sign in sign up
<<
Home , Omni Processor, Sewage treatment

Technology STe P Platform

Key Takeaways Population and Housing Trends • China’s sanitation strategy emphasizes the expansion of underground sewers with China is home to 1.4 billion people, 56% government funding and treatment targets bolstering the construction of piped residing in urban areas (2015). The country’s sewer networks and centralized treatment plants. However, unlike most countries annual population growth rate is a low 0.5% that fully transition households (HHs) to sewers, Chinese HHs continue to utilize although the country is experiencing rapid onsite septic tanks for primary treatment. as people move in search of • Because of this, nearly 100% of China’s population is reliant, in some way, on better employment opportunities. About 67% onsite sanitation (OSS) requiring a blend of fecal management (FSM) and of China’s population is expected to reside in treatment. With only a few examples of new construction abandoning urban areas by 2030.5 septic tanks, this practice is expected to continue. High population density characterizes China’s • In light of China’s renewed commitment to tackling persistent , FSM urban areas with housing stock dominated by may grow in importance in the coming years. Drivers exist that suggest there may multi-family dwellings (88% of urban HHs in be increased receptivity towards non-sewered sanitation solutions in rural areas, 2007),6 whereas in rural China, families typically where systems are already trending towards decentralization and cost minimization live in small, wooden dwellings (estimated 70% is of great importance. is also of grave concern across China, of rural HHs).7 Expectations of migration to particularily in large cities and in the arid North. As urban areas draw more water small and medium-sized cities has driven an resources away from poorer, rural ones through massive water diversion projects, overproduction in residential construction. Over sewered sanitation solutions that depend on fresh water for flushing could become the past 5 years, China has built more than 10 less feasible. million new apartment units annually, surpassing • Using the methodologies outlined below: annual demand for about 8 million units, • The annual upside market for the reinvented (RT) is estimated at ~523,000 although official government documents place units in 2030. Of this, the residential market is expected to make up ~97% of the production at about 8 million.8 Although this has total, comprised of roughly 438,000 SURTs and 67,000 MURT. China represents led to the proliferation of hundreds of “ghost a relatively large percentage (~20%) of the total annual market for the RT. For cities,” this trend is expected to continue. comparison, the Indian market is estimated at 328,000 units annually.1,2 Based on a report by China’s central planning • The omni ingestor (OI) market spans both urban and rural markets and is agency, city development plans could house 3.4 estimated at 64,000 units, representing approximately 25 to 35% of the total billion people by 2030, despite this significantly global market. exceeding current projected growth rates. 9 • The potential market for the (OP) is large, encompassing 98% of China’s urban 1,657 cities and between 10 and 20% of the total global market Sewage Coverage in China for fecal sludge treatment plants (FSTPs).3 This reflects China’s continued reliance China’s approach to sanitation has strongly on septic tanks for primary treatment and the need to treat fecal sludge (FS) from favored the growth of underground sewers populations that are both fully reliant and partially reliant on OSS. An additional with aggressive city-level targets being set 628 cities could have a need for advanced treatment, expanding the every 5 years through the central government’s market even further. Five Year Plans (FYPs). Based on government • RT products may benefit from limited government subsidies in rural areas, documents, China exceeded some of its 2015 stimulating adoption. To date, government has invested little in FSM but has a goals of 100%, 85%, 70%, tradition of investing in sectors that align with their political priorities, including and 30% in 36 select cities, municipalities, spending an estimated $6 billion per year on treatment between 2011 counties, and towns, respectively, while falling 4 and 2015. The country is expected to invest an additional $46 billion in sewer short on others. Regardless, FYP13 was issued expansion between 2016 and 2020.3 continued on page 2

