4. Market size and structure Market size and
growth The air pollution control (APC) market is already mature in some North European countries, in particular with respect to incinerator flue gas treatment. In Germany, Sweden and Switzerland, 90 % of waste is incinerated and regulation is very restrictive concerning emissions. Incineration is particularly developed in France and there are about 100 plants are in operation, which is roughly equal to the total number of plants in other European countries.
However, the APC market continues to develop in most European countries as recent regulation concentrates more on specific industrial and chemical atmospheric pollutants such as volatile organic compounds (VOCs) and CO2. Reducing these emissions is
therefore becoming a top priority for several European countries. As an example, the total market for APC is estimated to be €470 million in Belgium, which would represent a 12 % market share of Belgium’s environmental expenditures.53 The APC market amounts to €176
million in Finland54 and €175 million in Portugal.55 The APC market is
also developing in the 10 new member states. For example, it is estimated to be €78 million in Hungary.56
Outlook Concerning the incinerator flue gas treatment market, growth is expected to be weak in countries that are already equipped with incinerators. However, the 10 new member states are expected to invest in such technologies in the future. Many projects are being carried out and about 50 incinerators could be built within the next decade.
Power plants are also deemed to represent a strong market for air pollution control industries, principally in the 10 new member states. Lastly, the fact that most European countries are far from fulfilling their obligations regarding industrial and chemical emissions, in particular greenhouse gases and VOC emissions, and it will strengthen the APC market. For example, it is estimated that approximately €5 billion will be spent by Italy alone in order to reach full compliance with air quality legal requirements.
Export market Most development opportunities are in Asia (especially China) as the North-American market is mostly mature at present.
5. Market drivers & obstacles
Regulation According to people interviewed, regulation is the main driver of this sector as it determines ceiling emissions for polluting substances. So far, regulations have been more restrictive for incinerators because they are usually managed by local communities, whereas it is more
53 Air Pollution Control equipment and services in Belgium, International Market Research, September 2003 54 Air Pollution Control equipment and services in Finland, International Market Research, May 2004 55 Air Pollution Control equipment and services in Portugal, International Market Research, July 2003 56 Air Pollution Control equipment and services in Hungary, International Market Research, January 2003
difficult to constrain industrials. But as mentioned above, recent regulation tends to focus more on industrial and chemical emissions (namely VOCs and greenhouse gases).
Regulation also imposes a minimum percentage of energy that must be produced from renewable resources. This can help to reduce pollutant emissions by decreasing fossil fuel use.
In addition, regulation is also the main driver for catalytic converters since they are now required in all new cars purchased in the EU. Other market drivers Public funds are another key driver for air pollution control industries.
According to players interviewed, funding for environmental projects will increasingly come from the EU’s structural funds, in their various forms (ISPA, PHARE, and Sapard).
In some countries (namely the 10 new member states), European financing may even become the leading source of funding for environmental projects in the coming years.
6. Key competitiveness factors
Technology High level technology and innovation capacity are critical
competitiveness factors, as well as the ability to provide small scale solutions.
In this field, US companies are strong competitors with EU
companies, as their products are generally considered to be reliable and of high quality. However, US companies are often specialized in large-scale equipment, which are sometimes over-sized and
expensive, while the European market mostly demands small-scale operations.
Market incentives and supporting
mechanisms
The ability to finance projects through various funds is a second major success factor, especially in the 10 new member states. Indeed, an increasing number of environmental-related projects are being realized through instruments such as pre-accession funds (ISPA, PHARE…). EU companies have a competitiveness advantage as eligibility for participation in these projects is strictly confined to companies residing in the EU-25.
As EU financing might become the leading source of funding for environmental projects in coming years, US firms are adapting to this market constraint by :
• Creating EU-based offices and manufacturing facilities, • Building alternative financing packages backed by banks or
other sources of financing. 7. SWOT analysis
Strengths
Many specialized medium-size companies (or big groups’ departments) are
competitive in small-scale solutions, for which there is strong demand in European
Weaknesses
Little market growth is to be expected in incinerator flue gas treatment, in western and northern Europe (market is reaching maturity). Third countries are strongly present and
countries.
EU public funds support investments in air pollution control equipment.
sometimes leader in some European countries.
Opportunities
Regulations on air pollution control are increasingly stringent.
New directives focusing on industrial and chemical emissions (VOCs, CO2…), which will enhance the APC market in most European countries.
Threats
Third-country competitors are creating offices in EU and building alternative financing packages.