The Pearl River Delta and its surrounding provinces in South China are growing economically at a rate faster than any other region in the world. Guangdong Province is South China's economic powerhouse with more than 60,000 foreign enterprises doing business in the region since 1979. Guangdong is nationally number one in GDP, urban population income, retail sales, exports and imports.
Without a doubt, such rapid economic growth has resulted in an energy supply gap and serious environmental protection problems for Guangdong. Its energy consumption reached 110 million tons of coal equivalent by the year 2005 and will reach 150 million tons by 2010. Therefore, Guangdong plans to allocate 3% of its GDP for overall environmental spending during the 11th Five-Year Plan (2006-2010) , which is more than $8 billion. Flue Gas Desulphurization is getting commonly adopted in existing and planned coal fired power plants.
Although Guangdong will be relying on coal to drive its economic growth in the foreseeable years, energy efficiency and renewable energy are being addressed and will generate new business opportunities. For example, $726 million is to be allocated to support wind power projects between 2005- 2010 in Guangdong. Guangzhou, the capital city of Guangdong plans to manage 90% of its solid waste by using waste-to-energy (incineration) technologies.
Water conservation, air quality improvement and solid waste disposal remain the province's greatest environmental concerns. Funding for the massive environmental projects comes from the governments at various levels, and also from the capital market. Investment will be put into five priorities:
- Regional waste water management and river pollution abatement
- Desulphurization of power plants
- Solid waste management, including hazardous waste and electronics waste treatment
- Ecological protection and development
- Radiation source and waste treatment
Market and sector challenges (strengths and weaknesses)
The government of Canada, provincial agencies and Canada's environmental industries work together to provide world -class Canadian environmental solutions to the global market including China. Canada has a competitive advantage in the environment sector given that Canada has more than 7,500 environmental firms, servicing a C$26 billion market in Canada, contributing 2.2% of Canada's GDP. The export of environment -related products, technologies and services exceed C$1.5 billion annually. Canada offers a skilled workforce with a broad range of expertise.
More than 9,500 public and private organizations employ over 220,000 environmental practitioners, with more than 50% of them holding a university degree or college diploma. The people employed have success in a variety of geographic and sector-based markets, with experience across languages, cultures, jurisdictions and climatic conditions.
Canada's environment industry benefits from ready access to a number of Centres of Excellence, which provide a link to a strong science base of academic and industry researchers. Operating within a strong culture of innovation, Canadian companies offer numerous niche solutions to environmental problems, mainly covering the following key sub sectors:
- Water & wastewater
- Climate change solutions including technologies and services
- Air pollution control
- Solid/ hazardous waste management
- Engineering and consulting
Other specialty areas such as laboratory and analytical services, development of environmental management systems and capacity building as well as green buildings and sustainable infrastructure.
Market access consideration
A lack of funding is a major factor impeding the construction of infrastructure and the import of foreign equipment. Some IFIs, in particular the World Bank and Asian Development Bank, are very active in financing China's environmental projects. Most of these projects are subject to international bidding, which provide Canadian equipment and service providers good opportunities to access the market.
For companies new to the market, finding capable local agents or distributors is also a good way to enter. A local partner, familiar with Chinese business practices, is very useful in helping Canadian companies penetrate the Chinese market.
Opportunities for Canadian Companies
- Water and wastewater treatment: products, technologies and services of UV disinfection, membrane, anaerobic treatment and natural eco-system remediation
- Solid waste management: technologies, equipment and services related to waste- to- energy, control and disposal, medical waste incineration, sludge treatment
- Air pollution control technologies: flue gas desulphurization, transportation missions, and indoor air quality Pollution monitoring, modelling and analysis systems for water, air and noise;
- Alternative energy such as Hydrogen and Fuel Cells applications on back up power systems and vehicles Renewable energy technology such as wind, solar and biomass.
Water and waste water: water shortage and pollution are two pressing problems China faces as its economy develops, and it is no different in Guangdong. Rapid industrial growth and urbanization in Guangdong have caused serious problems . Investment in the magnitude of RMB38 billion (USD4.7 billion) has been earmarked to mitigate water pollution.
Under the master plan for water pollution control and abatement, waste water treatment capacity will be increased by 5.95 million tons per day in the next five years, at a capital investment of RMB17.64 billion (USD2.2 billion). This translates into more than 100 key waste water treatment facilities to be built in the cities of Guangdong. Another massive investment of RMB20.34 billion (USD2.5 billion) is dedicated to regional waste water management, and river channel improvement.
Municipal water and waste water treatment plants which are seen as infrastructure will attract more government investment, but financing mechanisms are becoming more diversified with the entry of more private investment, leading to a more vigorous and efficient market. Build-Operate-Transfer (BOT) and Transfer-Operate-Transfer (TOT) are common models.
