The Environmental Pollution Situation Remains Severe. How Should the Environmental Protection Campaign Be Fought in 2018?

2018 was the opening year for the nationwide implementation of the spirit of the 19th National Congress of the Communist Party of China, and a crucial year for the implementation of the 13th Five-Year Plan. China's economy is shifting from high-speed growth to high-quality development, and every industry and enterprise should firmly move in this direction. As the material support for my country's green development and a component of the green economy, the environmental protection industry is no exception.

Overall, my country's environmental pollution situation remains severe. Problems such as frequent smog, black and smelly urban rivers, "garbage siege," soil pollution, hazardous waste disposal, and rural environmental pollution are prominent, and pollution control remains a long and arduous task. Winning the battle against pollution is a key task clearly defined by the 19th National Congress; it also calls for the rapid, sustainable, and healthy development of the environmental protection industry.

my country's environmental protection industry has ushered in a rare development opportunity. The goal of a basically improved ecological environment and a beautiful China by 2035 indicates that the country's investment and supervision in the environmental protection field will not weaken in the future. The report of the 19th National Congress set a timetable and roadmap for ecological and environmental protection work, and also clarified the key tasks for the environmental protection industry.

The development of the environmental protection industry is an inherent part of supply-side structural reform. Supply-side structural reform is the main theme of industrial structure optimization and upgrading during the 13th Five-Year Plan period; environmental protection is an important measure to promote supply-side structural reform. In June 2016, the Ministry of Environmental Protection issued the "Guiding Opinions on Actively Leveraging the Role of Environmental Protection to Promote Supply-Side Structural Reform," outlining the overall approach and key tasks. Driven by the central environmental protection inspections, various provinces have successively shut down many small, scattered, disorderly, and polluting enterprises that failed to meet emission standards and seriously polluted the environment. The demand for pollution control in high-pollution and high-energy-consuming industries such as petrochemicals, steel, non-ferrous metals, chemicals, coal, and cement will be further released.

Increased enforcement will contribute to the sustainable and healthy development of the environmental protection industry. In January 2015, the strictest environmental protection law in history was introduced; in August, the Air Pollution Prevention and Control Law was revised again, including VOCs in the monitoring scope; in November, the Basic Ideas of the 13th Five-Year Plan for Environmental Protection were released; in 2016, the new Ambient Air Quality Standards were introduced; in 2017, the Government Work Report proposed winning the battle for blue skies, requiring the average PM2.5 concentration and the number of heavily polluted days in the "2+26" cities of the Beijing-Tianjin-Hebei region to decrease by more than 15% year-on-year. The effectiveness of pollution control was linked to the performance evaluation of local government officials, and the "River Chief System," central environmental protection inspections, and special rectification campaigns were successively launched, with unprecedented penalties. From 2016 to 2017, the central environmental protection inspection teams achieved full coverage of 31 provinces (autonomous regions and municipalities) nationwide, basically clarifying the current status of pollution prevention and control across the country. As of August 2017, 18,223 cases were filed and punished, fines totaling 728 million yuan were levied, 1,199 people were detained, and 12,724 people were held accountable. The market's role in allocating environmental pollution control resources is becoming increasingly apparent. Pollution control is increasingly performance-oriented, with a gradually improving system encompassing source control, end-of-pipe treatment, and payment for treatment. Policy measures are extending from administrative means to legal, administrative, and economic measures, fully mobilizing the enthusiasm and initiative of third-party pollution control. Market-based mechanisms such as environmental protection taxes and discharge permits are being introduced, and policy dividends are gradually becoming apparent. With increasing government investment, residents' demands for a livable environment, and growing public attention, the environmental protection industry has enormous potential for development due to the huge investment demand for air pollution control, water pollution control equipment, and solid waste treatment equipment. The environmental protection industry should and can certainly develop into a pillar industry to meet the needs of ecological environmental protection, pollution control, and ecological restoration. According to relevant forecasts, environmental protection investment during the 13th Five-Year Plan period will be approximately 7.6 trillion yuan (the investment scale in 2018 was 1.6 trillion to 1.8 trillion yuan), roughly double that of the 12th Five-Year Plan period. According to the "Environmental Protection Industry Development Prospects and Investment Analysis Report" by the Qianzhan Industry Research Institute, the output value of the energy conservation and environmental protection industry is projected to exceed 7 trillion yuan by 2018, reaching 7.47992 trillion yuan.

All of this, especially with the normalization of environmental protection inspections, the increased frequency and intensity of supervision, and the improvement of governance standards in areas such as air, water, and solid waste, has created a rare favorable environment for the development of the environmental protection industry.

