Real Time, Real World Solutions ™

1. Real Time,Real WorldSolutions™ NEVADA AUTOMOTIVE TEST CENTER

2. Increasing the Recycled Content in New Tires • Topics of discussion • Background • Studies conducted to increase recycled content in new tires • Tradeoffs and variables such as cost and performance • Factors affecting increased recycled content • Consumer behavior affecting purchase of new tires with increased recycled content • Industry roadblocks • Potential incentives for manufacturers, retailers and consumers • Recommendations

3. Increasing Recycled Content (Background) Major Application 1992 1994 1996 1998 2001 Tire-Derived Fuel 57 101 115 114 115 Civil Engineering 5 9 10 20 40 Ground Rubber 5 4.5 12.5 15 33 Export and Misc. 1 24 27 28.5 30 Total Use 68 138.5 164.5 177.5 218 Total Generation 252 253 265 270 281 Use as Percent of Total Generation 26.9% 54.7% 62.1% 67% 77.6% Estimated Total Waste Tire Market (in millions of tires) Source: STMC

4. Increasing Recycled Content (Background) • Significant increase of in ground rubber market over the past decade • However, increasing recycled content growth is slow • Processing plants with the capacity to produce fine crumb rubber to increase recycled content do not focus on this market • 0.5% recycled content ~10 years ago • Up to 5% at present • Is usage reported combine factory waste and waste tire crumb rubber??

5. Increasing Recycled Content (Background) • Rubber recovery from tires difficult due to: • Individual tires consisting of many rubber compounds • Compounds are unique to each manufacturer • To safeguard quality and the uniqueness some manufacturers use factory waste as the raw material for increased recycled content • Multiple processing steps • Use of expensive equipment

6. Studies Conducted to Increase Recycled Content • Most of research is focused on the effect of recycled content on rubber characteristics • Potential tradeoffs on performance of rubber or processes of rubber production • Potential reduction in strength • Higher hysteresis: • Increased internal heat generation leading to: • Increased rolling resistance • Reduced fuel economy and useful life of tires • State of North Carolina has a contract with Continental Tire • $1.2 million contract • Completion date August 31, 2003

7. Performance Tradeoffs (Continued) Compounding Tensile Strength Tear Strength Loss Modulus Compounding Load Speed Inflation Pressure Inflation Pressure • Traction • Handling • Durability • Skid Resistance Speed Load Increased Lifespan Retreadability Rolling Resistance Reusability Compounding Increased Recycled Content

8. Performance Tradeoffs (Continued) Properties Control 17% Crumb 33%Crumb 50% Crumb Mooney Viscosity 40 61 91 111 Rheometer Maximum Torque 59 57 33 34 TC90, min. 2.5 2.4 1.8 2.0 Tensile Strength (psi) 1,470 1,150 870 560 Ultimate Elongation % 330 330 300 270 Cryogenic Grinding Properties of Compound with 17, 33 and 50% Crumb Addition (Reference 7)

9. Performance Tradeoffs (Continued) Properties A B C Tensile Strength (psi) 2,950 2,210 2,080 Elongation % 820 750 740 100% Modulus (psi) 106 105 106 Hardness Shore A 52 52 53 Die C Tear (psi) 253 240 243 Test Results of Soft Trade Grade Compounds Containing 5 Percent by Weight of Crumb Rubber (Reference 17) A=Control; B= A+5% tread crumb ; C=A+5% crumb from whole tire

10. Performance Tradeoffs (Continued) • The amount of crumb rubber that can put into new tires is currently reported to be limited to 3-5 percent (by weight) • Without adversely affecting the performance characteristics of the new tires • Tire manufacturers’ view • The price of natural and synthetic rubber must rise significantly to warrant a more aggressive consideration of recycled content in new tires

11. Factors Affecting Increased Recycled Content • Collection, sorting and transportation of waste tires • Crumb rubber processing methods • Low cost of virgin rubber • Reliable source of crumb rubber supply • Consistent quality of crumb rubber for use as a recycled content • Other competing markets with low cost of production of size reduced rubber

12. Factors Affecting Increased Recycled Content (Continued) • Crumb rubber processing methods affect suitability for increased recycled content • Ambient grinding • Rubber is reduced to 10-40 mesh through a series of regrinding • Cryogenic grinding • Little or no heat generated in this process • Less degradation of the rubber • Almost all steel or fiber is liberated from the rubber • Wet or solution grinding • Limited written material • Grinding wheels used with continuous spray of water to cool the crumb rubber

13. Factors Affecting Increased Recycled Content (Continued) • Other processing methods include • Ultrasonic devulcanization • Chemical devulcanization • Thermal devulcanization

14. Consumer Behavior Affecting the Purchase of New Tires with Increased Recycled Content • Consumer perception • The use of recycled content in new tires as an accommodation to inferior material, compared to the virgin products • As a result of such perception, consumers are not willing to pay the same or higher price than paid for tires with virgin components

