This article is from WeChat public account:energymagazine, author: Xue Tao
Although there has not been a major twist in the field of solid waste, the recent treasury’s response to the waste incineration subsidy combined with the intensified low-price competition in recent years has also caused people to worry about the waste incineration market. And how long can the fire and waste field of the same heavy asset layout be fired?
The “Thirteenth Five-Year Plan” is definitely a special five-year period in the history of China’s economic development. I believe that many years later, we will review the turning points of these five years. On the macro level, we propose two mountains and build ecological civilization, and we must face the gradual downward shift of industrial structural upgrading and GDP growth, while the outside we face more complicated trade conflicts and the resulting low Transnational industry transfer.
In the specific areas of environmental protection, the new environmental protection law and the promulgation and implementation of the three “Ten Articles” have brought about the gradual tightening of supervision, the continuous improvement of the system, the large-scale release of demand and the environment in various fields of environmental governance. Explosive development of various types of industry, Hazardous waste industry is one of the typical representatives – according to statistics, the average growth rate of China’s hazardous waste in recent years is close to 20%.
E20 Environmental Industry Jiugongge
From the environmental industry’s Jiugongge released by the E20 Research Institute in 2014, the hazardous waste industry has a water business (mainly sewage plant) investment operation field And solid waste (mainly waste incineration) several common features in the field of investment operations: One is a typical capital pull type, one It is necessary to participate in the enterprise to have certain government communication skills.
These investment operations are distinguished from the general environmental engineering and equipment business. They are a business model with relatively long-term income expectations and a continuous investment in exchange for assets and operating income. This is also a hazardous waste. The field has become the core cause of the most attention of the capital market in addition to the above two areas.
Therefore, in addition to Dongjiang Environmental Protection, a leading company in hazardous waste investment and operation, most of the listed companies such as China Everbright International, China Energy Conservation, Beijing Enterprises, and the First Environment, which have extensive experience in water solid waste investment operations, have also successfully deployed. In this field, Agile, which comes from the real estate industry, has gained a place in the hazardous waste field in just a few years, based on these two capabilities.
Hazardous Waste Industry Features
Therefore, under the impetus of the capital boom, the hot and dangerous industry is attracting attention, the price of mergers and acquisitions has risen linearly, and the performance of leading companies has expanded rapidly. The industry is also worried about the risks accumulated in this field.
Since 2018, the hot trend of the environmental protection industry has been turned down by the failure of the PPP leading Oriental gardens to issue bonds. The valuation of the entire listed sector has moved down rapidly. The root cause is the water environment and garden projects. The immaturity of the PPP-like model; although there has not been a major twist in the field of solid waste.
But recently the Ministry of Finance’s response to the waste incineration subsidy has been combined in recent years.Strong low-cost competition also makes people worry about the waste incineration market. For the long-term dangers of the hazardous waste field, which is also the heavy asset layout, it still needs to start from analyzing the differences between the two markets.
01, the hazardous waste industry is not in the public service field, and does not have the administrative monopoly characteristics of the first two areas
As the Ministry of Environmental Protection’s policy on hazardous waste industry continues to adjust, it is a process in this segment that shifts from public services to the commercial sector.
In 2008, the risk-based waste price mechanism shifted from administrative-type charging to operating-service charging, which was the first stage of market-oriented transformation. In 2015, the contradiction of the fundamental mitigation of hazardous waste disposal was in short supply. The power of examination and approval to the provinces, and the substantial relaxation of the total amount of market access, makes the disposal of hazardous waste no longer have the basis for implementing a type of government-regulated franchise (or because it is not in the public service area, it is not covered by PPP) – Absolute or relative administrative monopoly.
Therefore, as a dangerous waste industry that directly collects fees from polluters and is not subject to monopoly protection by the government, unlike the water solid waste field, it is necessary for investment companies to face price risks and demands from full market competition. Risks and competitive risks, even including the need to face increasingly stringent environmental regulatory risks, there is no possibility of sharing with local governments in the field of water solid waste.
