E297 B EDGE Winter 2002-3
Instructor: Prof. Bruce Lusignan
PA: Ana Maria
MS. Student
Department of Civil and Environmental Engineering
Stanford University
Mar. 20, 2003
Table of Contents
4.1
Considerations
.
. 11
4.2
Perspectives
.
. 11
4.3
Business
Plan On Environmental Nanotechnology
.
. 12
As environmental market and its businesses are huge, a growing concern about the interaction between trade and environment is generally acknowledged one of the important issues currently in the world. A lot of experts consider these issues are complex problems from worldwide multilateral negotiations, non well-defined classifications, and comprehensively involved environmental regulations. However, for business point of view, the concerns from most business analysts and investors always are: what would be the trends to the future environmental market? What should be the new strategies under the interactions of trade and environment? Will there have any kill-applications in environmental market in the near future?
This paper tries to touch those points. Before that, its essentially and fundamentally significant to have an idea of the scale for the environmental market. Therefore, we firstly talk about the definition of environmental industry and its market in the paper. Secondly, we look into the issues between trade and environment, and then prospect the future trends about those under the WTO framework. Finally, in the section 4, we analyze the possible business opportunities and strategies in Taiwan environmental market and business. As an entrepreneur, we also provide our own business plan: environmental nanotechnology in the end of this paper.
2.1
Definition
And Scale For This Market
Generally speaking, the definition for environmental industry and its market is still vague and not well defined in the world. However, according to the conclusions by OECD[1] in 2000 and by the Doha Ministerial Conference of the World Trade Organization (WTO) in 2001, there could have two different scale definitions for environmental businesses. The narrow one is: environmental goods and services are those whose use results in a beneficial environmental impact - capital goods or technologies required for `end-of-the-pipe' pollution abatement. The broader definition, on the other hand, takes into account the environmental characteristics of the goods themselves and/or their production processes. This includes the goods that have relatively less negative impact on the environment at the production, consumption or disposal stage, or even in terms of being produced in an environmentally friendly manner or with "clean technology".
In terms of the evaluation by EU (European Union), the world output value of environmental services and goods market is about 280 billion US dollars. It has been estimated that the global market in these goods and services is around $550 billion, and is likely to touch $640 billion by 2010. In addition, the annual average growth rate is 8 %, in which its 3~4 % in industrialized countries and Japan, 5~10% in Asia and Latin America.
Thus, the global market for Environmental Goods and Services (EGS) is large and growing fast. The US is the world's biggest producer and consumer of EGS. It is also the biggest market share country[2] and the second largest net exporter of environmental goods after Germany[3].
2.2
Classification
Of Environmental Industry
Its always the most important to clearly classify a big market before analyze or forecast it. The environmental industry can be defined and classified by OECD (1999) as comprising of three main sectors:
Pollution Management and Control: defined as products, systems and services for the removal of gaseous and particulate pollutants from air. Examples include filters and catalytic converters (products), gas treatment plant (systems), and turnkey contracting (services). Wastewater Treatment: defined as products, systems and services for the removal of pollutants from municipal wastewater (sewage) and industrial wastewater. Examples include membranes, chemical dosing, pipes and tanks (products), control systems, aerobic and anaerobic systems), and trench less boring and facilities management (services). Wastewaters are defined to including cooling waters. Activities for purifying and supplying water for drinking or for use in industrial and commercial activities are included in the Resources Management section. Waste Management: defined as products, systems and services for the collection, disposal and treatment of municipal, commercial and industrial wastes. Examples include landfill liners and composers (products), landfill gas extraction (systems), and collection and disposal (services). Waste recycling activities are not included in the Resources Management section. Remediation and Clean up of Contaminated Land and Water: defined as products, systems and services for the identification, assessment and remediation of contaminated sites. Examples include adsorbents and injection equipment (products), monitoring systems and proprietary treatment processes (systems), and sampling/analysis (services). Noise and Vibration Control: defined as products, systems and services for the abatement of noise pollution. Examples include acoustic enclosures and noise barriers (products), vibration measurement systems (systems), and noise and vibration measurement (services). Environmental Analysis and Assessment: defined as products, systems and services for the monitoring of environmental standards and conditions, both directly and remotely. Examples include monitors and instruments (products), continuous emissions monitoring Page 3systems (systems), and installation and maintenance (services). Environmental Research and Development: defined as discrete research and development activity specifically attributable to environmental objectives. Examples include laboratory analysis and attributed technological development. Each of the sectors above comprises of a variety of equipment and services, from general "low-tech" items, such as standard pumps and valves, to specialized "high-tech" equipment and services, such as pollution monitors and advanced filtration plant. Between the two lies a wide spectrum of technologies, skills and capabilities. Two remaining areas examined within the "Pollution Management" category include: General Administration (Public sector): activities within the public sector which involve an explicit environmental dimension or function. For example, environmental protection agency inspection teams, environmental tax collection and administration, Government departments etc. Environmental Management (Private sector): activities within the private sector, which involve an explicit environmental dimension or function. For example, environmental management system operation, ISO14001 management and operation, environmental audit work etc.
