Weibold Academy article series discusses periodically the practical developments and scientific research findings in the end-of-life tire (ELT) recycling and pyrolysis industry.

Claus Lamer
Claus Lamer

These articles are reviews by Claus Lamer – the senior pyrolysis consultant at Weibold. The reviews aim to give industry entrepreneurs, project initiators, investors, and the public a better insight into a rapidly growing circular economy. At the same time, this article series should stimulate discussion.

For completeness, we would like to emphasize that these articles are no legal advice from Weibold or the author. Please refer to the responsible authorities and specialist lawyers for legally binding statements.

Introduction: Why a bookkeeping tweak is suddenly a board-level issue

A decade ago, tire pyrolysis oil (TPO) was mostly a technical conversation: viscosity, contaminants, refinery compatibility, and whether a complex waste stream could be made reliable enough to enter established fuel and chemical supply chains. Today, that conversation has a second axis: credibility. The last two years have pushed sustainability claims from marketing to enforcement. Regulators are tightening “mass balance” rules; auditors are converging on stricter interpretations; and Tier‑1 offtakers—refineries, fuel suppliers, and chemical majors—are becoming allergic to anything that looks like creative accounting.

In the middle of this shift sits a deceptively simple question: When you sell a parcel of TPO, how much renewable (biogenic) content are you allowed to claim?

ISCC EU’s Mass Balance Guidance 1.2 (valid from 18 December 2025) is a key moment in this story. It does not eliminate mass balance. But it sharpens the distinction between flexible assignment (where sustainability characteristics can be allocated freely within a permitted pool) and proportional assignment (where outgoing parcels must mirror the tank’s physical composition at the time of withdrawal). It also names end‑of‑life tyres as a canonical example of a mixed‑origin material where proportional assignment applies.

At the same time, the destination market is becoming decisive. The EU’s RED III framework (and its implementing rules) is increasingly prescriptive about “product groups,” separate mass balances, and the non‑transferability of sustainability information—while the UK’s RTFO framework explicitly allows attributing sustainability characteristics from additions to different withdrawals (so long as the overall balance closes), i.e., a structurally more permissive compliance construct. This article explains what has changed, why it matters, how EU vs. UK delivery affects what a supplier can claim, and—importantly—why there is still a pragmatic, slightly optimistic path forward for producers and sellers of TPO.

1) What ISCC EU Guidance 1.2 actually tightens

1.1 The heart of the shift: mixed fossil + biogenic materials, and the TPO from ELT

ISCC EU Guidance 1.2 states, in plain terms, that when physically non‑identical materials from different product groups are physically mixed, they must be proportionally assigned. Then it goes further: “Raw materials that contain fossil and biogenic components follow the same logic and fall under proportional assignment, for example, end‑of‑life tires or municipal solid waste.”

The document explains why: the fossil and biogenic components are not considered physically identical and cannot be counted in the same product group—specifically referencing different entries in the ISCC material list and different RED categories.

For TPO stakeholders, that sentence is the “shockwave” that many market actors felt on 18 December 2025. The practical meaning is blunt: for ELT/TPO, the biogenic and fossil components are treated as non‑identical, so proportional assignment becomes the default; you cannot “pull forward” renewable share from the tank heel into a single outgoing parcel; and premium models tied to “high renewable share parcels” become constrained.

1.2 Product groups become gatekeepers to flexibility

ISCC EU 1.2 emphasizes that before assignment rules can be applied, one must determine whether materials are physically identical or at least belong to the same product group, because that classification determines whether proportional or flexible assignment is possible.

It also ties “physical identity” to the ISCC EU material list: only if two materials appear under the same entry are they considered physically identical.

And it defines proportional assignment with an operational clarity that matters for trading: if a tank contains a 60/40 physical mix of two non‑identical materials that do not belong to the same product group, outgoing batches must maintain that ratio; and crucially, “Sustainable shares in the tank heel cannot be credited to outgoing batches but remain proportionally assigned in the tank.”

That is exactly the kind of “ledger magic” that some buyers have begun to call out as greenwashing: allocating a “100% renewable” parcel from a mixed tank while leaving another buyer with the non‑renewable remainder. It can be compliant under some mass‑balance constructs; it can also be reputationally toxic.

