Main listed companies in the industry: Everbright Environment (00257), Beijing Capital Environmental Protection (600008), Beijing Enterprises Water Group (00371), China Tianying (000035), Hanlan Environment (600323), Yingfeng Environment ( 000967), Bishuiyuan (300070), Chongqing Water Affairs (601158), etc.

The core data of this article: environmental protection industry classification, traditional environmental protection, modern environmental protection, operating income of listed environmental protection companies, competition pattern of the environmental protection industry

1. Definition

The definition of the environmental protection industry has a narrow sense and a broad sense in our country.

In a narrow sense, our country basically follows the definition proposed by the Organization for Economic Cooperation and Development (OECD), that is, "the environmental protection industry provides equipment and services for environmental pollution control and emission reduction, pollution cleanup, and waste treatment." ”

In a broad sense, the environmental protection industry refers to technology development, product production, commercial circulation, resource utilization, information services, etc. for the purpose of preventing environmental pollution, improving the ecological environment, and protecting natural resources. A general term for activities such as project contracting and nature protection and development. The environmental protection industry in the broad sense not only includes the content of the environmental protection industry in the narrow sense, but also adds parts such as clean technology, cleaning products and ecological environment construction. The environmental protection industry in this article mainly includes the production of environmentally friendly products and environmental protection services.

According to the classification of energy-saving and environmental protection industries in "Strategic Emerging Industries (2018)", the environmental protection industry can be divided into three major aspects.

2. Industry chain analysis: The industrial chain involves multiple links

The upstream of the environmental protection industry is mainly raw material suppliers including steel, chemicals, electricity, electronics, and non-ferrous metals. These industries provide raw materials for the production and engineering implementation of environmentally friendly products, and their price fluctuations directly affect the costs of the environmental protection industry, thereby affecting the profits of subdivided industries.

The downstream of the environmental protection industry mainly includes municipal administration and water pollution prevention and control, air pollution prevention and control, solid waste treatment, soil remediation, noise and vibration control and environmental testing and other industries. Government departments are important demanders of environmental protection governance. This is because the environmental protection industry has a strong public welfare attribute, and its demand changes largely depend on industrial policies.

From the perspective of participating companies in the environmental protection industry chain, the upstream participating companies mainly include Baosteel Co., Ltd., China Construction Industry Co., Ltd., China Aluminum Corporation and Huaneng International, etc.; midstream environmental protection equipment, engineering and service providers mainly include Infore Environment, Sanfeng Environment and Capital Environmental Protection, etc.; enterprises in the downstream application field mainly include Longjing Environmental Protection, Everbright Environment, Sente Technology Co., Ltd. and Zhongding Co., Ltd.

Industry development history: It emerged earlier

After nearly 60 years of development, my country's environmental protection industry has begun to take shape. The rapid development of industrialization and urbanization has promoted the enhancement of environmental awareness of Chinese residents and the development of environmental protection industries. Especially since the "10th Five-Year Plan", the state has intensified its efforts to control heavily polluting industries such as electricity, cement, steel, chemicals, and light industry, and strengthened the construction of environmental protection infrastructure such as centralized disposal of urban sewage, garbage, and hazardous wastes. Investment has strongly stimulated the market demand for the environmental protection industry. The overall scale of the industry has rapidly expanded, the field has continued to expand, the structure has gradually been adjusted, the overall level has been greatly improved, and the operation quality and efficiency have been further improved. China's environmental protection industry has developed from focusing on "three waste management" in the early days to an industrial system that includes environmental products, environmental services, clean products, and waste recycling, across industries and regions, and with basically complete industrial categories.

Industry policy background: With policy support, the industry has developed rapidly

At present, the regulatory pattern of my country's environmental protection industry has basically taken shape. Under the new pattern, the environmental protection industry has entered the era of policy seeding. In the era of comprehensive policy development, policies and regulations involving all aspects of water, soil, gas, and solid waste treatment are increasingly improving. During the "14th Five-Year Plan" period, we have entered a critical period to focus on carbon reduction as the key strategic direction, promote the synergy of pollution reduction and carbon reduction, promote the comprehensive green transformation of economic and social development, and realize the improvement of ecological environment quality from quantitative to qualitative changes. Accordingly, relevant departments have also launched a number of policies, such as the "National Carbon Emissions Trading Market", "Blue Sky Defense", "Special Environmental Protection Action for Black and Odorous Water Remediation" and "Waste-Free City" to comprehensively support the ecological environment. Protect and promote the comprehensive green transformation of economic and social development.

