Energy

Mon, 03/23/2009 - 12:19

In the week's Interfax energy guest column, Frost & Sullivan's China environmental practice research manager Vivian Chen discusses the opportunities in environmental monitoring in China amid the economic downturn.

Shanghai. March 23. INTERFAX-CHINA - Water pollution issues in Jiangsu Province's Yancheng City in late February have once again piqued interest in the issue of drinking water safety. The absence of effective supervision over industrial waste and water quality led to the accident, which closed down two area water treatment plants.

Environmental monitoring is becoming an increasingly important sector of the environmental protection industry as the Chinese government pays more attention to emission control and reduction.

Environmental monitoring involves tracking environmental quality and pollution as well as emergency monitoring of air, water, soil, noise, acid rain and radiation. The central government has already established a four-level environmental monitoring system with more than 5,000 professional and industrial-use monitoring stations nationwide.

The environmental monitoring sector generates tens of billions of dollars each year worldwide, which in developed countries, dates back 50 years. These countries have already stepped into the era of quality environmental monitoring, whereas China is still developing stage-pollution source monitoring. A huge gap exists between China and developed countries in terms of regulatory systems, equipment technology, the professional level of employees, product diversity, and service coverage.

There are more than 1,300 companies providing environmental monitoring services in China, with total annual revenue amounting to about RMB 2 billion ($293.08 million).

Currently, there are about 150 companies in China that manufacture environmental monitoring equipment. The sub-sector generates about RMB 600 million ($87.92 billion), although foreign brands, such as HACH, ABB, and Agilent, account for most of the high-end products. Most local manufacturers are small and medium-sized companies with products that do not usually have advanced technologies or add a lot of value.

For environmental monitoring equipment manufacturers, the greatest challenge at the moment is the downturn in end-use applications, especially in key industries such as power generation, petrochemicals, construction materials, metallurgy, paper making and food processing. For example, online monitoring equipment installed at pollution sources or emissions outlets has seen a decrease.

Despite the downturn, there are still great opportunities abound. Besides the RMB 4 trillion ($585.84 billion) rescue package, China provided guidelines in late February 2009 to revive 10 industries. Eight industries covered in this program are relevant to environmental monitoring, which include automotive, steel, textiles, equipment manufacturing, electronics and information, petrochemicals and chemicals, light industry and nonferrous metal.

In addition, the Ministry of Environmental Protection (MEP) will invest RMB 15 million ($2.19 million) in environmental protection over the 11th five-year plan period from 2006 to 2010.

The investments will lead to the development of four major aspects of China's environmental monitoring sector.

Firstly, product technology and quality will be enhanced. The larger number of multinational corporations manufacturing equipment in China will introduce more state-of-the-art technologies utilizing biological, electronic, and optical techniques. Local manufacturers will have no choice but to research and develop value-added products to remain competitive.

Currently in developed areas such as the United States, Japan, and European Union, the process of environmental monitoring services has become automated, from sampling, analysis, and data processing and transmission. However, in most of China's developing areas, services are still manual. Such investment will propel the Chinese market's development towards an automatic, intelligent, and networked one.

Next, products and services will be expanded. In mature markets, as many as 1,600 items can be monitored, the majority of which are organic pollutants. In China, that number is only 400.

Last but not least, monitoring services' quality assurance (QA) and quality control (QC), which are essential in ensuring services quality, will be improved.

Therefore, it is important to bear in mind that high value-added equipment which is automatic, multi-functional, instant, systematic, and intelligent will be the most promising in China. Typical products include automatic monitoring systems for water quality, online automatic monitoring systems for soot or sulfur dioxide, automatic and continuous monitoring systems for organic pollutants, continuous monitoring systems for key pollution sources, and on-site portable emergency monitoring equipment.

A lot of environmental protection equipment and services are being used at the national level at present and there is room for further growth. For instance, regular air quality reporting and acid rain monitoring in key cities will result in stable growing demand for equipment and relevant services. China will also focus on key watersheds in the 11th five-year plan period, including the "Three Rivers" (the Huai, Hai and Liao rivers), the "Three Lakes" (the Tai, Chao and Dianchi lakes), "One Jiang" (the Songhua River), and "One Reservoir" (Three Gorges).

The country's emphasis on protecting the ecological environment has also created great demand for remote sensing and monitoring equipment, which is gradually evolving from merely ground monitoring to both ground and remote monitoring. 

Statistics show that total annual government and corporate investment in environmental monitoring equipment has exceeded RMB 200 million ($29.31 million) in recent years. China's environmental monitoring market is entering a period of modernization and advancement. The indirect effects of the financial crisis could be the catalyst for sector restructuring, which will likely lead to an average annual growth rate of 15 percent from 2009 to 2012.

The above is a personal opinion piece by the author. Its publication in no way implies that Interfax shares the views expressed in the article.