2022 ANNUAL REPORT
TABLE OF CONTENTS 3. 5. 7. 9. 10. 11. 13.
The Basics of Producer Compliance Compliance & Performance // Connecting with Service Providers Operations & Optimizing Efficiency // Technology & eSRP Enhancements Financial Management: Stability and the Cost of Compliance New Website Resources Reducing Environmental Impacts: Scrap Tire Life Cycle Assessment Industry Engagement // Looking Ahead to 2023 & Helpful Reminders
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THE
In 2022 we finally started to see restrictions lifted and the world returning to pre-pandemic levels. It took the better part of the year but we made it. The tire industry also saw positive returns, while at the same time experiencing a significant rise in production costs. Statistics Canada reported in their December 2022 update that Canadian tire manufacturers sold and shipped $295.5 million dollars worth of product in September 2022, compared to 251.1 million a year earlier, and $260.8 million in September 2020. This is contrasted with estimated values for raw materials, fuel, supplies, and components more than doubling during that same period, due to a rise in production costs. As in previous pandemic years, used tire volumes and
NEW NORMAL subsequent tire collection activity continued to be lower due to lower volumes coming into the market in the two years prior. Throughout 2022, eTracks collected tires from Kenora to Hawkesbury, from Thunder Bay to Windsor, and from Tobermory to Cochrane. We established special collection sites to clean-up old racetracks, go-cart tracks, farms and the like - all in efforts to collect as many verifiable used tires as possible. On January 1, 2022, our team completed the live launch of eSRP, our new regulatory platform, to roughly 7,000 users across the province. We held weekly webinars and tutorials from November to December of 2021 to ensure our customers and service providers were able to make a seamless transition from the antiquated Treadmarks system. The implementation of eSRP allowed us to immediately reduce paper waste and manual transactions from 89 percent to 43 percent across the supply chain, while increasing the accuracy of transactions and data capture. Using eSRP also allowed us to reduce our infrastructure and hosting costs by roughly 65 percent over the course of the year. (Learn more on page 7.) The spirit of Ontario’s tire recycling regulation is focused on, among other things, improving environmental outcomes. With this in mind,
we participated in the Scrap Tire Life Cycle Assessment (LCA); a combined effort initiated by the Canadian Association of Tire Recycling Agencies (CATRA) in collaboration with its provincial members. The LCA assessed the environmental impacts of various emissions created when recycling tires into new products, and compared these results to the emissions created using virgin material to create the same products. To learn more about the positive results of the study see page 11. In spite of increasing costs across the tire recycling system, most notably in fuel prices, eTracks maintained price stability for its customers from 2019, through to the end of 2022, four years into the Resource Recovery and Circular Economy Act (RRCEA). Knowing that many of our haulers were suffering due to extreme fuel fluctuations, we initiated a fuel surcharge benefit to all eTracks enrolled haulers in September of last year; offsetting the impact of fuel prices and ensuring the continued flow of used tires throughout the province. Overall in 2022, we were able to reduce our service delivery costs for hauling and processing by roughly 7 percent, offsetting the cost of the new fuel surcharge benefit.
Proposal (RFP) process leading up to the December 2022 expiry of our Master Service Agreements (MSA) with many of our hauling and processing service providers. This renewal period allowed us to examine, restructure, and adjust to ensure fairness in our rate structures, while reinforcing the role that haulers and processors play in supporting producer compliance. As a compliance centred company, and the only not-for-profit tire PRO, our team is solely focused on the compliance success of it’s customers. As we continue to see shifts in the sector, eTracks will strengthen it’s role as a trusted multi-service, compliance and sustainability partner. We look forward to improving service provider engagement, proactively working to solve industry challenges, and utilizing our technology assets and “big data” to optimize benefits for customers and service providers.
STEVE MELDRUM, CEO eTracks
Over several months our team conducted a rigorous Request for
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THE BASICS OF PRODUCER COMPLIANCE The tire recycling system in Ontario consists of several key stakeholders, all of whom play an important role in keeping used tires out of landfills, contributing to a cleaner environment, and driving innovation and sustainable practices. Tires were the first of five material classes rolled out under the Resource Recovery and Circular Economy Act (RRCEA) in 2019, followed by, batteries, electronics, hazardous waste and Blue Box materials. A person or business is considered a tire producer under the RRCEA if they: • are the brand holder of the tire and have residency in Canada. • import tires from outside of Ontario and sell them in Ontario. • are the vehicle manufacturer and have residency in Canada. • import new vehicles into Canada and sell them in Ontario. Tire producers are responsible for meeting mandatory and enforceable targets for collecting and recycling
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used tires, and most work with a Producer Responsibility Organization (PRO) to meet these requirements. With the amendments made in 2022, tire PROs now have a shared responsibility in meeting regulatory requirements, including establishing and operating a tire collection network and ensuring that used tires are managed responsibly. The Resource Productivity and Recovery Authority (RPRA) is the regulator mandated by the Government of Ontario to enforce the province’s circular economy laws. As the only not-for-profit tire PRO, our sole priority is to ensure our customers (tire producers) meet their compliance obligations and support the circular economy (CE).
