BEIJING. Jan. 14 (Xinhua) -- As China's economy enters the new stage of high-quality development, the idea that a sound ecological environment is the most inclusive well-being for people's livelihood gained increasing popularity.
With ecological protection and pollution prevention high on the country's agenda for the 14th Five-Year Plan period, Huang Runqiu, Minister of Ecology and Environment, noted the battle against pollution is expected to be deepened and expanded.
China's environmental protection industry will still be under strict supervision but also be empowered by increasing investment both from fiscal support and the capital market, industry observers say, noting that along with transformation and innovations, the industry is heading towards quality development in the following few years.
Stricter, Greener
Tightening-up supervision is felt with a slew of measures introduced over the past few years. It was particularly so in 2020 with the strictest-so-far Solid Waste Law coming into force, "waste sorting" and "ban on free plastic bags" being fully implemented, medical waste and urban water treatment being listed on agenda, and the import of "foreign waste" being completely banned. On December 30, 2020, the long-awaited Reform Plan for Legal Disclosure of Environmental Information was approved, marking the beginning of an era of mandatory environmental information disclosure.
The Solid Waste Law that "could reconstruct industry chain" as observers put it, will exert continuous influences during the 14th Five-Year Plan period, posing supervision over areas such as medical waste, sludge, waste classification, construction waste, disposable plastics, and proposes for the first time that China should implement solid waste classification system and realize its effective coverage. Environmental supervision is becoming stricter. The Producer Pays principle was put forward on the basis of the original Polluter Pays Principle, where the responsibility of industrial solid waste producers is strengthened and fines for illegal activities associated with solid waste substantially increased.
Insiders believe that the new Solid Waste Law hikes illegal cost thus will lead to increasing environmental protection equipment use which would expand relevant market. Further, the new Solid Waste Law guides a greener path for enterprises following energy saving and emission reduction, quality improvement and consumption reduction, and high-quality development through industrial upgrading.
The country will make new breakthroughs in key areas of the pollution prevention and control such as air quality improvement, carbon emission reduction, ecological supervision enhancement, eco-water increase, soil conservation and prevention of ecological and environmental risks and promote green and low-carbon transformation of the whole society during the 14th Five-Year Plan and the 15th Five-Year Plan periods, Huang noted.
On January 4 this year, the Ministry of Ecology and Environment specified that the system of ecological protection supervision regulation standards and a national ecological monitoring network will be initially established by 2025.
Big Market, Big Money
Under the reform of registration-based IPO system, energy conservation and environmental protection enterprises enjoy "smoother" A-share listing as one of the seven strategic emerging industries. In 2020, A-share market welcomed 28 energy conservation and environmental protection enterprises as of December 25, compared with only 9 new listing in 2019, according to Shanghai Securities News.
This brought the number of energy conservation and environmental protection enterprises on the A-share market to 296, of which total market value hitting 2,243.41 billion yuan, up 16.48 percent year on year. These firms generated revenue of about 1,244.569 billion yuan in the first three quarters of 2020, up 6.96 percent on year.
Industry insiders say that the registration-based IPO system is expected to further expand the A-share energy conservation and environmental protection sector. Data compiled by Shanghai Securities News shows that 34 energy conservation and environmental protection enterprises had disclosed their pending IPO updates by the end of 2020.
Besides the capital market, China's fiscal expenditure for eco-environmental protection and green development has been growing over the years, according to Xu Bijiu, Director of the Department of General Affairs of the Ministry of Ecology and Environment. National fiscal expenditure on energy conservation and environmental protection amounted to 2.4 trillion yuan during 2016-2019, guiding and mobilizing a large amount of social capital to participate in local ecological and environmental protection.
Local-government eco-environment protection related special bonds increased significantly as well with data by Wind showing that 134 local-government special bonds of 248.1 billion yuan were issued for eco-environment protection, pollution control and water-related affairs in the first eight months of 2020, accounting for 8.44 percent of new special bond issuance.
The National Green Development Fund (NGDF), which has been brewing since the beginning of the 13th Five-Year Plan, was formally established in July 2020, with a registered capital of 88.5 billion yuan.
The NGDF aims to promote green and sustainable development through finance, noted Shi Yichen, Deputy Dean of the International Institute of Green Finance of the Central University of Finance and Economics. The fund will help advance R&D, technology transformation and promotion of green technologies through financial means to promote the development of green industries while also making full use of government capital and market capital to effectively motivate and guide more financial institutions and social capital into green investment so as to address the long-standing fund shortages in this field, Shi said.
The NGDF would drive a new round of green investment, which could further boost development of environmental protection industry in the 14th Five-Year Plan period, insiders say.
Cooperation and Innovation
The environmental protection industry is facing some tougher challenges rolling into the 14th Five-Year Plan period, according to Xue Tao, Executive Director of the E20 Institute of Environment Industry.
These challenges are more complex, said Xue, giving air pollution control, which now requires dealing with VOC governance and ozone pollution besides continuing to control PM2.5 concentration, as an example.
In urban water treatment, there are still question marks in terms of how to prevent re-pollution, improve quality and efficiency, and find alternative financing under increasing fiscal pressure, Xue said, noting that how to align solid waste disposal with waste classification and resource recycling besides waste incineration also requires further efforts.
In addition, the conflict between the systematic environmental governance and management the fragmentation poses great challenges. During the 14th Five-Year Plan period, topics like these require joint efforts by both the government and enterprises in terms of top-level design and practice.
In fact, leading enterprises are already tackling such issues. "The company is improving operation while developing co-processing to improve project economics and product added value as 'Operation is key' in waste incineration industry's future development," said Qiao Dewei, President of Dynagreen Environmental Protection Group Co., Ltd.
Facing the vertical and horizontal industry chain integration, Xu Yanjun, CEO of Qiaoyin Environmental Protection Co., Ltd., said "the company will constantly expand business and provide whole-industry-chain services through industry, information, technology and experience sharing."
According to the Report on the Development of China's Environmental Protection Industry (2020) jointly issued by the Ministry of Ecology and Environment and the China Association of Environmental Protection Industry, revenue of the environmental protection industry was about 1.6 -2 trillion yuan in 2020, which is expected to exceed 2 trillion yuan in 2021 and 3 trillion yuan in 2025.
(Edited by Niu Huizhe with Xinhua Silk Road, niuhuizhe@xinhua.org)
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