September 14, 2017 7:30 am JST

China finds silver lining with business of combating climate change

Companies turn challenge into opportunity with clean-energy, recycling

KAZUYOSHI KODAIRA, Nikkei Business Shanghai bureau chief

Chengdu Green Earth Environment Technology started a business to collect garbage for recycling in Chengdu, Sichuan Province. (Photo by Kazuyoshi Kodaira)

SHANGHAI -- The effects of global warming on economies and industries have taken a costly toll in recent years, with natural disasters such as typhoons, floods and droughts incurring $36.9 billion in damage-insurance payouts in 2016, according to global reinsurance firm Swiss Re.

And the effects of climate change on companies will likely continue. A 2014 report by the United Nation's Intergovernmental Panel on Climate Change said the global average temperature will increase by as much as 4.8 degrees Celsius by the end of this century, noting that a rise of just 2 degrees Celsius would inflict huge damage on plants and farm produce. 

But the changing global environment has become a seed of new business for some.

In China, environmental damage caused by rapid economic growth is at a critical level, bringing an increased public awareness of the issue. The central government has responded by toughening environmental regulations, and some companies see new opportunities.

Wen Hui, chairman at Tus-Clean Energy Technology -- a group company of Tus-Holdings, an investment company affiliated with Tsinghua University in Beijing -- said his company aims to become a trailblazer in global clean energy.

Tus-Clean Energy Technology handles a wide range of new energy businesses -- including solar power generation, biodiesel and thermal supply -- with technologies developed at the university for large cities.

It also invests in new energy-related companies through a fund it has set up. Tus-Clean Energy Technology's investment in the field of new clean energy totals more than 6 billion yuan ($919 million) and itself has more than 30 group companies. The group's total investment is expected to expand to about 15 billion yuan by the end of this year. The company also has its eye on overseas markets, having launched businesses in the U.S., Thailand, and Kenya. 

Recycling awareness

On a Sunday in late July in Chengdu, in China's Sichuan Province, a group of employees from Chengdu Green Earth Environment Technology Co., a recycling service company, collected waste material and set up green parasols in front of a gate at a residential area. 

The company collects recycled products with varying frequency -- from once a week to once a month -- in about 800 small residential areas in the city, an operation outsourced by the Chengdu municipal government. The waste material is sorted into paper, plastic, metal and clothes at its factory and then sold to recycling vendors in the market.

In China, where public awareness of recycling is relatively low, the company is looking to find innovative ways to motivate people to recycle. It found the answer in smartphones, which are ubiquitous in Chengdu.

Residents in the city receive points on a smartphone app, depending on the categories of items they bring in for recycling. The accumulated points can be exchanged for products, like tissue and plastic garbage bags, or converted into cash through the e-wallet of WeChat, a popular chat service in China. The company's business is now thriving, thanks to the program that encourages people to participate in recycling.

Waste-processing facilities at major cities in China are reaching their limits in handling waste, and the company is stepping in. "We have been receiving inquiries from local governments around the country," said Anna Yang, a manager at Chengdu Green Earth.

Originally published by Nikkei Business on September 4 issue.

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