A green leap forward

As China marches towards its date with Olympic destiny later this year, the mighty dragon has settled into a softer, though equally purposeful pace. Peta Tomlinson writes

The dragon is going green, and while its pledge to host a 'green Olympics' - one with zero net emissions - is perhaps the most visible sign of intent, it is also a significant indicator of a far deeper environmental resolve.

Only a few years ago, such an ambition may have seemed far-fetched, given China's environmental problems. But economic prosperity has engendered a new awareness, and it is resounding at every level. Having established itself as the world's factory, China is on a new mission to shake off unwanted by-products of its rapid industrialisation.

The Olympics was doubtless the catalyst. After losing an earlier bid to host the world's most prestigious sporting event, China launched an environmental programme to underpin its 2001 pitch for the 2008 Olympics Games. Successful this time, the Government pledged unprecedented efforts to tackle pollution. It formalised a five-year plan to crack down on major pollutants, improve waste treatment by up to 70%, reduce energy and water consumption by 20% and 30% respectively, and plant millions of trees.

The Government has also put its money where its mouth is, announcing a total of US$175bn in environmental protection investments for 2006-2010, nearly double that spent in the previous five years.

Various government officials have gone on record asking for outside help to overcome China's pollution problems, and the multi-billion carrot translates to opportunity for overseas businesses involved in environmental technologies.

Companies quick off the mark include Southwall Technologies of the US, whose glass solutions will improve energy efficiency in China's commercial buildings. Southwall Executive Vice President, Dennis Capovilla, says China's willingness to embrace innovative green building solutions represents an enormous business opportunity. 'We view China's adoption of sustainable design concepts as a compelling growth opportunity for Southwall's core energy-saving products.'

Australian engineering firms Maunsell and Bassett are involved in a complete energy efficient retrofit of what will be China's first five-star energy rated building, the Environment Protection Bureau in Tianjin. The implications are enormous, given the China Ministry of Construction's stated aim to retrofit 25% of its existing public buildings to greener standards by 2010.

Volkswagen of Germany - Europe's biggest car maker - will launch its energy-efficient hybrid Touran cars at the Beijing Olympics, kicking off large-scale production of the much anticipated vehicles. Spanish wind turbine maker Gamesa is providing equipment and manpower to set up wind farms in China through contracts valued at over €160m.

But as a recent study by Helmut Kaiser Consultancy confirms, water - or lack of - is possibly China's biggest problem. Supply is scarce in the populous north, while flooding endangers lives and land in the south. 'China has about the same water supply as Canada, but 100 times more people,' the report states. It adds that Beijing 'is determined to ease its water shortage', investing US$87bn in environmental protection programmes focusing on water, drinking water and air pollution control.

Jeremy Gordon, chief executive of UK-based China Business Services, says China's pollution problems present a good environment for foreign business, especially for those involved in water treatment, waste water, environmental impact assessments and recycling.

He cites the example of French company Veolia Water, which has over 30 projects in China, almost doubling its workforce (to 7,000) in the past two years. French environmental conglomerate Suez Group plans to double its investment in China, which so far stands at 19 joint ventures in 16 Chinese cities, an investment of more than US$641m. It has now signed contracts for designing and building 160 water plants across the nation.

Hyflux of Singapore also has major contracts in China, including the construction of what will be the mainland's largest desalination plant.

'It's been estimated that US$10.4bn needs to be invested in municipal wastewater treatment alone over the next three years, presenting an attractive opportunity for the foreign firms that design, build and manage such facilities,' says Gordon.

In addition, the Chinese Government no longer turns a blind eye to polluting industry, closing down 3,176 businesses last year for environmental infringements, according to the official media. The State Environmental Protection Administration has also embarked on a 'name and shame' campaign, publishing a list of more than 6,000 industrial polluters. Last year, Premier Wen Jiabao announced a phasing out of tax breaks for highly polluting industries, and limiting their discounts on land and electricity.

'Solar, wind and hydro energy represent massive opportunities for foreign companies in the search for clean, economical alternatives to traditional, polluting, coal-fired power stations,' says Gordon.

He added that while the Olympics had been a catalyst for an environmental clean-up in China, the Central Government is concerned with more than merely the global spotlight. 'The biggest threat domestically is disenchantment of the masses - the people who have been left out of China's growth, and who have been getting poorer while the [wealth] gap widens. The idea of a Harmonious Society - Communism's modern ideology of shifting the focus from economic growth to societal balance - has a lot to do with quality of life and, for this to be achieved, people's lifestyle needs to be improved.

'In terms of opportunity, companies that align themselves with government strategy will set themselves up for the long-term, rather than just individual hits.'

The lawyer Michael Wadley, who set up Wadley Business Consulting in Shanghai, agrees China is a market of enormous opportunity in most areas including environmental services, but cautions that with this comes enormous competition and rapid maturation of the markets.

'I agree the Government is serious [about the environment] as they are dealing with a generation who think differently and don't regard development as good just for the sake of it. They realise there are other consequences that have to be factored in earlier rather than after disaster strikes.'

Local firms are currently unable to cope with increasingly demanding environmental regulations, opening the way for foreign expertise. However, this doesn't mean it will be an easy ride. 'One has to look at the supply and competition, and the market can quickly become competitive with the whole world pouring in here, and with many firms competing on low margins,' says Wadley. 'Skilled human resources are also a big challenge - there is no point in getting the work if you can't do it.'

Great improvements

So, can China do it? Some good news was delivered in December, when Germanwatch released its annual index on climate protection performances of 56 industrialised countries.

China ranked 40th but, significantly, was hailed as one of the best improvers. The country's 'serious efforts to enhance energy efficiency and promote renewable energies, as well as the recognisable turnaround in national climate and environmental policy within the last two years', meant that it jumped up four places in a year, the report found. 'China's relatively positive political assessment gives hope that emission growth will slow down in the future,' adds Christoph Bals, executive policy director of Germanwatch. 'This puts it far ahead of some countries in the ranking.'

At United Nations talks in Bali in December, China also received a tick for pursuing strong policies on climate change. Hans Verolme, director of WWF International's Global Climate Change Program, attributed China's position to concerns over energy security and a recognition that climate change is having a severe impact on the country.

'China made up its mind about a year ago that it was going to get serious,' Verolme said. 'They want to show the world it understands and it wants to do what is necessary to stop dangerous climate change.'

Peta Tomlinson is a freelance journalist who writes for the South China Morning Post and the Hong Kong Trade Development Council.