As to industrial waste water treatment, industrial enterprises in China used to build and operate their own low-efficiency wastewater treatment facilities. A new trend, though, is that companies in the petrochemical, iron & steel, micro-electronics, auto and even food industries intend to outsource (turn over the entire process: design , construction and operation) to more professional contractors in hopes of focusing on their core business. The benefits are lower costs and higher efficiencies.
There will be an increasing demand for both municipal and industrial wastewater treatment technologies and facilities with the latter focusing on pollutant-specific technology.
As waste water treatment plants expand their capacity, sludge increasingly need to be better managed so as to avoid further damage to the environment. Guangzhou's first sludge treatment plant, with a capacity of 900 tonnes per day, was operational in April 2004. The province intends to set up more treatment plants in coming years.
Solid waste management: including hazardous waste and electronics waste treatment is high on the agenda. An investment of RMB23.2 billion (USD2.9 billion) will be allocated in this area. The master plan envisages the construction of five regional hazardous waste treatment and management centres in Guangdong, at a cost of RMB2.03 billion (USD251 million), with a combined processing capacity of 370,000 t/a. To respond to the increasing threat of electronics waste, four regional treatment centres for electronics and electrical waste will be built, capable of processing 3.75 million t/a .
At present, landfill (70%) is still the main method of waste disposal in Guangdong. However, there is increasing interest in composting and incineration technologies. Furthermore, hazardous waste and medical waste disposal technologies are in high demand due to limited local capability.
Air pollution management: The air pollution in Guangdong is attributed greatly to its coal-based economy and the increased use of automobiles. Measures will be taken to address the problem, including widespread use of flue gas desulphurization equipment in power generation plants, electrostatic precipitators , cleaner coal technology, increased use of natural gas and the installation of environmental monitoring equipment.
In 2000, Guangdong launched its CAD $1 billion Blue Sky Program, addressing air pollution. The provincial government plans to reduce the concentration of the 4 main air pollutants in factories and power plants so as to alleviate the severity of acid rain, which affects the cities of Foshan, Jiangmen, Qingyuan, and Guangzhou. By 2010, sulphur dioxide and nitrogen oxides will be reduced by 40% and 20% respectively, while respirable suspended particulates and volatile organic compounds will each be reduced by 55%.
At present most coal- and oil -burning power plants in Guangdong do not have desulphurization facilities , which is the major cause of SO2 emissions and acid rain. The government announced that all the existing coal- and oil- fired power plants, as well as those currently under construction, will be required to install flue gas desulphurization (FGD) technology by 2010. In the coming 2 or 3 years, existing power plants with the total generation capacity of 7,220 MW are to be equipped with FGD. It is a huge market here.
To control and reduce auto emissions, stringent regulations and standards have been implemented by the Chinese government in recent years. There has been a campaign in large cities in China to use only unleaded gasoline. And all existing vehicles must install emission control devices, such as a catalytic converter.
In early 2003, Guangzhou municipal government launched a 'Green Public Transit' Program, through which Guangzhou Communications Commission, Sinopec Guangdong Petroleum Company, and Guangzhou-based PetroChina/BP retail JV all agreed to fuel the city's public bus fleet of over 6,800 vehicles with low-sulphur clean diesel. Guangzhou thus became the first Chinese city to kick off the use of cleaner fuels.
These new fuels, with 500 ppm sulphur, are already available at over 50 gas stations. In September 2003, 26 buses switched from common diesel to LPG (liquefied petroleum gas). 4,000 cabs have already been equipped with LPG-fuelled engines, and Guangzhou will require the remaining 12,000 cabs to use LPG in the next 3 years to reduce exhaust emissions.
Ultimately, Guangzhou intends to require all public transit vehicles to use LPG fuels. Market potential for automotive technologies dealing with alternative fuel vehicles will also be substantial.
Energy efficiency: has been on the Chinese government's agenda for quite a while. Energy consumption for residential houses accounts for 37% of national consumption. 98% of the buildings in China are not energy efficient. Even for newly built construction, only 5% met the current energy saving standard. This makes China's housing heating cost 3 times that of developed countries with similar climate conditions.
However, it was only in 2005 that we started to see detailed regulation coming out. The development of the following technology and products are being encouraged in the new regulation:
- Advanced energy efficient wall systems,
- Roofing and insulation materials and technology;
- Energy efficient doors and windows;
- Central heating &HVAC;
- Heating measurement and control system;
- Solar, geothermal and other renewable energy equipment;
- Energy efficient lighting system and technology;
- Energy saving air conditioning tech and products; and
- Other energy efficient tech and management system.
The Ministry of Construction is in the process of drafting standards for geothermal heating equipment and solar heating equipment.
It is worth noting that environmental software including environmental information systems, environmental assessment tools and services and emergency response and training-related materials and services have become integral parts of the Government's plans. Market potential in these fields should not be overlooked.