Sanitation Technology Platform RTI International is the lead implementing ill& elinda partner of STeP, funded by the Bill & Melinda B M RTI International Gates Foundation. Gates foundation 3040 East Cornwallis Research Triangle Park © All Rights Reserved 2015-2018 North Carolina, USA 27709-21994 http://stepsforsanitation.org/ [email protected] RTI International is the implementing partner of STeP, funded by the +1 919 316 3991 Bill & Melinda Gates Foundation. © All Rights Reserved 2015-2018 Policy Landscape China is home to 20% of the world’s population but holds sludge settles to the bottom of the and is periodically removed for only 6% of the world’s water resources,14 making water disposal or treatment. central to the country’s economic growth and political Despite significant gains in sewage treatment, nearly 728 million Chinese priorities. To curb pollution, the central government still rely exclusively on OSS today, and 2% of the rural population practices continues to expand its goals and reach by striving towards open .11 With central government targets to reach 100% sewage higher coverage rates and enacting increasingly treatment in municipalities, 95% in prefecture-level cities, and 85% in counties stringent discharge standards. A new national strategy to by 2020,12 this number is expected to decline precipitously into the future. reduce was issued in 2015 with the goal of eliminating heavily polluted water basins by 2020 and fully Sanitation coverage estimates(2013)1 restoring water by 2030. With this, FSM is Urban (%) Rural (%) Total (%) expected to grow in importance.15 Sewer connections 74 9 45 In China, FS (otherwise referred to as or Other improved 25 56 35 excrement) is considered a form of municipal solid Other unimproved 7 33 19 and is regulated by the Ministry of Construction. Standards 1 3 2 on FS transport and treatment were first established in the late 1990s and amended in 2008. Policies and guidance documents span the sanitation value chain from onsite However, only limited evidence suggests that China is moving away from storage to treatment.10 its use of septic tanks for preliminary treatment; therefore, FS collection is expected to continue as HH’s transition from being fully reliant to partially Based on existing design guidelines, all HHs must first reliant on OSS. pretreat their sewage in an onsite septic tank or anaerobic 14 tank, regardless of access to sewage treatment. However, Fecal Sludge Generation and Collection some coastal cities such as Shanghai, Hangzhou, and An estimated 226 million m3 of FS are accumulated across China each Guangzhou are abandoning septic tank installation in newly year. FS collection in urban China reached a height of 38 million m3 per year 16 built areas. in 2005, and then began to steadily decline at a rate of 6.5% annually as sewage treatment capacity increased (see graph). In 2015, 14.4 million m3 continued from page 1 of FS (40,000m3/d) were collected from 126,000 , of which 47% was in 2016, setting even higher goals and emphasizing their treated at a WWTP or a centralized FSTP. The remaining 7.6 million m3 is continued commitment to this strategy. thought to either be land applied for agricultural benefit or indiscriminately 3 13 An estimated 48% of China’s population had access to dumped, while 212 million m may go uncollected. sewers in 2015, with substantially higher underground sewer connectivity observed in urban populations (79%) than rural ones (9%);2 46 billion m3 of wastewater are collected each year. A total of 92% is treated, and 88% is processed in a centralized plant (WWTP).8 It is likely that the remaining 4% of wastewater collected is managed in small-scale WWTPs.

Reliance on OSS A toilet revolution is underway in China. Today, 75% of rural areas have sanitary , and the government plans to reach 85% coverage by 2020. Prior to the rapid expansion of sewers in the early 2000s, nearly all HHs relied on a septic tank. Unique to China, these septic tanks are still used as a primary treatment Funding for the RT step today, even though most urban HHs are now also connected to sewers (partially reliant populations). In this There is evidence to suggest government funding for toilet technologies is system, flows to a WWTP for treatment while likely to come in several forms: central government subsidies for household toilets, regional government purchases of MURTs, and central and regional government purchases of public toilets. For example: • Prior to 2010, the central government funded $5.7B in sanitation projects in rural areas including reactors and sanitary toilets for ~187 million HHs.15 • In Youngkang Village in Central Jiangsu, households received ~$129 from the government to renovate their toilets against a total average cost of $483, with homeowners expected to pay the difference. The central government offers subsidies ranging from $22-74 for building new toilets, with amounts varying by region.17 continued Probable buyers of SURTs will be homeowners, whereas MURT will likely be purchased by builders / building owners in urban areas and regional / local government in rural areas. It is likely that OPs will be purchased by regional / local governments as well.

