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360 Degree Perspectiveof the Environmental Industry
and Review of Major Trends by 2020
N8EE-15June 2011
2N8EE-15
Disclaimer
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Contents
Future Mega Trends and Implications to Environmental Industry 8-12
Top Trends in the Environmental Industry
Recession to Recovery - Outlook to 2020 and Impact to Industry Structure
Key Market Opportunities in 2020
Emerging Technologies and New Business Models of the Future
Addressing Market and Customer Needs
13-16
17-22
23-29
39-42
30-38
Meeting Emerging Environmental Challenges 43-53
Conclusion 54-55
About Frost & Sullivan 56-60
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Global Environmental Industry, Anticipated Timeline for Major Issues 14
Water and Wastewater Treatment Technology Trends 26
Environmental Management Technology Trends 27
Next-generation Technologies for the Environmental Sector 28
The World's Top 10 Polluters Ranked by their Absolute Greenhouse Gas (GHG) Emissions 50
The World's Top 10 Polluters Ranked by their Absolute Greenhouse Gas (GHG) Emissions 51
List of Figures
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Interplay of Environmental Issues 9
Factors Challenging Water and Wastewater Management 16
Worldwide Commitment to Greening 18
Balancing Environment and the Economy 19
Process of Greening GDP 20
The Interrelated Industry Overview 24
Opportunity Triggers, 2020 25
Environmental Market Drivers and Restraints 31
Environmental Market Growth Trends 32
Global Water and Wastewater Market Dynamics 33
Global Water and Wastewater Treatment Equipment Market: 2010 to 2015 34
Global Water and Wastewater Market – Growth Opportunity by Technology Type, 2010 35
Total Global Municipal Water and Wastewater Treatment Equipment Market, 2010 36
List of Charts
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Industrial Manufacturing Procurement Habits, United States 37
Vertical Market Growth Opportunities 38
Competitive Tiers and Future Evolution 40
Competitive Focus and Positioning 41
Global Water Shortage 44
Water Desalination in Various Countries 47
Impact of Market Forces - Present to 2020 and beyond 52
List of Charts (continued)
8
Future Mega Trends and Implications to Environmental Industry
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Water and Wastewater
Waste Management
Environmental Management
Green Supply Chain Management
Sustainability with Social Responsibility
Green Monitoring andDiagnostics
Source: Frost & Sullivan analysis.
Circular Economy/Cradle-to-Cradle
Low Emission FutureEnvironmental Protection and
Security
Cross-impact of Diverse Issues
Air Pollution Control
Achieving environmental security will depend upon a wide spectrum of issues coming together. Each in its own capacity must ensure that end practices are more accountable, and a measurable
commitment to emission reduction is highlighted. Most importantly, they need to advocate a stop to further impact to the environment, through adherence
of stringent performance procedures governing activities in their respective domains.
Interplay of Environmental Issues
The Interplay of Environmental Issues
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Greater regulations on the national, municipal, and industrial fronts continue to drive activity inthe environmental industry segments.
Gaps in municipal infrastructure spending continue to exert influence on service delivery andproject implementation.
Concerns over mandatory reuse, recycling, and zero-liquid discharge continue to be the top-of-mind agenda of all industries dealing with questionable environmental footprints.
Attention to water monitoring, resource monitoring, consolidation, and applying smart solutionsfor managing data and resources within the environmental segments emerge as major trends.
Sustainable business practices and effective management of manufacturing processes arebeing implemented to incorporate occupational health and safety, urban repair, and social well-being.
Corporate social responsibility (CSR) considerations are raising requirements for effectivechanges—from simply addressing the pollution problem of an enterprise or sector to adjustingthe industrial structure, promoting clean production, and developing a circular economy.
These factors are expected to intensify competition and eliminate low-end competitors that arenot environmentally friendly.
The Interplay of Environmental Issues (continued)
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1950s Urbanization
2000s Suburbanization
2015s Network City
2020s: Branded Cities
• Most offices moved to the first-belt suburbs except noncost-sensitive activities: citycenters becoming shopping areas (small-scale deliveries) for expensive goods and livingareas for “double income, no kids” households.
• Industry offices moved to the first-belt area along with medium-income families.Meanwhile, manufacturing facilities and low/medium-income families relocated to thesecond- and third-belt areas along with logistics centers created on the second-beltperiphery.
• “Green wave” families live in outer suburban areas. Hypermarkets and malls mostly havebeen created inside the third-belt, low-cost area (for large-scales deliveries).
• Environmental issues such as water stress, sanitation, waste disposal and treatment,landfill problems, and pollution will have to be addressed for emerging urban centers, thuscreating new opportunities for industry participants.
Urban sprawl, first highways and ring road
Creation of the historic center and districts
Third suburban area and cities along the highways created, ring road overblown by urban sprawl
Ring road motorway, living areas growing
outside the ring road as seen in
London
Western Hemisphere will face an increasing trend of deurbanization
Urbanization Trends will Impact Environmental PrioritiesNeeds from emerging deurbanized cities and corridors will create new challenges and opportunities
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Example: India’s urbanization prospects by 2030
40% of India’s population will be urban
68 cities will have a population of more than 1 million each
70% of net new employment will be generated in cities
Change in solution delivery is moving from unitary tointegrated and turnkey solutions, with attention toportability aspects and emergency deployments.
Governments globally will promote megacity corridorsto deurbanize and ease pressure on infrastructureresources.
The need for environmental management programsand new practices to meet a growing need for drinkingwater, water treatment, sanitation, and wastemanagement among others will increase significantly.
Suppliers’ preparedness to respond to these growingdemands will be influenced by the type of deploymentwarranted by geographic peculiarities, availability ofresources, and cost-effective solutions.
Suppliers with local expertise and established logisticalcapabilities will have first mover advantage in providingsolutions.
Alliance partnerships among public and privatepartners will mark the supply landscape.