>>> WHAT IS THE CIRCULAR ECONOMY (CE)?
ON BEHALF OF PRODUCERS, WE MANAGE THE FOLLOWING: • Meeting, or exceeding the collection and management targets for used tires.
A circular economy is a model of production and consumption, which involves recycling, and recovering existing materials in-order-to utilize their resources, for as long as possible in new products. It aims to tackle climate change, environmental degradation, waste, and pollution, by emphasizing innovation and design-based improvements. CE is in opposition to a linear economy, where new materials are sourced, made into new products, and turned into waste at the end of their life cycle.
• Establishing and operating a compliant tire Collection Network.
REVIEW OF AMENDMENTS TO TIRE REGULATION 225/18:
• Managing the tire recycling supply chain in a competitive market; ensuring fair and equitable treatment within the tire collection and management system.
(December 2022 to March 2023) • Canadian brand holders are now obligated (expanded from Ontario-only brand holders). • Small producers are now exempt from registration and reporting. • Promotion and education requirements for visible fees have been removed. o Businesses will continue to have discretion over whether they charge a fee to recover the cost of recycling their products. However, with this amendment, if they charge a fee, they are no longer required to provide information about who is charging the visible fee and what it will be used for. • Removal and revision of audit requirements. • Definition of a “hauler” now includes parties that arrange for transport. • Definition of “reuse” now includes reuse with modification. • Introduction of volunteer organizations who can now register and report on behalf of producers. • Expanded collection requirements for municipalities with populations under 1,000 and First Nations reserves.
• Maintaining productive dialogue with the Resource Productivity and Regulatory Authority (RPRA). • Maintaining records and submitting monthly reports to the regulator.
• Managing and measuring customer performance while maintaining transparency. • Informing consumers about used tire recycling and disposal options within the Collection Network. • Protecting the interests of our customers by ensuring that tire recycling obligations are met ethically, and responsibly throughout the province. • Collecting and providing auditable compliance data and performance reports to the regulator.
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COMPLIANCE & PERFORMANCE HERE’S HOW WE ENSURED OUR CUSTOMERS MET THEIR COMPLIANCE OBLIGATIONS IN 2022:
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COLLECTION ACTIVITIES
RECOVERY ACTIVITIES
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compliant Collection Network (including outreach to more than 6,500 sites!) (Read more on page 6.) 4. We bought and sold collection and recovery credits to ensure compliance was met throughout the industry. 5. Our technology team developed enhancements to increase the ease of auditability and end-user reporting services captured in eSRP.
1. We continued to collect as many tires as possible and ensured that over 85 percent of the weight of tires collected went to displace new materials. 2. We ensured all our customers were compliant in fulfilling their resource recovery obligations under the current regulation. 3. We undertook a comprehensive project focused on the requirement to establish and operate a
TIRE COLLECTION & MANAGEMENT FLOW CONSUMER
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HAULER
Used Tire Pick-Up
CONSUMER COLLECTION SITE
Used Tire Drop-Off Used Tire Replacement
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PROCESSOR Used Tire Processing
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HAULER STORAGE
Pre-Collection Used Tire Storage/Sorting
RETREADING OR PROCESSOR SALES (OR FOR RE-USE) Proof of Approved Use
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RETREADER OR PROCESSOR WEIGH-SCALE (OR FOR RE-USE) Scale-in at Tire Processor (Collection)
5 RECYCLING PRODUCT MANUFACTURER Approved Use Products
RESOURCE RECOVERY TARGETS WERE EXCEEDED FOR THE FOURTH YEAR IN A ROW!
COLLECTED USED TIRES
Weight counted towards meeting producer’s minimum target
RESOURCE RECOVERY
Weight of tire derived material used in new products or packaging
COMMUNICATIONS & CONNECTING WITH SERVICE PROVIDERS FOCUSING ON COLLECTION SITE ACTIVITY: 2022 FALL & WINTER OUTREACH WEBINARS
We hosted webinars for 137 collection sites to discuss regulatory requirements and the importance of accepting tires free of charge from the public, including tires on rims.
