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The race for Renewable Energy Domination

The race for Renewable Energy Domination

At the start of 2017, China announced that it would invest $360 billion in renewable energy by 2020 and scrap plans to build 85 coal-fired power plants. In March, Chinese authorities reported that the country was already exceeding official targets for energy efficiency, carbon intensity, and the share of clean energy sources. And just last month, China’s energy regulator, the National Energy Administration, rolled out new measures to reduce the country’s dependence on coal.

 

 

These are just the latest indicators that China is at the center of a global energy transformation, which is being driven by technological change and the falling cost of renewables. But China is not just investing in renewables and phasing out coal. It also accounts for a growing share of global energy demand, meaning that its economy’s continuing shift toward service- and consumption-led growth will reshape the resource sector worldwide.

 

 

At the same time, various other factors are reducing global resource consumption, including increased energy efficiency in residential, industrial, and commercial buildings, and lower demand for energy in transportation, owing to the proliferation of autonomous vehicles and ride sharing.

 

 

According to Beyond the Supercycle: How Technology Is Reshaping Resources, a new report from the McKinsey Global Institute (MGI), these trends are slowing the growth of primary energy demand. If rapid adoption of new technologies continues, that demand could peak in 2025. And with less intensive energy use and increased efficiency, energy productivity in the global economy could increase by 40-70% over the next two decades.

 

 

While global growth in energy demand is slowing, China’s share of that demand is increasing. By 2035, China may account for 28% of the world’s primary energy demand, up from 23% today, whereas the United States could account for just 12% by 2035, down from 16% today.

 

 

China has already made significant progress in reducing its resource intensity: between 1980 and 2010, its economy grew 18-fold, but its energy consumption grew only fivefold. According to World Bank data, that reflects a 70% decline in energy intensity per unit of GDP.

 

 

In its 13th Five-Year Plan, the Chinese government aims to reduce energy intensity by a total of 15% between 2016 and 2020. It is already well on its way toward achieving that goal. At China's National People’s Congress earlier this year, Chinese Premier Li Keqiang reported that China’s energy intensity fell by 5% last year alone. Renewables are one reason for China’s declining resource intensity. Hoping to become a world leader in the field, China is already investing more than $100 billion in domestic renewables every year. That is twice the level of US investment in domestic renewable energy and more than the combined annual investment of the US and the European Union.

 

 

In addition, China is investing $32 billion – more than any other country – in renewables overseas, with top-tier Chinese companies increasingly taking the lead in global renewable-energy value chains. China’s State Grid Corporation has plans to develop an energy grid that draws on wind turbines and solar panels from around the world. Chinese solar-panel manufacturers are estimated to have a 20% cost advantage over their US peers, owing to economies of scale and more advanced supply-chain development. And Chinese wind-turbine manufacturers, having gradually closed technology gaps, now account for more than 90% of the Chinese domestic market, up from just 25% in 2002.

 

 

These trends suggest that China will be a major source of both energy demand and cutting-edge technology, implying that it will have a unique opportunity to provide global leadership. Its experience in reducing energy intensity can serve as a roadmap for developing countries. And its investments in renewables at home and abroad can lead to additional technological breakthroughs that drive down costs for consumers everywhere.

 

 

 

But China will also face challenges as it moves from fossil fuels to renewables within a changing global resource sector. Its economy is still highly dependent on coal, implying sizeable costs as it shifts capacity to other resources such as natural gas and renewables.

 

 

Moreover, the construction of solar panels and wind farms in China has outpaced upgrades to its electrical grid, creating a great deal of waste. And Chinese producers, like most others, are feeling increasing pressure to reduce costs and improve efficiency to make up for slower demand growth worldwide. Despite these hurdles, technological innovation should help Chinese producers realize productivity gains and deliver savings to consumers. According to MGI, by 2035, changes in the supply and demand for major commodities could result in total cost savings of $900 billion to $1.6 trillion worldwide.

 

 

The scale of these savings will depend not only on how quickly new technology is adopted, but also on how policymakers and companies adapt to their new environment. But, above all, it will depend on China.

 

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Written By

Jiang Kejun , Senior researcher, Energy Research Institute of China’s National Development and Reform Commission.