Source: Delhi-Mumbai Industrial Corridor Development Corporation
Environmental Priority Areas:• Formulating a sustainable flood management strategy • Minimum 20% recycling of water • Optimizing energy demand through renewable energy• Emphasis on reduce, recycle, reuse
The Central Challenge—Water:• Need to promote recycling and reuse of urban and industrial
water and use of sea water in coastal areasSolutions:-• Desalination and cost-effective membrane technologies will
be adopted substantially to meet this challenge
Urbanization at this scale could lead to unprecedented consumption and extreme stress on the country’s natural resources. Significant attention will be given to sustainable water, energy and waste.
Addressing Emerging Environmental Needs
13
Top Trends in the Environmental Industry
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2010 2015
Water Issues
Major Issues
Sustainability and
Environmental Security
China overtakes the United States as the
world’s biggest emitter of CO2
2020
Accelerated investmentin carbon capture
and storage
Price stabilizes for large-scale deployment of water
treatment technologies
Source: Frost & Sullivan analysis.
Environment Management
Issues
Resurgence of interest in public-private-partnerships (PPP) and infrastructure
renewal mandates for water distribution
Mandate for water footprinting and
reporting globally
Water security planning gains momentum
Information technology plugs Into
environmental diagnostics
Carbon becomes a business imperative
Environmental information monitoring set to avert more than
60,000 tons in emissions
Regulators take class actions with reduction mandates for carbon
and resources
Water becomes the new carbon
“Green” dominates chain of command
with heavy emphasis on CSR
Streamlining of landfill regulations and disposal
techniques
Revisiting drinking water security with growing
pressure on fresh water sources
Drinking water and sanitation needs driven by new build in Asia-
Pacific region, the Middle East, North Africa, and Latin America
India to drive the global momentum of meeting millennium-linked
drinking and sanitation needs for developing countries
China Latin America near completion of basic
sanitation infrastructure
Water stress driving water reuse in the Middle East, Australia, and the United
States
Utilities opt for streamlining collection and
storage/treatment/reuse/disposal of storm water
Municipalities establish commercial links of selling treated
wastewater to industry
Concerns on chlorine by-products benefits nonchlorine disinfectants
such as ultraviolet (UV)
UV joined by ozone, advanced oxidation, and
chlorine alternatives
Biosolid concerns in municipal sectors catalyze growth in
Europe and the United States
Mandatory standards for cradle-to-cradle production
process
Global sustainability rankings to set parameters and standards for behavior
of nations and organizations
Membranes and reverse osmosis, EDI –
electrodeionization
Bioremediation
Global Environmental Industry, Anticipated Timeline for Major Issues
Global Environmental IndustryAnticipated Timeline for Major Issues
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Rapid population growth and urbanization
Water stressStorm/flood water
management
Material resource and energy recovery
Carbon footprint
Water quality and public health
Water reuse and recycling
(membranes, chlorine injections) Water tariffs
Social
Ecological
Economical
Water supply and sanitationneeds of remote communities
Aquatic biodiversity and habitats
International agenciesRegional/national environmental
protection agencies
Political and
Financial Business and financial agencies
Key Sustainability Drivers
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Global populations are expected to exceed 9 billion by 2050. Morethan one-fifth of the global total, 1.6 billion people, are expected tolive by a coastline by 2015.
Inadequate infrastructure and management systems for theincreasing volume of wastewater that will be produced are at theheart of the clean water and wastewater crisis.
Only 1% of the Earth's fresh water is available for withdrawal andhuman use. Production processes generally use 70%–90% of theavailable fresh water, returning much of this water to the systemwith additional nutrients and contaminants.
Despite high profile attention from world governments andorganizations such as the United Nations, these issues are provingdifficult to resolve, requiring significant sums for investment duringlong periods of time.
Successful and sustained water and wastewater management willneed an entirely new dimension of investments to start now,involving public and private sources.
In light of rapid global change, communities should plan water andwastewater management against future scenarios, not currentsituations.
Water availability, security, and the problems ofwastewater management are challenged bythree interlocking crises that make presentsupply and distribution systems unsustainable.
Rising costs
Changing demographics
Quality
The Size of the Problem
Cost
Demographics Quality
Cost
Demographics Quality
Factors Challenging Water and Wastewater Management
Source: Frost & Sullivan analysis.
Water and Wastewater- A Key Global Challenge
17
Recession to Recovery - Outlook to 2020 and Impact to Industry Structure
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Worldwide, governments respond to economic downturn with significant financial commitments toward“green” initiatives and environmental sustainability.
A “green” economy is seen as a way out of an economic crisis, particularly with creation of “green” jobsthat reduces dependency on finite resources and mitigates adverse impacts of climate change.
Investing 1% of the gross domestic product (GDP), or about $750 billion, into five key sectors—fromrenewable energy to freshwaters—could, in conjunction with other measures, play an important role inreviving the global economy and boosting employment.
“Global Green New Deal Economy”—United Nations
Environment Program (UNEP), early 2009
One-third of the approximately $2.5 trillion of planned stimulusmoney, put together by governments globally, is anticipated to beinvested on “greening” the world economy.
China andSouth Koreaare emergingas globalleaders intheircommitments.
In China, more than one-third of recoveryspending is focused onwater infrastructure forenergy efficiency andrenewables such aswind and solar power.
South Korea isinvesting in atransition to alow-carbon,resource-efficient“green” economy.
Other significantcontributorsinclude Australia,the United States,Japan, Germany,South Africa, andFrance.
One year later …
Worldwide Commitment to Greening
Source: Frost & Sullivan analysis.
Worldwide Commitment to Greening
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Economic analyses of mitigation undertaken in the United Kingdom, Australia, andsome Scandinavian countries indicate that reducing greenhouse gas emissionssignificantly is possible at a modest cost.
The costs associated with inaction are much higher than those associated with thismitigation program. To succeed, the whole economy needs to be pushed towarddecarbonization-a fact that remains true regardless of what balance a country maywish to strike between economic health in the long term and environmentalprotection.