1.3 What’s not changing: mass balance still exists

Guidance 1.2 starts from a stable premise: under ISCC EU, both physical segregation and mass balance remain allowable chain‑of‑custody models. Mass balance still permits physical mixing while keeping sustainability characteristics separated on a bookkeeping basis, and it still requires that no entity claims more certified product than it sourced.

So, the headline is not “mass balance is dead.” The headline is: flexible assignment is no longer the safe default for tire‑derived mixed‑origin streams.

2) EU (RED III) vs UK (RTFO): Does destination change?

2.1 The EU direction: more prescriptive constraints

In our EU vs UK analysis, the executive answer is unambiguous: destination increasingly matters because EU deliveries face more prescriptive constraints on what can be pooled, how product groups are defined, and when sustainability information can (or cannot) be moved across balances.

The EU tightening mechanism: Implementing Regulation 2022/996 sets out how voluntary schemes must implement Renewable Energy Directive (RED) verification; it reduces room for “attribute reshuffling” by requiring product‑group logic and preventing the transfer of sustainability/GHG information between separate mass balances.

Even without quoting legislation, the operational consequence is straightforward for TPO: the more the EU system treats fossil vs biogenic components as non‑groupable, the more it forces outcomes that resemble proportional treatment for the biogenic vs fossil split.

2.2 The UK RTFO direction: explicit permission for flexible attribution in the accounting model

The UK’s mass balance definition is structurally different: UK RTFO (Renewable Transport Fuel Obligation) explicitly allows a mass balance system in which sustainability characteristics may be attributed to different quantities withdrawn from a mixture—“flexible assignment” in the bookkeeping sense.

The mechanism is spelled out: the system “provides for the sustainability characteristics of amounts added to the mixture to be attributed to other amounts withdrawn from the mixture,” and requires that the characteristics attributed to withdrawals equal those attributed to additions “in the same quantities.”

This concludes that while UK rules are more tolerant of flexible attribution, that does not automatically mean it is risk‑free to market a specific physical parcel as “100% biogenic.”

2.3 The practical truth that survives both systems: compliance claims vs product truth claims

Even where flexible attribution is legally permitted (UK RTFO and some EU mass‑balance contexts outside the tire case), misrepresentation risk can rise if sellers confuse accounting constructs with physical truth. Characterizing a parcel as “100% biogenic” when the physically mixed material is analytically ~X% biogenic can be perceived as misleading; the regulatory allowance concerns system‑level integrity, not necessarily what is prudent to state as a product truth claim.

This is not a theoretical point. The “flexible” example often conflicts with analytical reality (e.g., 14C), while proportional assignment does not.

2.4 The UK is not a free pass—just a different compliance construct

Our view is straightforward: the UK route offers bookkeeping flexibility, but claims must be carefully managed; the UK is not a free pass and carries a higher reputational risk if marketed poorly. The UK RTFO mass balance is structurally more tolerant of attribute allocation within a closed system, but the same warning applies: avoid “physical purity” language if the product is analytically mixed.

In other words, the UK may preserve more compliance‑accounting flexibility, but it does not eliminate the need for disciplined, defensible communication.

3) An optimistic outlook: TPO monetization in the EU‑27 is becoming more structured—not less

Many TPO suppliers hear “tighter mass balance” and conclude “the EU market just got worse.” We suggest a more nuanced—and more actionable—view.

3.1 The EU doesn’t have one RTFO—but it has multiple RTFO‑like value levers

For strategic planning: the EU does not have a uniform, tradable certificate system like the RTFO across all Member States, but RTFO‑like monetization opportunities are emerging through national implementations and enforcement regimes of RED III, as well as through national quota/certificate/tax incentive systems.

This implies a market‑development reality: the “EU route” is not one route; it is a portfolio of national levers.

3.2 The low‑regret lever: monetize the biogenic fraction first

The memo states the key near‑term insight for TPO: monetization is most likely via the biogenic fraction, verifiable through a robust Monitoring, Reporting and Verification (MRV)/Proof of Sustainability (PoS) chain.

This aligns with the “new credibility economy” described earlier: if proportional assignment forces you to sell the measured share, the biogenic fraction becomes the core monetizable unit.

3.3 The upside option: fossil fraction as Recycled Carbon Fuel (RCF)

Being cautiously optimistic about Recycled Carbon Fuel (RCF): the monetization of the fossil fraction, as RCF is anchored in EU law, but in practice it is multi‑step—requiring national recognition/counting, proof of life‑cycle GHG savings ≥70%, and full traceability/audit/mass balance.

