1. Development of hazardous waste treatment

China's hazardous waste treatment industry started late, and the early stage of industry management development was slow. It started in 1990 and initially formed a relevant management system in 1996. In 2008, the "National Hazardous Waste List" was issued, which went through a relatively long exploration process. In fact, the hazardous waste treatment industry also entered the fast lane during the "Eleventh Five-Year Plan" period. The state has issued many policies and regulations, and the density of issuance clearly shows that the industry development is accelerating.

At present, the overall status of China's industrial hazardous waste treatment industry is characterized by a high level of comprehensive utilization and a low level of harmlessness, with differences in different sub-sectors. Relatively speaking, resource utilization has higher economic efficiency due to its ability to recover resource value, and enterprises that generate hazardous waste can also obtain income by selling hazardous waste, so its development is faster and more sufficient. However, harmless treatment technology is complex, the treatment is difficult, and it brings a large cost burden to enterprises that generate hazardous waste, so its development is slow, and there are even a large number of dumping and discarding incidents. According to the statistics of the Environmental Protection Bureau, in 2015, China's industrial hazardous waste generation reached 42.2 million tons, a year-on-year increase of 16.13%; the comprehensive utilization and disposal rate was 83.6%, a year-on-year increase of 2.4%.

2. Characteristics of the hazardous waste treatment industry

(1) Franchising system

Hazardous waste treatment projects are usually implemented through franchising. Government departments grant franchise rights to qualified enterprises for standardized waste treatment, so that the operation of hazardous waste treatment enterprises has legal basis. At the same time, the government provides corresponding guarantees for enterprises in terms of waste supply and provides certain financial support.

(2) Hazardous waste charging disposal

Hazardous waste is hazardous solid waste generated during the production process of industrial enterprises, which usually needs to be harmlessly and safely disposed of. According to the principle of "who pollutes, who governs", industrial enterprises that generate hazardous waste need to bear the cost of harmless and safe disposal of hazardous waste. Enterprises that generate hazardous waste must properly store hazardous waste and promptly entrust units with hazardous goods transportation qualifications to transport it to treatment enterprises for paid treatment. The transfer of hazardous waste, storage, transportation, and disposal processes strictly implement systems such as transfer notes and implement full-process supervision and management.

(3) Cyclicity and seasonality of the industry

The hazardous waste treatment industry has a certain degree of cyclicity, which is basically consistent with the trend of the macroeconomic situation. Hazardous waste mainly comes from industrial enterprises. When the macroeconomic situation is prosperous, the operating rate of industrial enterprises increases, the amount of hazardous waste generated increases, and the industry prosperity level rises; vice versa. In addition, affected by the Spring Festival holiday, the operating rate of industrial enterprises in the first quarter is slightly lower, the amount of hazardous waste generated decreases accordingly, and hazardous waste enterprises also show a certain degree of seasonality.

(4) Regionality of the industry

The regional characteristics of the hazardous waste treatment industry are obvious, mainly due to: the high cost of long-distance transportation of hazardous waste, the existence of a certain transportation radius; the principle of centralized disposal and nearby disposal of hazardous waste, hazardous waste generated within the jurisdiction should be sent to the local hazardous waste disposal unit for centralized disposal as a principle. For the transfer of hazardous waste, hazardous waste generating units must report the hazardous waste transfer plan in accordance with national regulations and may only be transferred after approval.

3. Main laws and regulations of the industry

The hazardous waste treatment industry is an industry guided by laws, regulations, and policies. Throughout the development history of the hazardous waste treatment industry in various countries around the world, the more sound the environmental regulations, the stricter the environmental standards and environmental law enforcement, the more developed the hazardous waste treatment industry will be, and the more internationally competitive technologies it will have.

Overall, China's legislation in the field of hazardous waste is no more than 10 years, and it has become stricter in the past 5 years. The judicial interpretations of the two highs in the past two years and the promulgation of the new Environmental Protection Law have become important catalysts for the accelerated development of the industry.

Laws related to hazardous waste management include: the Environmental Protection Law, the Law on the Prevention and Control of Environmental Pollution by Solid Waste, the Renewable Energy Law, the Energy Conservation Law, the Law on Promoting a Circular Economy, and the Law on Promoting Cleaner Production. Except for the Environmental Protection Law and the Law on the Prevention and Control of Environmental Pollution by Solid Waste, other laws were promulgated after 2004. The revision of the Environmental Protection Law was completed in April 2014 and came into effect in 2015.