Source: The Conference Board of Canada, 2009
Economy• High GDP growth• Growth in industrial output• Employment growth• Increased savings and
investment• Growth in manufacturing
and exports
Environment• Safe air quality• Reduced energy intensity• Increased forest cover• Reduced waste• Lower greenhouse gases• Effective management of
fresh water resources
Technology, innovation, efficiency, and behavioral changes are key areas of emphasis for governments in their economic and environmental policies to improve their rankings while doing the balancing act.
Balancing Environment and the Economy
Source: Frost & Sullivan analysis.
Balancing the Environment and the Economy
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The “green” GDP is an index of economic growth with the environmental consequences of that growth factored in. Pioneeredby China in 2004, this concept is now increasingly being adopted by global policy makers and governments as part of theireconomic development agenda.
“Green” GDP is an adjustment of traditional GDP, deducting the resource development/consumption cost (RDC) andenvironmental damage costs (EDC) in economic activities.
Environmental pollution causes great economic losses in GDP. Green GDP is expected to provide a more comprehensiveperspective on GDP, and one that can improve environmental protection and rational resource utilization.
The environmental industry in emerging nations such as India, China, Brazil, and Russia is considered behind developedcountries by more than a decade. The introduction of the “green” GDP concept is likely to narrow the gap and forcecorporations to implement environmental priorities globally.
Source: Chinese Academy for Environ-mental Planning (CAEP), Frost & Sullivan analysis.
Process of Greening GDP
Greening GDPThe New Approach to Sustainable Economic Development
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American Clean Energy and Security Act“Reduce GHG emissions by 83 percent over 2005 levels by 2050”
California Global Warming Solutions Act
“GHG reductions to 1990 levels by 2020”
Other state and provincial initiatives:United States—Oregon, New York, Florida, ConnecticutOntario, Canada—Green Energy ActBritish Columbia, Canada—Environmental Assessment Act
UNCCC, 2009 -Copenhagen Climate Summit
“Copenhagen Green Climate Fund -$30 billion to developing nations to fight climate change issues”
WORLD WATER WEEK Stockholm
“Review regulatory directives; Highlighting Water Stress and Water Foot printing”
A mixed bagof bills making
headlinesin 2009
with varying priorities
and mandates
“Outcome –Still Divided on
Climate Change”
Regulatory Perspective
22N8EE-15
• Various bills addressing climate and environmental issues made headline in 2009, ranging from energy security,cap and trade, to energy reduction, and sufficiency goals and directives.
• The American Clean Energy and Security Act proposed cap and trade through a complicated process ofallowances and offsets that measure endeavors to reduce greenhouse gas emissions by 83% from 2005 levelsby 2050.
• In the absence of concrete federal measures, most state and local governments have taken their own steps tocurb greenhouse gas emissions. In North America, California was the first state to move on the issue. The state'sGlobal Warming Solutions Act, enacted in 2006, calls for greenhouse gas emissions reductions to 1990 levels by2020. Oregon, Connecticut, Ontario, and British Columbia are among other states and provinces with emissionsreduction legislation on the books. Several more states and provinces, through executive order or other methods,have instituted emissions reductions goals.
• The Copenhagen Climate Summit toward the end of 2009 was much awaited upon by environmentalists to bringabout stringent deadlines and greenhouse gas reduction goals for high-emitting countries. However onlynonbinding agreements, allowing nations to set their own emissions reduction goals, were established at thesummit, with no penalties if goals are not met.
• A major positive to emerge from the accord is the Copenhagen Green Climate Fund, which provides a pool ofabout $30 billion during the next three years to help developing nations mitigate the effects of climate change. Itis funded by the European Union, the United States, and Japan, among others.
• These various initiatives, alongside the Stockholm water Initiatives, are expected to keep the environmentalindustry participants active in meeting and helping others meet the regulatory directives.
• Industry opportunities are expected to align themselves with regulatory directives and timelines as nations fight toreduce the social and ecological imbalances, while continuing to maintain economic growth.
Regulatory Perspective (continued)
23
Key Market Opportunities in 2020
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Smart Infrastructure: Multimodal transport hubs providing air, rail, road connectivity to other megacities.
Smart Technology: Intelligent communications systems connecting home, office, iPhoneand car on a single wireless IT platform.
Satellite Towns: The main city center will merge with several satellite towns to form one megacity.
Smart Cars: At least 10% of cars will be electric, with free fast-charging stations every half mile.
Smart Grid: Infrastructure to enable real-time monitoring of power flow and provide energy surplus back to the grid.
Smart Energy: About 20% of the energy produced in a city will be renewable (wind, solar).
Smart Buildings: At least 50% of buildings will be green and intelligent, built with building integrated photovoltaics (BIPV); 20% of the buildings will be net zero energy buildings.
Source: Google ImagesImpact zone for water, waste management, environmental management
Megatrends in parallel industries will influence the
environmental sector and present new opportunities for
suppliers
The Interrelated Industry Overview
The Integrated Industry Overview - 2020Environmental Issues and the Urban Infrastructure Setting
Key:
25N8EE-15
ProjectedImpact on the
Industry
High Impact
Low Impact
Drinking water and sanitation needs in Asia, the Middle East,
Latin America, and Africa
Source: Frost & Sullivan analysis.