Air Pollution Control Industry: The 19th National Congress report called for a decisive battle to protect blue skies; the high level of attention paid to air pollution, especially smog control, by local governments at all levels will drive the formation and development of the air pollution control market. With the completion of ultra-low emission transformation in the power sector, the main battlefield for pollution control will shift to non-power sectors. Clean energy utilization will receive attention, especially with air pollution control during the heating season being put on the agenda, which will drive the rapid development of related industries.

Water Pollution Control Industry: According to the "Ten Measures for Water Pollution Prevention and Control," key urban built-up areas must basically eliminate black and odorous water bodies by the end of 2017, a very arduous task; the investment demand for water pollution control is enormous. According to relevant estimates, the total social investment required to complete the "Water Ten Measures" will reach 4.6 trillion yuan. In addition, the upgrading and renovation of sewage treatment plants under the PPP model and the control of non-point source pollution in rural areas will continue to drive demand for water treatment. With the completion of large-scale construction of water pollution control facilities, the operation and maintenance of these facilities will become a key focus of the environmental protection industry.

Soil Remediation Industry. With the enactment of the "Soil Pollution Prevention and Control Law," a healthier and more sustainable business model for the soil pollution control and remediation industry is expected. In the 2017 fiscal budget released by the Ministry of Finance, the special budget for soil was 11.2 billion yuan. During the 13th Five-Year Plan period, the soil remediation industry is expected to receive substantial impetus, driving investment of over 5 trillion yuan; related industries and enterprises will experience rapid development and expansion.

Solid Waste Treatment Industry. With the implementation of environmental protection policies and regulations, especially the circular development leading plan, the prices of downstream products in the renewable resources industry will improve. The waste treatment industry will gradually expand under the PPP model, and the hazardous waste treatment sector will experience high growth. The resource utilization and harmless treatment industries for municipal solid waste, kitchen waste, and electronic waste will develop rapidly. The integration of the solid waste and environmental monitoring networks will become a hot topic in the industry, and the performance of the solid waste treatment industry will also improve.

The environmental monitoring industry will see significant demand for monitoring instruments due to pollution source monitoring, ecosystem monitoring, and emission monitoring of urban stationary and mobile sources. Guided by policies such as vertical regulatory reform, third-party operation, and smart environmental protection, the construction of monitoring networks will drive the industry's rapid growth. On September 1, 2017, the Ministry of Environmental Protection held a video conference on the centralization of national surface water environmental quality monitoring authority. The authority for monitoring and assessing 2050 surface water sections will be centralized, and the construction of automatic water quality monitoring stations will be basically completed by the end of July 2018, which will create a certain demand for testing instruments.

In 2018, companies will continue to expand their businesses through mergers and acquisitions, but the scale of these acquisitions will stabilize and gradually shift towards the integration of the acquired companies' business operations. Industry concentration will increase, and companies with financial advantages will see their market share continue to rise. Overseas acquisitions will not only address domestic technological shortcomings but also enhance international competitiveness.

The modernization we aim to build is one of harmonious coexistence between humanity and nature. It requires creating more material and spiritual wealth to meet the people's growing needs for a better life, and also providing more high-quality ecological products to meet their growing needs for a beautiful ecological environment. Therefore, industries such as ecological protection, under-forest economy, and forest-based health and wellness have broad prospects.

Opportunities and challenges coexist. The environmental protection industry is a policy-driven industry. Continued effective environmental supervision will facilitate the survival of the fittest within the industry and become a powerful tool for supply-side structural reform and industrial upgrading. Technological innovation is a major challenge facing the development of the environmental protection industry. Only by possessing advanced and applicable technologies can companies secure a place in the fiercely competitive market. To seize the development opportunities for environmental protection enterprises, continuous technological innovation is essential. This requires changing the current vicious competition among companies, which relies on capital and price. Competitive advantages must be gained through technological, talent, and service competition. Increased investment in common key technologies is crucial, along with accelerated industry-academia-research collaboration to seize commanding heights and maintain a competitive edge in the international arena.

Editor's Note:

China's environment still falls far short of the demands and expectations of its people. Solving environmental problems through development is a tremendous challenge. We must focus on improving environmental quality, maintaining strategic focus—neither haste nor inaction will suffice. The strictest environmental protection system must be implemented, and a protracted battle must be waged. Tactically, clear phased goals must be set, and a decisive battle must be fought to gradually resolve environmental problems.