Environmental Technologies Industries
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Environmental Technologies Industries
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| Central and Eastern Europe Export Market Plan |
I. Regional Overview
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Introduction
The surveyed countries, struggling with declining economies in the early nineties, have achieved significant success in introducing market reforms and transforming their economies. Much of the privatization process has already been completed. As a result of the changes, economic performance has improved markedly, with annual economic growth in most countries currently ranging between 4% and 7%.
The political transition and reforms of the legislative and institutional framework have been successful as well. The Czech Republic, Hungary, and Poland have joined the Organization for Economic Cooperation and Development (OECD), with Slovakia expected to follow in the near future. The first three countries are also expected to be in the first wave of CEE countries joining the European Union early next century. Harmonization of domestic structures and legislation with those of the European Union is a high priority.
Environmental Expenditures
Even though environmental protection is not as high on the political agenda as it was in the early years of the transformation, the governments remain committed to improving environmental conditions. Despite other pressing problems (e.g., unemployment, restructuring of social security systems), the share of environmental expenditures in Gross National Product over the last few years has exceeded 1 percent.
Table 1.1: Total Environmental Expenditures in 1995
| Country Expenditures ($Million US) Share of GNP |
| Czech Republic 1185 2.6% |
| Hungary 385 1.1% |
| Poland 1308 1.1% |
| Slovakia 232 1.0% |
| Total 3110 --- |
As shown in Table 1.1, total environmental spending from both government and private sector in the surveyed countries exceeded 3 bln USD in 1995. It is expected that, in actual numbers, environmental expenditures will grow at the rate of between 6 and 12% annually.
Securing the necessary financing for environmental projects is one of the major problems facing those active in environmental protection
in Central and Eastern Europe. The countries generally have six sources of funds to support environmental investments:
- state budget and regional and municipal budgets extra-budgetary funds (State Environmental Protection Funds, other earmarked funds)
- environmental investments of commercial enterprises, both state and privately owned
- commercial credit, both domestic and foreign
- foreign environmental investments
- foreign assistance programs
A major change is expected in the financing of environmental protection. Currently, the main sources of funds for environmental projects include the state budget (including State Environmental Protection Funds), municipal budgets, and investors’ own funds. In the coming years, the share of business contributions is expected to rise sharply, while the contributions from the state budget will decrease. The bulk of state financing is allocated to the construction of wastewater treatment and sewage facilities, and public water supply projects, while the remainder is mainly allocated to air protection and waste management projects. Costs of projects in the latter two categories are covered mainly by individual industrial plants and municipalities.
Market for Environmental Technologies
The environmental products and services market is a rapidly developing sector of the economy, but accurate information on the size of the market for environmental technologies is still not available. Information relating to spending on environmental technologies is not tracked by national statistical offices, and there are no publicly available up-to-date market assessments for environmental technologies.
Based on a review of secondary sources, the market for pollution control equipment in the Czech Republic is estimated at between 600 and 700 million USD per year, with an annual growth rate of some 6%. Two-thirds of the market is based on domestic production, and one-third on imports. The Hungarian market for environmental technologies was estimated at between 127 and 289 million USD in 1995. The estimated size of the Polish market for environmentally safe technologies for burning coal and generating power was 240 USD mln in 1995; for pollution control equipment it was estimated at 330 USD mln, and for industrial process controls 98 USD mln. The size of the environmental technology market in Slovakia was estimated at 174 mln USD in 1995. However, the figures above should be taken with care.
State Environmental Funds
All surveyed countries have established national environmental protection funds to provide non-budgetary funds earmarked for environmental projects. The rationale behind the establishment of the funds was to ensure a steady flow of the significant amounts of money needed for environmental protection. The dominant share of these funds’ revenues comes from outside national budgets, so that the protection of the environment does not directly compete for limited resources with other social programs.
The resources of state funds can account for a significant proportion of a country’s environmental spending. In Poland, for instance, its respective fund covered about one-quarter of the total outlays for environmental protection in 1995. The resources are generally used to finance national and regional public infrastructure projects, local projects (such as the construction of wastewater treatment plants and potable water systems) whose costs exceed the capabilities of local budgets, and projects in priority areas.
State environmental funds’ main activities are to provide financial support for investments, usually through loans offered with preferential conditions. Other forms of support are also used, and include grants, subsidies to bank credits, equity involvement, and others The form of financing available from these funds depend on the project type, the investor, and the financing institution.
Table 1.2 presents the breakdown of expenditures from state environmental funds in 1995. As shown in Table 1.2, the bulk of funds’ expenditures was allocated to air and water protection projects, which is an indication of state environmental priorities. As noted already, the proportion of state funding is generally much larger in water related projects, where the most frequent investors are municipalities. In contrast, for air pollution control projects (mainly at stationary industrial sources) a high percentage of the project cost is covered by investors’ own funds, while waste management projects are mainly financed from municipal budgets.