15. Consumer Behavior Affecting the Purchase of New Tires with Increased Recycled Content (Continued) • Consumer perception • The Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act • May have a negative impact on increasing recycled content • Approximately 15 randomly chosen tire dealerships in California were contacted to assess customer awareness of recycled content in tires • Tire manufacturers or dealers do not promote the use of recycled content in the production of new tires as a benefit to the environment • No consumer awareness through dealerships

16. Industry Roadblocks • High cost of collection, sorting, and processing of waste tire material • Lack of standardized quality control procedures at processing facilities • Cost of transportation of crumb rubber to final destinations - tire manufacturing plant • High dynamic performance requirements of tires limit amount of recycled content

17. Industry Roadblocks (Continued) • Location of Processing Plants • Labor, materials, taxes, freight costs, and the site of a processing plant • Reliable energy source that is cost competitive • Energy costs are higher in California ($0.12 per kWh), compared to states such as Oklahoma ($0.08 per kWh) • Supplying buffings to a processing plant out-of-state may be a preferred approach • Equipment for crumb rubber processing • Most facilities have highly unique processing systems to meet the demand of selected market segments

18. Industry Roadblocks (Continued) • Maintenance • One of the maintenance cost drivers • Presence of steel and fiber materials • Steel and fiber materials can accelerate the rate of wear of the blades and require frequent replacements • Low reliability, availability, maintainability, and durability • As part of a feasibility study for installing new processing plants to produce crumb rubber, reliability analysis of selected machineries that exist in the market today must be conducted

19. Industry Roadblocks (Continued) • Reliable source of waste tire supply • One of the most important factors in operating a crumb rubber facility profitably is the presence of a consistent waste tire supply. In some developed waste tire market areas, the processors cannot secure as many tires as they would like. • Long-term contracts with waste tire suppliers are important to assure the consistency of waste tire supply and avoid disruption of operation • Moreover, a long-term contract assures stability of tipping fees

20. Industry Roadblocks (Continued) • Quality • Fine crumb rubber (80+ mesh) • Complete removal of steel and fiber • ASTM D-5603-96 (Standard Classification) • ASTM D-5644-96 (Particle Size Distribution) • Ambient, cryogenic and wet grinding (commercial) do not produce high quality crumb at competitive price • Crumb rubber from tread is relatively clean • No fiber, no steel, no sidewall rubber • Crumb Rubber Price

21. Industry Roadblocks (Continued) Average Price Comparisons for Different Mesh Sizes

22. Industry Roadblocks (Continued) Average Prices of Crumb Rubber for the Past Three Years

23. Potential Incentives to Manufacturers, Retailers, Customers • Reliable supply of high quality crumb rubber • Demonstration of safety and performance effectiveness of using government fleets • Requirements imposed by vehicle manufacturers • Government incentives including extending state income and sales tax exemptions, equipment, and land grants • Large source of waste tires in relatively concentrated southern and northern regions of the state to attract processors • Retread/buffing is not introducing technology but revisiting proven technology; therefore, it should attract existing retreaders for expansion of capabilities.

24. Potential Incentives to Manufacturers, Retailers, Customers • Comparative testing of tires with recycled content against like tires with virgin components for educating the consumer • Locate facilities where job creation will have an impact, because businesses have typically not been drawn to these regions

25. Recommendations • Resources need to be allocated to conduct research and development work to understand the effect of increased recycled content on the dynamic properties of tires • Comparative evaluation between tires with recycled content and tires with no recycled content • Traction, rolling resistance, wear rate, aging, and chip and cut resistance • Data generated under such tests can be used for performance verification improvement of consumer awareness

26. Recommendations (Continued) • Significant economic barriers must be overcome to establish a profitable fine crumb rubber processing facility in California • If a detailed feasibility analysis determines that such a facility can be profitable, a pilot fine crumb rubber production facility operated in collaboration with existing retreading/waste tire processing facilities can be a viable option

27. Recommendations (Continued) • With the prevailing technological level for processing crumb rubber, a reliable source of crumb rubber produced from buffings (tread) can be a strategic step to continue engaging tire manufacturers in the research and feasibility of increasing the recycled content • More research work is required to understand how recycled crumb rubber behaves in rubber compounds (i.e, as a filler or cross-linked into blends with virgin materials)

28. Recommendations (Continued) • Investigation should be initiated on the impact of reduced tread rubber in the buffed waste tires for other applications, such as rubberized asphalt concrete (RAC) • Address the concern that if the tread is removed, the crumb for other uses may not be as effective • This needs to be investigated by conducting tests of RAC ingredients with tread rubber contents at various levels • The minimum amount of tread rubber required in the use of whole tire crumb rubber for RAC

29. Thank You.