In addition to the above laws, regulations related to hazardous waste also include: "Measures for the Management of Hazardous Waste Licenses", "Identification Standards for Hazardous Waste", "National Hazardous Waste List", etc. The latest revision of the "National Hazardous Waste List" was on June 21, 2016. In June 2013, the two highs issued the "Interpretation of Several Issues on the Application of Laws in Handling Criminal Cases of Environmental Pollution in Links", and stricter law enforcement and higher standards have led to a simultaneous increase in the price and volume of hazardous waste treatment.

4. Industrial chain

The hazardous waste treatment industry does not belong to a certain industry field. It is a comprehensive emerging industry that crosses industries, fields, and regions, and intersects and permeates with other industries. The upstream and downstream industries closely related to the company's business include electroplating, metallurgy, petrochemicals, and water conservancy. Their relevance mainly lies in the mutual penetration of upstream and downstream industries, that is, upstream industries are also downstream industries, fully reflecting the circular economy characteristics of the hazardous waste treatment industry.

5. Market driving factors

(1) Huge amount of hazardous waste generated creates urgent treatment needs

According to the statistical data of the Zhongtou Consultant Industry Research Center, in 2015, China's industrial hazardous waste generation reached 42.2 million tons. The waste generation and licensed units in most regions cannot match the compliant and standardized disposal capacity, resulting in a large amount of hazardous waste being illegally disposed of, indicating that the hazardous waste treatment rate is overestimated. In the first half of 2016, the successive promulgation and implementation of the "Soil Pollution Prevention and Control Action Plan" and the "National Hazardous Waste List (2016 Edition)" and other hazardous waste treatment-related special plans further catalyzed the development opportunities of the hazardous waste treatment industry. It can be seen that China has a large gap in hazardous waste treatment, and the market development prospects are broad.

(2) Uneven distribution of hazardous waste generation and treatment capacity

At present, most of the domestic industrial hazardous waste generation is concentrated in the eastern and northwestern industrialized areas. According to the statistics of the Environmental Protection Bureau, in 2014, the provinces with larger amounts of industrial hazardous waste generation were Shandong with 7.098 million tons, accounting for 19.5% of the national industrial hazardous waste generation; Qinghai with 3.257 million tons, accounting for 9.0% of the national industrial enterprises; Xinjiang with 3.193 million tons, accounting for 8.8% of the national industrial enterprises; Hunan with 2.606 million tons, accounting for 7.2% of the national industrial enterprises; Jiangsu with 2.433 million tons, accounting for 6.7% of the national industrial enterprises. The following figure shows the regional treatment of industrial hazardous waste in China in 2014:

Due to the national principle of "proximity and centralization" in hazardous waste management, the regional characteristics of hazardous waste treatment are also obvious. In 2014, the provinces with the largest volume of comprehensive utilization of industrial hazardous waste were Shandong (6.398 million tons), accounting for 31.0% of the national comprehensive utilization of industrial hazardous waste; Hunan (2.325 million tons), accounting for 11.3% of the national industrial enterprises; Qinghai (1.46 million tons), accounting for 7.1% of the national industrial enterprises; Yunnan (1.371 million tons), accounting for 6.6% of the national industrial enterprises; Jiangsu (1.253 million tons), accounting for 6.1% of the national industrial enterprises; the national comprehensive utilization rate of industrial hazardous waste was 56.4%. A total of 11 provinces had a comprehensive utilization rate of industrial hazardous waste exceeding the national average, with Shandong, Hunan, and Anhui exceeding 80%. The following figure shows the comprehensive utilization rate of industrial hazardous waste in various regions of China in 2014:

In 2014, the provinces with the largest volume of industrial hazardous waste disposal were Jiangsu (1.131 million tons), accounting for 12.2% of the national disposal of industrial hazardous waste; Zhejiang (0.898 million tons), accounting for 9.7% of the national industrial hazardous waste disposal; Guangdong (0.828 million tons), accounting for 8.9% of the national industrial enterprises; Sichuan (0.662 million tons), accounting for 7.1% of the national industrial enterprises; Shandong (0.628 million tons), accounting for 6.8% of the national industrial enterprises.

