Introduction: In order to timely reflect the development dynamics of the ecological and environmental protection industry in the past year and predict the development trend of the new year, I have organized various branches to compile the "2024 Industry Review and 2025 Development Outlook" for reference by environmental protection enterprises, institutions, experts, and managers. This article is a review of the development of the water pollution control industry in 2024 and prospects for 2025. The authors are Zhang Mi, Zhang Lei, Yuan Min, Li Dinggao, and Song Yonghui from the Water Pollution Control Professional Committee of the China Environmental Protection Industry Association.

Industry Review in 2024

01 Main Policies

Accelerate the construction of a mechanism for protecting and managing key river basins and assessing water ecology. In January 2024, the State Council issued the "Opinions of the Central Committee of the Communist Party of China and the State Council on Comprehensively Promoting the Construction of a Beautiful China", proposing to deepen the protection and governance of major rivers and important lakes such as the Yangtze River and the Yellow River, promote the performance grading of sewage treatment and discharge levels of key industries and enterprises, accelerate the filling of the shortcomings of urban sewage collection and treatment facilities, carry out endogenous pollution control and ecological restoration according to local conditions, and establish a water ecological assessment mechanism.

Actively promote the integration of city level factory networks. At the central level, in March 2024, the Ministry of Housing and Urban Rural Development and five other departments jointly issued the "Notice on Strengthening the Construction and Operation Maintenance of Urban Domestic Sewage Pipeline Network" (Jiancheng [2024] No. 18), requiring the continuous promotion of "integrated plant network" professional operation and maintenance, and paying fees for the linkage between sewage treatment plants and pipeline networks based on efficiency; In May 2024, the National Development and Reform Commission, the National Data Administration, the Ministry of Finance, and the Ministry of Natural Resources jointly issued the "Guiding Opinions on Deepening the Development of Smart Cities and Promoting the Comprehensive Digital Transformation of Cities" (NDRC Data [2024] No. 660), proposing the requirement of "promoting the integration of environmental governance through the transformation of smart cities". At the provincial and municipal level, Henan, Hunan, Jiujiang, Wuhu, Yueyang and other provinces and cities along the Yangtze River have all carried out integrated exploration.

The filling of gaps in the pipeline network has received attention from governments at all levels. On the one hand, the government's requirements for sewage treatment efficiency are gradually increasing. In March 2024, the Ministry of Housing and Urban Rural Development and five other departments issued the "Notice on Strengthening the Construction and Operation Maintenance of Urban Domestic Sewage Pipeline Network" (Jiancheng [2024] No. 18), which clearly stated that the influent concentration of sewage pipeline network should be increased, and by 2025, the influent BOD5 concentration should not be lower than 100mg/L. On the other hand, the support for the construction, renewal, and renovation of pipeline networks has gradually strengthened. In April 2024, the "Notice on Carrying out Urban Renewal Demonstration Work" (Caibanjian [2024] No. 24) provided a special fund of 800-1.2 billion yuan per city annually for the renewal and renovation of "factory network integration" pipeline networks in 15 pilot cities; In addition, policy funds such as ultra long term special treasury bond, special bonds of local governments, and investment within the central budget (pollution control, energy conservation and carbon reduction, etc.) all give preference and support to pipeline network construction.

Take multiple measures to accelerate the construction of an efficient industrial wastewater treatment system and a green circular development model. At the end of 2023, the National Development and Reform Commission and other departments jointly issued the "Implementation Opinions on Promoting Synergistic Efficiency in Reducing Pollution and Carbon Emissions in Wastewater Treatment", which clearly requires accelerating the construction of an efficient and low consumption industrial wastewater treatment system, ensuring that the standard discharge rate of industrial wastewater reaches 100% by 2025, and emphasizing the harmless treatment of sludge and resource recycling and utilization. Since 2024, provinces such as Zhejiang, Sichuan, Jiangsu, Guangdong, and Shandong have also introduced relevant action plans and implementation plans, including promoting the construction of zero direct discharge zones for industrial wastewater, recycling, improving emission standards, strengthening the rectification of heavy polluting industries, and overcoming difficulties in wastewater treatment, aiming to form a green circular development model.