EMAIL & PHONE CALLS
From October to December, we contacted over 6,500 collection sites across Ontario to promote compliance in our Collection Network. We asked collection sites to: • update their information, and; • confirm they had read and understand enrolled collection site requirements (i.e. section 10 of Ontario Regulation 225/18 and section 68.3 of the RRCEA, re: “no charge”).
POSTER
We mailed posters to all eTracks enrolled collection sites, encouraging them to post it in a public area, to reinforce their role in supporting a compliant tire recycling system. Additional posters continue to be mailed out by request, and any collection site that sends us a photo of their poster at their place of business, is entered into a monthly draw for a staff pizza lunch!
SOCIAL MEDIA
We monitored social media to address misconceptions within the industry regarding Ontario’s tire collection requirements, and responded with accurate information.
NEWSLETTERS
We sent regular newsletters to our enrolled haulers and processors further outlining the requirements of section 10 of Tire Regulation 225/18 and section 68.3, to highlight the importance of the role they play in accepting tires on rims from the point of collection; through to processing.
SERVICE PROVIDER AWARDS PROGRAM
We recognized outstanding service providers, including hauling and processing companies. In 2022, we introduced a new collection site category to recognize the valuable role collectors play in recycling tires. Winners received a personal letter and an award to display at their place of business!
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OPERATIONS & OPTIMIZING EFFICIENCY HOW WE IMPROVED: 1. 2.
Initiated direct hauling contracts for all hauling activity to improve visibility and accuracy across the system.
Refined our service delivery network and services to improve logistical efficiencies; eliminating long, inefficient hauls across the province in favour of shorter hauls to local processors.
6. 7. 8.
Added a new processor to increase resource recovery and improve service to Northwestern Ontario.
Introduced a fuel surcharge benefit to support haulers during periods of extreme fuel fluctuations.
Enhanced business processes with all service providers to more accurately identify non-eligible material and adhere to the regulation.
Renewed our focus on resource recovery rates with processors.
Increased focus on using dynamic data to better establish, manage, and operate a compliant Collection Network across the province.
3. 4.
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5.
Completed a Request for Proposal (RFP) process to establish new commercial structures for both hauling and processing within the new four year Master Service Agreements (MSA).
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TECHNOLOGY ENHANCEMENTS
1.5K
On January 1 2022, eSRP went live to over 7,000 users across Ontario including collection sites, haulers, processors and producers. It was a year of continuous improvement as we adapted the platform to meet more advanced needs across the tire recycling system. eSRP set two new records with over 160,000 completed transactions (compared to the previous system) and a record number of participants actively using our platform.
improvements and was made available for download from both Google Play and the Apple App Store. The eSRP Portal was enhanced with additional options to support inventory management, and improve our traceability and transaction features. eSRP provides robust tracking and reporting on key data, such as: • tire supply and recycling fee remittances • collection and hauling for used tires • processing and retreading activities, and;
• end use of tire derived material that takes the place of new materials in products and packaging in Ontario.
DID YOU KNOW? eSRP can be implemented in other regions where producer responsibility is expanding and modernizing. This offers the potential for one harmonized compliance track and trace system to be used across the country.
eSRP Mobile was upgraded to include new features and security
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FINANCIAL MANAGEMENT THE COST OF COMPLIANCE SERVICES
FINANCIAL HIGHLIGHTS FROM 2022
eTracks fees amount to $391.50 per tonne of used tires. To understand how much of your producer fee goes towards eTracks revenue, let’s break it down: • An average used tire weighs 11.5 kg (based on a sample of 3,500 used tires) • There are about 87 used tires in 1 tonne (1,000kg) of used tires: (1000 kg/11.5 kg = 87) • eTracks revenue for 87 tires (when new, using $4.50 per unit) is $391.50.
• Tire recycling fees remained unchanged in spite of extreme economic pressures from 2019, through to the end of 2022. • We maintained all financial commitments to our service providers and supported financial stability across the tire recycling industry. • We showed sound financial management and tight internal controls resulting in two successful audits: 2022 Financial Results, and Resource Recovery Performance.
RESOURCE RECOVERY
Our cost to establish and operate a compliant collection system across Ontario is $172 per tonne. This includes the current fuel surcharge benefit that we pay our haulers. Adjusted for fuel and inflation, this cost is less than it was under the Ontario Tire Stewardship (OTS).
