Eco-preneurs To Combat Pollution

By Dr Zhanfeng Dong 18 June, 2019

The Chinese Academy for Environmental Planning's Dr Dong introduces 'eco-preneurs' & explains why they are the lynchpin to China's war on pollution

What are eco-preneurs? Sepeate from state-owned enetrprises, eco-preneurs are those entrepreneurs who start for-profit businesses with strong underlying green values or sell green products or services. In China, such private eco-preneurs play an important role in the environmental protection industry.

Eco-preneurs are those entrepreneurs who start for-profit businesses with strong underlying green values

To further promote the construction of the ecological civilisation and to win the war on pollution, China is strengthening its efforts to manage financing difficulties faced by these eco-preneurs. The aim is to create a fair, transparent and organized environment for them to grow. The government also needs to implement favourable policies so that these eco-preneurs could thrive.

Eco-preneurs are key to winning the war on pollution

Private entrepreneurs are an important feature of China’s socialist modernisation drive. In the past, President Xi Jinping has emphasised that the Party Central Committee has always supported and encouraged the development of private enterprises; while Premier Li Keqiang emphasised in the annual government work report that the local government should optimise the development environment of the private economy.

And with continuous reforms for ecological progress, the battle for pollution prevention and control is well under way. Since the 18th National Congress of the Communist Party of China, China has placed ecological civilisation construction and ecological environmental protection at an important position in governing the country. On this front, China will continue to:

1. Promote the reform of the ecological civilisation system,
2. Accelerate the modernisation of the eco-environment governance system and its capacity,
3. Create necessary and sufficient conditions for the private economy to participate in ecological governance,
4. Accelerate the development of the economy that centering around the principle of “lucid waters and lush mountains are invaluable”, and set the direction for the private economy to participate in ecological governance,
5. Comprehensively strengthen the ecological governance to win against the war on pollution,
6. Increase investments and push forward key projects to create a market space for the private sectors to participate in ecological governance.
7. Vigorously support the development and growth of private enterprises.

Eco-preneurs face unprecedented opportunities

Clearly, with the focus on the private sector participating in ecological progress, entrepreneurs are facing unprecedented opportunities to participate in eco-environment management, hence the term “eco-preneurs”.

Eco-preneurs have a large market share; but the market for ecological governance still lacks

A large proportion of the environmental protection industry is run by eco-preneurs. They play an irreplaceable role in environmental technology innovation research and development, as well as upgrading of environmental protection industry.

Private eco-preneur enterprises account for 77% of all environ protection enterprises

According to the results of the ‘Fourth National Environmental Protection Industry Survey’, private eco-preneur enterprises accounted for 77% of all environmental protection enterprises, 66% of operating income, and 72% of employed people in the industry.

For example, Elion has rehabilitated 1/3 of the Kubuqi Desert

As of November 2018, there are 440 on-going projects that are supported by both the Ministry of Ecology & Environment (MEE) and private capital, in which 189 projects or 43% are undertaken by eco-preneur enterprises. In terms of investment, projects funded by private capital account for 35% of total investment or RMB180bn. As an example, Elion, an eco-preneur enterprise, has rehabilitated one third of the Kubuqi Desert under the mantra of “combining green and rich, combining ecology with industry, and combining enterprise development with ecological governance”.

However, the market for eco-preneurs to participate in ecological governance is still not fully open

Nonetheless, the market for eco-preneurs to participate in ecological governance is still not fully open.

Firstly, the planning and design of eco-preneur projects is insufficient. Local governments generally do not understand the issues holistically. They are too silo-ed and still hold some traditional ideas in terms of environmental management be it water, air or waste management. They simply do not put ecological treatment projects into consideration.

Secondly, eco-preneur projects take off and progress too slowly. These projects still rely on government funding and in the absence of sufficient funding, they are often shelved. When the investment needs exceed the actual capital supply, it is difficult to transform ecological governance into a real market.

The future? Actively improve the market mechanism and form a favorable policy landscape

The key to promoting the development of the private sector in the environmental protection industry is to improve the market mechanism and provide a good policy landscape. Policy reform could play a big role in solving the problems currently encountered in the private sector.

Stronger environ PPPs & involving SOEs through equity financing are ways for eco-preneurs to raise more funding

Establishing a good financing environment is essential, such as increasing green financing support for eco-preneur enterprises and strengthening the development of environmental public-private partnerships (PPP). Alternatively, eco- preneurs can involve state-owned enterprises through equity financing, and combine multiple technologies, engineering, capital, equipment, etc. to achieve complementarity. With these improvements, eco-preneurs can truly thrive and win the war on pollution more readily.

Further Reading

• 2018 State Of Ecology & Environment Report Review – It is one year on since the Ministry of Ecology and Environment (MEE) reform, has it impacted China’s water? What has worsened & what has improved? We review the latest 2018 report
• UAVs To Monitor Ship Emissions – Is it a bird? Is it a plane? No it’s a drone! Dr Zhi Ning from HKUST expands on their method to detect ship emissions & help check compliance
• Beyond The Wall & Into The Watershed – Reducing your own factory’s water use is all well & good but what do you do when your basin is being impacted? Ecolab’s Ting He, Nestlé’s Qi Zhang & AWS’ Zhenzhen Xu provide examples on how to move into the watershed
• Jiangsu Chemical Park Explosion: Rectify Or Shutdown? – The Jiangsu chemical plant explosion may have been deadly but the environmental & regulatory risks it’s bringing to light may be more worrying. China Water Risk’s Yuanchao Xu unpacks it for us
• Your Inside Track To Rare Earths – Do China’s threats to weaponise rare earths in the trade war have any teeth? Even if not, a house of cards worth trillions could be at stake – find out why & get the edge now

• Two Sessions: Reform – Transform – It has been a tough year but President Xi is staying true to his resolution to build a Beautiful China – what transformations can we expect? Find out in our review of this year’s Two Sessions
• Ministry Reform: 9 Dragons To 2 – What does China’s long-awaited ministry re-shuffle mean – who manages what and how? China Water Risk’s Woody Chan and Yuanchao Xu review the roles and impacts of the new Ministry of Ecological Environment & Ministry of Natural Resources
• Water PPPs To Lead In China – All new water & wastewater projects in China need to follow the Public-Private-Partnership (PPP) model. Will this mean big change and how have other water-related projects been funded in China? China Water Risk’s Yuanchao Xu takes a look
• Financing Green Infrastructure In The GBA: Key Takeaways – The Greater Bay Area accounts for 12% of China’s GDP but climate change means this is at risk. How can green finance help? China Water Risk’s Dharisha Mirando shares key takeaways from the HKUST conference