As of November 9, 2022, the key development policies of my country's environmental protection industry are summarized as follows:

Current development status of the industry

1. Analysis of the profit scale of the environmental protection industry

2020 The total operating profits of the 15,556 companies included in the statistics were 179.42 billion yuan, a year-on-year increase of 7.1%. Enterprises with operating income of more than 100 million yuan contribute nearly 94% of industrial profits. Specifically, 93.9% of operating profits are concentrated in 1,414 companies with annual operating income of more than 100 million yuan, and the operating profits of companies with operating income of less than 20 million yuan account for only 0.3%. The average profit margin of the above-mentioned companies is 9.2%.

Note: "China's Environmental Protection Industry Development Status Report (2021)" was released on January 17, 2022. As of November 10, 2022, "China's Environmental Protection Industry Development Status Report (2022)" has not yet been released. , so the 2020 data is used as an example here for reference only.

2. Analysis of profitability of the environmental protection industry

In 2020, the average profit rate of the environmental protection companies surveyed was 8.8%. Among them, the profit margins of enterprises in the fields of solid waste treatment, disposal and recycling, noise and vibration control, and environmental monitoring are higher than the average, and their profitability is outstanding; the profit margins of enterprises in other fields are lower than the average, among which soil remediation The profit margin of enterprises in this field is less than 5%.

Note: "China's Environmental Protection Industry Development Status Report (2021)" was released on January 17, 2022. As of August 1, 2022, "China's Environmental Protection Industry Development Status Report (2022)" has not yet been released. , so the 2020 data is used as an example here for reference only.

3. Calculation of the market size of China’s environmental protection industry

The 19th National Congress of the Communist Party of China put forward a series of new concepts, new requirements, new goals, and new arrangements for the construction of ecological civilization, and clearly required the advancement of ecological civilization. Green development, focusing on solving outstanding environmental problems, increasing ecosystem protection, and taking "strengthening the environmental protection industry" as an important starting point to promote green development. With the implementation of the battle against pollution and the continuous improvement of policies and measures conducive to the development of the environmental protection industry, the market demand for my country's environmental protection industry has been further released, and the industrial scale and capability level have been effectively improved. Although the environmental protection industry was greatly affected by the COVID-19 epidemic in the first and second quarters of 2020, as the epidemic was gradually effectively controlled, environmental protection companies actively resumed work and production, and the overall operation of the industry gradually recovered.

Data from the "China Environmental Protection Industry Development Status Report (2021)" show that the operating income of the national environmental protection industry in 2020 was approximately 1.95588 billion yuan, an increase of approximately 7.3% compared with 2019. In the first half of 2021, the "14th Five-Year Plan" related to the environmental protection industry has been released one after another, and the start of the "14th Five-Year Plan" has made steady progress. In the first half of 2021, the overall revenue of the environmental protection industry showed retaliatory growth, and operating profits increased steadily and slightly. Judging from the second quarter, the revenue growth rate of the environmental protection industry has slowed down, new orders have continued to increase, and the employment situation has been generally stable. Data from the "China Environmental Protection Industry Development Status Report (2021)" show that the total revenue of the environmental protection industry in the first half of 2021 was approximately 763 billion yuan, an increase of approximately 4.4% compared with the same period in 2019, an increase of approximately 16.14% compared with the same period in 2020, and an increase of approximately 16.14% compared with the same period in 2019 and 2020. The average growth rate for the same period in 2020 was approximately 9.9%. Looking forward, based on the development status and development status of China's environmental protection industry in recent years, preliminary statistics show that the operating income of China's environmental protection industry in 2021 will be approximately 2,233.6 billion yuan.

Note: "China's Environmental Protection Industry Development Status Report (2021)" was released on January 17, 2022. The report only announced the operating income of China's environmental protection industry in 2020 and the first half of 2021; as of September 2022 As of March 1, the "Report on the Development Status of China's Environmental Protection Industry (2022)" has not yet been released. The operating income data of China's environmental protection industry in 2021 are forward-looking estimates and are for reference only.

4. Analysis of the economic contribution of China's environmental protection industry

The overall contribution of the environmental protection industry to the national economy shows a gradually increasing trend. In 2020, the operating income of the environmental protection industry and the GDP (GDP) ratio was 1.9%, an increase of 0.08 percentage points from 2019 and an increase of 1.5 percentage points from 2004. The direct contribution rate of the environmental protection industry to the national economy1 is 4.5%, an increase of 1.2 percentage points from 2019 and an increase of 4.2 percentage points from 2004. The overall contribution of the environmental protection industry to the national economy is gradually increasing.