Jonathan Woetzel, Director, McKinsey Global Institute

 

China, the Green Energy Superpower

China, the Green Energy Superpower

Investment in green energy is on the rise, and a world powered entirely by renewables is no longer a distant dream. It is the developing countries however, and China in particular, that is driving this green revolution. And these charts, from the REN21 Renewables 2016 Global Status report and the United Nations Global Trends in Renewable Energy Investment 2016 report, show how China is paving the way to a clean energy future.

 

 

 

 

1. China has the highest capacity for renewable power production

This chart shows the leading role China is already playing in the green revolution. It currently makes up about a quarter of the global capacity for renewable power, predominantly through wind power.

 

 

2. China takes the lead in wind power production

China is also the country with the most wind power capacity, and its lead over the US, in second place, increased by over 30 gigawatts in 2015.

 

 

3. Solar power is booming in China

The year 2015 saw huge growth in China’s solar power production. It moved into first place, ahead of previous solar leader Germany.

 

 

4. China is the biggest investor in renewable energy

In 2015, China had the biggest financial commitment to renewable energy, investing over $100 billion, an increase from $3 billion just over 10 years ago.

 

 

5. China helped push developing countries into the lead

Globally, $286 billion was invested in renewable power and fuels (not including hydro power) in 2015, and for the first time the developing world invested more than developed countries.

 

 

Source: World Economic Forum

New Pollution Action Plan for China

New Pollution Action Plan for China

A new set of Environmental regulations on air, water and soil pollution have recently been announced by China`s State Council: the Soil Pollution and Prevention Action Plan (also know as Soil Ten an “extension” of the Water Ten Plan). The plan outlines 10 headline actions split into 35 categories and 231 specific points aimed at making 95% of currently contaminated land fit to reuse for either agricultural purposes or urban development by 2030.

 

 

The first national survey on soil quality, released in 2014, showed the gravity of soil pollution. More than 16 percent of the samples taken nationwide were contaminated by heavy metals. Moreover, contaminants were discovered in 19.4 percent of surveyed farmland, 10 percent of forests and 10.4 percent of grassland.

 

 

Key targets:

  • To curb worsening soil pollution by 2020, and control soil pollution risks by 2030, with the aim to create a virtuous cycle in the ecosystem by 2050.
  • To ensure that over 90% of contaminated land can be utilised safely by 2020, and to increase this to 95% by 2030.
  • Using the next 2-3 years to focus on large-scale monitoring and finalising plans & laws; reining in chemical industries & heavy metals are key.

 

 

Soil pollution is the most difficult to tackle amongst soil, water and air; plus possibly the most expensive. Also, it is not possible to tackle soil pollution without addressing water pollution. Untreated wastewater can contaminate soil and conversely pollutants in soil can be washed into surface & groundwater sources contaminating them.

 

 

From the key actions to be taken, the government is signalling that it only intends to get a handle on the total area of contaminated farmland by 2018 and to only establish soil prevention & control related laws by 2020. The Soil Ten Plan singles out 8 specific industries:

 

 

  1. Non-ferrous metal extraction & processing
  2. Non-ferrous metal smelting
  3. Oil exploration
  4. Petroleum processing
  5. Chemicals
  6. Coking
  7. Electroplating
  8. Tanning

 

 

Action timeline:

  • By 2016, local governments need to finalise detailed work plans for submission to the relevant ministries;
  • By 2017, to set up national-level soil environmental quality monitoring points and monitoring networks;
  • By 2017, provincial soil remediation planning to be finalized and soil remediation result assessment methods to be issued;
  • By 2018, to finalise investigation of total area of contaminated farmland and assessment of impacts on agricultural products;
  • By 2020, soil environmental quality monitoring points to cover all the cities and counties; and
  • By 2020, to establish soil pollution prevention & control related laws and regulation system.

 

 

However one glaring challenge in the plan it the relatively limited number of  domestic companies with both the experience and infrastructure to clean contaminated land. Foreign companies with the required technologies are already involved in China, albeit participating in pilot projects funded by the World Bank or other international funds.

 

 

Analysts have estimated that the soil remediation market could be worth anywhere from RMB1-5 trillion, but authorities have struggled to determine who should pay for rehabilitating contaminated land. Many of the inland provinces targeted are not as rich as coastal regions and much of the responsibility for the costs now lies with relatively impoverished local governments.

 

China Greentech report 2014.

China Greentech report 2014.

The China Greentech Initiative (CGTI) has now released its 2014 report.  Greener, Smarter, More Productive, the fifth in a series that was first launched at the World Economic Forum in 2009.