02, unlike other fields, the national situation of the hazardous waste industry is quite different from that of the developed countries in the West
Comparing the international market (in the United States as an example), our hazardous waste areas are also different from municipalities such as water and solid waste. The western developed countries in the above-mentioned fields have a history earlier than our 50 years or even a hundred years. There are many mature experiences that can be used for reference. The situation to be dealt with in the municipal environmental protection field is also different in commonality. Many of our emission standards and management systems are relatively easy to learn from. . It is not the same in the field of hazardous waste:
The time gap is not far away: In the United States, for example, it is only two or three decades before us. The differences between the management policies of developed countries in the West are also great and in perfection.
The development of China’s hazardous waste industry has only a history of more than 20 years: from the explosion of dangerous chemicals in Shenzhen before 1993, the SARS incident in 2003 brought about the development of medical waste disposal. The rapid development of the entire hazardous waste industry was fully launched after the “two high judicial interpretations” and the series of waste-clearing actions of the Ministry of Eco-Environment during the 13th Five-Year Plan period described in this article.
Second, the national conditions are very different. Due to the international division of labor and industrial transfer, a large number of heavily polluting industries in developed countries have shifted to China and even began to shift to less developed countries and regions, leading us and the western developed countries to manage hazardous wastes. The national conditions faced are huge.
The above differences can be seen from a local perspective. The emission standards of China’s municipal infrastructure can be equated with standards that are even stricter than those of Western developed countries. (of course this There is also controversy), and some standards for hazardous waste disposal in China are relatively wide, which is also an eclectic choice in line with national conditions (standard Improvements need to consider many objective factors such as technology readiness, cost affordability, regulatory control, etc.).
Some environmental protection facility emission standards
03, the industry concentration of the current domestic hazardous waste industry in the short five-year high-speed development period is extremely low
Industry concentration is one of the industry’s mature characterizations, although such assessments need to consider industry and regional segmentation factors. The municipal sector has typical industry homogeneity characteristics. The fair competition opportunities brought about by the compulsory bidding system also weaken the geographical division characteristics brought by regional protection. Waste incineration is the most concentrated industry in the new market launched ten years ago. Although the field started early but faced market-oriented reforms (a franchise initiated by the Ministry of Housing and Urban Development in 2003) before the massive stock market.
Therefore, the industry concentration is slightly lower than that of waste incineration, but it is also much higher than the hazardous waste area, and the industry concentration in these two areas is still steadily increasing.
And for the hazardous waste area, the 13th Five-Year Period is accompanied by the tightening of environmental supervision and the concentrated release of demand (After the two high judicial interpretations in 2013, the crisis The approval rate for waste business licenses has doubled from 10% to 20% in 2016), and the relevant market access approval rights have been shifted. A large number of small and medium-sized regional private enterprises have entered this field(According to the incomplete statistics of the E20 Institute, at least 1,300 companies are involved, and this number is still growing), the concentration is quite scattered, which will inevitably bring The current low level of overall operation of hazardous waste treatment facilities, of course, also leaves plenty of room for future industry consolidation.
Environmental Environmental Concentration (CR10) Trends (Data Source E20 Data Center)
04, regional imbalances in the hazardous waste industry and industry disproportionation are prominent
In addition to the appearance of imbalance between supply and demand, the in-depth observation of the heterogeneity and commercial attributes of the hazardous waste area has led to regional imbalances in the hazardous waste sector and serious industry disparity. From the perspective of the new hazardous waste disposal capacity disclosed in the 13th Five-Year Plan of each province, Shandong and Sichuan have reached more than five times, and coastal provinces such as Guangdong, Zhejiang and Fujian have also exceeded 50%, with a total growth rate of 212%. It can be seen that the imbalance between supply and demand is the main contradiction at present.
