China's got a garbage problem, but not the kind you might think.
Landfills are maxed out, so cities turn to burning trash.
Now the burners say they cannot get enough to keep the furnaces going.
How big is this burning issue? We'll also explore some surprisingly promising steps China has taken in tackling its trash.
Coming to you live from Beijing, this is Roundtable.
I'm He Yang. For today's program, I'm joined by Steve Hatherly and Fei Fei in the studio.
First on today's show. For the last two decades, China's waste incinerators were built to tackle overflowing landfills. fueled by years of breakneck urban growth and mounting trash.
But now, many of these plants are running at less than 60% of their capacity.
Is this overcapacity issue a sign that garbage management efforts are finally paying off? or an expensive mismatch between planning and reality that could leave costly infrastructure underused.
Let's start with the reality check, so to speak, on the ground.
Many waste to energy incinerators are running at full capacity.
What do companies expect? have to say about this?
Well, this actually was reported by some researchers.
For example, a researcher called Pang Gong with the E20 environment platform, they did a survey of over 20 domestic waste incinerators in the first half of this year.
And they found out that two-thirds of them face the problem of insufficient waste supply, meaning they don't have enough trash to burn.
And they find that the load rate of a waste incineration plant he visited in April this year was only about 60%. in the four years after construction, mainly because of the design of overcapacity at that time. as well as weight being diverted to other plants.
So this plant is now preparing to burn other types of, for example, industrial waste. and also trying to explore other methods to take account of their, for example, to provide heat. to other industrial capacity enterprises nearby.
And according to that E20 environment platform, They think that over the past two years, the average capacity utilization rate of these waste-to-energy projects has been around 60% only.
There's two ways to look at this. You can look at this as a good thing or you the advantages of this, or it's easy, I think, to find the disadvantages of this as well.
And I think we're going to talk about all of that.
This hasn't just been something that's been in the news as of late.
This has been talked about online a lot, as a matter of fact.
China does not have enough waste to burn.
Netizens who... They have their opinions about this, and those who originally felt... bad about creating waste.
Even they left comments saying that they started to feel a little bit better about the situation.
So this has been a hot topic online too.
Yeah. And also the feeling a little bit better part is a double edged sword.
I don't think residents can afford to get complacent when it comes to If you think that you haven't generated enough garbage, that is the wrong question to ask in my opinion, and we'll get into that a little bit sooner.
So is this notion true, though, that China does not have enough waste to burn?
And the picture isn't as simple as too many plants, not enough garbage.
Yeah, I mean it depends on where you're looking at, I think, as a matter of fact.
There was a monitoring platform that was launched by the Ministry of Ecology and Environment. and it showed that of the 2,138 waste incinerators that are here in the country in 2024, 1,267 of those had an uptime.
That's the period during which they were available for operation. they had an uptime of more than 90%.
Shenzhen, for example, their largest plant processed an average of 8,985 tons a day in 2024.
But that exceeded its designed capacity of 8,000 tons.
That's according to a report that was put out.
So in that case, in Shenzhen, it's working beyond its designed capacity, right?
But also there's about 107 incinerators, about 5% of the total in the country that actually remained idle. for more than six months in 2024.
There's an example from July of 2020. That's when an urban a rural waste-to-energy incineration project in Xianyang in Shanxi Province.
It went into operation at that time, and there was a report from CCTV that the facility was designed to process 1500 tons a day, although the main urban area produced only 800 tons a day, and that made continuous operation. a challenge or maybe on certain days impossible, right?
So that's what I meant when I said it depends on where you're looking to find Plants working at overcapacity or plants that just don't have enough to burn?
And also, I think when it comes to plants that are facing problems, not having enough waste supplies.
There are also other ways for them to generate that revenues.
For example, in the summer of 2021, A1 of such project in Hebi in Henan province was reported that they are running far below capacity and only operating at about 50%.
And then they start to look at neighboring counties and cities. so that they can supply and provide ways for them to borrow and also at the same time, as I mentioned, A lot of them are sort of working with other companies, for example, in terms of manufacturing and they can provide heat for them.
And that's another channel of revenues so they don't have to solely rely on burning waste.