At scale, our cost to meet the compliance obligation of 85 percent resource recovery is $168 per tonne. Adjusted for inflation and energy cost increases, this is also lower than previous OTS costs.
OVERHEAD
eTracks reimburses its customers the RPRA fees they pay annually, equating to $15.65 on a per tonne equivalent basis. Our compliance infrastructure (people, investigations, technology/eSRP, transaction management) is about $35 per tonne which is among the lowest overhead for provincial programs in Canada as a percentage of revenue.
% 4.01
Our disciplined approach and industry leadership allowed us to pivot as needed, to meet the regulatory obligations of our customers and in turn, support the circular economy in Ontario during a very turbulent year.
PROVINCE-WIDE COLLECTION SYSTEM
THE COST OF COMPLIANCE: $391.50/TONNE
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8.96%
Prior to 2019, fees fluctuated anywhere from $3.50 to $5.50 under the previous stewardship program. As a not-forprofit, our fees are a direct reflection of our revenue combined with the cost of managing compliance under the current regulation. Establish and Operate Compliant Collection System 85% Resource Recovery
01%
44.03
%
RPRA Fee Reimbursement eTracks Compliance Infrastructure
NEW WEBSITE RESOURCES
We re-launched the eTracks website to include a robust resources section, including eSRP training videos, and an updated description of the tire recycling industry in Ontario. As the most visited area of our site, the “Find a Collector/Hauler” search tools became easier to find and access.
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SCRAP TIRE >>> REDUCING ENVIRONMENTAL IMPACTS
People expect that products made from recycled tires will deliver ecological benefits when compared to the use of (new) materials they displace. Putting numbers to this expectation was at the heart of the “Scrap Tire Life Cycle Assessment (LCA),” a study that involved the elective participation of seven members of the Canadian Association of Tire Recycling Agencies (CATRA). The study included collection and analysis of participating tire recycling agencies using data spanning 2017 – 2020, and in the Spring of 2022, participants received their individual LCA report. The engagement of a critical review panel ensured that the methodology of analysis and reporting aligns with the requirements of the International Organization for Standardization (ISO 14044).
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WHAT IS AN ISO CRITICAL REVIEW?
The LCA report underwent the critical review process in accordance with ISO standards. The purpose of a critical review is to ensure studies are performed in a manner consistent with ISO methodology and best practices, and that the conclusions of a report are supported by the data used. The LCA review found that the report was in conformance with ISO standards, the methods used to carry out the LCA are scientifically valid, and the findings are supported by the information presented. Note: the provincial model and findings for Ontario were included in the scope of the critical review, the individual provincial report was not. The following summary of the life cycle assessment focuses on data provided by eTracks for its tire recycling activities in Ontario including: used tire collection, hauling, processing and repurposing activities.
STUDY OVERVIEW
The LCA will continue to be coducted each year, and looks through the lens of six environmental impacts, including: global warming (climate change), smog, air particulates (human health particulates), acidification, ozone depletion, and air and water eutrophication. Results show how a Tire Derived Product (TDP) fares, in each of these categories, when compared to the life cycle impacts of its respective displaced material. Results also show how each TDP compares with another when it comes to ecological impacts. For each of these ecological impacts, the magnitude of avoided impacts in Ontario were at least twice the magnitude of those where new materials were used, with scores for climate change/global warming, human health (air) particulates and acidification being particularly favourable. The six impact categories used in the study measure the emission impacts of tire recycling activities, in comparison to the emissions that would have been created if making the same TDP from new/raw materials: (Numbers have been rounded up/down as appropriate.)