       


Increased awareness in China of the need to tackle pollution and improve the quality of life in Chinese cities is driving some significant changes in policy. The Report contends that to maintain a national GDP growth target of 7.5% through 2014, Chinese economic policy must be accompanied by an equally resolute vision for cleaner growth. Building on the new approach outlined in last year’s report, the latest edition offers a path forward for China to adopt a greener, smarter and more productive model of development.

The 2014 report asserts that there is a profound opportunity for leading companies to integrate their products and services to customize replicable solutions for China’s project owners and governments in the areas of industrial efficiency, distributed energy, greener buildings and cleaner mobility.

Since the release of the first report, China has emerged as an innovative driver of greentech industry development; and is fast becoming a hub for more productive practices and implementation that can be profitably adopted by global industry stakeholders. The report outlines ambitious new central and local government plans for pollution reduction; and highlights how forward-thinking companies can use innovative technologies, best practices, and global collaboration models to accelerate China's sustainable growth.

 

Please click here to downlaod the report as a PDF.

The China Greentech Report 2013. At...

The China Greentech Report 2013. At a crossroads.

The fourth Report in this series by the China Greentech Initiative, the 2013 Report examines China’s current pollution challenges and assesses the progress made in meeting energy and environmental targets set within the 12th Five-Year Plan. The Report concludes that quantitative targets alone are insufficient for China to move towards a more sustainable model of development, and suggests a new eight-point approach focused on measurable outcomes. Also featured in the 2013 Report are five “Visions and Roadmaps” developed by CGTI partner companies and government advisors across key greentech ecosystems: Built Environment, Electric Vehicles, Low Carbon Eco-Cities, Next-Generation Energy Value Chains, and Sustainability.

To download your free digital English copy of The China Greentech Report 2013: China at a Crossroads, please visit http://report.china-greentech.com.

China Renewable Energy Sector report...

China Renewable Energy Sector report 2013 - Growth Sectors.

China`s appetite for renewables will not dissapear anytime soon, it likely fulfilled, and maybe well exceeded, its goals for 10 GW of solar PV installations in 2013.  This report is a sector overview of current developments, for the report please click here.

The China Greentech Report 2012

The China Greentech Report 2012

The China Greentech Initiative releases The China Greentech Report 2012, the third in the series of annual China Greentech Reports. Each edition is the culmination of the annual collaborative research and development effort undertaken by CGTI's Partner Program community of 100+ commercial and policy organizations.

The China Greentech Report 2012 in particular enables readers to understand:

 

Four factors that characterize challenges and opportunities in China's greentech markets

 

  • China and global economic forces have impacted greentech growth
  • Aggressive government policies will continue to support greentech growth
  • Public awareness of urgent environmental problems is growing
  • China is going global to satisfy energy security needs and to meet emission reduction goals

 

 Market updates and opportunities for six greentech sectors:

 

  • Cleaner Conventional Energy - natural gas infrastructure; distributed gas power, coal bed methane; advanced nuclear power
  • Renewable Energy - relocating solar operations overseas; retrofitting wind turbines for higher output; biogas production
  • Electric Power Infrastructure - distributed energy management; energy storage; charging infrastructure and grid communication networks
  • Green Building - green building design; building energy retrofits; green building material supply; energy management
  • Cleaner Transportation - cleaner internal combustion engines; China's fleet vehicle electrification market; electric vehicles (EVs) and charging infrastructure.
  • Clean Water - wastewater and sludge equipment; water-use efficiency equipment; water quality monitoring technologies

 

 Some of the highlights from The China Greentech Report 2012 include:

 

  • Vast unconventional domestic gas reserves, including shale gas and coal-bed methane, could ease China's gas shortfall, which is expected to grow nine-fold by 2015
  • Private equity and venture capital investments in China's private water sector increased from $US 50 million in 2010 to US$ 400 million in just the first four months of 2011
  • Wind and solar farms costs have fallen dramatically: onshore wind farms in China can now be completed for around RMB 7000/kW and photovoltaic (PV) system costs have decreased from RMB 74,000/kW in 2007 to less than RMB 13,000/kW in late 2011 with costs continuing to drop

 

The China Greentech Report 2012 is available for free download at www.china-greentech.com/report.

 

China Environmental Protection Overview...

China Environmental Protection Overview.