Likely Buyers of Sanitation Products Urban Rural RT- SURT Homeowner (potential gov. subsidy for rural HHs) RT- MURT Builder / Building Regional or local Owner government RT – MURT National government (Public Toilets) OI Unknown – local government or private operator OP Regional or local government

Funding for FSM In recent years, spending on wastewater management has favored the expansion of underground sewers, increasing treatment capacity and effluent . Spending on wastewater treatment totaled $60 billion between 2011 and 2015, with more than half of the funds Incumbent Solutions coming from private sources.4 Annual government spending on FSM is estimated at $360 million (2014), representing only 5% of spending Decentralized sewage treatment is the most popular method on total expenditures on environmental sanitation services,8,18 which of treating sewage in rural China, and 97% of all decentralized also includes solid . Spending is growing at a treatment systems include a septic tank. In a study of 62 treatment compounded annual growth rate (CAGR) of 8.7%, although future systems, the most common combination of technologies was allocations to FSM are unknown. By comparison, utility spending a septic tank followed by either a membrane or an on wastewater treatment is expected to grow to over $27 billion by process. The cost to establish and maintain this 3 2018.13 Central government subsidies for sewage treatment only exist type of multi-family system ranges from $59 to $586/m of daily 3, 21 in rare and special cases.19 In rural China, regional governments are installed capacity and operating costs are $0.10/m. responsible for capital investments. For those HHs that are fully reliant on OSS, whether in rural or urban areas, pit latrines are the predominant type of system in Cost Recovery for FSM and Willingness to Pay use,11 suggesting that underground sewer expansion has favored Historically, urban water and wastewater utilities in China have septic tank users. Because of limited water resources and a operated at a deficit or very low profit margin. HHs pay municipal demand for products, composting toilets are used 2.6% utilities a combined water and wastewater fee-in 2012, the average of the total population, although their adoption has had limited wastewater charge was $0.13/m3.4 However, tariffs are on the success in urban areas. For example, “eco-toilets” were installed rise across China as the government tries to curtail consumption, in 832 apartments in Dongsheng, but they failed because of conserve water resources, and enact a polluter pays system. To do inefficient piping and ventilation and lack of user experience.24 A so, in 2015, government established a floor of ~0.13/m3, equating reported 15.4 million rural HHs are also using small-scale biogas to an average $58 / HH / year.4,20 It appears unlikely that per unit digesters. The digesters have been positively received by HHs wastewater charges are inclusive of septic tank desludging and FS because of their cost saving benefits: fertilizer for growing crops, treatment, indicating that further rate increases may be required to electricity for lighting, gas for stovetop cooking, and a reduction in improve FSM services. medical costs attributed to diarrheal disease.25 In rural communities, village-level governments are responsible for ongoing operating costs, however the taxation of village inhabitant’s incomes is prohibited, often resulting in a lack of funding.21 There is no direct evidence of rural HHs paying for sewage treatment, although China’s Toilet Revolution user fees for solid waste and water services suggest it is possible. In January 2015, China’s National Tourist Administration pledged For example, the World Bank successfully issued large rural water to build or renovate 100,000 public toilets in tourist sites around loans to regional governments between 1985 and 2005 the country by 2020. The program is progressing ahead of totaling $628 million, 75% of which was repaid through HH user fees. schedule. In April 2017, the central government announced that HHs were charged $0.30/m3, equivalent to ~3.6% of their total annual it had exceeded its new toilet target for Beijing, having already income, and payment compliance was usually over 90% due to a installed 36,000 units, with only 10,000 renovations to go. Total variety of incentive structures. Although willingness to pay (WTP) data investment in the program has exceeded $3 billion, with funding 26 for sanitation projects is unknown, WTP for solid waste services also coming from the central and local governments. offers a useful basis for comparison. According to a 2011 study of a In 2015, there were 167,000 public toilets across China, with poor county in Yunnan Province, the mean WTP was 1% of a HHs numbers expected to grow to 370,000 by 2030.2 Public total annual income for solid waste management services, or $16 / sites are believed to be early adopters of MURT technologies given year. The poorest HHs were willing to pay 5%, highlighting the likely the current focus of government funding and their high visibility. greater impact of solid waste on their daily lives.22,23 Potential Market for the Reinvented Toilet (RT) Potential Market for the Omni Ingestor (OI) The total upside annual market opportunity for Vacuum collection occurs in populations that are fully reliant the RT is projected to reach ~530,000 units and partially reliant on OSS. Based on FS volumes collected in by 2030. The market is dominated by demand 2015 (see above), the current addressable market for a typical from residential customer segments, with SURT 5m3 truck is approximately 3,000 units. However, the potential demand exceeding MURT demand by 6X. This market, assuming all FS is collected is about 64,000 units. The is partially attributed to the larger number of total market size is expected to decrease slightly by 2025 despite users per MURT, but also because of high UGS a shift towards underground sewers, as those HHs continue coverage rates in urban, apartment-prevalent desludging their onsite septic tanks. areas. With the large volume of new apartment units under construction in China, the new construction market Total Potential Market for the OI for MURTs and SURTs is expected to reach 42,000 and 19,000, (Thousands of Units) 2017 2025 respectively.2 Total 64 60

