Scandinavian Enviro Systems (Enviro) has signed a conditional USD 2 million service agreement with an international transport services operator in the energy sector, advancing plans for a North American tire pyrolysis plant designed to recycle up to 50,000 tonnes of end-of-life tires annually. The agreement follows a letter of intent signed in March 2026 and covers preparation of technical documentation for environmental, planning and fire safety permits as well as an initial design for the entire plant. Enviro will receive approximately SEK 19.5 million if the customer decides to proceed with the project, but work will not begin until several conditions are satisfied, including securing a plant site and signing binding offtake agreements covering at least 75% of expected production of both tire-derived oil and recovered carbon black. The service agreement does not itself provide a license to construct or operate a plant using Enviro’s tire pyrolysis technology, although the resulting plant design could form the technical basis for a future license agreement between the parties.

Agreement advances North American tire pyrolysis project

Enviro signed the service agreement on November 5, 2026 with a customer described as an international operator providing transport services to the energy sector.

The parties began evaluating the project under a letter of intent signed on March 17, 2026. Since then, Enviro has presented previous Swedish projects, contributed to the customer’s calculations and assisted with contacts involving potential buyers of products from the proposed facility.

Plant targets 50,000 tonnes of end-of-life tires annually

The proposed North American facility is intended to process up to 50,000 tonnes of end-of-life tires per year using Enviro’s proprietary tire pyrolysis technology.

If developed, the project would recover carbon black and oil from waste tires, creating secondary raw materials that could be sold into downstream industrial markets.

Enviro to prepare permit documentation

The first major deliverable under the agreement is technical documentation required for applications covering environmental, planning and fire safety permits.

Enviro will prepare the technical material needed by the customer to begin the permitting process and will also provide technical support for 12 months following delivery of the permit documentation.

Initial plant design included in USD 2 million scope

The second major deliverable is an initial design for the entire tire pyrolysis plant.

The design package will include drawings, equipment lists, technical calculations and specifications and is intended to provide the foundation for more detailed engineering work before a final investment decision.

Services depend on customer decision to proceed

Enviro will only begin providing the contracted services after the customer has formally decided to proceed with the project.

That decision is itself conditional on the customer securing an appropriate site for the plant and fulfilling commercial requirements related to product sales.

Offtake agreements must cover 75% of oil and carbon black production

Before proceeding, the customer must enter into binding agreements with buyers covering at least 75% of the expected production of each of the plant’s two principal products: oil and carbon black.

This requirement places product offtake at the center of the project development process and reduces market risk before substantial engineering and permitting work begins.

Agreement expires if project does not proceed by end of 2027

If the customer has not decided to proceed with the tire pyrolysis project by December 31, 2027, or decides not to proceed, the service agreement will terminate.

The agreement therefore represents a conditional development step rather than confirmation that the North American plant will be constructed.

Enviro to receive fixed fee of USD 2 million

The total fixed compensation for Enviro’s services amounts to USD 2 million, equivalent to approximately SEK 19.5 million.

Of this amount, USD 500,000 relates to preparation of the permit application documentation, while USD 1.5 million relates to the initial design of the plant.

First USD 450,000 payable after project decision

Once the customer formally decides to proceed, USD 450,000 of the contracted fee will become payable.

The remaining amount will be paid in installments as Enviro completes different parts of the agreed work.

Compensation does not depend on final permit approval

Enviro will be entitled to the agreed compensation for completed services regardless of whether authorities ultimately approve the required permits or whether the plant is eventually constructed.

Any additional engineering or technical support beyond the scope of the fixed-fee agreement will be invoiced separately on an ongoing basis.

Engineering assignment expected to take around seven months

Under the planned schedule, Enviro expects the complete assignment to take approximately seven months from the customer’s decision to proceed.

The technical documentation needed for permit applications is expected to be completed after approximately five months.

Customer can terminate assignment with 30 days’ notice

The customer may terminate the assignment with 30 days’ notice after work has started.

In that event, Enviro will remain entitled to payment for work already performed and costs already incurred in connection with the project.

Separate license agreement would be required

The USD 2 million service agreement does not give the customer the right to use Enviro’s technology to construct or operate the proposed tire pyrolysis facility.

Any commercial deployment of the technology would require a separate license agreement between the parties.

Plant design could become basis for future licensing deal

Enviro said the design work developed under the service agreement could provide the technical foundation for a future technology license.

This structure would allow Enviro to generate engineering revenue during the project development stage while preserving the possibility of longer-term licensing income if the plant progresses to construction and operation.

Agreement supports Enviro’s international licensing strategy

CEO Fredrik Aaben described the agreement as an important step toward establishing Enviro’s technology in North America.

The transaction reflects Enviro’s strategy of expanding internationally through projects in which external partners develop tire recycling plants based on the company’s pyrolysis technology.

Recovered carbon black and tire-derived oil central to project economics

The requirement for binding offtake agreements illustrates the importance of markets for recovered carbon black and tire-derived oil in commercial tire pyrolysis projects.

Both products can represent important revenue streams, but their value depends on quality, certification, downstream acceptance and the ability of project developers to secure reliable customers before committing to major capital investment.

North American project moves beyond letter of intent

The November agreement represents a more advanced development stage than the March 2026 letter of intent because it establishes defined technical deliverables, compensation and project conditions.

However, the proposed 50,000-tonne-per-year tire pyrolysis plant remains conditional on site selection, product offtake and a formal decision by the customer to proceed.

Original announcement by Scandinavian Enviro Systems.