China's fast-growing sustainability industries

IBISWorld has released a report showcasing China’s fastest growing industries in recent years. Given the country’s recent goal of energy conservation and independence, industries from the sustainability sector were strongly represented.

Source: IBISWorld.

Development of alternative energy sources is at the top of the Chinese government’s agenda due to escalating domestic electricity demand, reliance on imported oil and gas resources and growing environmental pollution concerns. Reports of deteriorating air and water quality in China’s big cities have also led to the increasing regulation of high-polluting sectors and strong growth in environmental protection industries.

Pollution treatment equipment manufacturing

Pollution treatment equipment is used for controlling environmental pollution, as well as for processing waste materials and recycling industrial materials. The Chinese government has imposed strict environmental protection regulations on the agricultural, mining, manufacturing and construction sectors to reduce the negative effects of China’s rapid economic progress on the environment. These regulations have contributed to the rapid development of this industry.

Energy-efficiency consulting

Energy-efficiency service companies help their clients, most of which are in the manufacturing and construction sectors, reduce energy consumption and pollutant emissions as required by the government. Based on the Chinese government’s 12th Five-Year Plan (2011 to 2015), energy-efficiency service companies will continue to receive strong government support. In addition, an influx of foreign capital will drive the development of the industry.

Water pollution control

Demand for the water pollution control industry in China comes mainly from government institutions responsible for handling the rising pollution of inland waters and underground water. In October 2011, the Plan of Underground Water Pollution Prevention and Control was issued, which set aside US$5.4 billion for the control of underground water pollution.

Environmental monitoring

Environmental monitoring and testing are important complementary services to environmental consulting firms but, in recent years, the market has expanded to households, with monitoring services for indoor air, noise and light pollution. The Chinese government is bringing more commercial reform to the industry to deal with capital shortages and to improve efficiency.

Alternative energy generation

Among the renewable energy modes being developed in China, wind power currently has the most potential. Currently, wind power ranks after thermal power and hydroelectric power in terms of energy output in China. As the country’s thermal power generation is mainly coal-fired, the government is closing smaller, less efficient thermal power plants and prioritising other forms of energy generation.

The hydroelectric industry has been negatively affected by decreasing precipitation in recent years. Although China has abundant water resources for small hydropower generation, these are mainly in remote and poverty-stricken regions. Nevertheless, the industry has been driven by increased overall investment in China’s alternative energy sector and the implementation of a market-based pricing mechanism.

The solar power industry has been developing rapidly, but it faces challenges. A well-developed electricity distribution network is essential for maximising usage of solar power, but current solar power resources are scattered across the country. In addition, the cost of generating electricity from solar power remains high. With technological advances, the expansion of scale within the industry and the further development of China’s electricity transmission and distribution industries, the solar power industry will grow.

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