May 29 2008
While households are slow to turn out the lights and separate perishables from plastics, some industry sectors are posting impressive profits from America's poor environmental progress, including waste collection and management companies, recycling facilities, and environmental consultants, according to industry analysts IBISWorld, Inc., recognized as one of the nation's most respected independent publishers of business intelligence research.
Municipal Solid Waste
"On the backdrop of World Environment Day on June 5, environmental habits and recycling efforts in the U.S. lag far behind European nations," said Mr. George Van Horn, a senior analyst with IBISWorld. "Our latest reports reveal that as a nation, Americans generate more waste than any other nation in the world -- an astounding 4.5 pounds of municipal solid waste (MSW) per person per day, 55 percent of which is contributed as residential garbage." He added, "The remaining 45 percent of waste in the U.S.'s 'waste stream' comes from manufacturing, retailing, and commercial trade in the U.S. economy."
And of the 245,700 million tons (up from 88 million tons in 1960) of the MSW that Americans produce each year, only 32 percent is recycled or composted. By comparison, around 70 percent of the MSW in Germany and Norway is recycled or composted -- world-leaders in the "Green Movement."
Carbon Dioxide Emissions Add To Global Warming Concerns
The U.S. accounts for only 4.6 percent of the world's population, yet the U.S. produces nearly a quarter of all carbon dioxide emissions, compared with China, a nation with approximately one billion people, or 21 percent of the global population but only 13 percent of the world's carbon dioxide emissions. This will soon change as carbon dioxide emissions in China and India are expected to soar in the next few years as both nations' economies grow, producing a larger middle class, rapid increases in consumption, and more carbon dioxide emissions. European Union countries, which make up 6.3 percent of the world's population, produces 14 percent of global carbon dioxide emissions, still a far better record than the U.S.
Power Consumption Continues Upward Trend
Despite headlines about global warming and campaigns urging consumers to consider conservation, Americans continue to devour resources at an alarming rate. For example, over the past four years, electricity consumption in the U.S. has risen 1.46 percent between 2004 and 2008 (figures in millions of kilowatt hours a year). IBISWorld estimates that regardless of current "go green" talk, power consumption will hit 4,333,631 million kilowatt hours by 2013 resulting in a growth rate of 1.93 percent over the next five years.
Water Supply And Consumption Concerns
We are a thirsty nation too. IBISWorld estimates that the typical single family home consumes 69.3 gallons of water per day. These figures are alarming in some parts of the country where water supplies are dangerously low due to drought, particularly in the West and the South East region of the U.S. Consumption of residential water breaks down into five areas according to the American Water Works Association (http://www.awwa.org) and (http://www.DrinkTap.org):
- Toilet use - 26.7 percent
- Washing machines - 21.7 percent
- Showers and baths - 16.8 percent
- Faucet use - 15.7 percent; and,
- Leaks -13.7 percent
If consumers install efficient water fixtures and check for leaks regularly, daily per capita water use would reduce by 35 percent, or 45.2 gallons per day. If every U.S. household installed water-saving technology, about 5.4 billion gallons of water would be saved each day, which translates into dollar-volume savings of $11.3 million per day, or more than $4 billion per year.
Good News For Garbage Collection, Recycling And Disposal Services
And while copious consumption in the U.S. points to our poor performance on the environmental frontline, the country's excessive waste production is good news for the business of garbage collection -- with many communities demanding expanded collection, recycling and disposal services, and large companies jumping at the chance to boost revenues.
"This year, the waste collection industry's revenue rose 4.5 percent to $39.87 billion, following several strong years in terms of increased demand for waste management services," said Mr. Van Horn. "Opportunities have arisen for industrial waste specialists as a result local government agencies outsourcing waste collection and management to private operators, heightened public environmental concern, enhanced demand for the collection, and processing of recyclable materials."
