Environmental Industries 

# Industry Facts The Office of Energy an d Environmental Industrie s (OEEI) is part of the Manufacturing section of the Manufacturing and Services Divisionof the International Trade Administration of the U.S. Department of Commerce . Its primary mission is to pr omote U.S. commercial and economic interests related to international trade and investment in energy and environmental t echnologies (goods and services). The office:

• analyzes international market trends;

• identifies export opportunities for American companies;

• disseminates trade leads to industry;

• counsels companies on export strategies;

• conducts a range of trade promotion activities;

• develops trade policy positions aimed at increasing free and fair trade;

• participates in trade negotiations and consultations; and

• advocates on behalf of U.S. exporte rs in particular transactions.
This web site focuses on the e nvironmental industries and is maintained by the environmental industries team of the office. Here is a link to our site focused on energy industries

. I ndustry Backgroundand Definition : I n general and as well as for th e purpose of this report, the e nvironmental technologies (ET) industry is defined as all goods and services that generate revenue associated with environmental protection, assessment, compliance with environmental regulations, pollution control and prevention, waste management, renewable energy, remediation of contaminated p roperty, design and operation of environmental infrastructure , and the provision and delivery of environmental resources. According to Environmental Business International (EBI), employment for the U.S. ET industry is approxi mately 1.6 million for all segments, producing r evenues of $290 billion. The U. S. ET industry revenue is br oken down into the various industry segments as follows: services (47% ), equipment (21%), and resources (32%). K ey subsectors for products and services of th e ET industry include: air, water, and soil p ollution control; solid and t oxic waste management; recycli ng; renewable energy; pollution p revention and resource recovery ; site remediation; environm ental monitoring; and water treatment for industrial and munici pal water use. This sector is extremely broad and includes a w ide variety of products and services that cut across many different i ndustry sectors. The ET industry evolved in response to concerns a bout the risks and costs of pollution and theenactment of pollution control legislation and regulations in the United States and around the w orld. It is now increasingly driv en by sustainability concerns.
I mportance of the Sector : The global ET market is a pproximately $782 billion. The U.S. is the world’s largest producer and consumer of environmental technologies w orldwide. I n the United States, approximately 119,000 ente rprises are engaged in the ET business. The U.S. ET industry generates approximately$300 billion in revenues, $43.8 billion in exports, and supports cl ose to 1.7 million jobs. (2008 Environmental Business International ) Global Competitiveness Factors : The United States is regarded as a world leaderin many ET categories, in cluding: engineering, design, construction, and consulting services ; pollution prevention and resource recovery; w ater and wastewater handling and treatment equipment; stati onary and mobile source ai r p ollution monitoring and control equipment; solid and hazardous waste management; contaminated site remediati on; automation for treatment sy stems and monitoring equipment; and information systems/software for e nvironmental management and analysis. While 99 percent of U.S. ET priv ate sector companies fall unde r the small and medium-sized enterprises (SMEs) category, th ey generate only 20 percent of the total U.S. ET revenue. Large E T companies, which represent onl y one percent of all private sector activity, account for 49 p ercent of total U.S. ET revenue. Public-sector municipalities and similar entities account the r emaining 31 percent of revenue and dominate wate r utilities, wastewater treatment works, and solid waste management. The ET industry continues to experience consolidation as larger ET companies typically arise through mergers and acquisitions, not internal grow th. More change of ownership and structure is likely to continue. U.S. Environmental ExportCompetitiveness 2004-2008 2004 2005 2006 2007 2008 Global Market 638.6 671.2 711.9 757.9 782.4US Market 245. 2 256. 3 271. 4 289. 6 299. 5 Non-US Market 393.4 414.8 440.5 468.4 493.8 % Exports 11.4% 12.0% 13.1% 14.2% 14.6% US Exports 28.7 31.8 36.9 43.1 43.8 % Growth in U.S. Env'l Exports 10% 11% 16% 17% 2% US Share of Non-US Market 7.3% 7.7% 8.4% 9.2% 8.9% Trade Surplus 5.9 8.2 10.7 12.8 10.9 Units:$ U.S. billion SOURCE: Environmental Business International, San Diego, CA

I n terms of exports as a percentage of total U.S. ET production, the leading subsectors are: r esource recovery (58%), instruments and info rmation systems (46%), water equipment and chemicals (36%), waste management equipment (25%), and air pollution control (16%), as illustrated in Figure 5 below.
E T Subsectors Exports in 2008 ($ billion )