2015
2020
2010
EU water reuse and recycling catalyzes growth;
China and India boost momentum
Biosolid concerns in the municipal sector catalyze growth in Europe and the
United States
Carbon footprint drives energy recovery particularly in
industries
Sludge generation in developing countries
triggers biogas and waste in the energy market
Sludge dewatering continues to be the choice for developing countries
Produced water sector for oil and gas establishes presence
Interest in nonchlorine disinfectants and
techniques such as UV
UV joined by ozone, advanced oxidation, and chlorine alternatives
The Asia-Pacific region emerges as the strongest market opportunity for
biosolids
Complex contaminants such as endocrine
disruptors gain focal point
Marketplace established for water trading between municipalities and commerce
Europe and North America evaluate best options to tackle extreme
weather -related flooding
Rainwater harvesting systems emerge as a strong market in the
Asia-Pacific regionDecentralized systems market heats up in
Southern, Central and Eastern Europe
Immediate Long Term
Opportunity Triggers, 2020
Opportunity Triggers-Major Trends by 2020
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1980 20001990
Evolution of Water Management Technologies and Solutions
2010 2020
Membranetechnology
Municipalwastewater
Serviceoutsourcing
Drinkingwater
Water and WastewaterTreatment
WaterManagement
Reuse and recycling
Advancedwastewater treatment
(nutrient removal)
Inte
grat
ed W
ater
Man
agem
ent &
Se
rvic
es
Turnkeysolutions
Material, resource and energy recovery
Biosolidsmanagement
Sewageconnection Worldwide
sanitation
Treatment systems for small communities
Retrofit, replacement and upgrades
Water needs of developing countries
Ballast -water treatment
Sustainable Solutions and Services
Chemical-free treatment
Reverse osmosis desalination
Storm water management
Water Reuseand Recycling
Water and Wastewater Treatment Technology Trends
Source: Frost & Sullivan analysis.
Water and Wastewater Treatment Technology Trends
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1980 20001990
Evolution of Waste Management Services
2010 2020
Gratetechnology
Sewagesludge
BiogasMunicipalsolid waste
Fluidized bedtechnology
WasteManagement
Waste toRevenue
Waste toValue
Biomass
Energy fromwastewaterIntegrated waste
solutionsCogeneration
(CHP)
Agriculturalwaste
Biofuels
Wastegasification
Wasteto Energy
Anaerobicdigestion
Villageelectrification
from waste
Valuerecovery
Mixed wastetreatment—landfill
treatment
Separationat source
Battery waste recycling
Waste electrical and electronic equipment
(WEEE) recycling
Biological waste to energy
Incineration
Steam sterilization
Waste management
servicesDeep -sea disposal for nuclear waste
Medical and nuclear waste
Environmental Management Technology Trends
Source: Frost & Sullivan analysis.
Environmental Management Technology Trends
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2010
Evolution of CCS and Associated Technologies
2015 2020
Postcombustion
Precombustion
Electric and Natural Gas
Utility
Process-based; Design/Build
Waste toValue
Oxyfuel combustion
Carbon Sequestration
Air separation
Gassifiers
CO2 compression
Deep-sea disposal
Geological Injections
Enhanced oil recovery
Carbon- based concreteAir capture technologies
Next-generation Technologies for the Environmental Sector
Source: Frost & Sullivan analysis.
Carbon Capture, Storage and SequestrationNext-generation Technologies for the Environmental Sector
29N8EE-15
More than $7 million in
federal stimulus funds,
part of the first round
of the Department of
Energy's (DoE) $1.4
billion piece of the
American Recovery
and Reinvestment Act
funds
Major Initiatives for CCS technologies in North America are setting the stage for global attention into this nascent technology sector.
Major Initiatives and Growing Attention for CCS
Air Products and Chemicals Inc.; design-construct-operate project; more than 1million tons of CO2 for sequestration into the Oyster Bayou oilfield, Texas. DoEshare of the project: $961,499.
CEMEX USA, dry sorbent CO2 capture technology to remove up to 1 million tonsof CO2 per year. DoE funds: $1,137,885.
ConocoPhillips; demonstration project at its own facility; 85% of the CO2 from theprocess stream will be captured, and more than 5 million tons sequestered. DoEfunds: $3,014,666.
Leucadia Energy and Denbury Onshore; demonstration project to capture andsequester more than 4 million tons of CO2 emissions at Lake Charles, La., toOyster Bayou oilfields in Texas. DoE funds: $540,000.
Praxair partners with BP, Denbury Resources and the Gulf Coast Carbon Centerto demonstrate CCS and to transport 1 million tons of CO2 per year. DoE funds:$1,719,464.
30
Addressing Market and Customer Needs
31N8EE-15
Mar
ket D
river
sM
arke
t Res
trai
nts
1-2 yrs 3-5 yrs 6-10 yrs
Government support stemming from a need to satisfy resource demand in a sustainable way and curb carbonemissions
Corporate social responsibility and sustainability considerations
Slow adoption rate for innovative technology and high investments
Lack of resource supply to meet existing demand on a regional basis
Planning issues and slow regulations for energy and resources, including technology adoption
Source: Frost & Sullivan analysis.
Addressing needs of aging infrastructurerequirements globally
Economic instability, reductions in capital expenditures and budget constraints
Environmental Market Drivers and Restraints
Current Trends and Challenges to Market Growth
High High High
High
High
High
High
Medium
Medium
Medium-High Medium-High
Medium-High
Medium-High
Medium-High
Medium-High Medium-High
Medium-High Medium-High
Medium
Medium
Medium
32N8EE-15
2011Water and Wastewater
Bioremediation
Waste to Energy
Waste Management
Air Pollution Control
2012
2013 2014 2015
Source: Frost & Sullivan analysis.
Example: North American Market Opportunities by 2015
• Water and wastewater treatment equipmentdominate all key environmental market segments.
• Regulations and environmental quality deteriorationissues are likely to generate interest for segmentssuch as waste to energy and air pollution control.
• Water and wastewater treatment equipment equalsapproximately $4.50 billion.
• Bioremediation equals approximately $12.00 billion.• Air pollution control equals $1.35 billion.• Waste to energy equals 2,500 megawatts of
installed capacity.
Environmental Market Growth Trends
Environmental Market SegmentsGlobal Snapshot of Projected Growth of Select Segments
Increasing Decreasing Steadily Increasing
33N8EE-15
Global growth for the past five years creating a sustainable buzz.
Major growth in private investments (equities up by 40% in 2007-2008) is driving the sector.
Regional market booms in China, India, the Middle East, and Eastern Europe.
Technology-led growth in reverse osmosisdesalination, recycling/reuse, distribution efficiency, etc.
Rapid emergence of energy from wastewater solutions.
Clean water is the oil of the 21st century, representing a rising demand for a fixed resource.