In 2014, the provinces with the largest storage of industrial hazardous waste were Xinjiang (2.736 million tons), accounting for 39.6% of the national industrial enterprises; Qinghai (1.768 million tons), accounting for 25.6% of the national industrial hazardous waste storage; these two provinces accounted for 65.2% of the national industrial hazardous waste storage.

According to the latest statistics from the environmental protection departments of various provinces and cities, there are nearly 1600 enterprises nationwide holding hazardous waste treatment licenses, with an approved operating scale of approximately 49 million tons/year. According to statistics from the Ministry of Environmental Protection, the national hazardous waste generation in 2014 was 36.335 million tons. The national average supply level is more than 70%, that is, the generation volume divided by the approved operating scale is more than 70%, but there are large regional differences, with 8 provinces having a level below 50%, mostly relatively economically developed regions, and 6 provinces where hazardous waste generation exceeds the approved operating scale. The following figure shows the provinces where hazardous waste generation exceeds the approved operating scale:

The uneven distribution of hazardous waste generation and treatment capacity in China creates growth opportunities for the hazardous waste treatment industry in areas lacking hazardous waste treatment facilities.

(3) The "Soil Ten Articles" promotes the development of the hazardous waste treatment industry

On May 28, 2016, the State Council issued the "Soil Pollution Prevention and Control Action Plan", also known as the "Soil Ten Articles". This plan sets specific targets for soil remediation and related indicators: By 2020, the safe utilization rate of contaminated farmland will reach about 90%, and the safe utilization rate of contaminated sites will reach more than 90%. By 2030, the safe utilization rate of contaminated farmland will reach more than 95%, and the safe utilization rate of contaminated sites will reach more than 95%. According to the requirements of the "Soil Ten Articles", we expect a market size of 200 billion yuan/year by 2020, with a compound annual growth rate of 49%. In addition, the strict standards and high requirements of the "Soil Ten Articles" for soil quality will lead to stricter control of pollution sources, so the introduction of the "Soil Ten Articles" will promote the hazardous waste treatment industry.

(4) Government strengthens supervision of hazardous waste, promoting market growth in the industry

Since the release of the "Twelfth Five-Year Plan" for Hazardous Waste Pollution Prevention and Control in 2012, the state has prioritized hazardous waste pollution prevention and control. Relevant laws, regulations, and technical specifications on hazardous waste management have also been successively issued in recent years, accelerating the development of the hazardous waste industry. With the revised "Law on the Prevention and Control of Solid Waste Pollution" in 2004 as the leading legislation, the revised "Management Measures for Hazardous Waste Operating Permits" in 2007 and the "Medical Waste Management Regulations" of 1999 as the backbone, and the second revision of the "National Hazardous Waste List" in 2008, the third revision of the "National Hazardous Waste List" in 2016, the "Management Measures for Hazardous Waste Transfer Consignment Notes" in 2013, and the standards for hazardous waste identification, incineration, and landfill as branches, China has established a series of hazardous waste treatment process management systems, further increasing the amount of hazardous waste treatment, reducing illegal disposal, promoting technological upgrades, and increasing the demand for hazardous waste treatment services.

6. Market capacity of hazardous waste treatment

According to statistics from the Environmental Protection Bureau, the amount of industrial hazardous waste generated in China in 2015 reached 42.2 million tons, with a year-on-year growth rate of 16.13%. In the first half of 2016, the successive promulgation and implementation of the "Soil Pollution Prevention and Control Action Plan" and the "National Hazardous Waste List (2016 Edition)" and other hazardous waste treatment-related special plans further catalyzed the development opportunities of the hazardous waste treatment industry. It is expected that China will maintain a compound annual growth rate of 15% in the next 5 years, increasing from 42.2 million tons in 2015 to 84.88 million tons in 2020, representing a doubling of market space. Based on the average disposal price of hazardous waste of 2200 yuan/ton, the market space for hazardous waste treatment in 2016 exceeded 100 billion yuan, reaching a production value of 186.7 billion yuan in 2020, doubling compared to 2015.