SURT MURT Total Market for the RT2 2015 2030 2015 2025

Residential 1,997 438,248 102 67,894

Non-Residential 0 0 1 17,792

Total 1,997 438,248 103 85,686

Market for the Omni Processor Because of China’s reliance on septic tanks, 98% of China’s 1,657 urban cities make up the potential market for the OP;27 1,009 of these cities generate between 100 and 500 m3 of FS per day, and an additional 221 cities generate between 500 and 1,000 m3 per day. Taken together, these cities represent 76% of the total FS generated by urban areas nationwide. A total of 628 cities have WWTPs that produce biosolids. Of those, 70% or 438 cities produce between 1 and 15 dry tons of solids each day. The largest share of total biosolids production comes

from 37 cities that generate between 100 and 500 dry tons per day followed by 4 mega-cities (Shanghai, Beijing, Guangzhou, and Shenzhen) at 31% of total nationwide production. Current biosolids management practices include , , lime stabilization, and disposal, although dewatering plus landfill disposal is the predominant method used.28 According to government regulations, FS can only make up 10% of a landfill’s incoming feedstock, which may create incentive for alternative use, especially as sewage treatment rates continue to grow.

Sanitation Technology Platform RTI International is the lead implementing partner of STeP, funded by the Bill & Melinda Gates Foundation. RTI International 3040 East Cornwallis Road • Research Triangle Park • North Carolina, USA 27709-21994 © All Rights Reserved 2015-2018 [email protected] • +1 919 316 3991 http://stepsforsanitation.org/ Methodology Market Sizing for OI: Market size estimates were calculated using the following • Using data from the National Bureau of Statistics, populations methodologies. Baseline data was collected from a mix of were segmented by fully reliant (those that rely exclusively on secondary and primary sources, and in some cases, based on OSS) and partially reliant (those that have a septic tank and are assumptions provided by local experts. also connected to a sewer) populations. • Using technical standards for septic tanks in China, STeP Market Sizing for RT: estimated the total daily volume of FS accumulated nationwide. • Analysis offers upside estimate. Model takes a snapshot of It was assumed that trucks service, on average 2.7 HHs / day, annual revenue and sales potential in 2030, and assumes RT to and operate 312 days / year. Based on a cursory search of have achieved steady state market dynamics. desludging vehicles for sale in the Chinese marketplace, vehicle size is assumed to be 5 m3. • RT uptake rate depends on both toilet type and past improvement in sanitation of country. Market Sizing for OP: • Adoption of SURT vs. MURT depends on construction type • Using city-level sewage treatment rates from the National (e.g., standalone houses use SURT, apartments use MURTs). Bureau of Statistics, STeP estimated the daily volume of FS accumulated by city, segmenting cities by accumulation rate. • Market is segmented across toilet (unimproved, , Note: It is recognized that sewage treatment rates are not septic, sewer) and construction types (new versus existing synonymous with sewerage coverage rates, however this construction). Residential markets = Number of households represents the best available city-level data and is believed to x expected RT uptake; Non-residential market = total square reflect the percentage of sewage treated of the total generated, footage x expected RT uptake. rather than the percentage treated of that collected. • Daily dry biosolids production rates were also sourced from the National Bureau of Statistics. City-level data on sludge management is not known, therefore, it is assumed that 100% of the biosolids generated are available for processing at an OP.