And also, so I think, yeah, maybe, you know, the headlines is a bit catchy when it comes to, you know, China doesn't have enough ways to burn.
But if we look at more closely, it's more of a, I would say, structural problem. that with different populations of different places and also For example, if I build such a waste-to-energy plant in this county...
It doesn't mean I only burn the waste of this place.
I can also burn multiple places from other counties as well, but it just requires some coordination among different governments and among different even companies as well.
Yeah, it's like if you evenly distribute these incineration plants all around the country without taking population... density into account it's like if you say well I'm gonna open 20 different shoe shops in every region of the country.
But in this region, only 10 people live there.
Well, they don't need 20 shoe shops, right?
It's kind of doing basic math. That's one way.
Yeah, neighboring counties. Here's another way.
Some have dug up or dug out aged waste. from landfills.
And Hubie, the government there, they excavated 91,000 tons of aged waste.
If you don't know what that is, that's material that's been decomposed over years and years in a landfill.
And they do that to make up the capacity gap.
But that being said, the excavation of that aged waste is not solely driven by waste shortages.
For example, in September of last year, authorities in Guangzhou in Guangdong province.
They said that their plans were to reopen a particular landfill It's one of the biggest in the country, as a matter of fact.
And then over the next four years, the city would excavate and incinerate the aged waste. from the site in response to dwindling landfill space.
And the reason for that is because after waste incineration, the residue, they call it fly ash, it's basically leftover residue.
It can't be fully recycled due to some constraints on how to recycle it.
So it has to be placed in the landfill. And by the end of 2023, the year before that, Guangzhou's landfill sites had over 3 million cubic meters of remaining capacity for fly ash disposal.
And that number is important because according to their assessments, that would only last until 2030. unless that aged waste can be excavated and removed and then incinerated to reduce volume.
So... The issue of removing the aged waste is also to create more space, if you will.
And also, I think landfills is one of the main emitters when it comes to methane emissions, which is another very important warming gas. when we are talking about global warming.
And I think the calculation has is about methane has the warming effects I think four times or two times more than carbon dioxide.
So a lot of that actually come from the waste sector.
And a major part of that, because for the past several decades, a lot of the countries around the world are relying on landfills to take care of the urban waste.
Well, yeah. In fact, some of the plants that were built here in major cities, these waste-to-energy plants, that's what they were initially built to do to address that accumulation of aged landfill waste.
So you could say that finally they're doing what they were initially set out to do.
That's a very good point. And I think it's probably...
The knee-jerk reaction for most people when you think about garbage, if you can't recycle it well, put it in a landfill and let it rot.
That's sort of the sort of out of sight, out of mind, easiest way to go about it and actually building these incineration plants This is the more costly high tech way, but also, you know, it's a solution on top of the landfill and we got to face it, there is not. even as a vast country China is, it does not have that much space just to continuously for us to dump the stuff we don't need anymore into Mother Earth.
And that's just not the way to go. Yeah, I mean, it doesn't matter how big the country is geographically speaking.
You're going to run out of space eventually, right?
Yes. And let's take a look at this huge discussion online.
As you guys have mentioned, you know, China doesn't have enough waste to burn.
So if some plants are short of supply of garbage, but does it matter?
And to whom? Who are the losers and possibly winners?
We need to shed some light on that side of the discussion too.
So what are your thoughts? Well, I don't think it's a bad thing. first of all.
That's refreshing. If it's the truth that victims going to disagree with you.
Let me know when you're done. Or maybe you'll change my mind.
Go ahead. But just look at the bigger picture.
If it's true that China doesn't have enough waste to burn, that means we didn't generate a lot of waste, which is a good thing. because waste is a major problem to our environment, to many of our sectors in the society nowadays. and when it comes to so when it comes to particular operators that they are facing the problem of having waste shortages.
And yes, they would face probably losing some of their revenues because they're not operating 100%.
But I think is how the market operates. you know, some of the smaller players or incompetent players in the market will be phased out and that's natural.
And then also at the same time, as we mentioned about all the examples before, there are also other ways of you know, generating revenues other than just burning waste.
So you can look at the things differently.
Yeah, you could say, and like I said before, when we started, you can look at this in a positive light, right?