This is not an immediate revenue promise; it is an optionality argument. A supplier that builds the MRV muscle for biogenic monetization is also building the infrastructure required to pursue RCF pathways.

3.4 Timing: Implementation pressure creates a window of opportunity

RED III required transposition by 21 May 2025 and, therefore, in 2026, many national systems are being redesigned—quotas, double counting, registry IT, recognition of new feedstocks—creating a window suited to proactive regulatory positioning of TPO.

This is a strategic opportunity: when systems are in flux, credible, well‑documented feedstock pathways can be introduced.

3.5 Focus: top markets with the highest monetization probability

Currently, we see the top three markets—the Netherlands, Italy, and Germany—not chosen for sentiment but for compliance‑monetization probability:

  • Netherlands: HBE/REV (Netherlands renewable fuel certificates) with high liquidity and enforcement IT.
  • Italy: CIC system (Certificati di Immissione in Consumo) with trading logic and high value leverage if the TPO biogenic fraction can be classified as eligible/advanced.
  • Germany: large market with GHG quota and co‑processing rules; but classification/accountability risk remains for TPO and potentially RCF. This supports a constructive narrative: the EU is not “closed”; it is “fragmented but monetizable,” provided the supplier plays the right national games with the right evidence.

3.6 The roadmap mindset: treat compliance monetization like a project

An action plan should assign clear responsibilities across legal/regulatory, MRV, commercial, operations/quality, and finance functions.

A roadmap should prioritize an MRV blueprint (Proof of Sustainability, mass-balance, and Union Database readiness), ¹⁴C and LCA pilot testing, and mapping co-processing attribution under EU 2023/1640, followed by focused national due diligence in the three priority markets.

This is the sober optimism TPO needs: not “everything will be fine,” but “there is a playbook.”

4) The strategic synthesis: how to win in both jurisdictions

The best one‑paragraph strategy summary may be the simplest: design pools correctly, measure rigorously, and write contracts that match physical reality.

We call this “the winning strategy”: correct pool design, measurement discipline, and contracts that price the new reality.

4.1 For EU deliveries

  • Assume proportional assignment is the safe default for ELT/TPO and build pricing models around measured biogenic share.
  • Treat “allocated renewable content” language as increasingly fragile; prefer “measured and proportionally assigned renewable share.”
  • Use national monetization pathways (NL, IT, DE first) and treat Recycled Carbon Fuel (RCF) as an upside option that requires high‑grade Monitoring, Reporting, and Verification (MRV).

4.2 For UK deliveries

  • Recognize that the RTFO accounting construct permits attribution flexibility; this can preserve compliance optionality.
  • But avoid marketing that implies “physical purity” if the product is analytically mixed; pair mass‑balance statements with measured‑share disclosures.

Conclusion: mass balance isn’t dying—cheap claims are

ISCC EU Guidance 1.2 did not ban mass balance. It did something more consequential: it accelerated a market shift from flexible allocation as a commercial instrument toward proportional assignment as a credibility standard for mixed‑origin streams such as tire‑derived TPO.

That shift does tighten some legacy sales models. It makes it harder to sell a premium narrative built on concentrated “renewable parcels.” It increases the need for measurement cadence, disciplined tank accounting, and contract language that matches physical reality.

But it also creates a clearer, more defensible future for TPO: one in which the monetizable unit is not a creative label but a measured share, backed by MRV and aligned with national compliance systems.

The EU’s complexity—no single RTFO‑style market—should not be read as a dead end. It is an invitation to build a portfolio strategy, starting with the biogenic fraction, targeting high‑leverage Member States, and keeping the fossil fraction as RCF as a real, if demanding, upside option.

And for UK deliveries, flexibility remains available in the compliance accounting model—but only disciplined communication will prevent it from becoming a reputational trap.

The winners in 2026–2030 will be the suppliers who embrace the new credibility economy: measure what you sell, sell what you can defend, and treat compliance monetization as an engineered system—not a slogan.

Copyright: ©2026 by Robert Weibold GmbH. This article is an open-access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license CC BY 4.0. You must give appropriate credit, provide a link to the license and this article, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.

If you would like to gain deeper insights into this topic, please don't hesitate to contact the author, claus@weibold.com.