| 0800 TYREWISE ( ) | 1 Progressing towards End of Life Tyre Stewardship in NZ Update for Environmental Protection Committee; 11 August 2015 Adele Rose, CEO 3R Group Ltd Tyrewise Working Group Facilitators

| 0800 TYREWISE ( ) | 2 The journey to date June 2011….

| 0800 TYREWISE ( ) | 3 Situation NZ – Market Failure Management and disposal of End of Life Tyres 3.5 million passenger tyres 400,000 commercial tyres Some success – but need systematic nationwide approach Tyre piles (unmonitored, unconsented, flight risk) Poor disposal practice (illegal dumping, acceptance at landfill) Access & transport issues (Cook Strait) Industry motivated to develop an accredited product stewardship programme Provided it was mandatory Required legislative test

| 0800 TYREWISE ( ) | 4 Breakthrough March 2012 Industry stakeholder coalition formed Recommendation to Minister for the Environment outlining process to develop PS for ELT Systematic approach required 7 Milestones to be completed by August 2013 including Business Plan and Cost Benefit Analysis/Financial Modelling for future scheme Looking for robust, evidence based, industry led solution that Government could support Local Government New Zealand Central Government (Ministry for the Environment) Keen to draw on international experience WBCSD Canadian programmes & others

| 0800 TYREWISE ( ) | 5 Objectives Development of a PS Programme for the recovery & safe disposal of ELT Benchmark against world best practice standards in support of: reduced waste & risk of environmental harm support export trade Specific objectives for programme design: Auditable process; independence between funders, managers & operators Economic drivers; develop new markets from initial processing or value add & new recovery routes support research and development programs Regulatory address local and central government legislative and environmental obligations (Local Government Act & Waste Minimisation Act 2008) proposal for robust regulation to prevent free-riders, longevity of ELT management, decreased cost of ELT stewardship

| 0800 TYREWISE ( ) | 6 Where we landed August 2013 ….

| 0800 TYREWISE ( ) | 7 Improving the value for end of life tyres in cost effective and environmentally sound ways Tyrewise is a …… National mandatory product stewardship programme for end of life tyres (ELTs), enabling all New Zealanders access to safe and environmentally compliant recovery of ELTs. Advanced disposal fee placed on point on import (loose tyres) and first registration (vehicles) The programme is more than just a recycling programme - the whole of the supply chain - from tyre manufacturers and distributors, through to end use processors, are actively involved in the design of the programme, funding, marketing and operational elements reduces environmental harm by providing a sustainable alternative to ELTs entering landfills, and by removing the motivation for illegal dumping and stockpiling. incentivises efficient recovery of ELTs via a network of registered providers and supports industry to find alternative and beneficial uses for the collected materials. educates on responsible disposal of unwanted tyres

Supply Chain - Summary 8 Registered Tyre ImporterRegistered GeneratorConsumerRegistered Collection Site Registered TransporterRegistered ProcessorRegistered ManufacturerEnd use product

Preferred Advanced Disposal Fee Model 9

| 0800 TYREWISE ( ) | 10 Improving the value for end of life tyres in cost effective and environmentally sound ways A co-regulatory approach; the best outcomes include legislative and regulatory support Using regulatory tools under the WMA2008 – priority product or product regulation Landfill bans or restrictions on tyre disposal be enacted as tyre processing infrastructure improves Procurement policies that enable or incentivise use of tyre-derived product with comparable performance and cost to virgin materials Development of NES

| 0800 TYREWISE ( ) | 11 MfE Waste Tyre Economic Research; Intervention options to promote investment in on-shore waste tyres recycling Authored by KPMG, 3R as partner to enable access to Tyrewise data Built on the Tyrewise work – the scope for Tyrewise did not cover in detail the propensity for investment in ELT processing The KPMG report covered the economic drivers and barriers to investment in detail Identified and evaluated potential government interventions to address these barriers Recommended strategies to implement suggested interventions Did not bring forward any new data or previouslyy undiscovered options

| 0800 TYREWISE ( ) | 12 Overview of Findings Barriers to investment Limited addressable end use market size Business models require scale Insufficient funding

| 0800 TYREWISE ( ) | 13 Overview of Findings Future drivers and enablers of investment Expand waste tyre collection nationwide Increase utilisation of existing processing capacity and establish capacity in SI Invest in scalable new manufacturing options (end uses) Develop an effective funding mechanism that covers the full cost of collection, processing and manufacturing

| 0800 TYREWISE ( ) | 14 Overview of Findings Intervention Options Key Levers; Additional Regulation and Enforcement Market Organisation New Funding Model Investment and Risk Mitigation Option Evaluation Enhanced Status Quo – Quick Wins, enforcement of current legislation Free market with further regulatory protections – disposal limitations, reporting, market led Mandatory Product Stewardship – Co-regulatory approach “Tyrewise Model”