These incinerators are operating at 25% capacity.
That means that the country is not producing enough garbage to be incinerated.
Okay, but if those incinerators, if their capacity is set at, you know, I'm going to make up a number, 10 million tons...
Well, that doesn't necessarily mean that the country isn't still producing a lot of trash.
It just means that they can't meet that 10 million ton mark.
And these plants were designed, I believe, with that idea in the future that Well, we don't want to build these with a low capacity and then tear them down and then have to build bigger ones with a higher capacity, right?
So I'm not sure. if that's a fair argument or not.
I do agree with you in the sense that It's a business, right?
And some players are going to survive and some players aren't.
But just on the point of it being a business.
This is tough on these incineration plants that are not. operating at full capacity because of their high fixed cost, right?
You've got the construction, you've got the infrastructure.
You've got the debt repayments if you were financed through bonds or loans or things like that.
You've also got the staffing, right? These plants are operated by highly skilled round the clock engineers.
These are really well-paid individuals, I would assume.
I don't have any statistics to back that up, but you've got them, you've got the technicians, you've got the operators.
These labor costs are fixed. They don't just go down if the amount of trash doesn't increase if it doesn't come in.
So you've got that, then you've got the maintenance, the regular and preventative maintenance that's key to make sure that the plant operates safely and efficiently.
So long story, long story long, I guess, when a plant operates below its maximum capacity, These high fixed costs, they're spread over a smaller amount of waste and a smaller amount of energy produced as well, which is another key point.
Right, but producing that energy is also, although now, thanks to technological advancements, small but still a certain amount of emission as well to generate that renewable energy.
And just from a very narrow-minded short-term site at this, Steve, you mentioned those highly skilled workers in the plant.
Now, they probably only have five hours a day of work instead of eight and on a fixed income.
That doesn't sound like too bad a story to me.
But it's very short term. I know. And the counter argument to everything I just said is, oh, well, would it be better if we had more trash then?
No, thank you. Right? So this is tricky.
But from a business point of view, if when the initial designation designated market is shrinking on your side.
As an entrepreneur, I think it is time to explore to other markets.
And when it comes to waste to energy plants, that they still have a lot of potential to tap.
For example, I visited one actually in June.
It is located in the city of Guiyang. And the waste that they are able to burn are mostly household waste. and only those that can be recycled that aren't organic.
So it's only a share of household waste. and they are operating 24 hours a day because of course, you know, waste are generated 24 hours a day. and they said they told me that even though they can burn most of the waste it doesn't mean that they also have 22% of the incineration will end up in fly ash. which is very toxic to the environment.
And in order to reach that zero waste goal because Guiyang is a city of zero waste, meaning literally the whole city cannot produce any waste.
They need to recycle everything. Including that 20% leftover fly ash.
Yes, exactly. So they're working on, for example, to recycle this fly ash. which are having a lot of technical bottlenecks at the moment.
For example, theoretically speaking, you can recycle those ash into tiles, into construction materials.
But you also need to make sure this process doesn't generate Yeah, because if you generate that fly ash into construction materials, what happens when that construction material needs to be?
Yeah, exactly. So they want to make sure the whole process is actually eco-friendly to the environment.
Net zero emissions. Yeah, so that can be a problem.
And then also at the same time, they also need to work with different players on the market.
So they also need coordination from the government, from the different companies so that they know this fly ash can be provided to certain manufacturers.
So that's also a communication thing. So I think for a lot of these projects, these waste incinerators, you have potentials that you can work on, not just looking for more waste, but maybe work on your technologies, working on your systems.
For example, they are monitoring their emissions from the burning.
And there's so much, a lot of room that they need to improve.
So they can rely on, for example, they're talking about artificial intelligence, coming to help.
So there are a lot of other spaces that you can work.
That's such a great sort of follow-up to what initially started this wave of private capital and operators coming into this space was subsidies.
So I think this also could be a cautionary tale for those decision makers to look at When you're allocating subsidies and you're trying to promote a very good promising green industry like this one, But how can you make maybe smarter decisions with limited waste, zero waste, you know, no pun intended here.
But initially when the subsidies were given out and then the private capital came into the market competing for that subsidy.