1 BCG (2017). Transforming Sanitation. Retrieved from http://stepsforsanitation.org/resource-center/reinvented-toilet/all-resources/#transforming-sanitation-commercializing 2 BCG (2017). Market Insights for the for the Reinvented Toilet- China. Retrieved from http://stepsforsanitation.org/resource-center/reinvented-toilet/all-resources/#market-insights-china 3 Based on the total global market in 2030 estimated by Boston Consulting Group for the Bill & Melinda Gates Foundation. 4 Global Water Intelligence. (2014). Global Water Intelligence Market Insight: China. Oxford: Media Analytics Ltd. 5 Based on an urban population growth rate of 2.7% and a rural population growth rate of -2.17%. Source: World Bank. (2015). Retrieved from http://data.worldbank.org/indicator/SP.URB.GROW?locations=CN Accessed 6/20/17. 6 Hou, Y. (2009). Urban Housing Markets in China. Stockholm: Tryck & Media, Universitetsservice US-AB 7 RTI International. (2017). Based on personal correspondence with Huatian Zang dated 20, June 2017. 8 National Bureau of Statistics of China. (2015) 2015 China Statistical Year. Retrieved from http://www.stats.gov.cn/tjsj/ndsj/2015/indexeh.htm 9 Bloomberg. (2016). Chinese Cities; Expansion Plans Could House 3.4 Billion People. Retrieved from https://www.bloomberg.com/news/articles/2016-07-15/chinese-cities-expansion-plans-could-house-3-4-billion-people 10 Estimated based on 2017 population estimates and 2013 sewerage coverage estimates from the Joint Monitoring Programme 2015: China for urban and rural populations. 11 WHO/UNICEF. (2015). WHO/ UNICEF Joint Monitoring Programme for and Sanitation. China Country File. Retrieved from https://www.wssinfo.org/documents/?tx_displaycontroller[type]=country_files 12 WHO/UNICEF. (2015). WHO/ UNICEF Joint Monitoring Programme for Water Supply and Sanitation. China Country File. Retrieved from https://www.wssinfo.org/documents/?tx_displaycontroller[type]=country_files 13 FS collection in rural areas is not known. 14 Yu, X., Geng, Y., Heck, P., Xue, B. (2015). A Review of China’s Rural Water Management. Night Soil Treatment Standards are titled “Hygienic requirements for non-hazardous treatment of night soil (GB7959-1987)”. Actual policy language could not be located. 15 Deng, Y. Wheatley, A. (2016). Wastewater Treatment in Chinese Rural Areas. Asian Journal of Water, Environment and Pollution, Vol. 13, No. 4 (2016), pp. 1–11. 16 Liu, T., Chen, ZL., Yang, L. (2010) Urban Night Soil Transportation and Treatment in China. In: Chen Y., Zhan L., Tang X. (eds) Advances in Environmental Geotechnics. Springer, Berlin, Heidelberg. 17 Xinhuanet. (2015). Across China: A “toilet revolution” in rural China. Retrieved at http://news.xinhuanet.com/english/2015-07/14/c_134412007.htm 18 Urban Night Soil Transportation and Treatment in China. Ting Liu, Zhu-Lei Chen, Lie Yang. September 2009. 19 http://huanbao.bjx.com.cn/news/20161222/798766.shtml 20 https://translate.google.com/translate?hl=en&sl=zh-CN&u=http://www.chinacitywater.org/zwdt/swyw/95826.shtml&prev=search 21 Guo, X., Liu, Z., Chen, M., Liu, J., Yang, M. (2014). Decentralized wastewater treatment technologies and management in Chinese villages. Front Environ. Sci. Eng. 2014, 8(6): 929-936. 22 Wang, H. (2011). management in small towns: an economic analysis conducted in Yunnan, China (English). World Bank Group. Retrieved from: http://documents.worldbank.org/curated/ en/824261468011757523/pdf/WPS5767.pdf 23 Wong, E. (2013) New York Times. Survey in China Shows a Wide Gap in Income. Retrieved from http://www.nytimes.com/2013/07/20/world/asia/survey-in-china-shows-wide-income-gap.html 24 Environment Stokholm Institute. (2012). Doomed eco-toilet scheme was “valuable experience.” Retrieved at https://www.chinadialogue.net/article/show/single/en/5088-Doomed-eco-toilet-scheme-was-valuable-experience 25 George, R. (2014). The Big Necessity: The Unmentionable World of and Why It Matters. New York: Picador 26 Buckley, J. (2017). China’s Toilet Revolution is Progressing Faster Than Expected. The Independent. Retrieved at http://www.independent.co.uk/travel/asia/china-toilet-revolution-upgrade-progress-toilet-paper-3-year-project- complete-90-per-cent-tourism-a7675961.html 27 31 Chinese cities have 100% sewerage coverage and due to their size, produce less than 1m3 of FS / day. Those cities alone are not believed to be a potential market for the OP. 28 Jin, L., Zhang, G., Tian, H. (2014). Current state of sewage treatment in China. Retrieved at https://www.ncbi.nlm.nih.gov/pubmed/25189479