Qianzhan compared the operating income of China's environmental protection industry in 2021 with China's overall GDP and found that the contribution rate of the environmental protection industry in 2021 was 2.1%, and the ratio of the environmental protection industry to GDP was approximately 1.6%.

Note: The industry contribution rate is calculated as the percentage of the industry’s annual revenue increase and the annual GDP increase.

Industry competition pattern

1. Regional competition pattern: mainly distributed in the Bohai Sea region, mainly Beijing, Shanxi Province and Shandong Province

From my country Judging from the regional distribution of enterprises in the environmental protection industry chain, environmental protection industry enterprises are mainly distributed in the southeastern coastal areas, mainly Shandong Province, Jiangsu Province, Fujian Province and Guangdong Province, and in the Bad Bohai Sea, mainly Hebei Province, Shanxi Province and Liaoning Province. regions; at the same time, there are also a large number of environmental protection industry enterprises in Henan Province, Hunan Province, Sichuan Province and other places.

Judging from the regional distribution of competitors in China's environmental protection industry, my country's environmental protection companies are mainly concentrated in Anhui Province, Guangdong Province and Zhejiang Province. In addition, there are also many competitors in the environmental protection industry in Fujian Province, Beijing City, Shandong Province and other places, such as Capital Environmental Protection, ST Longjing, etc.

2. Enterprise competition landscape: mainstream enterprises accelerate their expansion layout

As China’s largest environmental enterprise, Asia’s leading environmental protection enterprise, the world’s largest waste-to-energy investment operator and a world-renowned environmental group, Everbright Environment occupies the main market share of China's environmental protection industry; the company forms the first echelon of competition in China's environmental protection industry together with Beijing Enterprises Water, Beijing Capital Environmental Protection and China Tianying, which have relatively high domestic revenue; in the second echelon are GEM, Enterprises such as Yingfeng Environment, Hantian Environment and Longjing Environmental Protection have developed competitive and representative environmental protection businesses and products through long-term technology accumulation; enterprises with operating incomes of less than 10 billion yuan, such as Blue Water Source and Chongqing Water Affairs, etc. Leading the third competitive echelon of China's environmental protection industry.

Note: The first-tier companies are companies with operating income of more than 20 billion yuan in 2021; the second-tier companies are companies with operating revenue between 10-20 billion yuan in 2021; the third-tier companies are Enterprises with operating income of less than 10 billion yuan in 2021.

Industry development prospects and trend forecasts

1. Development prospects of the environmental protection industry: The operating income of China's environmental protection industry is expected to exceed 4.4 trillion yuan in 2027

In recent years, The scale of my country's environmental protection industry market continues to expand, and market space is accelerated. On June 15, 2022, with the guidance and support of the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Ecology and Environment and other departments, the China Environmental Protection Industry Association officially issued the "Accelerating the High-quality Development of the Ecological and Environmental Protection Industry

In-depth Laying The battle against pollution

Full support for the Carbon Peak and Carbon Neutral Action Plan (2021-2030)" (hereinafter referred to as the "Action Plan"). The "Action Outline" determines development goals around five dimensions: industrial structure and layout, technology level, standardization level, market entity competitiveness, and integrated development system. The "Action Plan" clarifies that by 2025, the compound annual growth rate of the operating income of the ecological and environmental protection industry will not be less than 10%; cultivate "ten, hundreds, thousands" enterprises, and form 50 large-scale enterprise groups and 100 comprehensive enterprises that systematically solve regional ecological and environmental problems. Professional backbone enterprises with strong service capabilities and thousands of "specialized, special and innovative" small and medium-sized enterprises. By 2030, a modern ecological and environmental protection industrial system that meets the needs of environmental pollution prevention and control, ecological protection and restoration, efficient resource recycling, carbon peaking, and promotion of comprehensive green transformation of economic and social development will be basically established.

Looking forward, based on the development status and development trends of China's environmental protection industry in recent years, combined with the development goals of the environmental protection industry proposed in the "Action Outline", it is initially predicted that the annual compound growth rate of operating income of China's environmental protection industry will reach 2022-2027. 12%. By the end of 2027, the operating income of China's environmental protection industry is expected to exceed 4.4 trillion yuan.

2. The overall development direction of China's environmental protection industry: accelerating industry integration and sustained high-quality transformation and development

The environmental protection industry is the backbone of the construction of ecological civilization and the battle against pollution, and is the key to coordinating high-quality economic development. It is an important support for quality development and high-level protection of the ecological environment, focusing on solving outstanding environmental problems, and realizing green transformation and development.