The frequent occurrence of debt conversion policies has led to a golden window for companies to participate in debt conversion due to outstanding debts. On November 8, the National People's Congress deliberated and passed the Proposal on Increasing the Local Government Debt Limit to Replace the Existing Implicit Debt, which plans the debt resolution work in the next three to five years, covering a debt replacement scale of up to 10 trillion yuan, which is unprecedented in strength and has attracted the attention of governments at all levels. Some enterprises' arrears of fees, as a form of government debt, have also been included in the scope of resolution.

02 Industry Development

In 2024, the water pollution control industry will further develop in a complex and ever-changing market environment, but there are also some common problems.

(1) The industry of watershed governance and water ecological protection has developed steadily under the strong promotion of policies

In 2024, the market demand for watershed management and water ecological protection industry will mainly focus on improving water quality, ecological restoration, flood control and drainage, and the demand for sewage treatment and ecological restoration in rural markets will also become increasingly prominent. Despite facing challenges such as insufficient funding, technological bottlenecks, and business model innovation, the industry still maintains a positive development momentum.

Typical cases continue to emerge, such as the comprehensive management project of ecological clean small watersheds in Yangquan City, which has achieved a win-win situation in ecological, economic, and social benefits through the unified planning of mountains, waters, forests, fields, and villages, and the coordinated promotion of mountain, water, and pollution control; Deyang City has comprehensively launched water ecological protection work, promoting the continuous improvement of water ecological environment and maintaining a high rate of excellent water quality, providing valuable experience and reference for the industry.

(2) The sewage treatment industry shows a trend of short-term growth and long-term slowdown

The 14th Five Year Plan proposes a national target for increasing the scale of sewage production by 20 million tons per day. In fact, by 2021-2022, the newly built scale has reached 27.54 million tons per day, far exceeding the planned target. It is expected that by the end of the 14th Five Year Plan period, the actual increase in new construction will exceed 50 million tons per day. Moreover, according to market transaction data, in the first half of 2024, the transaction volume of the new sewage treatment market increased by 39% compared to the same period in the previous two years, reflecting the strong growth momentum of the industry in the short term.

However, in the long run, as China's urban population reaches its peak, the actual incremental demand will gradually decline, and the growth rate of new heavy asset investment projects will continue to slow down. Data shows that the month on month growth rate of new sewage construction in China was 43% in 2020, but by 2021, this growth rate had dropped to 7%, and further decreased to negative values in 2022. This indicates that although there will still be new construction increments in the future, the growth rate has entered a downward channel.

(3) The continuous expansion of accounts receivable endangers the survival of enterprises

The water and environmental protection industry is a heavy investment industry that requires a large amount of capital in the early stages and even throughout the entire cycle. However, the long industrial chain and slow repayment lead to high advance or financing, which is a common phenomenon. In recent years, due to various factors such as increasing government debt, slowing economic development, and shrinking land finance, the overall pressure on fiscal expenditure has increased. Many local governments have not included subsidies for sewage treatment service fees in their fiscal budgets or have paid them in a lower order, resulting in an increase in accounts receivable for water pollution control enterprises year by year. According to the 2023 annual reports of 17 A-share and Hong Kong listed sewage treatment companies, the cumulative total accounts receivable reached 71.679 billion yuan, accounting for 74% of the annual operating income, which has brought adverse effects to enterprise operation, industry development, and social stability.

(4) The implementation of PPP new mechanism brings about the problem of connecting new and old projects

According to the Guiding Opinions on Standardizing the Implementation of the New Mechanism for Government and Social Capital Cooperation (document No. 115) issued in November 2023, "old" PPP projects before February 2023 shall be executed in accordance with the relevant provisions of the original PPP, and new projects after February shall be executed in accordance with the requirements of the new mechanism. The division mark is whether the agreement has been signed by the end of February 2023. In practice, some projects have completed the relevant bidding and agreement signing processes according to the original PPP model, and have even started construction. Due to changes in the original PPP policy or adjustments in project construction content, the implementation plan needs to be modified and re stored or transferred during the process. However, due to the suspension of PPP and the closure of the original PPP library, it is impossible to complete the storage/transfer. Financial institutions are concerned about the risk of non-compliance and have stopped financing the project, which will affect the progress of the project. Social capital is in a dilemma.

