Foreign Cos. Clean Up Chinese Industry

By ELAINE KURTENBACH AP Business Writer
© 2006 The Associated Press Via Chron.com

JINSHAN, China — Shanghai's gleaming chemical industrial park, a processing zone for some of the world's most toxic materials, is a showcase in China's campaign to clean up its polluted land, skies and water.

Frederic Gourdin's job is to keep it that way.

Gourdin's company, a joint venture between France's Suez Environment SA and the local company that runs the industrial park, is responsible for ensuring that the chemical-laden water discharged from the zone's huge, ultramodern factories poses no threat to the environment.

"We keep developing every day because we are always getting new customers," says Gourdin, general manager of Shanghai Chemical Industry Park Sino-French Water Development Co. "We never know what sort of chemicals we might need to deal with."

As China beefs up pollution controls following a spate of chemical spills it's turning to foreign businesses with the advanced technology it needs to help solve its increasingly complex problems with industrial waste.

The industrial park some 30 miles southwest of downtown Shanghai, along Hangzhou Bay, is an example of the potential opportunities offered by China's multibillion dollar for pollution controls.

Piecemeal efforts to tackle industrial pollution gained urgency after a spill from a chemical factory explosion in November in Jilin province tainted water supplies for millions living in northeastern China and in neighboring Russia.

"Last year, since the Jilin accident, there has been very strict control and monitoring," says Gourdin. "Safety here is not a joke. These are all chemicals that could be extremely dangerous."

China has budgeted some $162 billion for environmental protection in 2006-2010. At the same time, its more than 600 big cities are belatedly tackling long-neglected sewage treatment and searching for ways to restore depleted aquifers and purify tainted rivers and lakes.

The country's 27-year-old economic boom has left its waterways and coastlines severely polluted by industrial and farm chemicals and domestic sewage. Its countryside is littered with garbage and construction waste, and its cities suffocated by smog.

Having long failed to enforce its own environmental safeguards, China lacks the expertise to clean up its own mess. Contracts for such work often go to foreign companies like Suez, which has a 50-year contract to provide water treatment and supplies for the Shanghai industrial zone.

This month Suez inaugurated a research lab to develop technologies for recycling waste water from the chemical factories. The goal is zero emissions of toxins into the surrounding waters _ the park already more than meets Chinese environmental standards and in some cases, more stringent European ones, officials say.

Elsewhere in China, the challenges are even more daunting.

The State Environmental Protection Administration reports that 45 percent of the country's chemical plants pose major environmental risks. A survey of 7,555 plants nationwide found that 81 percent were on bodies of water or in densely populated areas.

"Such geographical distribution poses grave environmental risks. It's the fundamental reason behind soaring water pollution incidents since last year," SEPA deputy director Pan Yue said in comments carried by the official Xinhua News Agency.

Without stronger precautions, "environmental accidents will continue to occur and public environmental safety cannot be guaranteed," Pan said.

China's market for environmental goods and services is about $32 billion annually, according to the U.S. government's Office of Energy and Environmental Industries. Almost $20 billion of that involves water treatment.

The World Bank and Asian Development Bank have announced new loans for almost $750 million in new cleanup projects in just the past month. Some involve simple approaches such as building terraces for fields and replanting forests. But many others will require advanced technology.

"China now realizes that environmental cleaning is part of development," said Jean-Louis Chaussade, executive vice president of Suez SA in charge of Suez Environment. "It's an enormous objective. It's huge and it will take a generation," he said.

Shanghai, an industrial giant of 20 million, has closed down many old, heavily polluting factories, shifting manufacturing from downtown to dozens of suburban industrial zones built to meet 21st century environmental standards, often with imported technology.

The centerpiece of the Shanghai chemical park _ home to major international companies such as energy giant BP Plc, Bayer AG, Degussa AG and BASF AG of Germany _ is a $2.73 billion, 900,000 ton-per-year ethylene cracker, a joint venture between BP and Sinopec.

City officials say they expect the size of the park to triple as they build more crackers, which convert heavy hydrocarbons such as naptha into the lighter chemicals that are the building blocks of modern consumer goods, from semiconductors to sneakers.

Unlike older, less carefully planned sites, the chemical park has technicians maintaining round-the-clock monitoring systems and the latest in firefighting and waste management technology.

Another Suez subsidiary operates a high-tech incinerator as part of a 30-year arrangement to handle solid waste from the zone. Danbury, Conn.-based Praxair Inc. and France's L'Air Liquide SA run a "tank farm" to handle gas supplies and emissions.

Such deals don't always work out. In 2004, RWE Thames Water, a unit of German utilities conglomerate RWE AG, pulled out of a big project in Shanghai in 2004 after the government ended a policy of guaranteeing fixed returns on those investments.

But as other big cities such as Beijing follow suit, for Suez and other pollution control firms doing deals in China _ such as rival French firm Veolia Environment SA, General Electric, Dow Chemical Co. and Germany's Siemens _ the market is simply too big to ignore.

"We believe China is a good country to be in," said Chaussade.