Although my country's environmental protection industry has faced many difficulties in recent years, it is still in a period of promising strategic opportunities.

In particular, the current "high pressure of inspections" on environmental protection has become normalized, and the market demand for the environmental protection industry is gradually released; macroeconomic policies are adjusted counter-cyclically to boost investment in the environmental protection industry and reduce the operating costs of environmental protection enterprises; the reform of state-owned enterprises has started again, and they have laid out the environmental protection industry and accelerated With industry integration, the environmental protection industry is transforming and upgrading towards quality and centralization.

(1) Development direction in the field of water pollution prevention and control

In the field of water pollution prevention and control, in recent years, improving the quality and efficiency of sewage treatment has become an important demand for the development of the urban sewage treatment industry. The initial transformation of the sewage treatment plant to improve the quality and efficiency of the entire system such as pipe networks, pumping stations, and factories; focusing on the treatment of black and odorous water bodies and improving the quality and efficiency of sewage, the transformation from sewage treatment to standard discharge to water Improve the environment and realize the transformation of water ecological restoration goals; proceed from the overall governance needs of the urban water environment system, reasonably carry out standard upgrading and transformation of sewage treatment plants, and determine the effluent standards for sewage treatment plant upgrading and transformation in a targeted manner.

At present, water environment management projects have begun to extend to the "system model" of watershed environmental units composed of pipe networks, sewage treatment plants, rivers, shoreline landscapes, etc. Integrating development with the information industry to achieve digitalization, networking, and intelligence has become a new opportunity for the incremental and quality development of the water environment management industry.

In the future, with the innovation of environmental governance models, ecological environmental governance will achieve integrated development with industries such as ecotourism, ecological agriculture, forest economy, and urban development. Public welfare environmental protection projects will lack investment return mechanisms and other outstanding issues. With the solution, the environmental protection industry is expected to achieve exponential growth.

(2) Development direction in the field of air pollution prevention and control

At present, a large number of companies in non-electricity industries such as steel, coking, cement, etc. have still failed to complete ultra-low emission transformation or have not reached new standards. Special emission limit requirements, the demand for non-electric flue gas treatment and transformation continues to heat up, and the demand for environmental protection market space continues to be released. Transformation projects such as organized bid raising, unorganized management and control, intelligent monitoring and supervision, and clean transportation will create more project opportunities for environmental management companies. Urea replacement and upgrading of liquid ammonia tank areas in coal-fired power plants is expected to be significantly accelerated.

VoCs is an important precursor to the formation of O3. The Ministry of Ecology and Environment has regarded VOCs governance as an important task to win the battle to defend the blue sky. With the gradual improvement of my country’s VOCs-related policy and standard management system, The VOCs emission reduction and control industry will continue to develop in a refined and standardized direction, focusing on key industries, implementing VOCs management in key industries and comprehensive rectification of industrial parks, gradually improving pollution source supervision and supervisory monitoring capacity building, and reducing VOCs total emissions.

In terms of mobile source governance, in the future, remote online monitoring methods for mobile source emissions will be improved, and various methods such as big data comparison and scenario collection and comparison will be adopted to improve the compliance and accuracy of inspection operations and continue to promote Carry out emission control work on high-emitting machinery and ships in use to reduce pollution caused by high-emitting mobile pollution sources.

(3) Development direction in the field of solid waste disposal and resource utilization

In the field of solid waste pollution prevention and control, we will continue to promote the construction of "waste-free cities" in the future and carry out "waste-free cities". Evaluation of the effectiveness of "city" construction and accelerating the construction process of "waste-free city".

At the same time, continue to promote the classification of urban and rural domestic waste, accelerate the construction of garbage classification facilities, form a collection, transportation and processing system that is compatible with the classification of domestic waste, and basically establish a domestic waste classification and processing system. Promote the comprehensive management of pollutants such as domestic waste incineration fly ash, waste lead-acid batteries, waste plastics, and medical waste.

Strengthen pollution prevention, control and emission reduction in heavy metal industries. Strengthen chemical environmental risk assessment and environmental risk management and control of high-risk chemical substances. Increase investment in solid waste management and research and development, introduce advanced equipment and technology, improve the technical level of solid waste resource utilization equipment, and improve the comprehensive utilization rate. Promote the construction of a standard system for solid waste treatment and utilization.

For more detailed research and analysis on this industry, please refer to the "China Environmental Protection Industry Development Prospects and Investment Forecast Analysis Report" by the Qianzhan Industry Research Institute.