| 0800 TYREWISE ( ) | 15

| 0800 TYREWISE ( ) | 16 Cost Benefit Analysis KPMG Report

| 0800 TYREWISE ( ) | Assumption Type Base Case (ref page 7) Preferred Scenario (ref page 8) Alternative Scenario (ref page 9) GeneralBase year for data collection2011 Evaluation period10 years Discount Rate3.91% Projections (Per annum) Quantities of ELTs generated 62,000 tonnes, reducing by 1% annually Recycling Rates 18,000 tonnes/yr 29% 51,000 tonnes/yr 95% (Year 5) 29,000 tonnes/yr 58% (Year 5) Land filling/Export:38,000 tonnes3,000 tonnes21,000 tonnes Illegal Dumping.3,000 tonnes0 tonnes300 tonnes Tyre Fires4 fires per year3 fires per year Tyrewise Fee/Advance disposal fee $23 million $43 million (Yr1) to $14 million (Yr10) $32 million (Yr1) to $14 million (Yr10) Cost Assumptions (over 10 years of CBA Analysis) Government Costs$0$3.2 million$4.8 million Business Cost (compliance + capital investment) $0$47 million$69 million Illegal Dumping (orphan tyres) $16 million$0 Tyre Fires$12 millionSee benefit assumption Landfill stability leachate issues Not quantified Public Health (mosquito borne disease) Not quantified NZ 100% Pure Brand $122 million (0.1% drop)brand maintained Market value of resources $40 million$83 million$55 million New industry and employment $0$207 million$162 million Benefit Assumptions (over 10 years of CBA Analysis) Benefits of tyre derived fuel $0 TDF not in use $42 million Benefits of rubber asphalt $0 Rubber roads not in use $3.2 million Further benefits tbc by new project $3.2 million per yr Further benefits tbc by new project Avoided costs illegal dumping n/a$16 million$14 million Avoided costs tyre firesn/a$3 million Avoided landfills operating costn/a$24 million$5 million Avoided cost public health liability – legacy tyres n/aNot quantified Avoided cost to NZ’s brand, tourism and export industries n/a NET PRESENT VALUE-$89 million$36 million-$18 million Tyrewise CBA

| 0800 TYREWISE ( ) | 18 TWG Meeting with Minister for Environment, July 29th In summary mandatory stewardship won’t progress Barriers to implementation are: KPMG CBA shows NPV for mandatory stewardship is $16M & Tyrewise CBA shows NPV for mandatory stewardship is $36M Scope for Tyrewise was different to scope for KPMG Has discredited the Tyrewise CBA Minister has suggested if the TWG wish they can come back with an explanation for the variances Insufficient data on the real cost to consumer should the fee be collected at point of import as opposed to the retailer who takes off the tyre What will those retailers do with loss of profit? Minister has suggested if the TWG wish they can come back with a detailed impact of the cost to consumers beyond stating that consumers are currently paying a disposal fee and that an advanced disposal fee would replace this fee

| 0800 TYREWISE ( ) | 19 Cont. In summary mandatory stewardship won’t progress; barriers to implementation Unconvinced that markets for end use will develop; ELTs will always have negative value Awaiting feedback from NZTA about rubber in roading applications This requires significant technology investment AND a change in Government procurement drivers to incentivise the use of rubber emulsifiers – roads are more expensive & last longer Opened up WMF Round in October targeting development opportunities for ELT’s Specifically the round will look for applications for end-of-life tyre projects to demonstrate: How the project will grow markets for end-of-life tyres, which could include research or trials; or, That the supply of tyres and associated end markets are confirmed. Remains to be convinced that benefits to NZ exceed the cost of the scheme Data from 48 landfills that collect the $10/tonne levy show small volumes actually to landfill (MfE informal survey) Small minority of tyres being illegally dumped or stored – no data to prove its not the case Not actually a significant environmental problem

| 0800 TYREWISE ( ) | 20 Cont. In summary mandatory stewardship won’t progress; barriers to implementation Has advised he is not closed to the idea of mandatory stewardship, and the answer is not yet a no, however based on information currently before him it will not progress; He will review TWG feedback and come to a conclusion fairly quickly so as not to leave everyone hanging Water and Auckland housing are priority issues

| 0800 TYREWISE ( ) | 21 So where to from here? Industry remain committed to mandatory stewardship however no funding now to continue working with a current Government who does not appear to support the industry model; for any scheme to be successful it requires co-regulatory support Tyrewise working group remains intact representing all industry sectors including Local Government (Brent Aitken, Taupō District Council) 3R continue to support industry and affected parties by maintaining the Tyrewise website and Comms portal (560 registered parties) 3R working on tyre tracking software “Treadmarks” which will provide data from collection to disposal; bringing a pilot group together over the next 12 months Have offered to draft an NES for Tyres (would need funding, project headed by Darren Patterson) Supporting applicants to the WMF with data Maintaining dialogue