Thursday, November 22, 2012

Global Environmental Market Grows 4% in 2012 and 2011

Despite the embattled state of the global economy and resulting lack of political enthusiasm for tackling environmental and climate change issues, the $866-billion global environmental market managed 4% growth in 2011, fractionally ahead of global GDP growth of 3.9% and up from the 1% decline recorded worldwide in 2009, according to Environmental Business Journal's (EBJ) 2012 bi-annual edition on the Global Environmental Industry.

EBJ forecasts the same global growth rate for the industry in 2012. "Lack of progress at Rio+20* and intense focus by governments on their economic problems doesn't mean that they have turned completely away from sustainable development and environmental protection, to the extent it is already built into industrial, resource, and infrastructure development initiatives," observed EBJ Senior Editor George Stubbs. "The environment is, as it always has been, one of many priorities."

Where’s the Growth? Regions and SegmentsThe United States, Western Europe and Japan remain by a substantial margin the three largest environmental markets in EBJ's 11-region revenues analysis. But they are also the oldest and most mature. By contrast, growth in the global environmental market was led in 2011 by Africa, up 10%, followed by the Middle East and rest of Asia, both up 9%.

In terms of the 14 global environmental business segments tracked by EBI, the largest is Solid Waste Management at $140.9 billion, followed by Water Utilities and Water Treatment works. However, Clean Energy Systems & Power ranks as the fourth largest segment in 2011, demonstrating robust 11% growth - significantly higher than the traditional infrastructure segments. Only Resource Recovery grew faster, up 13% in 2011.

"Renewable energy, water reuse, recycling, green building, energy efficiency and other areas under the resource recovery and clean energy umbrellas are all growing at rates higher than the economy in most nations," noted Stubbs. "For example, more than 10% of Germany's electricity production is now from renewable sources, and a few other countries are in the 2-5% range."

Resource Development Dominates Global Environmental C&E MarketIn the consulting & engineering segment, which contributed $54.8 billion to total global environmental revenues in 2011, resource development is the dominant theme, as modernizing economies develop the energy and raw materials needed for industrial growth.
"C&E firms with capabilities in resource development are benefitting from the surge in mining and energy development activity, and they've been acquiring aggressively to expand their capacity to serve these far-flung markets," noted Stubbs. "They are following resource development around the world, from Canada to Australia, Latin America, Asia, and now Africa, which is on the environmental industry's radar screen like never before despite the ongoing political and economic challenges in several of the high-resource nations. The industry's multinational clients, particularly in the mining and the oil and gas sectors, are flocking there."

According to executives interviewed for this edition, global opportunities for environmental C&E firms in 2011 were also driven by:

  • Outsourcing of production by multinational manufacturers who face potential environmental risks from having complex, international supply chains.
  • The goal of multinational clients to institute and maintain consistently high environmental, health, and safety (EHS) standards throughout worldwide operations, even in regions where environmental regulations are less stringent.
  • Global M&A activity giving rise to remediation and management of global property portfolios.
Disaster Response & Prevention: A Timely Global MarketAn important market segment to watch on a global basis is disaster response and prevention, executives told EBJ. Whether or not governments believe the cause is climate change, natural disasters have been frequent and dramatic in recent years, and many governments around the world are establishing policies based on the potential impacts of climate change, such as sea-level rise and storm intensity and frequency. This translates into opportunity for environmental C&E firms in infrastructure-related projects like bridges and roads, water supply,power generation, communications networks, and ports, executives reported.

Countries as diverse as Australia, Laos, and Indonesia are engaging in disaster risk reduction (DRR) programs. In addition, the United Nations is doing the same through the International Strategy for Disaster Risk Reduction, EBJ reported. For government-led climate change adaptation programs, outside sources of funding remain necessary. Multilateral lending institutions, such as the World Bank and its International Finance Corp. (IFC) arm, the Asian Development Bank, and the Inter-American Development Bank, remain critical sources of funding, EBJ concluded.

Challenges and ConstraintsThe global environmental industry is enormously complex, and executives interviewed for this edition elaborated on the following challenges and constraints:
  • Economic uncertainty
  • Competition for talent due to demographic changes in the working population in many parts of the world.
  • Growth of local capacity to do infrastructure work; e.g., the emergence of pan-Latin American infrastructure firms
  • Management of increasingly global employment force and local offices
  • Consolidation of vendors in favor of fewer, internationally capable providers in the context of a constrained global economy
Inside this edition:
Environmental Business Journal's biannual edition on global environmental markets provides an overview of regional markets; detailed coverage of company activity in Latin America, Africa, Australia, the Middle East, Europe and Canada, and snapshots of the environmental industry in Malaysia, Vietnam and Chile.

Purchase EBJ's Global Environmental Markets 2012 edition (17 charts, 37,000 words) for $150

Charts in this edition include:
    The Global Environmental Market by Region ($bil and growth)
    The Global Environmental Market by Segment ($bil and growth)
    Annual Growth Reported by Environmental Companies by Region
    Prominent Global M&A in Environmental Consulting & Engineering Industry from EBJ's M&A & Transactions Database
    Decade of Growth in Electricity Production from Renewables
    EBJ Global Markets Survey 2012: Client Sector Market Ratings: Global Environmental Markets 2012-2014
    Clean Energy Investments in 2011 and 2004-Q1 2012
    Latin America Major Infrastructure Project List
    Top Australian Environmental C&E Firms
    African Economic Growth Rates 2010-2013 (% change in GDP)
    $17.5-Billion Middle East Environmental Market, 2011
    Leading Global Environmental C&E Firms in the Middle East
    The Global Environmental Market: Regions & Segments Matrix in 2010
    The Global Environmental Consulting & Engineering Market $bil
    Top Environmental C&E Firms in Canada

Companies interviewed in this edition include: Aquatech, Arcadis, Asian Development Bank, CH2M HILL, Export-Import Bank of the U.S., Golder Associates, Louis Berger, Maplecroft, Parsons E&C, Tetra Tech Inc., WorleyParsons Ltd, WSP Environment & Energy, Xylem. 

Environmental Business International (EBI)
Press Release dated November 16, 2012 

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