Back to black
Black Bear’s tyre-to-carbon black technology is a circular economy game changer. It could transform an industry that most of us don’t know exists, but which is a major source of CO2.
Every year, 1.5 billion tyres reach the end of their life around the world: 70% of them are simply incinerated. Not only does this release massive amounts of CO2, it is extremely wasteful. Tyres are full of valuable resources, including steel and carbon black (a fine powder used to provide structure in the manufacturing of tyres and as a colourant by the plastic and paint industry).
Resolving these seemingly irreconcilable facts is Black Bear’s mission. The Netherlands-based company, founded in 2010, has developed a unique process for producing carbon black from tyres. “We’ve figured out how to do something with those 1.5 billion tyres and extract valuable material from them,” explains CEO Martijn Lopes Cardozo. “We can tackle this huge problem and take advantage of an enormous opportunity in one go.”
Introducing the circular economy to the tyre industry is perhaps easier than in some other waste streams. There are already good tyre collection schemes and infrastructure in most countries: in Western Europe, 95% of tyres are collected. Logistically, harvesting this resource is therefore relatively straightforward. But creating a process to extract carbon black from tyres was anything but easy.
Perfecting the process
Black Bear is not the first company to try to extract carbon black from used tyres. “But we were the first to make a product that is as good as – or better than – virgin carbon black,” says Cardozo.
To achieve this goal, Black Bear worked with potential customers from day one. “When we started in 2010, we made sure we involved leading buyers of carbon black in the R&D process,” says Cardozo. “We only produced material at laboratory scale but the feedback of tyre, plastic and other users of carbon black was extremely important to us.”
Once around 20 customers had approved the product in its R&D phase, the company performed trials in Germany with industrial-scale equipment. With the technical validation complete, Black Bear, together with leading tyre recycling company Kargro, secured the financing for its first industrial-scale prototype plant. “At that point we had solid proof that Black Bear worked as a concept, and were ready to scale up our tyre-to-carbon black technology,” says Cardozo.
No waste, all value
Black Bear’s process lets nothing go to waste. The steel is extracted from the tyres, while the rubber is shredded and then carbonised. This produces oil and gas as well as carbon black (getting the latter into a useable, high quality form is essentially Black Bear’s major breakthrough).
Black Bear uses the gas in its factory to generate energy and ultimately plans to sell the oil produced, although more work is needed to raise the quality. “The circularity of the model is complete,” explains Troy Huijskens, who heads Black Bear’s business development. “There are three separate streams – steel, oil and gas, and carbon black. Everything is used and there are no leftover toxic waste streams.”
The comprehensive nature of Black Bear’s tyre-to-carbon black technology means it has significant environmental value. Producing virgin carbon black is, as one might expect, an environmentally-unfriendly process: around 2.5 litres of crude oil are burned to produce each kilo of carbon black. Necessarily, this process creates huge CO2 emissions. Given its environmental impact, carbon black producers tend to locate in countries with low regulatory standards.
Every kilo of carbon black produced by Black Bear saves 5kg of CO2 compared to virgin carbon black production. “That means that each Black Bear factory saves as much CO2 as one million trees,” says Huijskens. ‘Per euro invested, that’s three times as much CO2 as a wind turbine. Together, our plan for 1,000 factories could save as much CO2 as one billion trees.”
But Black Bear’s business model is not simply a green wish list. The Netherlands factory, which is roughly the size of a football pitch, can recycle more than one million waste tyres a year – or around 15% of the country’s waste tyres. That will produce 5,000 tonnes of carbon black, 5,000 tonnes of bio-fuel, 3000 tonnes of steel and one megawatt hour of green electricity.
What’s perhaps most remarkable about Black Bear’s process is that it produces carbon black at a lower cost than mainstream producers. That’s because the sole ingredient in carbon black – oil – is relatively costly. Of course, the oil price fluctuates wildly and carbon black prices moves in line with it. “When we started the company, oil was at around $100 a barrel,” recalls Cardozo. “It then dropped to $30 (at which point carbon black producers started closing factories). But we are competitive even below that level because our material costs are so much cheaper than oil.”
Black Bear was initially funded by its founders and management, as well as some innovation subsidies. Its first venture round in 2014 brought professional investors on board. A recent €16 million funding round tapped these investors again and added a consortium of new investors.
“Some of these new investors, such as ING Sustainable Investments and Social Impact Ventures, reflect our green credentials,” says Cardozo. But the new investors also highlight Black Bear’s industrial-scale ambitions; Thai petrochemicals conglomerate SCG also came on board in the latest round.
Black Bear plans to use proceeds from its latest funding to refine its processes and begin the worldwide roll-out of its technology. The company will use a partnership model that deploys its technology but works with tyre recycling companies and others to operate installations. “We liken it to wind turbine producers,” says Huijskens. “They make the turbines but they don’t necessarily have to operate them.”
This model facilitates a fast rollout of Black Bear’s technology but also aligns with its goal of local operation. “Each installation will be a single entity,” explains Huijskens. “This decentralised system limits the transportation costs – and environmental impact – of moving tyres for recycling.” Black Bear is currently in talks with multiple companies worldwide to set up recycling plants.
A move towards greater circularity
The carbon black industry is currently worth over €12 billion a year – Black Bear believes it can address up to half of this while helping tyre companies to meet their ambitious targets for improving sustainability. As well as tackling the 1.5 billion tyres that reach the end of their life each year, Black Bear can extract carbon black from existing tyre mountains, although cleaning buried tyres can be challenging.
Of course, building out the required infrastructure to recycle on this scale will be a massive undertaking: Huijskens estimates that up to €15 billion in infrastructure capital is required. While this sum sounds daunting, he is confident there are sufficient funds available. “There is plenty of green investor appetite,” he says. “A lot of money went into renewable energy but returns in those markets are falling as they de-risk: many investors are looking for new sustainable projects with significant growth potential.”
Black Bear’s progress in introducing circularity to an environmentally-unsustainable industry holds out hope for the rest of the global economy. “We are still scratching the surface in terms of the circular economy,” says Cardozo. “The Circular Economy report released at Davos indicates that just 9% of the world is currently circular. But there is lots of exploration going on and plenty of smart start-ups.”
Furthermore, Huijskens notes that both new rules and end consumers are increasing the pressure on industry to act and move towards greater circularity. “The recent EU Directive on CO2 reduction means all companies are at least thinking about these issues. In addition, there is growing awareness among end consumers, which could well be what drives the trend towards greater circularity.”