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3 HUMAN HEALTHPARTICULATES
*PM2.5
100 THOUSAND*
27
127
THOUSAND*
THOUSAND*
With Tire Recycling
Without Tire Recycling
AMOUNT OF AVOIDED EMISSIONS:
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100 THOUSAND KG PM2.5 *Indicates the quantity of particulate matter released into the air, adjusted for severity by comparison to 2.5-micron dust. These particles can’t be seen by
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LIFE CYCLE ASSESSMENT
OUR REPORT RECEIVED MEDIA COVERAGE IN:
1. CLIMATE CHANGE/GLOBAL WARMING (KG C02): indicates the
6. EUTROPHICATION (KG N): reports emissions
radiative forcing potential of greenhouse gas emissions (carbon dioxide) on a 100-year timescale. i.e. With tire recycling activities: 47,000,000 kg C02 impacts, vs. without tire recycling activities: 197,000,000 kg C02. Total amount of avoided emissions: 150,000,000 kg C02
of compounds containing nitrogen and phosphorus, which can destabilize aquatic ecosystems. i.e. With tire recycling activities: 22,000 kg N, vs. without tire recycling activities: 45,000 kg N. Total amount of avoided emissions: 23,000 kg N
2. SMOG FORMATION (KG 03): indicates the potential creation of
Source: Scope 3 Consulting LLC (2022), Scrap Tire Recovery and Recycling in Ontario: CATRA 2021 Scrap Tire Life Cycle Assessment, Version 2.2
ground level ozone from emissions of volatile compounds that create “dirty air”. i.e. With tire recycling activities: 4,500,000 kg O3, vs. without tire recycling activities: 13,400,000 kg 03. Total amount of avoided emissions: 8,900,000 kg O3
3. HUMAN HEALTH-PARTICULATES (KG PM2.5): indicates the quantity of particulate matter released into the air, adjusted for severity by comparison to 2.5-micron dust. These particles can’t be seen by the human eye but can be inhaled. i.e. With tire recycling activities: 27,000 kg PM2.5, vs. without tire recycling activities: 127,000 kg PM2.5. Total amount of avoided emissions: 100,000 kg PM2.5
4. ACIDIFICATION (KG S02): reports emission of compounds that contribute to increased acidity in the air, either by droplet or particle. i.e. With tire recycling activities: 210,000 kg S02, vs. without tire recycling activities 850,000 kg S02. Total amount of avoided emissions: 640,000 kg S02
5. OZONE DEPLETION (KG CFC-11): describes the destruction of ozone in the stratosphere by highly persistent halogenated chemicals. i.e. With tire recycling activities: 53 kg CFC-11, vs. without tire recycling activities: 103 kg CFC-11. Total amount of avoided emissions: 50 kg CFC-11
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THE PRODUCTS MOST EFFECTIVE IN REDUCING EMISSIONS
Of the twenty-one TDPs created from used tires, seventeen of them resulted in a net reduction of Green House Gas (GHG) emissions. Products that were most effective in reducing emissions in Ontario include: re-use of used tires, re-treading used tires, crumb rubber (including fiber and acrylic sand), rubberized asphalt, moulded rubber, moulded concrete and blast mats.
RESULTS INFORM DECISIONS
With this verified knowledge, eTracks and its customers can demonstrate the value of recycling and repurposing initiatives to effectively reduce negative environmental impacts. The study results also invite us to consider the ecological implications, along with many other factors that go into planning, decision-making and meeting compliance obligations.
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INDUSTRY ENGAGEMENT Steve Meldrum is the 2022-2024 Chair of the Canadian Association for Tire Recycling Agencies (CATRA); eTracks hosted the CATRA Annual General Meeting (AGM) in Toronto, Ontario in the Fall of 2022.
SPEAKING ENGAGEMENTS
• Conference on Canadian Stewardship (CCS), Canadian Product Stewardship Council (CPSC) • Circular Economy Conference (CEC), Recycling Council of Alberta (RCA) • Waste to Resource Ontario (W2R0), Annual General Meeting (AGM)
EVENTS
Ontario Tire Dealership Assocation (OTDA) Golf Tournament & Annual Fundraiser
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The event included tire recycling agency representation from across Canada.
Our commitment to promoting ethical practices throughout the industry comes from a genuine interest to actually make the system better. We’ll continue to do this through productive collaboration with the regulator and by proactively working to provide solutions to industry challenges.
We will continue to enhance and utilize our technology assets and “big data” to optimize the benefits for our customers and service providers, now and in the years to come.
MAY 31 2023
OCT 31 2024
Producer Performance Reports Due for 2022*
Tire Supply Data due for 2021**
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MAY 31 2023
Processing Ends for 2022
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We are also committed to ensuring the success of those who work with us to reinforce a compliant system, from our valued employees, to producers, to service providers. We’ll be expanding our efforts to engage with all stakeholders in meaningful ways that achieve our shared goals.
MAR 31 2023
Collection Ends for 2022
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eTracks will remain focused on delivering responsible, reliable and fair services that ensure the success and compliance of both customers and service providers.
DEC 31 2022
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LOOKING AHEAD IN 2023…
REPORTING TIMELINES:
3-Year Performance Audit due.* (eTracks will continue to perform annual audits to ensure accuracy)
*Submitted by eTracks on behalf of Customers **Submitted by Customers/Producers
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LEARN MORE AT: ETRACKS.CA INFO@ETRACKS.CA 1-844-ETRACKS 905-387-2257