in MI and several utility boilers– Resulting impact has been significant in some regions

POWER GENERATION (continued)

• Market segments

– TDF usage in MSW power units will increase for power generation if capacity is available.

– TDF usage in renewable energy (biomass) facilities is being negatively impacted by economic incentives intended to promote wind and solar energy.

– Low oil and natural gas prices are decreasing avoided cost revenue for merchant biomass power generation facilities.

– Decreased energy tax credits for renewable energy power generation facilities also may have negative impact

POTENTIAL ACCELERATOR

• Greenhouse gas reporting rules continue to evolve.

• EPA recognizes conceptually that the natural rubber portion of tires is a renewable energy resource

• Under evolving Clean Air and Clean Power Plant rules, and related greenhouse gas reduction rules, use of TDF may receive greenhouse gas credits for renewable fraction.

POWER GENERATION IN COLORADO

• Generally fluidized bed, cyclone and some stoker-fired boilers

• All 19 identified large coal-burning units are unsuitable (wall and tangentially fired)

• Three small fluidized boilers have limited potential

• Biomass boilers can require supplemental energy for complete combustion, but changing economics and renewable energy regulatory status is detrimental

EXPORT• Global energy markets and pricing have a

significant impact in some regions• Historical baled tire exports to China were

disruptive to US waste tire industry in some regions, especially West and East Coasts

• Current exports of shredded tires represent a major market operating within the industry infrastructure primarily on West Coast, but vulnerable to global energy price fluctuations

Thank You

Terry GrayTAG Resource Recovery

Member of Tetra Tech Consulting Team in Colorado

tagray@flash.net