Market Growth Opportunities
Drivers
Restraints
Drivers
Restraints
Growing demand for
potable water
Environmental legislation
Private sectorinvestment
Failed privatization
ventures
Qualityrequirements
Initiatives toraise access to
sanitation
Drivers
Restraints
Drivers
RestraintsRegionally
poor enforcement
Lack of public sector capital
raise access to
Market maturity in the European Union (and United States)
Intrinsic link to energy markets
Global Water and Wastewater Market Dynamics
Source: Frost & Sullivan analysis.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Water Wastewater Sludge
Year
Rev
enue
s ($
Mill
ion)
Global Water and Wastewater MarketsMarket Growth Opportunities
34N8EE-15
Global Water and Wastewater Treatment Equipment Market 2010-2015
61%Municipal
Industrial 7.7%
CAGR 2010-2015
8.0%
0%
Equipment Market 2010
39%
$21.4 billion
$14 billion
10%
8.2%
100%TOTAL $35.4 billion
• Rapid increases in population in developing countries and major urban centers will influence major investments forwater and wastewater treatment needs.
• Lack of freshwater resources is less of a region-specific issue and fast becoming a global issue, resulting in rapidgrowth of the seawater desalination market and water reuse and recycling.
• The aging water and wastewater infrastructure of the developed regions, coupled by increasing stringent legislation,will catalyze replacement opportunities as well as advanced and efficient treatment systems.
Source: Frost & Sullivan analysis.
Rev
enue
s ($
Bill
ion)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
West Europe East Europe North America Latin America& Caribbean
ME & Africa APAC
Ind Sludge
Mun Sludge
Ind WW
Mun WW
Ind Water
Mun Water
Global Water and Wastewater Treatment Equipment Market
35N8EE-15
Total Market Segmented by Technology (Total Global Market Size in 2010 = $35.20 billion)
Membrane Bioreactors (MBR)
Micro FiltrationReverse Osmosis
1.9 5.1 2.8 3.5 1.3 1.5 0.43
3.5 2.28 4.2
Ultra VioletOzone
ChlorinationDemineralization
Ultra Filtration
Wastewater Pretreatment9.910.9 10.811.333.6
Water and Wastewater ClarifiersOther Primary Wastewater
Activated SludgeOther Biological Wastewater
Sludge Thickening4.8 1.7 1.9
Sludge DewateringSludge Digestion
Sludge DryingFiltration 16.4
Nano Filtration
CAGR 2010 - 2015Low (<5%) Med (5-8%) High (> 8%)
Med
High
Very High
LowMed
Med
Med
Med
Med
Med
Med
Low
High
High
0.71.81.01.20.40.40.1
1.80.71.33.53.83.84.01.21.70.60.75.8
$ Billion MarketShare (%)
0.5 Upflow Anaerobic Sludge Blanket (Municipal) 0.2
Other Treatment Equipment 1.50.5
High
HighHigh
High
HighHigh
Global Water and Wastewater Market - Growth Opportunity by Technology Type, 2010
Source: Frost & Sullivan analysis.
Growth Opportunities by Technology Type
36N8EE-15
Compound annual growth rate (CAGR)2008-20158.6%
Municipal water and wastewater equipment market 2010$21.29 billion
0% 5% 10%
Total Global Municipal Water and Wastewater Treatment Equipment Market, 2010
Source: Frost & Sullivan analysis.
14.3%
14.9%
3.6%
5.3%West Europe
North America
East Europe
$4.92 billion
$1.27 billion
$3.54 billion
$1.26 billionLatin America
Middle Eastand Africa
$3.3 billion
APAC $7.0 billion
8%
9.7%
• The Asia Pacific region (APAC) hasemerged as the largest regionalmarket driven by new buildopportunities in both the municipaland industrial sectors.Western Europe and North Americaare the next largest markets with thepresent nature of opportunitieslargely related to rebuild,replacement, upgrades, andrefurbishment.
• Growth markets include theMiddle East, Africa, Latin America,and APAC, which are characterisedby high population density lackingadequate drinking water andsanitation.
• The municipal market is set toexperience high growth largely onaccount of global initiatives such asthe United Nations’ MillenniumDevelopment Goals of providingsafe drinking water and sanitation.The fulfillment of the targets willlargely be influenced by the fundingcapacity and support mechanisms.
Market worth $21.29 billion in 2010
Municipal Sector to Drive Regional Opportunities
37N8EE-15
Source: Frost & Sullivan analysis.
Equipment
OperationsSupport services
Maintenance of equipment
Ownership treatment plantsand equipment
Engineering and consultingservices
Operation of treatment plants
Outsource
In sourceVariable
Analysis/ studies
Design and fabrication of equipment
Industrial Manufacturing Procurement Habits, United States
Vertical Market Demand - Industrial Manufacturing
One of the top three users of water globally;viewed as the third-largest user of water inNorth America.
Variety of industry segments that use water formanufacturing purposes: pulp and paper,pharmaceuticals, mining, microelectronics, oiland gas, food and beverage, and textiles.
Corporate social responsibility and zero liquiddischarge programs being implemented intocorporate culture; these will impact waterpractices in this sector.
Positive trend for procurement of water servicesfrom the industrial sector and representingsustained business opportunities for suppliers.
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• Service vendors that offer design build and operations; maintenance capabilities should see an increase in demand
• Corporate social responsibility and sustainability vendors
• Municipalities that continue to pursue conservation programs and reuse strategies for residents
• Product developers of residential water treatment products that treat regional contaminant concerns
2011
Agriculture Industry
Power Generation
Industry
Industrial Manufacturing
Residential and Domestic Use
2012 2013 2014
2015
0
0
• Vendors that participate in smart-grid technology, either for design or implementation
• Water reuse design vendors that can retrofit existing commercial buildings for efficient energy and water uses
• Vendors that can provide advancements to existing irrigation technology
• Water rights organizations/associations that can mitigate the legal ramifications of distribution rights
Source: Frost & Sullivan analysis.
