Enormous opportunities for UK, European and US land remediation specialists to profit by importing technologies and expertise into China are there to be taken by those willing to accept a degree of risk, according to Charlie Welsh, editor in chief at XportReporter.
The business intelligence provider has published a soil contamination industry report for the nation, which stated the Chinese Ministry of Land and Resources (MLR) and the National Bureau of Statistics released the results of a 2006-2009 land survey on 30 December. At a briefing, vice minister of the MLR Wang Shiyuan said 3.3 million hectares of farmland – roughly 2.5% of China’s arable land – had become too polluted by heavy metals and chemicals to farm.
Wang said the government will spend “tens of billions of yuan” each year on “demonstration projects of heavy metal contaminated soil restoration and over-exploited groundwater comprehensive treatment”.
Much of the polluted land is located in developed regions of eastern and central China, such as the Yangtze River Delta, Pearl River Delta, industrial areas of northeastern China and the central province Hunan, Wang said.
Earlier in December the Ministry of Environmental Protection said it plans to release a comprehensive action plan on soil pollution soon. According to XportReporter: “Soil remediation is still a relatively new concern for China, which has a host of other environmental issues it has pledged to tackle.
“Investment in soil remediation is expected to reach thousands of billions yuan, exceeding funds planned for water and air pollution control measures, which are also large financial undertakings by the government. This could open a soil restoration market in the country, which currently accounts for just 3.7% of China’s environmental services industry.”
Technologies in demand
Welsh said the current gap between China’s soil remediation technological capabilities and those of advanced economies present opportunities for foreign companies specialising in the area. The report said: “As part of the policy guidelines to facilitate environmental protection industry released in August, the government put emphasis on developing in- situ immobilisation, ectopic fixative, bioremediation, safe disposal and resource utilisation technologies.
“Soil remediation will also drive the growth of heavy metal source monitoring for protecting farmland and water resources, controlling sources of pollution and risk management of contaminated land.”
Welsh told Environment Analyst focusing on soil pollution ticks a number of boxes for the Chinese administration, comparing the highlighting of the issue by the government with its efforts in the energy field, where environmental goals sit alongside social and economic drivers.
He said: “Putting lots of money into environmental technologies in the energy sector meets the goals of addressing social issues, economic stability, environmental problems, and China’s government is also interesting in making its energy industry more efficient and cutting costs.
“Decision-makers also have a more strategic goal, asking whether these industries can be developed as a big strategic economic opportunity going forward. If it ticks all these boxes, a lot of money will be poured in.”
Welsh cited China’s investment in nuclear energy, which is addressing demand, cutting down the need for imports and allowing the country to develop technologies it can itself export to developing nations.
Soil remediation is seen as having both immediate short-term benefits and longer-range strategic goals, from threats to social stability due to contamination of food resources, through to local administrations standing to benefit from selling remediated commercial land. “Looking at specific sites where work is taking place, you can see near-term incentives where people stand to gain, which is not necessarily a bad thing,” he said.
Opportunities and risks
Opportunities for Western land specialists to benefit from China’s pollution woes relate to a number of factors, according to XportReporter’s report, which said: “Problems still exist that are constraining development of the market. As an infant industry, China lacks well-established technological standards, fee-charging standards and market mechanisms for soil remediation. Some domestic companies focus more on temporal efficiency, which compromise the long-term goal by adding a secondary pollution.”
In other words, indigenous remediation companies tend towards ‘dig and dump’, rather than the more sustainable, sophisticated methods favoured in the UK and elsewhere. Welsh told EA: “Chinese firms always tend to go for the cheapest, simplest solution, which in the case of soil remediation can lead to secondary pollution further down the line.
“Expensive foreign technologies that offer real, viable long term solutions will only be purchased when the buyer is going to be impacted financially by the outcome at the end of the day – otherwise they’ll go for the cheaper, dig and dump solution.”
The government focus on developing the industry set out in the MLR report will see this begin to change, increasing the attractiveness of Western companies’ offerings. Welsh said: “It’s always the case in every sector, be it wastewater treatment, emissions or in land remediation that Western firms should get a foothold in the market before the local firms raise their game.
“A lot of Western firms are very wary of the tendency for the Chinese industry to copy their technologies, and reverse engineer solutions where possible. However, European firms are better than those from the US at seeing this for what it is – that to take advantage of the opportunities you have to partner with someone, and there will be a degree of technology transfer as a result.”
Welsh cites an EU chamber of commerce survey from last spring that said European companies, though concerned about the risk associated with intellectual property theft and market access (regulatory barriers), ascribed a value of 10% of total sales to these risks. But the risk of losing 10% of the value of a sale in a market offering opportunities like the $643 billion China plans in water resource investments over the next ten years “is clearly worth it”.
Welsh also said that the higher up the value chain the solution being introduced to the Chinese market, the lower the risk, as advanced technologies - relying for example on precise chemistry to be effective - are more difficult to duplicate.
“Forward thinking Western companies recognise the more commoditised solutions will be copied to a certain extent, but this is more difficult with the high margin, more sophisticated technologies,” he said.
“Specific examples of the types of technologies Western firms have and will supply include polytetrafluorethylene (PTEF) materials, electromagnetic valves and the control automation systems needed to make such specialised equipment and technologies work.”
Chaotic state of sector
A recent report published by WantChinaTimes.com, describes the Chinese market for environmental remediation as “burgeoning” but also “chaotic”. It states that the number of local companies active in the field has soared to 300, up from just 30 three years ago.
An industry source told WCT.com: “With good marketing and packaging, an environmental remediation firm can charge the government 100 million yuan (US$16.4 million) for a soil remediation project, which actually costs only 30 million yuan (US$4.9 million).”