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CCID Consulting Environmental Protection Industry Series: Twelfth Five-year Plan Brings Investment Opportunities for Sub-industries.

BEIJING -- Currently, the emerging industries represented by energy conservation, environmental protection, new energy, information technology and biology are leading a worldwide new wave of science and technology revolution. Meanwhile, low carbon has become an economic and social focus after the UN Climate Change Conference in Copenhagen, and unprecedented attention has been drawn to the issue of environmental protection. In China, where the development of the environmental protection industry has been part of the national strategy, the industry is undergoing an unprecedented key period of growth.

Policies will stimulate investment in the environmental protection industry during the Twelfth Five-year Plan period.

It is a major decision for the sake of sustainable economic development to develop the strategic emerging industry of environmental protection in China. Since the beginning of China's reform and opening-up over 30 years ago, China has made economic achievements on the basis of an extensive economic growth pattern featuring high energy consumption and high pollution. However, this traditional pattern is no solution for China's long-term economic development. under such circumstances, the State Council's Decision about Acceleration of Fostering and Development of Strategic Emerging Industries was unveiled in September 2010, requiring the acceleration of fostering and developing seven strategic emerging industries and priority on energy conservation and environmental protection.

Since the beginning of the country's reform and opening-up, China has been increasing its attention to environmental protection, with the percentage of environmental protection investment rising against the country's GDP. China's environmental protection industry dates back to the Seventh Five-year Plan period, with the size of investment expanding at an annual rate of over 15 percent since the start of the Tenth Five-year Plan. The total planned investment in environmental protection stood at RMB1.375 trillion, rising 96.4 percent from the previous five years and accounting for 1.35 percent of the GDP generated during the period. During the Twelfth Five-year Plan period, China's environmental protection investment is expected to reach RMB 3.1 trillion, accounting for 1.5% of the country's GDP.

Fig. 1 China's Environmental Protection Investment and Its Percentage against GDP

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Data source: CCID Consulting, February 2011

Environmental protection industry will continue growth.

The environmental protection industry can be divided into the sub-industries of sewage treatment, solid waste treatment, air pollution treatment and noise and vibration treatment based on the subjects they treat. Sewage treatment can be further classified into traditional sewage treatment and MBR treatment; solid waste treatment into landfill, incineration and composting; and air pollution treatment into de-dusting, desulphurization and de-nitrification.

At present, the environmental protection industry is in its prime period with a favorable external environment, and will continue its growth as a whole. However, the sub-industries vary from each other in terms of the speed of development and maturity. The solid waste treatment sub-industry is at a growth stage; the sewage treatment sub-industry is lagging behind the urban water supply system; in the air pollution treatment sub-industry, de-nitrification is of great growth potential, the de-nitrification of power plants is developing well, while the de-nitrification markets like iron and steel are underdeveloped.

Fig. 2 Classification of Environmental Industry

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Data source: CCID Consulting, February 2011

Fig. 3 Development Stage of Environmental Sub-industries

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Data source: CCID Consulting, February 2011

Investment opportunities crop up in environmental protection sub-industries.

Solid waste treatment

The solid waste treatment sub-industry with a fast-growing investment will be a major growth point in China's environmental protection industry in the future. Among the industry chain consisting of upstream equipment, midstream solid waste treatment projects and operation and downstream solid waste treatment plants and recycle of solid waste, solid waste treatment projects and equipment integration have a higher ROI (return on investment). Meanwhile, incineration power generation will gain more attention than landfill and composting in urban domestic garbage treatment in the country.

Sewage treatment sub-industry

After a booming period, the sewage treatment industry currently stays at a relatively stable growth stage. The future investment opportunities will lie in the following aspects: firstly, the sludge treatment of sewage treatment plants and comprehensive utilization of the sludge after hazard-free treatment are key investment points; secondly, the rise of the sewage treatment standards for industrial enterprises brings new investment opportunities; thirdly, the county and middle and small town sewage treatment facilities are likely to become a new investment point; fourthly, industrial sewage treatment which has a high industrial threshold and the reclaimed waste water technologies (such as MBR) may become an investment hit.

Air pollution treatment sub-industry

The air pollution treatment sub-industry has presented a stable and slightly strengthening development trend. However, it varies with the segments in the sub-industry. Desulphurization: the investment boom of thermal power plants has gone, and the desulphurization market of steel sintering is taking shape. De-nitrification: the rise of the industry standards drives de-nitrification into a booming investment period. De-dusting: the investment opportunities lie in periodical replacement of core components of de-dusting equipment and the consolidation of the industry.

Noise and vibration treatment industry

In the noise and vibration treatment sub-industry, the treatment industrial pollution source no longer plays a dominant role, while that of construction, transportation and social life noises have become the key investment points. In general, the noise and vibration control technologies and equipment are being regulated, standardized and enhancing accessory matching. The research and development of noise and vibration control technologies and equipment has a good development prospect.

To sum up, the environmental protection industry generally shows a clear growth tendency. In the Twelfth Five-year Plan period, great investment opportunities will crop up, but it varies from sub-industry to sub-industry. CCID Consulting holds that the solid waste treatment will have the largest growth space and highest growth rate; the sewage treatment will grow steadily, and there are structural investment opportunities in industrial sewage and sludge treatment; as for air pollution treatment, the growth rate of desulphurization will slow down, but the rise of desulphurization standards will generate new space of investment growth.

About CCID Consulting Co., Ltd.

CCID Consulting Co., Ltd. (hereinafter known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market (GEM) of the Stock Exchange of Hong Kong (HKSE:08235) and the first consulting firm which gets ISO 9001 international and national quality management system standard certification, is directly affiliated to China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen, Wuhan and Chengdu with over 300 professional consultants after many years of development. The company's business scope has covered over 200 large and medium-sized cities in China. With its powerful industrial resources, information technology and data channels, CCID Consulting provides customers with public policy establishment, industry competitiveness upgrade, development strategy and planning, marketing strategy and research, HR management, IT programming and management services. The company's customers range from industrial users in electronics, telecommunications, energy, finance and automobile to government departments at all levels and diversified industrial parks. CCID Consulting commits itself to becoming China's No.1 advisor for enterprise management, No.1 consultancy for government decision and No.1 brand for informatization consulting.
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Comment:CCID Consulting Environmental Protection Industry Series: Twelfth Five-year Plan Brings Investment Opportunities for Sub-industries.
Publication:Business Wire
Article Type:Conference notes
Geographic Code:9CHIN
Date:Apr 25, 2011
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