0
0
Vertical Market Growth Opportunities
Vertical Market Growth OpportunitiesSelect Segments
Increasing Decreasing Steadily Increasing
39
Emerging Technologies and New Business Models of the Future
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Manufacturers
Environemntal consulting companies/service providers
Turnkey infrastructure providers
Technology incubators, third-party solution providers and integrators
Municipalities, grid-security solution providers, power infrastructure providers, IT
solution providers
Monitoring, quality control, health and safety providers, IT solution providers
Market Evolution and Consolidation
Com
petit
ive
Tier
s
Traditional Positioning
Diversification, collaboration and
new capability creation with
market evolution
Competitive Tiers and Future Evolution
Source: Frost & Sullivan analysis.
Competitive Tiers and Future Evolution
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Supply chain and logistics management for remote
deployments
Advanced environmental quality monitoring
Advanced waste management for
nuclear waste and carbon waste
Water grid management and
monitoring
Carbon capture, storage and
sequestration
Turnkey solutions for water, waste and
sanitation for emerging markets
Technology diversification to
include treatments for complex
environmental contaminants
Value recovery and treatment of by-products
Packaged solutions for small
communities Technology and market trends will shape competitive focus
Readiness to respond to these changing trends will influence
growth of market participants by ensuring potentially high returns
Market
Tech
nolo
gyStrategy for operating
decentralized market systems
Competitive Focus and Positioning
Sour
ce: F
rost
& S
ulliv
an a
naly
sis.
Competitive Focus and PositioningInnovation to Drive Positioning of Participants
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• Generally suppliers tend to focus on one or more of thesefactors to position and brand themselves in the environmentalindustry as shown to the right.
• Increasingly however, suppliers are developing their pitcharound ‘responsible manufacturing’, ‘cradle-to-cradleinitiatives’ and ‘enhancing the concept of well-being for theuser’.
• Beyond just marketing messages, in the future theseelements will comprise key indicators that measure acompany’s performance and investor confidence.
• Reporting corporate social responsibility as part of annualreports will become a more comprehensive exercise, with theyardstick extending to include a company’s performance inareas of providing ‘health, wellness and well-being’ as part ofits value proposition to customers.
Safety and Security
Low Emission
Product Quality
Comfort/Convenience
Ease of Installation
Design and Styling
Cost of Ownership
Factors which currently form basis of differentiation among OEMs
Health, Wellness and Well-Being is expected to be the Next Big Performance Indicator For Differentiation for OEMs
The Next Big Factor for Differentiation and PositioningEmerging Key Performance Indicators
43
Meeting Emerging Environmental Challenges
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Water stress in the above map is defined as: • Low when less than 10% of total available is withdrawn • Moderate when 10% to 20% of total available is withdrawn • Medium-High when 20% to 40% of total available is withdrawn • High when more than 40% of total available is withdrawn
Source: The World Business Council for Sustainable Development, and Frost & Sullivan analysis.
Global Water Shortage
Global Water Shortages Will Drive Water Strategy and Planning Issues
Intelligent water planning to searchfor scarce supplies and to protectsupplies will be stringently followedby organizations in 2020 – to becomea measure of corporate governances.
Water footprint and reporting isexpected to be mandatory by 2020.
Contaminant removal regulations willinfluence vendors and theirbusinesses.
Waste disposal and deep-sea burialIssues will continue to challengetechnology innovators.
Water commoditization and tariffs willimpact supply and demand by 2020.
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Water scarcity is often a factor of geography rather than an issue of global shortage. This is often exacerbated bypoor water management and allocation, resulting in inefficient water use and a lack of water for vulnerablecommunities and environmental needs. Added to this is the challenge of creating access to available supply, whichis at times financially prohibitive.
Water shortages are likely to spread due to increasing demands from a growing global population, unsustainablewithdrawal rates, difficulty in finding new supplies, and changing climatic and precipitation patterns.
As water availability declines per capita and existing resources are required to satisfy a broader range of needs,competition for water rights can materialize. In such cases, local authorities are required to balance the needs ofdomestic, industrial, and agricultural consumption by considering the requirements to maintain ecosystems.
In a number of regions of the world, the quality of freshwater resources is declining rapidly due to reasons such asdischarge from industrial sites, agricultural runoff, sedimentation due to land clearance activities, saline intrusion ofcoastal aquifers, and the reduced ability of watercourses to assimilate pollutants due to decreased stream flow.This can lead to greater water treatment costs to meet the quality requirements required for production of goods.
Community interaction with water will play an important role, particularly in regions where water scarcity is alreadybeing felt.
The ability of businesses to work in isolation is no longer a valid proposition as community groups are increasinglyexercising their rights to question water allocation and actual/perceived abuse of water resources by companies.
Business will be required not only to ensure their facilities are being optimally run in terms of water usage, but alsoto ensure their activities are transparent to the local community with open channels of communication.
Relationship between Business, Government and Society will be Significant in Managing Water Crisis
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Energy and resource recovery fromreverse osmosis desalination plants
Water reuse and recycling systemsmarket (membrane bioreactorsystems) *
Chemical-free, disinfection, and waterand wastewater treatment (UV andozone; OSHG and BHC; advanced watertreatment technology such as UV, EDI,ozone; desalination) *
Nutrient removal and wastewatertreatment solutions for rapidlygrowing cities (moving bedbioreactor systems)
Biogas generation from wastewatertreatment (anaerobic digesters suchas upflow anaerobic sludge blanketsystems)
Demand from Asia, Africa, and the
Middle East will fuel the need for faster commercialization and deployment.
* Trends in disinfection technologies are expected to gravitatetoward concepts such as biological nutrient removal fromdrinking water, and cleaner variations of chlorine treatment suchas on-site hypochlorite (OSHG) and bulk hypochlorite (BHC)generation technologies. Liquid chlorine gas treatment isexpected to be phased out in favor of cleaner alternativetreatments, but that is projected to be 20-25 years away.However, this requirement will ensure that new technologyinnovation and development coincide with concepts such asOSHG, BHC, as well as advanced water treatment technologiessuch as UV, ozone, and membrane-based treatment processes,among others.