(5) Dual improvement of industrial wastewater treatment technology and resource utilization level

With the continuous improvement of policy requirements, the industrial wastewater treatment industry will show a rapid development trend in 2024. Local governments actively promote the upgrading and transformation of industrial wastewater treatment systems, and promote the use of advanced sewage treatment technologies and equipment. At the same time, the resource utilization and near zero/zero discharge pilot of industrial wastewater are constantly advancing, and the demand for concentrated salt water treatment is further increasing. In key regions (Beijing Tianjin Hebei, Yangtze River Basin, Yellow River Basin) and key industries (coal chemical industry, petrochemical industry), the requirements for sewage reuse and discharge standards continue to increase, prompting relevant enterprises to increase investment and improve wastewater treatment capacity to adapt to stricter environmental protection requirements.

03 Key Core Technology Progress

(1) Rural sewage treatment

The treatment of rural domestic sewage is an important part of improving the living environment in rural areas and a crucial measure for implementing the strategy of rural ecological revitalization. In recent years, governments at all levels have attached great importance to rural sewage treatment work, actively promoting rural domestic sewage collection and treatment projects through measures such as seeking special funds, conducting comprehensive investigations and evaluations, and formulating scientific plans. Various regions have actively explored the "one household, one policy" governance model to ensure that the governance methods are in line with the local actual situation. In recent years, significant achievements have been made in the treatment of rural domestic sewage. According to statistics, as of June 2024, the national rural domestic sewage treatment (control) rate has reached over 45%, and the situation of rural sewage cross flow has been significantly reduced. In Guangyuan City and other places, rural domestic sewage has been effectively treated by adopting treatment models such as "biogas digesters+old manure pits" and "three grid septic tanks and domestic sewage collection tanks", which not only improves environmental quality but also promotes the recycling of resources.

(2) Watershed water management

Watershed water management is an important means to ensure water security and improve the efficiency of water resource utilization. Taking the the Taihu Lake Lake basin as an example, the the Taihu Lake Lake Basin Administration of the Ministry of Water Resources actively plans to promote the high-quality development of water conservancy in the the Taihu Lake Lake basin, and strengthen the unified planning, management, dispatching and management of the basin. Through measures such as improving the basin planning system, promoting the implementation of a new round of comprehensive water environment management tasks in the the Taihu Lake Lake basin, and high-quality construction of the digital twin the Taihu Lake Lake, we will continue to improve the ability to prevent floods and droughts in the basin, the ability to save and intensive use of water resources, and the ability to optimize the allocation of water resources, and strive to provide a strong water security guarantee for the integrated high-quality development of the Yangtze River Delta. Technological innovation has also played an important role in watershed water management. For example, advanced technologies such as enhanced subsurface flow artificial wetland treatment technology based on volcanic rock filling and integrated technology of water artificial wetland ecological purification have been widely applied in the fields of reclaimed water upgrading, wastewater treatment plant effluent upgrading, non-point source pollution control, etc., effectively improving water quality and ecological environment quality. The innovative application of these technologies not only solves the problems existing in traditional governance methods, but also promotes the development of watershed water governance to a higher level.

(3) Municipal sewage treatment

Intelligent technology utilizes technologies such as the Internet of Things, big data, and artificial intelligence to achieve automated monitoring and management of sewage treatment processes, improve operational efficiency, and reduce energy consumption. In 2024, significant progress has been made in the intelligent application of municipal sewage treatment technology. This is specifically reflected in the adoption of intelligent solutions by Tangjiatuo Sewage Treatment Plant, which not only improves sewage treatment efficiency but also reduces energy consumption and operating costs through the construction of energy-saving and efficiency enhancing projects such as precise aeration, intelligent dosing, smooth optimization of agitators, and multi-point addition of carbon sources; The fourth phase project of Shanghai Zhuyuan Sewage Treatment Plant adopts advanced electrical control equipment, such as frequency conversion cabinet machine solutions, to adapt to more demanding sewage treatment plant environments and application requirements, thereby achieving energy conservation and efficiency improvement.

