China’s pollution problems present an opportunity for U.S. businesses

In Europe, the United States and Japan we polluted our way to prosperity and dealt with the environmental consequences after our economies matured. China is trying to follow the same model, but the ecological consequences are catching up with them while their economy is still immature. 

For the right companies this represents a massive opportunity to do the right thing and make money doing it. The technology we developed to rein in water and air pollution and control our energy consumption is a valuable commodity in China. China has built its economy fast and cheap. In a land where opportunity waits for no one, the government faces the daunting task of getting people to think beyond the next six months (does this sound frighteningly familiar). China already has very good environmental laws on water, air and ecology but anemic enforcement and the day-to-day pressures of managing an explosive economy have severely dampened their efforts.

If you have technology and/or equipment to cut air and/or water pollution, and/or save energy, and can recoup your costs and make some profit in three years or less you should be looking carefully at China. To help you think about this here are some facts which were culled from an August 25, 2007 International Herald Tribune article “As China rises, pollution soars.”

Water

• In China nearly 500 million people lack access to safe drinking water in a country that has on a per capita basis one-fifth as much water as the United States.

• Areas in the north of China are facing cataclysmic drought.

• Wells in Beijing and Hebei (the province surrounding Beijing) must extend more than half a mile before they reach fresh water.

• Chinese industry uses 4 to 10 times more water per unit of production than the average in industrialized nations.

• China’s environmental monitors say that one-third of all river water, and vast sections of China’s great lakes, the Tai, Chao and Dianchi are unfit for industrial or agricultural use.

Air and Energy

Air and energy are linked issues because of expanding auto ownership and reliance on coal as a primary energy source.

• Only 1 percent of China’s urban population of 560 million now breathes air considered safe by the European Union due in large part to expanding car ownership and low-grade gasoline.

• China relies on coal for about two-thirds of its energy needs and given the price of oil and its large reserves will continue to do so.

• China already burns more coal than the United States, Europe and Japan combined.

• In 2005 and 2006 alone China added 168 gigawatts of electricity to its power grid, (equal to the total yearly electrical output of France and Britain) by building mostly inefficient small and medium-sized coal-fired power plants.

• In 1996, China and the United States each produced 13 percent of the world’s steel. By 2005, the United States produced 8 percent, China produced 35 percent.

• By 2006, China overtook Japan to be the second-largest producer of cars and trucks after the United States.

• Chinese steel makers, on average, use one-fifth more energy per production ton than the international average.

• China now makes half of the world’s cement and flat glass, and about a third of its aluminum.

• Chinese cement manufacturers need 45 percent more power than the international standard.

• Chinese ethylene producers need 70 percent more power than producers elsewhere.

• China’s aluminum industry alone consumes as much energy as the country’s commercial sector including all the hotels, restaurants, banks and shopping malls combined.

• Since 2003, China has built about 7.5 billion square feet of commercial and residential space each year, more than the combined floor space of all the malls and strip malls in the United States.

• Chinese buildings rarely have thermal insulation. They require, on average, twice as much energy to heat and cool as those in similar climates in the U.S. and Europe.

China has no choice but to be concerned about its air, water and energy situation. They are already spending, $60 billion on one project to divert flood waters from the Yangtze to the Yellow River. But government action and urging have their limits and turning the Chinese economy around is not something that can be done on a dime. Like the west, the primary concern of companies is on the profit line, not national priorities, and without a strong enforcement mechanism this is unlikely to change.

This creates an ideal opportunity for western companies to sell environmental solutions with short payback periods. How to do this is another story.

 

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