China, the world’s largest emerging economy, is continuing to experience economic maturation and urbanization of an unprecedented scale. The ballooning urban populations are causing tremendous pressure on energy producers, coupled with enormous amounts of waste. According to Chinese state-owned news outlet People’s Daily, the local government of Shenzhen recently announced plans to construct three waste-to-energy projects between now and 2019. Based on official data released by the Chinese government, the southern city located in the Guangdong province generates approximately five and half million metric tons of urban waste every year, with the number growing at six percent annually. The planned daily processing capacity of the three plants will exceed ten thousand metric tons, equivalent of about two thirds of the amount of waste the city’s residents generate.
Galaxy Green Energy, a firm at which I serve as an advisory board member, is a Shenzhen-based company that focuses on constructing and operating such type of waste-to-energy projects that convert everyday solid waste to electricity by the process of combustion. According to Waste-to-Energy Research and Technology Council, a Germany-based environmental research group, the entire combustion process occurs in various stages, whereby “incoming waste enters the combustion chamber and advances experiencing different temperatures [inside a furnace].” Through these stages, the waste is dried and then oxidized, leaving only water, carbon dioxide, ashes, and of course, heat. Heat generated in the process is used to power steam turbines which in turn generate electricity. The ashes and incombustible metals are then collected, cooled, and recycled. What is notable is that the ashes can be transformed into high-quality construction materials used for heat and noise insulation.
Much debate still remains around the net environmental impact these waste-to-energy plants have. In the case of China, however, the net impact is likely positive. According to sustainability expert Warren Karlenzig, Chinese companies, for years, have been illegally dumping their waste on the sides of dirt roads, empty fields, and waterways. Corrosion of topsoil and poisoning of drinking water are becoming ever more prevalent. Waste-to-energy plants can help alleviate the soaring energy need while offsetting the demand on coal fire energy plants. During low peaks of energy demand, the Chinese government mandates that certain types of energy producers be shut down and give priority to “clean energy producers” such as wind and solar plants. Interestingly, the waste-to-energy plants have even higher priority over wind and solar plants – thanks to its “two birds with one stone” nature.
Going forward, firms like Galaxy Green Energy will continue to face an uphill climb in terms of achieving mass adoption across China. According to Renewable Energy World, an independent online news publication, “China currently has 20 waste-to-energy plants in operation spread across 15 cities, including Zhuhai, Hangzhou, Shanghai and Shaoxing…[yet] Chinese cities identified as having a daily waste incineration capacity of more than one thousand tons are no less than several dozens.” Educating the vast addressable market in China therefore becomes the primary task. However, the key stakeholders span across government officials who are risk-averse when adopting unfamiliar practices, to local residents who lack basic information on the potential impact the plants have on their lives, and finally to potential investors who are unfamiliar with such a new type of assets. The key challenge for leaders of Galaxy Green Energy would be to build its first operational plant to demonstrate to all the key stakeholders the viability of the waste-to-energy economic model and the net positive impact on the lives of the local residents.
With every new municipality Galaxy Green Energy enters, the key question continues to repeat itself – where is the best place to start the conversation: local politicians, environmental activist groups, or investors? [619 words]