I Major problems faced in environmental industry
As evaluated, the market scale of environmental industry has reached appropriately 400 billion RMB. On the other hand, in China, the environmental industry still in its initial stage, besides opportunities, there are still some problems left for address.
First, the environmental services demand currently defined could not completely cover all the environmental needs. At present, the environmental industry is mainly concentrated on end-control over water, gas and waste, regardless of environmental problems accompanied with rapid economic development in recent years.
Second, environmental industry is still at the initial stage that needs to be driven by sufficient funds. For a long time, the government inserted more attention to engineering investment, rather than giving certain seed capital towards consumption and purchase of environmental products. As shown, during 10th FYP, the government has invested 800 billion RMB to address environmental problems, 1500 billion RMB during 11th FYP, and expected 3000 billion RMB during 12th FYP. The governmental investment greatly flow into engineering construction and device production, rather than translate a certain amount of money as the seed capital in order to attract much more social capital. It should be noticed that in the 12th FYP, the planning for energy-saving and environmental protection still follows that traditional environmental idea.
Third, the environmental industry has lingered on a lower level in China for a long time, the growth rate of environmental services, as known, is to reflect to what extent the environmental industry get matured. For developed countries, environmental service has reached for 50%-60% in environmental industry, while 20% in China, which shows that China still has a long way to go.
Fourth, there is a great gap existed between rapid industrial development and limited environmental effects. As shown, environmental industry has won a substantial development in facility field under governments huge financial support package, for example, there are 3000 town-level WWTPs has been constructed so far, establishing a functional basis for the industrial development. On the other hand, the operational performance is failed to get balanced with the huge efforts on investment and construction. As the construction of amounts of facilities, it calls for a specialized operator to operate these facilities. In other words, operation service has been taken as the sign for environmental industry developing towards a services-dominated industry.
II Defining Environmental Services
As the increasing conscious towards natural resources protection, together with environmental industry keeps going on, environmental services industry is created. At present, environmental service has become a component sector with fastest growth in environmental industry. In meanwhile, with the growing demand for comprehensive and elaborated environmental services, it calls for a new way to define environmental output clearly, so as to promote further development of environmental industry. Comprehensive environmental services industry is now, and will future, representing the tendency of environmental industry.
Environmental service is defined as a systematic service industry to provide comprehensive solution package to assist the consumers to address given environmental and pollution problems, satisfying the consumer’s requirement on expected environment quality and environmental effect.
According to service sectors, environmental services, covered consulting, specialized operation, engineering and investment services under a main contract, will be passed to qualified service providers. Specifically speaking, environmental services industry possesses some unique features, as following:
First, the product of environmental services is the well tailored systematical solutions subject to given environmental problem. Stamped as a tech-intensive industry, environmental service industry has covered a wide spectrum from evaluation and design, investment and construction to operation management subject to environmental protection and pollution control. On the other hand, the aim for environmental industry is to achieve the expected environmental effects through creating a comprehensive solution after bird-eyed analysis and consideration on the given problem.
Second, the quantified environmental output will become standards to measure whether the service satisfied the consumer or not.
Third, environmental services will be provided by specialized service companies under a contract. It has witnessed a badly change from technical services to a service package comprising of decision making, management and financing, to environmental services. On the other hand, this change creates much higher requirement to specialized services.
III Significance for developing environmental services
Currently, environmental industry must insert more efforts to develop comprehensive environmental services to further expand service margins, rather than simply rely on engineering construction and facilities. Comprehensive environmental services will be the product of the development of environmental industry, by virtue of qualified capacities to provide specialized services, comprehensive environmental services especially could extend the industry chain and expand some new services fields to find more market opportunities for services providers. In addition, comprehensive environmental services industry means a lot to stimulate the development of economy and society, specifically:
1. To drive the transition of economic growth
Rapid economy development has been translated as a great destruction to environment for last more than three decades. Optimistically speaking, it has been generated as great market potential for environmental services. At present, it has been reflected by charging companies for their discharged wastewater into public sewer system, and collecting wastewater treatment fees from all the stakeholders.
Theoretically speaking, the total capital package of at least 500-1000 million RMB will be needed to support the works for environment recovery. That’s a huge investment definitely and hardly afforded by a single party. Therefore, the governments should not only act as a qualified investor but also a leader in investment. In doing so, the investment pressure will be relocated to social stakeholders, besides, a much huge capital flow will in environmental industry to support the infrastructure construction. Before the funds getting in position, we should spare no efforts to develop environmental services, encourage the consumption of environmental services to concentrate the capital flow, whereas the governmental funds as seed capital to lead and attract funds from other sources.
2. To Relief the short-term investment pressure of government
The price for economic development is that huge. The environment has suffered a depredation when we enjoy a rapid economic growth. What shall we do now? If we directly invest money on overall environment recovery, that’s so reckless that a single party is hardly to afford it, whereas, if we resort the environmental crisis to developing environmental services, that’s will be completely different, because the service provider will raise money from commercial financing from various sources. Then, local governments could re-arrange the “saved” investment package and split it to supporting 15-20 years environmental services requirements.
3. To promote economic development
When environment market fully and effectively exposed, the wide sense environmental industry will accounted 15-20% of GDP, leading the economy developing in a green manner.
4. To realize environmental protection target
During the 12th FYP, environmental industry will witness great change.
IV Main ideas for promoting environmental services
Specifically speaking, there are three measures, as defined, to promote the development of environmental industry, i.e. exposing environmental potential, providing policy supports and conducting structure innovation.
In order to dig possible environmental market, it is appreciated to formulate relative standards and regulations to set limit to social activities, monitor whether the individual take their accountability for protecting environment and controlling pollution, stimulate individuals to apply advanced environmental technologies, revealing the market demand for environmental services. The government should set end subsidies to purchasing environmental services. Cultivate the industrial bodies to develop demonstration project for contracted environmental services, and it will be appreciated for the environmental companies to develop new commercial models.