This Item was produced for China Brain by CIO

China Intelligence Online gathers business intelligence and provides analysis as well as general business services  for  international  organisations  working  or  interested  in  the  Greater  China  and  East  Asia markets. Business services include company establishment, customised research, sales and marketing, and client representation. www.chinaintelligenceonline.com

 

For many years the importance of China’s economic growth far outweighed the environmental consequences of that growth. Urbanisation and industrialisation have resulted in environmental degradation country so serious that 16 of the world’s 20 most polluted cities are in China.

 

In response to this growing threat, the Chinese government’s objectives, as detailed in China’s 11th Five-year Plan for Environmental Protection) are threefold.

 

To  place  equal  emphasis  not  only  on  economic  growth,  but  also  on  environmental protection.

 

 The second objective is to shift strategies for economic growth towards development that promotes environmental protection, not degradation.

 

The third objective is administrative and attempts to apply more  comprehensive  legal, technological and necessary administrative frameworks to better facilitate and enforce environmental protection policies.

 

Introduction.

 

China’s determination to generate growth to improve the material lot of its population for many years was pursued at any cost; not least that of the environment. Over the past few decades, first at the hands of its lumbering,  State-owned  industries,  and  later  as  at  unseen  consequence  of  its  market-socialist  reform, China’s environment has become the victim of a wide number of environmental issues.

 

 In spite of bold goals outlined in the 11th Five-Year Plan, it remains to be seen how effectively China can implement them and incorporate them into their economic development plans for the future.

 

China’s acute environmental problems stem from a deteriorating natural resource base, dense population, heavy reliance on soft coal, outmoded technology, under-priced water and energy, and breakneck industrial growth. The World Bank estimates that health costs of air and water pollution in China amount to about 4.3 percent of its GDP. By adding the non-health impacts of pollution, which are estimated at approximately 1.5 percent of GDP, the total cost of air and water pollution in China is about 5.8 percent of GDP.

 

Dominated by hostile geographic terrain, half of China’s population lives on only 13.5 percent of its land. Since only 10 percent of China’s land is arable, a mere 7 percent of the world’s cultivated land feeds 22 percent of the world’s population.

 

China’s  environmental  problems  have  become  a  global  issue  with  nations  embarking  upon multilateral efforts  to  reduce  greenhouse  gas  emissions.  No  country  exists  in  isolation;  China’s  airborne  particle pollutants settle in Japan and are even partially to blame for Los Angeles’ smog cloud. Pollutants originated in China have even been located as far away as Lake Tahoe in the western United States.

 

The 10th Five-year Plan failed to meet its objectives to reduce total pollution discharge by 10 percent from 2000 levels and instead saw only a 2.1 percent reduction in CO2 emissions and an actual 27.8 percent increase in SO2 emissions that it set for its 2005 target [unsure how to unpack this sentence-MS]. Through edicts in the 11th Five-year Plan, the government has unleashed new rounds of environmental legislation and called for the shut down of thousands of factories with the aim of once again reaching a 10 percent reduction of the 2005 levels of emissions for CO2 and SO2. Still, local enforcement of environmental laws is spotty, and investment in pollution control infrastructure is inadequate.

 

Competition from domestic  firms in the  environmental  protection field is  increasingly strong.  Products enjoying  the  best  sales  prospects  include  low-cost  flue  gas  desulphurisation  systems,  air  and  water monitoring  instruments,  drinking  water  purification  products,  vehicle  emission  controls  and  inspection devices,   industrial   wastewater   treatment   equipment,   and   energy   efficient   and   resource   recovery technologies.

  

What environmental solutions does China need most?

 

Environmental needs vary from region to region in China, but water and wastewater treatment, flue gas desulphurisation (used by coal-fired power plants to reduce sulphur dioxide emissions), energy efficiency improving technologies, and river basin management and flood control rank at the top of the list. Water reuse projects and sludge treatment and disposal are also high priorities for local planners.

 

Because environmental projects often lack funding, demand for market-based environmental solutions that allow investors to reap financial benefits is growing. Opportunities exist in the areas of environmental treatment, clean production, energy efficiency, and recycling and reuse technologies. Though local planners have  shown  an  interest  in  industrial  waste  recycling  and  municipal  waste  composting,  the  market  for recycled products remains small, and quality standards for these products are lacking. Demand for remediation of industrial sites is also growing since factories must relocate to make way for residential areas, but local governments have limited resources available for cleanup.

 

Which regions in China need which environmental projects most?

