The dark side of the tire business
Irregular sales, illegal disposal and tax evasion are the three factors that, according to the Observatory on illegal trading and ELTs, are poisoning the environment, the economy and the work of honest operators in the sector
There is a dark side in the tire supply chain, made up of illegal sales and ELT disposal and tax evasion. An illegal market worth about 100 million euro each year with negative effects on the environment, the economy and the work of honest operators in the sector. Recent news helps us to grasp the idea of what is happening: in November 2019, 10 thousand used tires were seized from a company in Pieve Emanuele, Milan, ready to be processed and sold without authorization. In June of the same year, besides end-of-life tires, special waste was also found stocked in a company based in Soverato, in the province of Catanzaro. A few months earlier, in mid-February, in Frignano, in the heart of the Terra dei Fuochi (Land of fires), an illegal landfill with 2,500 square metre of ELTs was discovered, along with used oil and other types of special and hazardous waste. Illegal practices, therefore, represent the bug in a trading system that includes ELT collection and disposal. A situation that was perfectly described in a report on the illegal flow of tires and ELTs in Italy produced by the Observatory and illustrated by Legambiente together with Ecopneus, EcoTyre and Greentire as well as associations such as Confartigianato-Imprese, Cna, Assogomma, Airp and Federpneus in Rome in the presence of the Minister of Environment, Sergio Costa. The document, which collects data, studies and illegal behaviours by unauthorized operators, highlights the critical areas along the entire supply chain. It is estimated that in Italy, every year illegal tire trading amounts to anything between 30 and 40 thousand tons. Numbers that translate into a failure to pay the environmental contribution for an amount of around €12 million - money which is taken away from the consortia operating in the sector and will inevitably cause delays in the recovery of ELTs - and a VAT evasion of around €80 million. In addition to this, there is a high risk of illegally generated ELTs being abandoned and therefore outside the rules of the national collection system. In order to limit this phenomenon, at the beginning of 2019 the Ministry of the Environment imposed upon the consortia responsible for taking care of the collection and recovery of ELTs, an increase in the management target of more than 5 per cent (the collection target, therefore, went from 90 to 95 per cent of the ELTs placed on the market). However, this measure has not succeeded in restricting these illegal flows by much as they have continued to affect the system damaging the activity of the many operators who are following the rules. In fact, illegally generated ELTs end up being confused in the mass negatively affecting the objectives set for the year. This results in ELTs accumulating in yards or being abandoned along country roads, in illegal dumps and sheds.
The situation described by the Observatory illustrates the grey areas of a system which, as a whole, is a virtuous example in Europe. Every year 380 thousand tons of ELTs are collected from tire shops, garages and service stations and legally disposed. A large part of these, feed a circular economy that both consortia and trade associations have been pursuing for years, fighting against any illegal practice. ELTs, in fact, can have a second life. Through different manufacturing processes they can return as retreaded or re-grooved tires or be turned into powder (plastic components are separated from other materials, such as metals and textile residues, and then rubber is shredded and recovered into very small particles). In this second case the applications are many: asphalt additives and modifiers, sports surfaces and sound-absorbing rubber sheaths or panels. "Our country can rely on a system of excellence in Europe - explains Enrico Fontana, coordinator of the Observatory - and cannot afford that this heritage, through which economic resources and jobs are generated in the supply chain with important environmental benefits, is compromised by those who work illegally. For this reason, it is important that all the players in the sector, from Legambiente to the main ELT management consortia and trade associations, decide to share a concrete commitment to protect the vast majority of honest operators, who are the first to suffer the consequences of illegal practices”. Hence the proposals that the supply chain has presented to Minister Costa. Among the desired actions: the establishment of a Register of tire manufacturers and importers and the updating, at least every six months, of the Bip Tire Information Bank, already in possession of the Ministry of the Environment, the establishment of Control Office for all the subjects authorized to collect ELTs (consortia and individuals) and the creation of a task force supported by both the police and the Customs Agency, to combat illegal imports and sales, trafficking and illegal disposal of ELTs.
A regulatory framework
The standard on which the entire ELT management system is based, is Ministerial Decree n° 82/2011 (Regulation on the management of end-of-life tires). The decree has also introduced the European principle of extended producer responsibility for tires sold in Italy and has rationalised the supply chain, making it possible to bring most of the illegal disposal phenomena within the law. However, there are still shortcomings in the mechanisms for controlling flows of tires. These, according to Minister Costa, should be closed with the update of Decree n° 82/2011. The new text in fact - the approval is expected by the end of February, Editor’s note - incorporates many of the requests made in 2019 by the Observatory's partners.
These proposals focus on four macro-areas, namely: transparency of the system for collecting and recycling end-of-life tires, tire and tire flow traceability, a more stringent control system and support in favour rubber recycled from ELTs. The update of Decree 82/2011 would mean a further step forward in the direction of a virtuous model. But it is not the only one. In fact, the whole sector is waiting for the go ahead from the Ministry of the Environment of another important piece of the puzzle: The End-of-waste decree. This regulation, in short, refers to the recovery process carried out on waste, at the end of which this will lose this qualification, as waste, to acquire a new life as "secondary raw materials". Real manna from heaven for the ELT recovery sector, as it would unlock a variety of alternative industrial solutions for rubber powder. Within this framework, the Ministry of the Environment has included, as of 2020, a new Directorate-General in support of a circular economy. This body will be responsible for promoting eco-friendly policies and for planning, monitoring and supervising the entire waste cycle.
The Observatory and the CambioPulito platform
From June 2017 to 15 December 2019, the work of the Observatory, also carried out through CambioPulito, the whistleblowing platform reserved for operators in the sector and managed by Legambiente, made it possible to identify critical issues and photograph the current situation of the sector. In detail, in two and a half years of work 361 reports of registered offences were filed, 301 companies charged, 136 operators reported and 8 criminal complaints forwarded to the police. Going into more detail, what emerges is that those complaints focused on alleged illegal online marketing and illegal disposal, failure to pay VAT and environmental contributions, exercise of the profession without the relevant authorization and unfair competition. As far as the reports are concerned, around 80% of them concerned alleged violations of the rules of trade, free competition and the labour market. The reports also highlighted an upsurge in new tires theft which are later sold on the black market. Turning our attention to the ELT management chain, illegality translates into the sale of end-of-life tires passed off as second hand tires, illegal recycling activities and fraud on ELT weighing systems. As far as geographic distribution, among the regions most affected by the reports, Campania collected the highest number of reports (77), followed by Lombardy (51), Puglia (25), Abruzzo (22), Emilia-Romagna (21), Sicily (18), Calabria (17), Liguria (15) and Lazio (14).