(4) Industrial wastewater treatment

In recent years, the industrial wastewater treatment industry has made key technological breakthroughs, effectively addressing the long-standing challenges of complex water quality, difficult treatment, and high energy consumption. For high difficulty wastewater, such as phenolic compounds in the petrochemical industry and antibiotic fermentation residue in the pharmaceutical industry, China has introduced special and efficient biodegradation technology and anaerobic ammonia oxidation technology. Anaerobic ammonia oxidation technology decomposes ammonia nitrogen under anaerobic conditions using specific bacterial strains, which is not only environmentally friendly but also economical. It has been applied in multiple petrochemical and pharmaceutical companies with significant results.

With the increasing complexity of wastewater treatment processes, intelligent systems have become the key to improving treatment efficiency. The intelligent monitoring system based on the Internet of Things and sensor technology can monitor the wastewater treatment process in real time, and accurately regulate the treatment process through dynamic detection of microbial communities. The intelligent system can also adjust the dosage and processing temperature in a timely manner through data analysis, achieve automation of the processing process, reduce human dependence, lower costs, and improve efficiency. At present, heavy polluting industries such as metallurgy and pharmaceuticals have applied AI based intelligent control systems to make wastewater treatment more efficient and environmentally friendly.

The treatment of high salt wastewater is another major challenge, especially in industries such as petrochemicals and pharmaceuticals. To this end, the company has introduced low consumption electrochemical desalination technology and ultrafine bubble technology. These innovative technologies not only effectively remove high concentrations of salt from wastewater, but also significantly reduce energy consumption. For example, a certain chemical enterprise adopts a treatment process combining chemical desalination and ultrafine bubble technology, which reduces treatment costs by more than 40% compared to traditional evaporation methods and no longer relies on a large amount of energy.

Outlook for Development in 2025

1. Development prospects in terms of policies and markets

(1) Policy driven industry standardization and upgrading

With the continuous growth of China's economy, environmental problems are becoming increasingly prominent. The country's emphasis on environmental protection and ecological civilization construction will continue to increase, and water pollution control standards will become stricter. Industries will continue to be strongly driven by policies, and measures such as capital investment and tax incentives will further encourage enterprises to increase their efforts in technology research and development and facility construction. At the same time, the increasingly strict environmental regulations will also promote the standardization and development of the industry, which will help the industry move towards high-quality development.

(2) Since the Standing Committee of the National People's Congress on November 8th, the country has launched a series of policies to inject vitality into the operation of industry enterprises through the combination of debt and credit. This will not only alleviate the current debt pressure on local governments, reduce interest expenses, and provide more financial resources for local governments to promote development and improve people's livelihoods, but also enable local governments to have more conditions to timely pay for water pollution control projects. This will help reduce the accounts receivable of industry enterprises, restore their financial situation, expand market share, and boost the economic level.

(3) The filling of gaps in the pipeline network injects new energy into the industry. The Ministry of Housing and Urban Rural Development and five other departments jointly proposed the goal of basically eliminating direct discharge outlets and facility blank areas for domestic sewage in urban built-up areas by 2027, and achieving a centralized collection rate of over 73% for urban domestic sewage. To achieve this goal, various regions will continue to accelerate the implementation of sewage pipe network renovation, including carrying out anti backflow renovation of rainwater outlets and combined sewer overflow outlets along water bodies, accelerating the renovation and repair of damaged inspection wells, and comprehensively carrying out the upgrading and renovation of drainage facilities that have exceeded their service life, outdated materials, and prominent problems. The implementation of these policies will directly drive the development of municipal construction fields such as the construction and renovation of pipeline networks, providing a broad market space for water pollution control enterprises.

(4) High efficiency operational capability is the key to breaking through in market competition. In the era of stock operation, more emphasis will be placed on the combination of standardization and experience. Enterprises need to deeply summarize and accumulate operational experience to optimize operating costs and achieve high efficiency. For example, sewage treatment companies need to reduce the use of chemicals while meeting water quality standards, and rely on smart operations and artificial intelligence to learn from experience and knowledge to improve operational efficiency. This high-efficiency operational capability will become the key to differentiated competition among future water pollution control enterprises in the market, driving the industry towards more specialized and intelligent development.