 

Though it would be convenient to attribute environmental problems to specific regions in China, the nature of air, land, and water pollution are such that environmental problems tend not to stay in one place for very long. Generally speaking, northern China suffers from soil erosion, air-pollution, desertification, and drought; southern China suffers from silting and acid rain; industrial cities choke from air pollution; urban areas lack proper sewage and water treatment; and many of China’s rivers and lakes are seriously polluted.

 

Fortunately, environmental projects are sprouting up throughout China, from dust control in Inner Mongolia to wastewater treatment in Chongqing, to hospital waste disposal in Shanghai. Beijing ‘s hosting of the 2008 Olympics  has  cast  a  spotlight  on  the  city  ‘s  environmental  protection  effort,  leading  to  a  host  of infrastructure, transportation, and conservation projects. Shanghai ‘s 2010 World Expo plans have spawned similar ‘green’ projects such as clean mass transit, energy-efficient buildings, and auto emissions control. To prepare for the Expo in 2010, Shanghai launched a three-year (2003-05) environmental protection plan that focuses on water, air, solid waste, forestation, industrial pollution, and agricultural contamination problems. Nearly 300 projects are planned, including several large sewage treatment plants along the Yangtze River and medium-scale plants on Hangzhou Bay.

 

 Following the leads of Beijing and Shanghai, many cities and provinces have launched environmental protection campaigns to obtain funding from the central government or attract the attention of foreign investors. But many of these projects offer companies low returns on investment. Like much of China’s development, many  of the  reliable  and well-funded projects are located in the coastal regions, where competition is intense.

 

How should my company approach World Bank- and Asian Development Bank-financed projects?

 

It is important to identify projects that are likely to receive World Bank (WB) or Asian Development Bank (ADB)  funding  early  in  the  process  by  networking with  local  design institutes,  government  authorities, foreign engineering firms, and bank project officers. Equipment requirements and specifications for these projects are usually identified before the loan is finalised, well before the tender opportunity is made public. Having a local presence in the market, either through a sales office or a sales agent, helps companies learn about projects early, introduces their technologies, and follow up as the project unfolds. Embassies and Consulate Generals may be able to help foreign firms through liaison officers at the WB and ADB.

 

Is there much demand for environmental consulting services?

 

Although consultants have traditionally had difficulty selling their services in China, the opening of China’s services market to foreign competition, improved environmental standards and compliance requirements, and the demand for sophisticated technologies have led to more consulting opportunities. Many European firms have been successful in bundling consulting services with turnkey design-and-build projects. Some equipment providers offer free consulting services up front to develop sales later in the project. WB and ADB projects usually include substantial consulting and technical assistance components that are open to bids from international firms.

 

Though it may be difficult to sell consulting services to China’s state-owned enterprises, the steady stream of foreign investment into China has created a niche for consulting services that offer their expertise to foreign manufacturers throughout the country. Foreign consulting firms that sell environmental due diligence, environmental health and safety, or environmental impact study services to major corporations outside China should consider offering these services to their clients‘ China operations, if they haven’t already. Many environmental consulting firms target multinational corporations in China’s burgeoning manufacturing, information technology, semiconductor, pharmaceutical, and petrochemical industries.

 

Is it true that the PRC government plans to invest billions of dollars in wastewater treatment?

 

PRC government plans call for massive investment in this sector, but most projects are either financed in Chinese yuan or lack financing altogether. Foreign companies that want to access a larger portion of this market must be willing to accept local currency, make equity investments in projects, or offer competitive

 

financing terms on equipment and technology sales. Although multilateral bank loans represent a drop in the bucket compared to China’s investment needs, there are several USD multimillion WB and ADB projects currently in the planning pipeline, including urban environmental planning, acid rain control, river basin management, and wastewater treatment in Anhui, Beijing,  Jiangsu,  Shanghai,  Sichuan,  and Zhejiang, to  name a  few  projects. These  projects  usually offer international competitive bidding opportunities and payment in hard currency.

 

Do build-operate-transfer (BOT) projects make sense for wastewater treatment projects?

