Ahead of this year's Recovered Carbon Black Asia 2024, we spoke with Xiaogang Zhao, General Manager at Shandong Hesheng Environmental Protection Technology, to get a sneak peek of what we can expect from his presentation on 'Lead the way with the "dualcarbon" concept and strive to be the vanguard of industv development' Here's what he had to say…



Q1 Your presentation at the inaugural Recovered Carbon Black Asia will cover Lead the way with the "dualcarbon" concept and strive to be the vanguard of industv development Why is it important for others in the industry to hear this message?

First, the tire pyrolysis industry aligns with national policy guidance. As global climate change poses a significant threat to human society, more and more countries are elevating "carbon neutrality" to a national strategy, envisioning a carbon-free future. In 2020, based on the intrinsic requirement to promote sustainable development and the responsibility to build a community with a shared future for mankind, China announced its vision for carbon peaking and carbon neutrality. The "dual carbon" goal is a major strategic decision made by China, driven by the responsibility to build a community with a shared future for mankind and the intrinsic requirement for sustainable development. It demonstrates China's firm determination to actively respond to climate change, pursue a green and low-carbon development path, and promote the common development of humanity.

Second, pyrolysis technology allows for the recycling of waste tires, enabling the production of derivatives such as carbon black, steel wire, and pyrolysis oil. It offers advantages like zero pollution and zero emissions, making it one of the best current methods for treating waste tires. Waste tire recycling has a positive impact on the development of the environmental protection industry, and the country attaches great importance to it. In 2020, the Ministry of Industry and Information Technology released the "Regulations for the Comprehensive Utilization of Waste Tires," clearly stating that the production capacity design of waste tire recycling enterprises should be compatible with the recoverable amount of waste tires and incorporating pyrolysis technology as a primary method for the comprehensive utilization of waste tires. This provides momentum and support for the development of China's waste tire recycling industry.

Third, achieving carbon peaking and carbon neutrality is a broad and profound systematic transformation of the economy and society. Under the "dual carbon" goal, the prosperity of China's waste tire recycling industry continues to improve. Industrial continuous pyrolysis technology has enabled the resourceful utilization of waste tires without generating new waste, gas, or wastewater, becoming the mainstream treatment process for waste tires in China. Benefiting from the growing market demand, the comprehensive utilization of waste tires in China has entered a "green gold" era, with the industry's development prospects continually improving.

Fourth, our company, as the chairman unit of the Pyrolysis Branch of the China Tire Recycling Association, is the first in the country to adopt industrial continuous pyrolysis technology. We are a modern environmental protection technology enterprise specializing in the pyrolysis treatment and resource recycling of waste tires. After more than ten years of development, we have a mature operational and experienced management team in sales, with multiple patented technologies and independently owned production equipment in carbon black modification and granulation. Through this conference, we share experiences with our peers and actively strive to be leaders in technological innovation and promoters of low-carbon transformation, making due contributions to the green revolution of the tire industry and the achievement of China's "dual carbon" goals.

Q2 What are the main challenges in your day-to-day work relating to sustainability in tires/recovered carbon black/tire pyrolysis？

First, the country has yet to establish a comprehensive and efficient recycling system for waste tires. Recycling is the primary stage of waste tire processing and serves as a bridge connecting tire production, facilitating the circular utilization of tires while reducing carbon emissions. The fundamental source of sustainable development for waste tires lies in the recycling system. Only by establishing an effective recycling system can the healthy development of all related sectors be coordinated.

Second, the presence of small-scale oil refining and the high proportion of batch pyrolysis are primarily due to the low equipment investment costs of these manufacturers. Compared to industrial continuous pyrolysis enterprises, these companies reduce operational costs by neglecting environmental protection and essential safety, leading to unfair and disorderly competition. This has severely hindered the achievement of China's "dual carbon" goals.

Q3 What are some of the biggest opportunities gaining attention within the recovered Carbon Black industry？

Given the current domestic capacity of carbon black, national policies provide directional guidance for the carbon black industry, focusing on eliminating outdated capacities, raising entry barriers, optimizing industry structure, and cultivating a group of internationally competitive carbon black enterprises. The policies are favorable toward functional and specialty carbon black, where domestic shortages exist. As these policies are gradually implemented, the phasing out of outdated capacities will positively impact the concentration of the carbon black industry. On December 30, 2021, the Ministry of Finance and the State Administration of Taxation issued the "Announcement on Improving the VAT Policy for Comprehensive Utilization of Resources," which provides a VAT preferential policy for products and services related to the comprehensive utilization of waste tires, achieving a 70% dual-direction benefit. This relatively reduces the industry's operational costs, increases profit margins, expands development opportunities, and promotes the industry's growth to a larger scale and broader dimensions. On April 25, 2024, the State Administration of Taxation issued the "Announcement on Relevant Matters of 'Reverse Invoicing' by Resource Recycling Enterprises to Individuals Selling Scrap Products" (hereinafter referred to as the "Announcement"), which clarifies specific measures and operational methods for "reverse invoicing." This creates a favorable tax environment for the accelerated development of the entire industrial chain of the resource recycling industry, aiding in enhancing the quality and level of the national economic cycle.

In the field of carbon black recycling, China is one of the world's largest markets. Carbon black improves the wear resistance of tire treads, significantly increasing tire mileage, and enhances the tensile and tear strength of rubber compounds. Therefore, carbon black is widely used in manufacturing various types of tires and other rubber products. In 2022, the global tire market sales reached approximately 1.749 billion units, with replacement tires accounting for about 1.153 billion units, maintaining a market share of over 65%. Tire usage is a rigid demand, and in recent years, the continuous development of China's automotive industry has resulted in a large overall industry scale. The growth of new energy vehicles will also drive the domestic tire market's expansion, increasing the demand for carbon black.

Q4 What do you think will be some of the most interesting advancements in recovered carbon black/tire pyrolysis in the near future？

First, the country will establish a comprehensive and efficient waste tire recycling system to ensure the healthy, continuous, and stable development of all aspects of the waste tire pyrolysis industry.

Second, on the technical front, regarding the constraints on the industrialization of waste tire pyrolysis, Qingdao University of Science and Technology has overcome technological barriers. From technology to equipment, further improvements will be made, and efforts to introduce these advancements to the market have begun.

Third, in terms of market regulation, relevant government departments across various regions will intensify inspections to resolutely eliminate small-scale oil refining and batch pyrolysis, ensuring fair and orderly competition within the industry. Efforts will be made to firmly combat "crude oil refining," improve the business environment, establish standards for recycled products based on pyrolysis technology, and expand the market for these recycled products. Additionally, measures will be taken to effectively reduce the tax burden on pyrolysis enterprises, promoting the sustainable development of the waste tire pyrolysis industry.

Q5 What are the challenges the tire pyrolysis value chain has to overcome in the next few years？
 

First, technological research and development and equipment upgrades are crucial for improving the capacity and product quality of pyrolytic carbon black. It is necessary to increase investment in R&D, strengthen independent innovation and technology introduction, enhance capacity, and reduce production costs.

Second, market demand and product application are important factors driving the development of the industrial chain. Efforts should be made to expand the market, strengthen collaboration with the tire, rubber, ink, coatings, and plastics industries, and expand product application areas and market share.

Q6 What collaborations in/with the value chain are you seeking？

Domestic and international tire manufacturers, masterbatch producers, and high-end manufacturers in the rubber and plastics industries.