"Major players making the most out of our wasteful ways include larger companies that are vertically integrating their waste management services to include collection, recycling, transfer, and disposal services, which boost their advantage when tendering for collection contracts," said Mr. Van Horn. "Waste Management is on example. We predict the trend toward privatizing collection services will continue, as they are on the whole 'more efficient', use more effective pickup crews, have lower absenteeism, and higher productivity, because they serve more households per hour and often acquire standardized trucks with increased capacity."
And while the past few decades have seen rubbish production rise rapidly in the U.S., there has been somewhat of a turnaround in recent years with the amount of MSW produced decreasing marginally as the "go green" message has started to get through. Unfortunately, IBISWorld believes the U.S. will return to rising waste volumes over the next five years, albeit at a slow rate of around 0.5 percent a year. At the same time, revenues for waste collectors will grow by 3.48 percent per year.
New Initiatives On The Horizon
Although it may seem that community and government pressure to reduce waste at its source would be bad news for the wider waste industry, new initiatives, such as those in California, and New York move to raise their requirements for a set amount of waste to be diverted from the waste stream from 50 percent to 75 percent -- a change that can produce a healthy profits for companies that collect and process recyclables.
Recycling facilities currently generate estimated revenues of $2,981 million a year, and times have been good. Growth has exceeded 7 percent per year for the past five years due to rising waste volumes and increasing recyclable commodity prices.
Mr. Van Horn warns of the danger of pushing recycling rates to unprecedented levels in the face of weak recycled material markets, saying operators may experience diminishing returns and extremely high marginal costs. He added, "Revenue growth for the next few years would be at a more modest rate of around 2.1 percent per year as a result of rising household waste volumes stemming from higher per capita consumption of take-away and highly-processed, and packaged, foods; together with strong community and government pressure to boost recycling rates.
"Firms engaged in environmental consulting have done particularly well in recent years," said Mr. Van Horn. In fact, industry revenue is expected to hit $12.6 billion in 2008 -- up 9.7 percent from 2007. Next year will be even better with industry revenue forecast to rise another 11.3 percent to $14.07 billion. And with 2008 being an election year, Mr. Van Horn said the push, and press, toward environmentally friendly practices is stronger, and more highly publicised than ever before as businesses and politicians, strive to appear "green" in a bid to gain favor, and eventually political office."
"Developing these policies, and then later implementing them, all require the services of environmental consultants, and as firms become increasingly aware of their environmental impact -- and as a marketing tool -- environmental consultants can look forward to not just a bumper year, but a bumper decade," said Mr. Van Horn.
"Advisory services will also do well by servicing private businesses keen to change their policies and practices to promote the 'go green' message, either for the benefit of the environment, for positive publicity, or to attract or placate staff," said Mr. Van Horn. "Other industries set to do well out of the focus on global warming and climate change include construction companies focusing on building "green" buildings, and environmental engineers."
New Innovation On The Way
And interestingly, IBISWorld reports that while the energy industry is central to the problem of climate change, with fossil fuel burning lying at the heart of the issue, it may also end up a major financial winner from the environmental debate, by focusing on producing energy through geothermal sources, windmill farms, solar energy, and other developing technologies.
"Ethanol production will continue to expand as biofuels attract increasing attention as an alternative energy source, and we may see investment tax credits for the construction of bio-refineries to convert cellulose to transportation and other bio-based products," said Mr. Van Horn.
"While nations around the world are investing in boosting the production of bio-based fuels at competitive prices to replace petroleum-based products," Mr. Van Horn added, "biotechnology corporations are rubbing their hands at the prospect of big breakthroughs and the funds that will pour through in future years if they are able to develop cost-effective, environmentally-friendly alternatives to petroleum."
"Across the board, entrepreneurial companies are working frantically to drive innovations which may result in new product development, products with higher profit margins, or competitive advantage, as the climate change issue is only going to gather momentum," said Mr. Van Horn. "These problems are certainly not going away, and any industry which can 'go green' cost-effectively will benefit from an improved public image and the perception at least of being well ahead competitors."