but for dataThe detailed analysis found that the actual utilization rate of the approved business scale in 2017 was only 27.5%. In addition to the time necessary to eliminate the construction and operation of new projects, the problem of mismatch of license capacity did exist. The rough estimate has the following four reasons. Reason:
1. Compared with the advanced experience of the French Suez company in France and Shanghai, the information on the front-end industrial waste-producing enterprises in the dangerous waste disposal enterprises in most of China’s provinces is lacking, and the pressure on effective compatibility has also increased greatly. The difficulty of continuous safe production, according to our understanding, this will be the next step for the Ministry of Ecology and Environment to gradually improve through the pollution permit, collection of transport system specifications and information, but it will take a long time;
2. Under the background of the macroeconomic situation mentioned above, the industrial structure adjustment and transfer, the suspension of production and rectification caused by environmental supervision, the extensive collection and transportation system on which the front end of the hazardous waste disposal relies, the difficulty of the profits of the industrial enterprises, and the difficulty in handling the expenses. The reason is that it is more difficult to release the capacity of hazardous waste enterprises;
3. The planned economic color of the construction of hazardous waste facilities implemented in 2003 led to the allocation of the capacity and corresponding industrial segmentation of the plan, which could not be fully matched with the manufacturing industry in the past 10 years after the GATT. Rapid development; the dangerous and waste business licenses that were released during the 13th Five-Year Plan period are based on the technical, capital, and operational capabilities of the hazardous waste disposal enterprises brought about by the dispersion of enterprise concentration mentioned above. Slow lifting and digestion;
4. Compared with the comprehensive safety disposal (landfill and incineration), the resource project is spontaneous and the company is applying for enthusiasm, but this The category is severely constrained by price fluctuations in the back-end products. In the case of the economic slowdown in recent years, the price of license resources in the resource sector has risen sharply.
As mentioned above, the hazardous commercial sector is different from the pure commercial property of municipal environmental protection. Combined with the huge regional differences in China, it also brings about the imbalance of regional development in the hazardous waste industry. Roughly speaking, the smelting and chemical industry in the western and central provinces, which are mainly minerals and rough processing, and the high value-added industries (such as the electronics industry) ) and fine chemicals are the coastal areas of the layout, and the nature of the problems to be dealt with in hazardous waste disposal varies.
The factors of payment capacity, land scarcity and environmental sensitivity play a huge role in it. For different characteristics of different regions, it is necessary to target both hazardous waste disposal enterprises and environmental management.Sexual countermeasures.
In order to effectively avoid the risk of pollution transfer, the current thinking of hazardous waste management in China is becoming more and more strict in inter-provincial transfer, combined with the liberalization of the transfer within the province, and the orientation is the provincial balance towards hazardous waste disposal. Although this is still controversial, it will exacerbate the regional and industrial imbalances and dismatches described above. But before the dangerous and illegal regulatory measures can not be fully in place, it will also be a long-term compromise.
Returning to international comparison, after more than a decade of international trade division and manufacturing development, no country currently has such a complete industrial category in China, but it also brings hazardous waste. There are many challenges to the management of hazardous waste, and it is an opportunity for sustainable development in the field of hazardous waste disposal.
05, industry adjustment and risk of competition in the industry
Different from water and solid waste, the hazardous waste disposal industry closely serves the manufacturing industry, so the risk of industrial restructuring and transfer to hazardous waste operating enterprises is far greater than the first two areas.
With the upgrading of technology, the increase of labor costs, the increase of environmental costs, and the international and domestic industrial transfer and structural adjustment brought about by international trade conflicts, the hazardous waste operation operators hope that the investment recovery period can be controlled within two or three years. There is an inherently reasonable risk consideration factor, which is also the inherent reason why the field of return is higher than the two relatively low-risk municipal areas mentioned above.
But such a high return situation is not stable. First, the relevant competent authorities, especially the relevant authorities with high degree of marketization and high degree of marketization, pay more attention to safeguarding industrial economic development, promoting employment and overall tax increase, and will be more inclined. Introduce full competition to reduce the disposal cost of waste-producing enterprises and provide a better investment environment. Second, the three major games unique to the hazardous waste field have made existing companies always face uncertainty risks:
1. Game of harmlessness and resource utilization
In theory, along with the advancement of science and technology, the pursuit of efficiency by enterprises, and various encouragement policies of the state on resource recycling, the hazardous waste disposal mode of single-category is a harmless integrated disposal plant. There is always a diversion effect, which is manifested in the waste acid and waste alkali waste organic solvent waste oil and other aspects. Of course, some categories require a relatively large or concentrated output.
