During the past two decades, China's significant position in the global economy has been indisputable. Today the whole world is admiring China’s resources for development: numerous manufacturing bases, strong export capacity and growing consumer groups. However, despite this remarkable development, China is facing enormous challenges when balancing the environmental protection and the economic development. The only solution is to vigorously promote clean technology and environmental protection industry.
The output value of the environmental protection industry in China has increased from 3 trillion RMB in 2012 up to 3.98 trillion RMB in 2014, with a compound annual growth rate of 15.2%. 2015 was the first year after the new Environmental Protection Law came into being. By the end of 2015, the output value of the energy conservation and environmental protection industry in China had reached 4.5 trillion RMB. The investment in environmental protection in China was about 1 trillion RMB every year during the 12th Five-Year Plan period and is expected to reach around 2 trillion RMB every year during the 13th Five-Year Plan period. In the 8th China Environmental Industry Conference at the end of May in 2015, an environmental protection official announced that it was estimated by the Ministry of Environmental Protection that the total social investment in environmental protection during the 13th Five-Year Plan period would reach 17 trillion RMB. This number has exceeded any amount forecasted by then, which also implies the Government’s expectation on environmental protection industry and its significance among all industries in the overall layout.
Policy
Due to the special attributes of the environmental protection industry, policy drive is usually the first engine to motivate the development and technological innovation in a particular field, especially at the early stage of the development. Historic evidence has shown us that the forecasting, deployment and implementation of a relevant policy would impact the market sentiment to a certain extent. There is no doubt that, as environmental problems become more and more prominent, the central and local governments in China would pay more and more attention to the environmental protection issues. It has become an irresistible momentum to tighten the environmental standards and strengthen the regulation. It is just a matter of time to release the stock market and the incremental market of environmental management and ecological restoration.
In 2015, the environmental protection policies were enacted one after another. Catalyzed by various events and themes, good news was released continuously in the environmental protection industry, among which the Water Pollution Prevention Action Plan (also known as the "Water Ten" Plan) and the Public-Private Partnerships (PPP) model drew much attention in the market. Following the Air Pollution Prevention and Control Action Plan (also known as the “Air Ten” Rules), the “Water Ten” Plan was officially released, in which seven indicators were listed and requests were made in the areas like watershed management, water quality upgrading and reconstruction, recycled water utilization, and sludge treatment. After that, a series of guidelines on the Public-Private Partnerships (PPP) were released from central government to local levels, which leads to an upsurge of PPP model. Among the 206 PPP projects announced in the second batch by the Ministry of Finance, 94 projects are related to environmental protection, which account for almost 50% of the total number of projects, with a total investment of 154.522 billion RMB.
China’s national “two sessions” in 2016 coincide the beginning year of the 13th Five-Year Plan period, and thus the topics of the “two sessions” are expected to focus on the 13th Five-Year Plan. The emphasis on the energy conservation and emission reduction industry - an important module in the 13th Five-Year Plan will be further strengthened. During the local “two sessions”, various provinces and cities have deployed the priority tasks for environmental protection to promote the development of the local energy conservation and emission reduction industry. It is considered by the industry that the upcoming national “two sessions” will bring another opportunity for the energy conservation and emission reduction industry.
In 2016, more comprehensive, detailed and tightened environmental protection policies and standards will be enacted.
Market
1. Discharge of industry pollution sources in full compliance with standards
To transform those enterprises that cannot reach the standards steadily in such sectors as iron and steel, cement, plate glass, paper, printing and dyeing, nitrogen fertilizer and sugar; to close down unqualified and heavily polluted projects; to reconstruct sewage treatment facilities in industrial parks within a prescribed time limit.
2. Treatment of atmospheric environment
To focus on Beijing-Tianjin-Hebei and its surrounding areas, Yangtze River Delta, Pearl River Delta and the Northeast area; to control total regional coal consumption and push forward the “Coal to Gas” projects in key cities; to carry out comprehensive regulation and reform on the volatile organic compounds from petrochemical and chemical companies and gas stations; to speed up the elimination of “yellow label” vehicles and old vehicles and implement China VI emission standards and corresponding oil standards; to promote the recycle and treatment of trucks and oil storage tanks.
3. Treatment of water environment
To implement strict protection on those rivers, lakes and reservoirs whose source water quality is equivalent to or better than Class III Standards, and implement the construction on sewage outlets to important rivers, lakes and reservoirs, and accomplish the construction projects of important potable water sources to reach the standards; to launch groundwater remediation pilot projects in areas such as Beijing-Tianjin-Hebei; to regulate and treat the pollution in main estuaries.
4. Treatment of soil environment
To launch intensive investigation on soil pollution; to complete the regulation and treatment of soil pollution after the safe and environment-friendly relocations of chemical companies; to advance comprehensive treatment of heavy metals pollution with a focus on Xiang River basin.
5. Prevention and control of hazardous waste pollution
To carry out the general survey of hazardous waste on a national level, strengthen the comprehensive treatment of wastes containing heavy metals like chromium, lead, mercury, cadmium and arsenic, the fly ash from municipal solid waste incineration, antibiotic bacterial residues and persistent toxic wastes; to construct hazardous waste treatment facilities.
6. Enhancement of nuclear and radiation safety and security
To construct technology development and research base for nuclear and radiation safety and regulation, push forward the decommission of obsolete nuclear facilities, and enhance the treatment and disposal project of radioactive residue waste left over from history, and construct the real time monitoring and supervision system for high-risk radioactive sources; to speed up the construction of the emergency rescue team for nuclear accidents.
Technology
The optimal business model for the environmental protection industry puts market in the first place, capital the second, and technology the third. Through investigating environmental protection industry in China and combining the two dimensions of policy and life-cycle, the technologies with unique development potentials and values in 2016 will be:
Water technology – The Chinese standards are too low to satisfy the demands for the treatments of existing water pollution, and have even become obstacles preventing new technologies from replacing the old ones. It is obvious that improving the emission standards has become a matter of urgency and a general trend.
Sludge treatment – Sludge is the inevitable product of sewage treatment. With the constant increase in volumes of waste water discharge and treatment, sludge disposal has become one of the biggest challenges in water treatment in China.
Soil remediation – Soil remediation has gradually entered the right track of industrialization, and it will involve a market of hundreds of billions RMB. According to a conservative estimate, the market will reach 150 billion RMB in 2020.
Waste incineration – With the acceleration of Chinese urbanization process, the number of waste incineration plants will keep increasing. It is estimated that by the end of 2015, there will be more than 300 municipal solid waste incineration (waste to power) plants in use and/or under construction.
Atmospheric controlling – During the recent years, fog and haze occurs frequently in many areas in China, especially in Beijing where alerts for heavy air pollution were successively posted at the end of 2015. This problem again has drawn the public attention and become the hot topic.
Conclusion
2016 will be a milestone year in the history of clean technology development in China. The Ministry of Environmental Protection will set up the departments of “water”, “soil”, and “air”. The Soil Pollution Prevention Action Plan (also known as the “Soil Ten” Measures) will be enacted and the Environmental Protection Law will be completed thoroughly. 2016 is also the first year of the 13th Five-Year Plan in China, in which the direction of the future development of the energy conservation and environmental protection industry is determined. The tremendous demands will lead to tremendous investment. China is still in the stage of pollution control. In this regard, the clean technology industry in China will go through huge changes and reforms, which will bring new opportunities and challenges to the global suppliers in the clean technology industry. We can certainly say that the “wave front” of China’s clean technology has just arrived, and the broader future is waiting ahead of us!
The blog is produced by Umore Group Shanghai.