Cleaner/resource efficient technologies and processes: Cleaner and resource efficient technologies decrease material inputs, reduce energy consumption, recover valuable by-products, reduce emissions, minimize waste disposal problems, or some combination of these. Cleaner/resource efficient products: Cleaner or resource efficient products decrease material inputs, improve product quality, reduce energy consumption, minimize waste disposal problems, reduce emission during use, or some combination of these
Resources Management: Potable water treatment and distribution: any activity that produces equipment, technology or specific materials, designs, constructs or installs, manages or provides other services for water supply and delivery systems, both publicly and privately owned. It includes any activities aiming to collect, purify and distribute potable water to household, industrial, commercial or other users. Recycled materials: This class includes any activity that produces equipment, technology or specific materials, designs, constructs or installs, manages or provides other services for manufacturing new materials or products, separately identified as recycled, from recovered waste or scrap, or preparation of such materials or products for subsequent use.
We can also sort environmental market and business by attributes:
public sectors (government), R&D sectors, teaching sectors, engineering
companies, consulting companies, environmental technician agency, environmental
examination, monitoring and laboratory, environmental instrument companies,
environmental equipment companies, environmental machine-driven industry,
environmental agents/ pharmaceuticals industry, waste disposal companies, waste
treatment companies, recycling/reuse industry, and energy related companies.
2.3
Environmental
Market in Taiwan
According to the historical records, Taiwan environmental market had a dramatic growth from 1991 to 1996, especially in pollution management and control industry. Nevertheless, with more than 56% environmental businesses imported from other countries, Taiwan is a high import trade dependence country in its environmental businesses and market[4].
As regards the environmental technical aspect, Taiwan has moved toward self-developed environmental technologies. However, their inputs usually couldnt conform to economy scale because most environmental R&D and enterprises are medium or small businesses. Thus, although Taiwan now has many proprietary technologies on environmental products rather than mostly importing them from other countries in the previous years, its a general belief that the environmental technologies in Taiwan still fall behind some developed countries (US or Japan) for 3~5 years[5].
In light of the ratio on environmental expenses in total GDP, its 0.28% in 1997 and 0.30% in Taiwan in 2000. Indeed, theres some improvement though, it still lags behind most developed countries a lot (average 0.55% in Japan recently).
On the other hand, Taiwan has become a member of WTO since January 2002. That means Taiwan not only needs more transparent on its environmental and trade policies, but also has to face stricter worldwide environmental standards. Furthermore, under the WTO agreements, government cannot preserve some certain local industry and cannot put tariff on environmental products from out side Taiwan either. Those will be a huge impact on the environmental businesses and market in Taiwan.
3.1
Environment
And Trade Linkages
The links between trade and the environment are multiple, complex and important, especially on environmental aspects of economic globalization. These trends are not isolated; they are fundamentally related. Much environmental damage is due to the increased scale of global economic activity.
The nexus between trade and the environment has raised in prominence since 1991, when a panel of the General Agreement on Tariffs and Trade (GATT) ruled that the United States violated GATT rules by restricting imports of tuna if a caught tuna by encircling and killing dolphins. Since then, countries of the world have institutionalized the GATT and then a lot of other trade-related agreements within the World Trade Organization (WTO).
In addition, trade liberalization is an important principle for either trade or environment when doing business. At another level, environment and trade represent two distinct bodies of international law. Trade law is embodied in such structures as the WTO and regional trade agreements. Environmental law is embodied in the various multilateral environmental agreements, the regional agreements and as national and subnational regulations. It is inevitable that these two systems of law should interact.
3.2
About
WTO-CTE
Issues relating to sustainable development, trade and the environment have been discussed in the GATT and in the WTO for many years. Since 1995, work has been conducted in the Committee on Trade and Environment (CTE) pursuant to a comprehensive work programme. At the Fourth Ministerial Conference in Doha, Qatar, in November 2001, Ministers agreed to start negotiations on specific issues relating to the trade and environment linkage.