But then once all these expensive infrastructure is built in place, then we're looking at operation problems.
So I think what... Fei-Fei just mentioned to us about there's uncharted territory and a lot of interesting development where businesses can go into.
And I think that is really chapter two of this, let's call it green waste story.
And if we can take a step back at the overall picture to have a look at it, how well is China managing its urban waste these days?
Doing a pretty good job, as a matter of fact, in urban household waste treatment.
In 2024, the total volume of urban household waste collected and transported all around the country. was over 262 million tons, but almost all of that underwent harmless treatment.
And incineration accounted for almost 80% of that total harmless treatment, and that help prevent large amounts of waste from occupying land and then when it occupies the land it can pollute the soil and the water sources but All of that was prevented because of the very high efficiency rate in which they were able to incinerate that trash.
Also, if you talk about China's research institutions and the enterprises, they've really reached world-class levels in areas such as incineration equipment. or furnace temperature control, or exhaust gas treatment, all of kind of the technical side of of this industry.
There was a really good example, there was a breakthrough in ultra-low emission technology and that allowed for waste-to-energy plants in the country, in this country, to achieve world-leading pollution control with key flue gas indicators consistently outperforming EU standards.
There are technological innovations such as a resource utilization rate of over 60% for fly ash.
You talked about the difficulty in dealing with that particular uh residue and also bottom ash as well they've brought about greater returns for enterprises so when we look at you know the world um range or scale, if you will.
China's doing a really, really good job.
Yeah. And to better understand the issue at hand, we need to look back at how China's waste strategy has shifted.
How has China moved from landfills to incinerators in the last two decades?
Well, actually, the first waste to energy incinerator industry began as early as 1985 in China.
It's very early and it was in the city of Shenzhen.
They imported two waste incinerators from Japan. and then started this plant.
But then as household waste at that time has such a low calorific value, meaning we don't really have a lot of the garbage classification efforts going on.
That means a lot of these waste going into combustion cannot be fully utilised in this sense.
So it wasn't until really early 2000s when the economy and living standards improved. proved it nationwide and that value of domestic waste started to increase.
And then The build-operate-transfer model was then introduced to the waste and insinuation industry in 2005 allowing private enterprises to participate in this construction. and provide such related public services.
And also that's when the government subsidies were introduced.
But now I think the subsidies are slowly facing out because the industry are maturing. no longer needs more government support and to so so that during that process starting in 2005
A lot of the waste to energy plants, they are referring, receiving preferential policy, such as when it comes to great connections. and feeding tariffs so that power companies are also required to purchase a lot of the electricity generated by these projects at that time.
Yes, it was quite a wholesome policy design in that way.
And also we've seen that a regulatory framework has been robustly built and for these companies to meet, to follow.
And that's essential to making sure that it's high quality service, that these waste to energy plants are delivering.
Yeah, they were ordered to install automatic pollution monitoring equipment.
This is an order from the ministry of ecology and environment they were also ordered to display emissions data in prominent public locations and and they had to integrate their systems with those of environmental authorities.
In 2020, at the very beginning of 2020 as a matter of fact, on the first day of the year, the ministry launched what they called the National Online Platform for Waste-to-Energy Plant Monitoring Data.
And that allowed for public access to real-time emissions data from these incineration facilities.
And that included important indices like nitrogen oxide and sulfur dioxide levels and furnace temperatures and All of this information suddenly became available to the public and with those measures in place, then incineration was established as really the primary method of treating household waste and that led to the pretty rapid proliferation of projects all around China.
Yeah, in so many places in China. And the crux of the sort of business downturn for the or at least some of these incinerating operators lies in why supply and demand haven't necessarily aligned.
So let's take a look at what's driving incinerator overcapacity in some regions.
There are some very interesting sort of analysis around this.
Well, I think first of all is that the trash processing capacity increases a lot.
According to the monitoring platform, the total designed processing capacity of China's waste incineration plants was over 1 million tons a day last year.
That was up from just over 200,000 tons daily in the year 2016 and according to you over the past from the year 2021 to 2025, the incineration capacity of urban household waste in China is set to reach around 800,000 tons per day by the end of this year.