Demand for Emerging Technology Solutions
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Water Desalination in Various Countries
Des
alin
atio
n C
apac
ity: T
hous
and
Cub
ic M
eter
s P
er D
ayContinued Interest in DesalinationDriving Water Programs and Innovations
The United States is the second-largest global market fordesalination projects, however, most of the applicationsare for brackish groundwater treatment.
Technological advancements may reduce energyrequirements and costs, although regulations are notprescriptive.
This is a segment that will continue to drive innovations,technology commercialization, and viable marketdemand globally.
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Desalination of sea water is often the only viable option for providing safe drinking water in many arid, coastalregions, or isolated locations such as small islands.
This has been an established technology since the 1950s. By 2006, approximately 24.5 million cubic meters ofwater were being produced per day for drinking water, tourism, industry and agriculture, amounting to 58% ofall desalinated water produced as per the United Nations Environment Program (UNEP). Production isexpected to increase to 98 million cubic meters a day by 2015 (UNEP sources, 2009).
Desalination is not without consequences, both in terms of high economic cost, energy requirements, andenvironmental and social implications.
Desalination could lead to local ecological changes, resulting in shifts in species diversity, opening thepotential for the colonization of exotic and potentially invasive species, and changing ecosystems.
The sustainability of desalination will improve with technology and innovations, and will witness activedevelopments by 2020.
For instance, researchers at the Massachusetts Institute of Technology are developing a new way todesalinate water, which could lead to small, portable units powered by solar cells or batteries that can providefresh water to rural areas or during disaster relief. This could create a low-cost, low-power, highly effectivedesalination process for small-scale relief operations. The innovation is expected to lead to productmanufacturing during the next two years.
Desalination Processes in the FutureEnvironmental and social implications must be considered
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Water Scarcity Solutions Long-term Potential
Water reuseprograms Medium-High
Desalination Medium-High
Water rightsand regulations Medium
Water Reuse Areas Water Rights and Regulations
Contaminant removal from groundwater isof growing concern for municipalities inproximity to industrial manufacturingwastewater sites.
Ultrapure treated wastewater is onlyreused for non-potable applications suchas irrigation or internal boiler cooling.
Stigma remains against potable reuseprograms globally.
Potential for Key Water Programs
Activated carbon systems-treatmentsystems used to remove volatile organiccompounds (VOCs) from industrial waterand landfill water reuse applications.
Media filtration systems-gravity andpressure filter systems (deep-bed, upflow,pulse-bed, and dual multimedia) types.
Membrane filtration technology-microfiltration, nanofiltration, ultrafiltration,and reverse osmosis applications.
Transfer of water rights from the agricultural sector togovernment control is being explored, but has anumber of legal ramifications.
Water use restrictions imposed on industrial andresidential end users becoming more common.
Changes to regulations will drive technologicaladvances to treatment equipment.
Focus of upcoming regulations on contaminantremoval from water supplies and more stringenteffluent standards are growing trends.
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The World's Top 10 Polluters Ranked by their Absolute Greenhouse Gas (GHG) Emissions
Countries and Emissions(mt/p.a)
2020 Reduction Goals and/or Other Initiatives Challenges
Key Demand Areas and Opportunities for Solution
Providers
#1 China 6,027
Reduce emission intensity by 40% to 45% by 2020,
compared to 2005 levels.
Given its high economic growth rate, China's emissions will continue to rise rapidly for at least a decade.
Water treatment, waste management, air-quality management, water
infrastructure renewal.
#2 United States5,769
No firm commitments, but various low-carbon initiatives
announced.
Resistance to the Kyoto Protocol and lack of consensus on climate change action are major issues for the United
States. Although it houses only 4% of the world's population, the United States accounts for a staggering
25% of all carbon dioxide emissions.
Water treatment, air- and water-quality management, drinking water security, waste disposal, contaminant removal
from fresh water.
#3 Russia1,587
Reduce emission intensity by 25% by 2020.
Economic growth and rapid urbanization will continue to raise emission levels.
Water infrastructure renewal, water security and treatment, air- and water-
quality management, waste management.
#4 India1,324
Reduce emission intensity by 20%-25% by 2020 from the
2005 level.
Given its high economic growth rate and rapid urbanization, India's emissions will continue to rise for at
least a decade.
Water infrastructure renewal, water security and treatment, air- and water-
quality management, waste management.
#5 Japan1,236
Reduce emission intensity by 15% by 2020 from 2005 levels.
Japan’s contention is that its factories are already among the world's most energy-efficient, however, it still has to
struggle to cut greenhouse gas emissions amid increased urbanization growth.
Industrial waste treatment, water infrastructure renewal, air- and water-
quality management.
Opportunities in Environmental Quality Management The world's top polluters and their 2020 reduction goals
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Countries and Emissions(mt/p.a)
2020 Reduction Goals and/or Other Initiatives Challenges
Key Demand Areas and Opportunities for
Solution Providers
#6 Germany798
No definite commitment. Government is working to meet EU commitment to
identify nature preservation areas in line with the EU's Habitats Directive (for flora
and fauna).
Emissions from coal-burning utilities and industries will continue to contribute to air pollution, and acid rain, resulting from sulfur
dioxide emissions. Key challenges include damage to forest cover; water pollution from raw sewage and industrial effluents from rivers in eastern Germany, and hazardous waste disposal.
Industrial waste treatment, bioremediation, water
infrastructure renewal, air-and water-quality
management.
#7 Canada572
Economy-wide target of a 17% reduction in greenhouse gases from 2005 levels
(Copenhagen Summit).
Continued support to the polluting oil sands industry in Alberta and a lack of serious effort to curb emissions at the consumer
level are key challenges. Because half of all emissions in Canada are from industries (Alberta contributes 40%), environmentalists
target them instead of consumers.
Water security and quality monitoring, waste
management, contaminant removal, bioremediation, air-
quality monitoring.
#8 Britain523
Reduce the industrial and commercial waste disposed in landfill sites to 85% of 1998 levels, and recycled or composted
to at least 25% of household waste, increasing to 33% by 2015.