Some examples of provisions in the WTO agreements dealing with environmental issues are listed below:
GATT Article 20: policies affecting trade in goods for protecting human, animal or plant life or health are exempt from normal GATT disciplines under certain conditions.
Technical Barriers to Trade (i.e. product and industrial standards), and Sanitary and Phytosanitary Measures (animal and plant health and hygiene): explicit recognition of environmental objectives.
Subsidies and Countervail: allows subsidies, up to 20% of firms costs, for adapting to new environmental laws.
Therefore, for a government, now a key question should be: if one country believes another countrys trade damages the environment, what can it do? Can the it restrict the other countrys trade? If it can, the solutions should be under what circumstances? These issues are still under discussion and negotiation in WTO.
3.3
What
Would Be In The Future
Obviously, there will be more negotiations on trade and Environment debates in WTO. Those negotiations and future agreements should be based on four basic WTO principles/agreements: MFN (Most-favored Nation Treatment), Transparency ( i.e. Predictability through binding), National Treatment ( i.e. treating foreigners and locals equally), and Gradually Freer trade through negotiation. Its will be the first mission to eliminate trading barriers and blocks (discrimination on rent, property rights, environmental regulations; limitation)
One of a possible trend is WTO might loosen the classification of environmental market and businesses, especially on services (Or to sort them by new approaches fitting with trade sectors and affairs)
Another important issue for business is eco-labeling. Eco-labeling (Labeling environmentally-friendly products) is an important environmental policy instrument. For the WTO, the key point is that labeling requirements and practices should not discriminate, either between trading partners (most-favored nation treatment should apply), or between domestically-produced goods or services and imports (national treatment).
For business, its also important to understand the rules of the WTO agreements, especially on technical barriers to trade in the future. Under the WTO rules, governments cannot preserve some firms or products that enjoyed the monopoly environmental market before. On the other hand, there will be more big foreign companies and advanced products enter into a local environmental market without technical barriers or discrimination regulations, unless that is a international technical barriers.
4.1
Consideration
The new successful business opportunities in Taiwan environmental market should take the following three considerations into account:
1. Current reality: New environmental firms have to face and improve the current circumstance. (how to avoid a price war, how to deal with the liability to pollution)
2. Trends of WTO trade and environmental agreement: Its important to closely keep an eye on the trends of WTO trade and environmental agreements. This includes: to comply with the agreements, to prepare the competitions with other foreign firms and products, and to grasp the new business opportunities produced by WTO future agreements. (Key skills and barriers: advanced technologies, enough information, and integration [integrate resources and form a big enough firm in order to compete with other foreign companies in the free trade world])
3. New kill-applications: A successful business and entrepreneur should think about what would be the new environmental kill-applications in the next generation.
4.2
Perspectives
Here we make some perspectives suggestions for Taiwan government and business to the trends of globalization and future environmental market.
1. To examine the classification of Taiwan environmental markets: We need to comply with WTO framework (the same is the best).
2. Its urgent to develop advanced environmental technologies.
3. Its also urgent to establish environmental information and businesses database system.
4. We need more researches on the evaluation about impact of economy by environmental industry.
5. We also need to enhance green technologies on energy
6. In order to compete with foreign companies in Taiwan or in the world, integration of some related environmental firms is an inevitable trend and strategy. This help Taiwan environmental industry not only exports their products but also have better competition force in local market. This includes several options, such as merging or integrating homogenous, upstream and downstream, interdisciplinary entrepreneurial combinatory partnership, or conglomeration corporations as alliances or even to form a new firm.
7. Its also important to invest for goodwill and brand marketing (brand image) in global environmental market.
4.3
Business
Plan On Environmental Nanotechnology
According to the discussions and analysis form the above, here we provide a business plan on one of the most potential benefits in future environmental market, environmental nanotechnology: Environmental nanotechnology, with better waterproof, dustproof, deodorization, and other characteristics, will extensively apply in environmental industry[6] (supply water, waste water treatment, air pollution control, and etc.) and products market (Nanotech applications, nanotech photo-catalyst and materials).