2. Technological development prospects

(1) The Development Path of Technological Innovation in the Field of Water Ecological Environment

One is to enhance the applicability of existing technologies and carry out integrated innovation. Focusing on the systematic optimization of sewage treatment processes, exploring the collaborative removal and process integration path of pollutants from multiple sources and types based on their characteristics, constructing a refined technical system from pollution identification, tracing to treatment, forming a comprehensive solution that spans media, the entire chain, and multiple pollutants, and enhancing the applicability, stability, and long-term effectiveness of water environment treatment technology.

The second is to study and solve the problems of restoring the integrity of aquatic ecosystems and controlling new pollutants. Focusing on the systematic restoration of aquatic ecological environment, promoting the improvement of aquatic ecological environment, restoration of water system connectivity, and enhancement of biodiversity, improving the theory and methods of precise regulation of aquatic ecosystems, and building a highly resilient aquatic ecosystem. Strengthen the identification of new pollutants in water and research on ecological toxicology methodology, gain a deeper understanding of the impact of the coexistence of various new pollutants on ecosystems and human health, develop targeted control and efficient purification technologies, and propose strategies for the full lifecycle management of pollutants.

Thirdly, in order to achieve the dual carbon goal, water treatment technology needs to accelerate its transformation towards resource utilization, low carbonization, and intelligence. Comprehensively promote energy-saving processes and low-carbon technologies, introduce new technologies such as the Internet of Things, big data, and artificial intelligence, build a smart watershed ecological environment management platform, achieve precise perception and intelligent control of the entire drainage and water treatment process, efficient physical separation of pollutants, build short process and prefabricated treatment plants, and support the resource utilization, low-carbon, and intelligent development of water treatment technology.

(2) Development prospects of industrial wastewater treatment

The Ministry of Industry and Information Technology, in conjunction with relevant departments, has released a catalog of industrial water-saving processes, technologies, and equipment encouraged by the state, formulated a supply and demand docking guide, and vigorously promoted a number of advanced and applicable wastewater recycling technologies and equipment around water scarce areas and water environment sensitive areas such as the Beijing Tianjin Hebei, Yellow River Basin, and Yangtze River Economic Belt. Guide enterprises and parks to actively carry out water efficiency benchmarking based on actual production, and promote the multi use and cascade utilization of water in enterprises through improving production processes, optimizing production processes, and building smart control systems.

One is to promote innovation and application of wastewater recycling technology. Deploy innovative research on key technologies for industrial wastewater recycling, with a focus on breaking through technological bottlenecks such as high-performance industrial membranes and high concentration recalcitrant organic wastewater treatment. Cultivate a group of excellent wastewater treatment equipment and engineering application enterprises. Build a universal and integrated public service platform and industry alliance for wastewater recycling, carry out service to enterprise activities, and support industrial enterprises and parks to implement wastewater recycling technology upgrading and transformation.

The second is to establish a comprehensive control system for the entire process of wastewater recycling. Accelerate the revision of standards for industrial wastewater recycling technology, management, and evaluation, and build a smart management platform. Strengthen the rigid constraints on water resources and improve the assessment requirements for unconventional water utilization indicators such as wastewater and recycled water. Establish a sound monitoring system for the entire process of wastewater circulation water quality, gradually establish a risk prevention and early warning system covering the entire process of wastewater circulation, and ensure the safe utilization of wastewater circulation.

The third is to improve the incentive mechanism for wastewater recycling. Increase financial support for industrial wastewater recycling projects, introduce special policies for industry finance cooperation to promote green industrial development, and guide financial institutions to provide green financial support such as guarantees and loans for enterprises. Encourage the price of industrial wastewater recycling to be determined through negotiation between the supply and demand sides, fully leveraging the market's role and increasing the enthusiasm of enterprises to participate in industrial wastewater recycling.

The water pollution control industry still faces some prominent problems, such as uneven levels of technical equipment and insufficient investment in funds. Especially in the key core technologies, such as the research and development of high-efficiency sewage treatment equipment and low-cost wastewater recycling technology, they are still bottlenecks in the development of the industry. Therefore, implementing the spirit of the 20th National Congress of the Communist Party of China, winning the battle against key core technologies, and promoting ecological priority, intensive conservation, green and low-carbon development will be the key to the future development of the water pollution control industry. By strengthening technological innovation, improving policies and regulations, and increasing capital investment, we aim to promote high-quality development of the industry and contribute to the construction of a beautiful China.