## U.S. Environmental Exports By Sector, 2008 Equipment US ind %export Water Equipment & Chemicals 28.5 36.2% Air Pollution Control 18.0 16.2% Instruments & Info. Systems 5.9 46.0% Waste Mgmt Equipment 11.4 25.0% Process & Prevention Tech. 1.9 8.0% Services Solid Waste Management 53.1 0.3% Hazardous Waste Mgmt 9.2 1.0% Consulting & Engineering 27.1 12.8% Remediation/Industrial Services 12.5 6.0% Analytical Services 1.9 7.4% Water Treatment Works 40.7 0.6% Resources Water Utilities 39.2 0.2%Resource Recovery 28.5 58.0% Clean Energy Systems & Power 21.5 16.0% Total 299.5 14.6% S

ource: Environmental Business International, Inc. (San Diego, CA). N

ote: U.S. Industry is equal to revenues generated by U.S. companies worldwide. U. S. market refers to revenue from U.S. c ustomers. Exports do not include ownership of overseas companies but do include repatriated profits

. The U.S. ET industry should be able to increase its global competitiveness as it focuses greate r attention on key international markets and introduces new, state-of-the art products and services (e.g., part icularly technologies applic able to water reuse and recycling, desalination, and technologies with comprehens ive environmental management system applications). While t echnological development can undoubtedly help increase U.S. industry’s competitiveness, stricter laws and regulatory enforcement worl dwide are essential to addressing the world’s environmental issues. The international market for ET is fueled by several important policy and market drivers o f demand: greater global focus on climate change and sustainable developm ent; liberalization o f trade in environmental goods and services via bilateral and multilateral efforts; growing industrialization and environmental awareness in key emerging markets; and, application o f cleaner production and environm ental “best practices” not only by multinationals and majo r foreign companies, but also and increasingly by SMEs. B arriers to the Export of Environmental Technologies : The developing world is progressively embraci ng environmental protection and is developing n ew regulatory frameworks, but much work is stil l needed in this area. Relatively high tariffs on ET products (averaging 15-20 percent) are pr esent in most major emerging markets. In some key markets, such as China, the Philippine s, Malaysia, and Brazil , tariffs on ET products are as high as 40 percent. Weak environmenta l regulatory regimes and enforcement in some foreign markets also failed to increase demand fo r the ET sector at large- thus affecting U.S. E T exports. N umerous non-tariff barriers (NTBs) affect worl dwide trade in ET goods, including: restrictive t echnical standards; disproportionately oner ous labeling, packaging and documentation r equirements; non-transparent government procurement and contracting procedures; r estrictions on professional services, investment , and ownership; and, product design/life cycle and recycling issues. F oreign ET firms enjoy substantial government support for their overseas ventures, and U.S. E T companies find it very difficult to compete on such terms. Generally, most U.S. ET firms lack international experience. U.S. ET firms also lack the capitalization necessary to move into emerging overseas markets and pr ovide necessary large-scale infrastructure investments.To address these barriers, OEEI cooperates ex tensively with the Export-Import Bank, which h as established an “environmental lending program .” OEEI also works closely with the Office of the U.S. Trade Representative (USTR) to lower tariffs on environmental goods internationally and to establish new agreements that will facilitate increased access to global m arkets for U.S. environmental technology firm s. In 2007, USTR announc ed a joint proposal b y the U.S. and the European Union to place prio rity action on technologies directly linked to addressing climate change and energy security by establishing an environmental goods and services agreement in the Wo rld Trade Organization (WTO). The agreement would include a commitment by all WTO Members to remove barriers to trade to a specific set of climate

friendly technologies—a great step for the industry and possibly a giant leap for environmental p rotection and citizens’ health. I n 2007, the United States and the European Unio n initiated a drive to reduce or eliminate W TO tariffs on clean energy technologies. Progre ss on this initiative depends in part on the outcome of the Doha Round of negotiations. N umerous nontariff barriers to trade exist within European and Asian markets that effectively r estrict U.S. exports and prevent meaningf ul U.S. industry market penetration. China and other countries consider the establishment of a renewa ble energy manufacturing b ase to be a national prio rity and can be expected to maintain a variety of non-tariff trade b arriers and investment restrictions to pr otect their domestic producers. In numerous consultations with energy industry companie s, the Office of Energy and Environmental I ndustries identified many barriers to U.S. companies doing busine ss overseas. Among them are:

• Intellectual property protection,

• Preferential procurement,

• Lengthy or non-transparent project approval process,

• Central versus provincial government authority issues,

• Legal framework issues,

• Regulatory framework issues,

• Lack of financing,

• Limits on foreign equity ownership,

• Lack of adequate ener gy infrastructure, and

• Incompatible standards.
F or additional information on this report, please contact the Of fice of Energy and E nvironmental Industrie s at (202) 482-5225.Updated April, 201 0

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