But the actual waste incineration capacity last year has already far exceeded that level.
So the capacity is greater than the volume of domestic waste. being generated.
So that's why some plants had had unexpected suspend their operation because of this insufficient supply. this is what we were talking about before right it's And that's why this is such a double-edged sword, because in your planning, it's always better to be overprepared.
Yeah. Then under prepared. Right. But again, when you are over prepared, then you see these types of things happening as well.
And China has built more such of these plants as well.
There was information or data from the Ministry of Housing and Urban Rural Development that revealed that the number of trash incineration plants increased from 67 way back in 2005 to 1,010. in 2023.
And most counties, they built these types of plants and that led to the overcapacity of waste incineration.
So for towns and counties with a lower population, and these towns and counties that don't generate as much waste, they should share the waste incineration plant with neighboring counties, but Doing that, they might not be willing to receive their waste due to environmental concerns.
That's a tricky. It's tricky. That's very tricky. right because of environmental concerns right if you're bringing in trash from outside to be incinerated Your local population might not be thrilled that that's happening, right?
Exactly. And also there's another set of figures that sort of tell the story. researchers at the Ministry of Ecology and Environment and the Chinese Research Academy of Environmental Sciences found that more than 75% of counties, so these are very small cities or even smaller than these small cities, administrative ranking jurisdictions. have insufficient waste incineration capacity, meaning that 70% of these very small entities, would like to have a place where they can burn their garbage in a green manner, but they don't have it.
And on the other hand, we're talking about all these places that have overcapacity that need more garbage to be burnt.
You can't really transfer. the garbage to these places.
It's kind of a conflict of interest. And it's just kind of a complicated issue to look at, and that's sort of the difficult reality that the industry is facing.
And it sounds like it needs coordination, but this kind of coordination Without the government being fully involved, and I guess some people would wonder what question if you want that much interference either, but it's not entirely in a market, not a market. mechanism can decide or solve issues.
So that's sort of like the difficult aspects of trying to resolve this problem we're seeing.
And overcapacity isn't always a waste. problem, it can be a planning problem.
And we're seeing that when these companies see that they can, well, they have all this capacity and where where else to go and they're thinking maybe overseas could be the opportunity.
Yeah, because if you're well, it's like any business, right?
If your local market is saturated, then you look to outside markets.
And that's exactly what's happening here as well.
There was an article not so long ago that was published from a financial media outlet called TMT Post.
That article stated that there are more than 50 waste-to-energy projects operated by Chinese companies overseas.
These companies are mainly located in the Middle East, also in Southeast Asia.
And even in developed countries like the UK and France, there's a growing trend of cooperating with Chinese enterprises on such projects. and also introducing new waste incineration production lines.
And many of these Chinese waste incineration plans, yeah, they've gone to areas like, for example, Southeast Asia.
Yeah, and Southeast Asia are proved to be quite attractive to Chinese companies because they They are experiencing rapid economic growth, which means filling their rising demand in infrastructure, energy and environmental industries.
And a lot of these Southeast Asian companies are also in a transition from landfill to waste incinerations.
And also they are facing problems from, for example, increasing foreign waste imported to those countries, So they need technologies and methods and business models actually from these successful Chinese companies. to start looking at waste incinerations.
Yeah, because the things that the Chinese companies have learned and applied to their companies in the local market here in China, they can now take that technology and all that knowledge and apply it to those markets as well.
Yeah, that sounds like a really good way to bring your strong key core strength.
That is apparently technology for these Chinese companies. one snippet or tidbit, let's say, I find really interesting as a strong suit of the Chinese companies is apparently they have very high-tech in-depth knowledge in how to deal with very complex composition of waste.
And it just made me think, what kind of complex waste have we generated in this country?
And then these companies are really good. at dealing with the aftermath of it and making it green and renewable as a new source of energy.
Not having enough garbage to feed some incinerators might hurt some businesses, but it also highlights a positive shift.
Effective waste management is taking hold in this country.
That said, China still faces a huge volume of waste overall.
The challenge remains to manage it effectively.
And the key takeaway, we should celebrate progress in reducing burnable trash but remain mindful that reducing waste at the source is still the most important goal.