 

BOTs are possible but there are few, if any, profitable BOT projects in China’s wastewater sector. Because environmental projects perennially lack funding, local officials hope to attract foreign investment into this sector by offering 20-30 year operating concessions to foreign companies in return for building the facilities. Since the government commonly subsidises domestic treatment plant operation, domestic project planners and their foreign counterparts often disagree on the technology and investment required to turn a profit. Low tariff rates, fragmented fee-collection systems, irregular accounting practices, and lack of payment guarantees are key barriers to developing viable BOT projects. These projects make more sense in the water- supply sector where increasing demand combined with gradually rising water tariffs in residential, commercial, and industrial sectors make investment more attractive.

 

Are there any good environmental trade shows in China?

 

There are a number of trade shows in China, but most of them are small and regional, and many are not well organised. The biannual China International Environmental Protection Industry Conference is the country ‘s largest. (see  www.chinaenvironment.org/index_en.aspx ). The conference will cover a wide range of sectors including air pollution, water, wastewater, solid waste, recycling, green transportation, and energy conservation. The Guangzhou International Environmental Protection Exhibition, is also broad in scope. The China Environmental Protection Industry Association plans to organise a large show in Shanghai. Foreign firms should consider participating in technical seminars and conferencesto network and learn the latest trends. Local government bureaus are often eager to co-organise workshops and  technical  seminars  to  introduce  foreign  technologies.

 

Conclusions

 

There has been a general increase in water projects creating a large, diverse and growing market for water treatment technologies, including municipal water treatment facilities for drinking water, as well as drinking water treatment equipment for the bottled water and home treatment sectors.

 

The government ‘s inability to invest and to fill the huge capital demand creates opportunities to involve non-state-owned or foreign investment. The Chinese government is encouraging non-state-owned and foreign  investment  participation.  These  policies  include  preferential  tax  policies  for  the  industries  and projects  listed  in  the  Foreign  Investment  Industry  Guideline.  Guided  by  the  state  ‘s  policies,  local governments established relevant policies applicable to local areas. Companies can obtain details on these policies from the local governments and taxation bureaus.

 

Forming a private and public partnership (PPP) is a common method for non-state-owned and foreign participants in the water supply and wastewater treatment sector. For specific projects, build operate- transfer (BOT), and design-build-operate (DBO) schemes are often used. Because the concept of PPP is a new one in China, the Chinese government has not set specific regulations or guidelines regarding schemes. Foreign companies and investors are likely to encounter a dilemma in assessing the opportunities and challenges for participation and the accompanying financial risks.

 

Clean fuels, desulphurisation, coal washing, air quality monitoring, and other related technologies for prevention and control of air pollution are also required.

 

As for the solid waste treatment sector, advanced equipment and technology are always welcome, especially for the treatment of hazardous solid waste and medical solid waste.

 

Whilst research centres have been created advanced environmental technology for hazardous solid waste treatment is still essentially in the research stage and is only recently being put into practice. This means there is a large-scale environmental market in China offering a wide range of market opportunities for foreign companies.

 

Importing Environmental Technologies...

Importing Environmental Technologies to China

By mid-2007, the Shuikoushan Non-Ferrous Metal factory in Hunan Province faced a crisis. As part of its 11th Five-Year Plan (2005-2010), the Chinese government was closing down high-polluting factories–and the Shuikoushan factory was among those at risk. The 110 year-old state-owned factory, with a gross annual income of more than US $1 billion and 12,000 employees, was emitting high levels of heavy metals into the local water supply. This polluted water was flowing directly into the Xiang River and affecting the drinking supply for millions of people within the nearby city of Changsha. Despite several attempts to remove the heavy metals by using conventional chemical treatment methods, the factory continued to emit dangerous levels of pollution.

In late 2007, US-Pacific Rim International, Inc.(USPRI), a US consulting company that assists US companies market and sell their products and technologies in China, began to promote the electrocoagulation (EC) water treatment system of one of its client companies, Kaselco, to the factory. USPRI highlighted the EC system’s unique electrochemical process to remove heavy metals from water. Faced with the risk of closure, the Shuikoushan factory decided to try the product.

 

During a pilot test of the EC system in late 2007, the factory found it could almost completely eliminate the heavy metals that the factory was emitting. After three months of further tests and negotiations, the Shuikoushan factory decided to purchase and install the EC system.

 

The EC system began operating in May 2008, and the results were dramatic. The factory was able to reduce the amount of heavy metals it discharged by almost 99 percent, meet the highest national water pollution emission standard and treat 4,100 tons of water a day. Deputy Director of the Hunan Provincial Environmental Protection Bureau Xie Lishuai inspected the EC system and praised the project as a model for wastewater treatment. In the space of several months, the Shuikoushan factory had gone from being a dangerous polluter to a socially responsible enterprise.