For instance, filter systems for drinking or wastewater, natural gas pipelines, and smokestacks can be designed at the molecular level, to remove even the most minuscule of impurities. For water, that means cleaner drinking. For gas, finer filtration means cleaner burning, with fewer smog-creating. Pollution-absorbing nanoparticles that can be used to clean up tainted water or soil is another concept under study
For industrial plants, they may be able to use more sensitive emission "scrubbers" that screen even nano-sized flecks of soot from waste gases. Nanoparticles are also being examined for use as sensors to monitor air or drinking water for the presence of toxins. Farther out, such sensors might be networked to give a full picture of the environment and any encroaching pollutants even chemical or biological weapons.
Also, the entire concept of building devices at the
molecular level means that
products will be smaller. There is less waste in the production process and
in the trash, when nano-devices are discarded at the end of their lives.
Many analysts envision that there will have a $1 trillion yearly market in products that carry nano-components in the scenarios of coming future[7].
In the global marketplace, as a entrepreneur, we provide our
analysis here for the Taiwan environmental nanotech company. These will help firms to do their planning
and their strategies.
Strengths:
ุ
High profit / monopoly (Patents) (long-term, 5-10 years)
ุ
High knowledge, advanced technology and equipments
ุ
Skills, and core competencies on nanotech
ุ
Great nanotech support by Taiwan semi-conductor industry and
research
Weaknesses:
ุ
High cost in producing and development (short-term)
ุ
High labor cost
ุ
Weakness capital, resources, and financial support
ุ
Lack of marketing path to the global marketplace
ุ
Wrong or weak invested targets from bias judgments, asymmetry
information, competitive intelligence
ุ
Too many invested products
Opportunities:
ุ
Subsidy, financial aids and supports from government and
research sectors
ุ
Enter the new market or global market
ุ
Advanced nanotechnology and more and more applications
ุ
Eliminate old, traditional, and low-tech in the environmental
product market through competition
ุ
Environmental nanotech products have potential to form a
technical barriers in the global market under WTO agreements.
Threats:
ุ
Emerging competitors
ุ
More advanced or new technology
Some other strategies are
as follows,
ุ
Focus on the environmental nanoproduct by its differentiation
and function from traditional environmental products
ุ
Be aware of who would be the potential buyers and upstream
material or key technology suppliers.
ุ
Maintain good relationship with nanotech and knowledge
providers (such as educations sectors and research sectors). They are one of the key components in
environmental nanotech entrepreneurs.
ุ
Maintain good relationship with potential buyers (such as,
consulting companies, downstream firms, and etc.), and educate them the
environmental nanotech efficiency and functions.
ุ
New products rely on not only new technology but also
innovation design, high quality, and extraordinary service.
ุ
Strong marketing force and directional strategy
ุ
Appropriate incorporate with traditional or other
companies. (Be aware of the high
contracting cost and transaction cost)
1. The United Nations Environment Programme. (2000). Environment and Trade A Handbook.
2. Terry L. Anderson and Donald R. Leal. (2000). Free Market Environmentalism.
3. Thompson and Strickland. (2001). Crafting and Executing Strategy.
4. OECD (Organization for Economic Co-operation). (1999). The Environmental Goods and Services Industry, Manual for Data Collection and Analysis.
5. WTO (the World Trade Organization) http://www.wto.org/
6. APEC (Asia-Pacific Economic Cooperation) http://www.apecsec.org.sg/
7. Taiwan EPA http://www.epa.gov.tw/
8. Tainan Importers & Exporters Chamber of Commerce http://www.taiwantrade.org/
9. Taiwan Trade Center at San Francisco http://www.taiwantradesf.org/
10. Taiwan trade--The e-Trading Hub for Illuminating Opportunities http://www.taiwantrade.com.tw/
11. Taiwan Research Institute Organization http://www.tri.org.tw/
12. Rice University. Environmental Technology. http://www.ruf.rice.edu/~opa/sallyport/2002/spring/features/president/enviro.html
13. Idaho National Engineering and Environmental Laboratory http://www.inel.gov/
14. Taiwan NANOWEB http://www.stic.gov.tw/
[1] Organization for Economic Co-operation (OECD)
[2] Top 10 environmental market share countries are: (in order) US, Japan, German, France, UK, Italy, Canada, Netherlands, Spain, and Australia. (the statistical data from EBI(Environmental Business Journal), 1994 )
[3] Japan is the third. The US, Japan and the European Union, put together, control 85 per cent of the trade in this industry. Most of the developing countries, including Taiwan, are net importers.
[4] More than 23% of those businesses are imported from US.
[5] 2000, research from Yang, Zhi-xing, Taiwan MOEA
[6] From National Nanotechnology Initiative research (2002)
[7] From National Science Foundation