Source: Green Online

The construction of ecological civilization that is continuously promoted nationwide is spurring a huge demand for environmentally-friendly and rigid, and the environmental protection industry has also entered the era of “strong supervision”.

Although many environmental protection companies are in the period of deleveraging in 2018, looking at various factors, the market situation in 2019 is worth tracking.

On the one hand, it is policy catalysis, on the other hand, it is driven by market demand. In the context of double benefits, the overall development trend of environmental protection has been remarkable since 2018. Although the industry has accelerated its differentiation due to factors such as capital and technology, with the optimization and improvement of the financing environment, the industry recovery is a high probability event, and all the capital will also flow in.

The environmental protection market is becoming more and more “just needed”, and this trend is manifested in the process of deepening the construction of ecological civilization.

Incomplete statistics show that during the “Twelfth Five-Year Plan” period, the total investment in environmental protection in the whole society was about 4.15 trillion yuan, and this figure will soar to more than 16 trillion during the “13th Five-Year Plan” period, of which soil restoration accounts for about 20 %, water environment treatment accounts for about 50%, and solid waste treatment accounts for about 30%.

As for the so-called "cold winter" caused by PPP clearing inventory, deleveraging and the national macro economy, it was actually broken in 2018. For example, in November, policy solutions for private companies' equity pledges and debt risks were intensively released, and central and local governments, financial institutions, and societies were all flowing into the environmental protection market.

In response to the issue of environmentally-friendly listed companies, Wu Haoze, director of the Environmental and Economic Policy Research Center of the Ministry of Ecology and Environment, pointed out:

Individual companies are too radical, short-term debt long-term investment, mismatched funds, and violate the basic economic laws. De-leverage and financial supervision must be used to correct the situation.

Regardless of how the marketization process develops, China's current environmental protection industry is greatly affected by policies. "Regular environmental supervision is the biggest driving force for the development of environmental protection industry," Wu said.

Fortunately, this driving force is getting more and more powerful. From the perspective of 2018 alone, the supervision and enforcement of the entire environmental protection industry is unprecedented.

The eco-environmental governance system, the ecological environmental damage compensation mechanism, and the environmental law enforcement supervision mechanism have become increasingly perfect, and the environmental protection industry has truly entered the era of “strong supervision” in many populations.

Under the strong supervision, the policy dividends are released, and the reshuffle of environmental protection companies is inevitable.

An unnamed senior expert in the environmental protection industry said that, like the overall economic situation, the environmental protection industry is also abandoning the extensive development of the past and entering the stage of high-quality development.

This process may have to be maintained for about three years. At that time, the environmental protection industry will form a new pattern of state-owned enterprises leading investment and private enterprises focusing on market segmentation technology.

At the end of 2018, the benefits of the environmental protection industry are still uninterrupted. At the relevant meeting of the Ministry of Ecology and Environment held on December 24, environmental protection work in 2019 has been deployed. It is reported that the work of pollution prevention and control will continue to advance, and the investment will be expanded. The next step will help enterprises to formulate environmental governance solutions.

As for PPP, it has also warmed up.

Jiao Xiaoping, director of the PPP Center of the Ministry of Finance, recently revealed that PPP regulations and relevant opinions on the development of PPP will be issued soon, and pointed out that “the 10% red line must not be broken, and the PPP expenditure within 10% of the legally compliant red line is emphasized. Responsibility is not implicit debt. The opinion also emphasizes that the legally compliant PPP fiscal expenditure responsibility must be included in the budget."

Looking at the growth rate of the environmental protection industry, the data shows that the growth rate of China's environmental protection industry reached 17% in 2017. In 2018, the growth rate of environmental protection engineering and equipment companies also reached 15% to 30%.

As for 2019, under the stimulus of steady growth and wide credit, the environmental protection industry has room for growth and imagination.

Editor in charge: Miao Rong

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