Urbanization, growth of megacities, and economic growth will exert challenges to climate change initiatives.
Air-quality monitoring, water security and quality monitoring, waste
management, bioremediation.
#9 South Korea488
Reduce carbon dioxide and other heat-trapping gases by 4% below 2005 levels
by 2020.
Economic growth, pollution pressure, and slow adoption of climate initiatives are key issues. If no action is taken to cut
emissions, South Korea is expected to produce 813 million tons of greenhouse gases in 2020.
Water treatment, waste management, air-quality
management, water infrastructure renewal.
#10 Mexico437
Reduce 50% of emission levels of 2000 by 2050.
Lack of hazardous waste disposal facilities; rural-to-urban migration; scarce natural fresh water resources, raw sewage and industrial effluents polluting rivers in urban areas will continue to
challenge Mexico’s climate initiatives.
Air-quality management, water treatment, waste
management, water infrastructure renewal,
bioremediation.
The World's Top 10 Polluters Ranked by their Absolute Greenhouse Gas (GHG) Emissions (continued)
Source: International Energy Agency and Frost & Sullivan: Absolute emissions (carbon dioxide equivalent—million tons per year, 2008 data)
Opportunities in Environmental Quality Management (continued) The world's top polluters and their 2020 reduction goals
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Source: Frost & Sullivan analysis.
Present
Stimulus funding
Entry of sustainable technologies
Infrastructure renewal opportunities
Increased interest and attention for water scarcity planning and emission reduction
2015
Market proliferation of smart concepts
Decentralized markets with enhanced competitiveness
Growth in opportunities supported by emerging demand from developed countries
2020 and beyond
Explore linkages for market commercialization of innovative technologies
Water scarcity planning techniques and advanced treatment process to gain market traction
Sustainability rankings to influence corporate decisions and behavior
Enhanced awareness for climate change issues
Smart technologies make serious inroads into stress areas
Effective C02 reductions and adherence toward climate change targets
Impact of Market Forces - Present to 2020 and beyond
The Road Ahead
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• Industry participants will have to focus on technological innovations to capitalize on opportunities emerging outof resource shortages globally.
• Geographic concentration of opportunities will be among the top polluters and emerging economies. Havinglocalized expertise and logistical support in these regions will be key.
• The route to market will be characterized by strategic alliances and partnerships. With decentralization ofenvironmental resource distribution and asset management in most emerging economies, public-privatepartnerships and concession agreements are expected to gain traction.
• For businesses, competitive differentiation will determine their visibility and success. Sustainability metrics andrankings among peers will become mandatory evaluation parameters.
Focus Areas
Focus Areas for Industry Participants
54
Conclusions
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Conclusions and Key Questions
The Big Questions
Commoditization of water-Is it time
for a seasonal water tariff?
Green nuclear-How should the
industry address safe disposal and
treatment practices?
Smart technologies-How do we
speed up “concept to commerce”?
Waste to value—Will there be viable
commercial linkages for treated
wastewater and hazardous waste?
Key Issues
o Issues of water and energy are
converging. Efficiency is emerging as
the most important value proposition.
o Smart technology is redefining the
market and becoming integral to energy
efficiency. “Smart” solutions have
leapfrogged “green” solutions.
o Technology convergence leads to
convergence of competition and
redefined value chains.
56
About Frost & Sullivan
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The Growth Consulting Company• Founded in 1961, Frost & Sullivan has over 45 years of assisting clients with their decision-
making and growth issues
• Over 1,700 Growth Consultants and Industry Analysts across 32 global locations
• Over 10,000 clients worldwide - emerging companies, the global 1000 and the investmentcommunity
• Developers of the Growth Excellence Matrix – industry leading growth positioning tool forcorporate executives
• Developers of T.E.A.M. Methodology, proprietary process to ensure that clients receive a 360o
perspective of technology, markets and growth opportunities
• Three core services: Growth Partnership Services, Growth Consulting and Career BestPractices
Who is Frost & Sullivan
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Exclusively Focused on Growth
Global thought leader exclusively focused onaddressing client growth strategies and plans –Team actively engaged in researching anddeveloping of growth models that enable clientsto achieve aggressive growth objectives.
Industry Breadth
Cover the broad spectrum of industries andtechnologies to provide clients with the ability tolook outside the box and discover new andinnovative ideas.
Global Perspective
32 global offices ensure that clients receive aglobal coverage/perspective based on regionalexpertise.
360o Perspective
Proprietary T.E.A.M.TM Methodology integrates all6 critical research methodologies to significantlyenhance the accuracy of decision making andlower the risk of implementing growth strategies.
Growth Monitoring
Continuously monitor changing technology,markets and economics and proactively addressclients growth initiatives and position.
Trusted Partner
Working closely with client Growth Teams –helping them generate new growth initiatives andleverage all of Frost & Sullivan assets toaccelerate their growth.
What Makes Us Unique
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Frost & Sullivan’s proprietary T.E.A.M. methodology, ensures that clients have complete “360 DegreePerspective” from which to drive decision-making. Technical, Econometric, Application, and Marketinformation ensures that clients have a comprehensive view of industries, markets and technology.
TechnicalReal-time intelligence on technology, including emerging technologies, newR&D breakthroughs, technology forecasting, impact analysis, groundbreakingresearch, and licensing opportunities.
EconometricIn-depth qualitative and quantitative research focused on timely and criticalglobal, regional, and country specific trends, including the political,demographic, and socioeconomic landscapes.
Application
Insightful strategies, networking opportunities, and best practices that can beapplied for enhanced market growth; interactions between the client, peers,and Frost & Sullivan representatives that result in added value andeffectiveness.
MarketGlobal and regional market analysis, including drivers and restraints, markettrends, regulatory changes, competitive insights, growth forecasts, industrychallenges, strategic recommendations, and end-user perspectives.
T.E.A.M. Methodology
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• 1,700 staff across every major market worldwide• Over 10,000 clients worldwide from emerging to global 1000 companies
Global Perspective