 

Even as China faces enormous environmental challenges, success stories like Shuikoushan’s EC system reveal an excellent opportunity for US environmental companies to export their advanced technologies to China. American companies can play a role in helping China address its environmental problems.

A review of some of China’s environmental statistics demonstrates that as China continues its rapid growth, it also faces significant environmental challenges. Currently, 70 percent of the country’s rivers, lakes and reservoirs are not safe for human use, 70 percent of its energy comes from high-polluting coal and 5,800 square miles of its grasslands are lost to desertification every year.

 

As these environmental problems grow, the market for environmental products and technologies is expected to expand as well. The China Greentech Report 2009 estimates that by 2013 the market for environmental technologies will be between US $500 billion and US $1 trillion. According to the US Foreign Commercial Service, the greatest opportunities for US environmental companies lie in municipal and industry wastewater treatment technology, hazardous waste and medical waste treatment technology, waste-to-energy technologies, de-SOx and de-NOx technologies, as well as air and water monitoring equipment.

 

Investments by the Chinese and US governments on a variety of environmental initiatives in China also offer opportunities for US greentech companies. Of China’s US $586 billion 2008 stimulus plan, approximately 37 percent is dedicated to greentech-related projects. China’s upcoming 12th Five-Year Plan (2011-2016) is also expected to build on the 11th Five-Year Plan’s significant focus on the environment.

US-Chinese government cooperation on environmental issues has also been growing. During President Obama’s visit in November 2009, the US and China committed to spending at least US $150 million of public and private funding on a US-China Clean Energy Research Center, as well as agreeing to a host of other initiatives related to energy, coal and shale gas.

 

The complexity of many environmental problems will also require collaboration between US environmental companies. Multiple companies may be needed to complete just one environmental project. For example, a lake clean-up project could require different companies to provide industrial pre-treatment, pipes for dredging and adequate infrastructure. Such collaboration is especially important for small and medium-sized enterprises, when they approach Chinese municipalities and companies they can offer comprehensive environmental solutions. Public-private initiatives such as the American Water Working Group, sponsored by the Foreign Commercial Service, and the US-China Energy Cooperation Program, based out of AmCham China, are promising examples of such collaboration.

 

Even while there are bright prospects for US environmental companies in China, the challenges of cost, intellectual property rights (IPR), lack of transparency in project bidding and domestic competition must be recognized by any greentech business that wants to export to the Chinese market.

 

The advanced nature of some US technologies means their prices can be relatively high in China, but still find a place in the market. While the higher costs of certain US technologies will price them out of some markets here, it should not lead US environmental companies to give up on the country completely. Many Chinese companies respect, and are willing to pay a higher price for, high-quality US technologies. In addition, while costs may be too high in some regions of China, in more developed parts of the country, Chinese companies and state-owned enterprises will pay for exceptional US products. Further, companies should consider becoming original equipment manufacturers in China for all or part of their products in order to drive down costs.

 

As with any company that wishes to export its technology to China, US greentech companies should be particularly concerned about IPR. Even as IPR enforcement has improved in recent years, and even if appropriate safeguards are taken, it is almost certain that companies will have some of their technology copied in China. Recognizing this reality, and treating it as part of a business strategy rather than a legal issue, is a necessity for any US environmental company looking to export to China. To stay ahead of IPR violations, companies must ensure that their products remain leaders in their field.

 

The lack of transparency in the bidding process for environmental projects can also prove a challenge for US companies. In order to address this issue, companies should hire Chinese staff or engage local sales agents to represent them in the bidding process. Local knowledge of Chinese culture and business practices will enable Chinese staff to illuminate the complex and opaque bidding process for American companies.

 

Significant public and private sector investments in China’s green industry means US environmental companies will face growing competition from local Chinese companies. Nonetheless, American companies can continue to offer unique technologies in China. In order to offer the greatest value, US environmental companies exporting to China should conduct thorough market research, determining where the country lacks advanced and integrated technology to meet their greatest environmental challenges.

Exporting environmental technologies to China holds enormous potential for small and large US companies. While selling greentech products also presents some challenges, these issues can be addressed by taking a realistic approach to the Chinese business environment. By increasing US environmental exports to China, US companies will not only expand their market, but will also help raise China’s living standards.

 

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