2. The game of recycling within the factory and the disposal of the certificate outside the factory
For example, the recycling of waste acid has recently been exempted from the use of the waste in the Dangerous and Exempted List. The promotion of cleaner production and the need for industrial enterprises to reduce the cost of hazardous waste, combined with advances in technology, will be The “factory” brings continuous promotion, especially for enterprises with single production and large output.
3. The game between cement kiln and harmlessness
In the past two years, the use of cement kiln to cope with hazardous waste has also entered a period of high growth. From 2017 to 2018, a total of 45 projects have been added, with an additional scale of 2.7 million tons per year, bringing huge impact to the traditional hazardous waste treatment industry. pressure. Utilizing huge amounts of cement production and accompanying thermal energy to incinerate hazardous waste, of course, it has a huge advantage over traditional hazardous waste incineration costs (about only the latter 1 /2-1/3).
However, cement kiln disposal of hazardous waste also has the following drawbacks: the backward production capacity of cement hopes to retain this motive, the cement kiln can accept only fifteen kinds of hazardous waste, the location of the cement kiln and the distance limit, the future infrastructure needs Concerns about how to maintain capacity after the decline, the risk of dilution of pollutants in cement kiln incineration, the risk of long-term stability of certain newly added pollutants in cement products, and the impact of hazardous wastes on cement production processes, etc. Etc. These unfavorable factors relatively restrict the release of the capacity of the cement kiln.
Considering that the relevant standards are still imperfect and the various negative factors mentioned above, in the “13th Five-Year Plan for Ecological Environmental Protection” in 2016, the caliber of disposal of hazardous waste in cement kiln has been changed from “encourage” to “guidance”. And the specification, it can be seen that the competent authorities have already seen the relevant risks.
In summary, hazardous waste, as the purely commercialized field of competition as described above, is inevitably faced with changes in market demand and strong competition from entrants. Investors need to be fully prepared for this, rather than simply looking at other municipal environmental protection investment operations. For hazardous waste disposal enterprises, it is necessary to carefully analyze and predict the status quo and development trend of the industrial structure in the region. It is also necessary to continuously innovate related technologies and continuously improve the operational capabilities in order to maintain their own continuation in the increasingly fierce competition. Competitive ability.
The future of hazardous waste industry
Overall, environmental management for hazardous waste is still being improved: the NDRC’s Green Price Mechanism document proposes that the polluters will be gradually improved.According to the payment system, according to a series of documents issued by the Ministry of Ecology and Environment, it is a trend to emphasize resource recycling and encourage in-plant utilization, especially for large enterprises with large production and waste.
The province’s regional capacity balance will lead to more intense competition in the regional market. At the same time, the in-depth environmental protection inspectors in these years (including ecology The hazardous waste inspection just to be carried out by the Ministry of Environment), the pilot of no-waste city, the self-certification management of the whole process of combining the discharge permits of waste-producing enterprises, the gradual standardization of the collection and transportation system, and the big data supervision accompanying the advancement of IT means Measures, etc., the regulatory measures of the Ministry of Ecology and Environment will also become more and more strict.
Back to the topic at the beginning of the article, the “Thirteenth Five-Year Plan” is the first stage in the field of hazardous waste disposal, which is forming a cluster of industrial clusters. It is also normal for the capital market to generate some false fires in this field. The current low concentration of the industry is in line with the initial stage of its development path that has been passed by developed countries in the West.
Combining the process of the “Blue Ocean-Red Sea-Desert Flower” in the Sino-US hazardous waste field released by the E20 Research Institute, even if the industrial structure and legal environment of the two countries are different, it still has important reference for analyzing the relevant industrial cycle. significance.
From the perspective of the overall industry law, the blue ocean is often not mature in the market, and the Red Sea is in an excessively competitive state. The blue-red communication is often the period when the average profit of the industry is high, while for individual enterprises, it depends on itself. The long board and the sustainability of technological innovation can find blue high growth opportunities in the business community that continues to turn red.
Recognizing this is especially important for large-scale hazardous waste enterprises. How to maintain their core strength in technological upgrading and operational capabilities while building capital through capital expansion is the ultimate ability to remain competitive and become a desert. The only way to flower.
This article is from WeChat public account:energymagazine, author:Xue Tao