Table 1.2: Breakdown of 1995 Expenditures of State Environmental Funds ($US Million)
| Country | Czech Republic | Hungary | Poland | Slovakia |
| 1995 Expenditures | 191 | 42 | 42 | 734 |
| Number of Funded Projects | 364 | 267 | 970 | 962 |
| Expenditures by Sector | Water protection 44%
Clean Air Program 34%
Other air protection 14%
Waste 5%
Nature protection 2% | Water protection 41%
Air protection 39%
Waste 12%
Nature protection 8%
Noise 1% | Air 40%
Water protection 25%
Mining and geology 8%
Land protection 4%
Nature conservation 3% | Wastewater 30%
Air protection 28%
Water supply 22%
Waste 10%
R&D 5% |
Source: REC Bulletin, Autumn 1996 (based on information from the respective Funds)
State environmental funds generate revenues mainly from economic instruments for environmental protection, such as user fees, disposal charges, and non-compliance fines. Air emission fees and wastewater charges make up the major source of revenues, although actual solutions vary from country to country. In Hungary, for instance, taxes on fuel, car tires and batteries, and coolants are channeled to the fund. Additionally, since 1995, a waste packaging fee has been applied to any goods where packaging is required. In the Czech Republic, in addition to the revenues from air, water, and waste fees and fines, a third of the 1995 funding came from for the national Clean Air Program. Recently, significant income has started to come from loan repayments and servicing.
Legislation and Enforcement
Each of the countries have enacted comprehensive environmental legislation. The regulatory system is currently undergoing changes mainly related to improving the framework regulations (eliminating gaps and improving consistency), enacting specific pieces of legislation (e.g., Waste Act), and harmonizing domestic environmental legislation with that of the European Union.
The level of enforcement is still inconsistent. Enforcement policies mainly rely on monetary penalties, but also include environmental standards, restrictions, and permitting systems. Additionally, enforcement policies are often implemented by local governments without coordination at the national level, which results in considerable differences in both requirements and levels of enforcement. Also, with the rapid growth in the number of small and medium enterprises, compliance monitoring is often difficult.
The main environmental policy instrument applied to industry is the permit system including fees and fines for non-compliance. Most of the collected environmental fees and fines are earmarked for environmental purposes, and make up a major part of the revenues of state environmental funds, or municipal budgets for environmental protection.
The system for assessing environmental fees and fines is rather complex, and the scope of responsibilities of various authorities varies, depending on the environmental media and the nature of the payment (fee vs. fine). In general:
- Environmental fees are payable for the emission of regulated substances into air and water; fees are also due for water extraction and waste disposal. Fees are due irrespective of the level of compliance with relevant permits.
- Environmental fines are assessed when a polluter exceeds the emission limits set in the relevant operation permit.
The effectiveness of monetary penalties as an incentive to improving compliance is limited. The polluter-pays-principle is employed, but levels of charges are not high enough as yet to be a major stimulus for polluters to introduce environmental improvements. Furthermore, fee collection rate is far from 100%. However, the countries are undertaking activities aimed at increasing base fee rates, indexing charges to inflation, and improving collection.
Policy coordination, refinement of legislation, better enforcement of regulations, education and institutional strengthening, the development of clean technologies, and priority capital investments for air and water quality are the likely focal points for future environmental actions.
Environmental Administration
The system of environmental administration has undergone major restructuring during the transition period. Decentralization of many environmental activities among regional and local bodies has taken place. Generally, all countries have established three levels of environmental administration:
- national level ministries (e.g., Ministry of Environment; other ministries with environment-related duties);
- regional level (county, provincial) environmental department of regional authorities, inspection bodies, water management boards, etc.;
- municipal level created by local authorities.
Ministries of environment are usually in charge of determining national environmental policy and implementation plans, maintaining pollution monitoring systems, coordinating environmental projects of national importance, and maintaining international cooperation. Additionally, each country has different administrative structures for various areas, such as health care, agriculture, forestry, water management, physical planning, and transport. Responsibility also varies by media (air, water, soil).
Environmental compliance monitoring and enforcement is carried out by regional environmental inspectorates. Most environmental permitting is administered at the regional level as well, along with developing local standards, collecting charges and imposing penalties, and developing regional environmental policies.
Physical planning and construction permits as well as utility contracts are generally issued at the municipal level. Municipalities are increasingly responsible for waste management and wastewater treatment, including operating the systems, and calculating and collecting charges.
Governments collect environmental information, such as records of compliance or discharge monitoring, for processing, storage, and distribution, but often do not provide timely access to the public. National statistical offices are mainly responsible for processing and disseminating environmental information. State of Environment reports are generally published by ministries of environment.
Environmental Priorities and Project Opportunities
In all the surveyed countries, severe environmental damage has been sustained in the past. The development of heavy industry and the energy sector based mainly on coal are among the key causes of pollution. Although there has been a decline in manufacturing activities, and a corresponding reduction in environmental pollution, environmental degradation still frequently continues.
While air pollution and poor drinking water quality are the most frequently cited environmental problems, management of wastewater and solid waste, pollution from the transport sector, and environmental degradation related to the energy sector also represent major challenges. Environmental pollution is particularly heavy in industrialized areas, where large industrial enterprises are located (e.g., chemical and petrochemical works, smelters, foundries and steel mills, cement and paper factories, coal mines, etc.).
Additional environmental damage has been caused in some cases by forestry mismanagement, poor agricultural practices and intensive tourism.
Environmental policies in most countries place high emphasis on restructuring the industrial sector in order to reduce the negative impact on the environment. The policies generally stress the preference for preventive measures instead of the end-of-pipe approach, application of environmental regulations to all branches of industry regardless of ownership, and the use of the “polluter pays principle.” Introduction of environmentally friendly, modern manufacturing techniques throughout all production processes is emphasized.
In practically all the surveyed countries, the two major environmental priority areas are air pollution control, and protection of water resources and improving the quality of drinking water. Table 1.3 presents the breakdown of environmental expenditures (from both the public and private sectors) by media.
Table 1.3: Breakdown of Environmental Expenditures by Media-1995
Source: 1996 Statistical Yearbooks of the surveyed countries
As shown in Table 1.3, the bulk of environmental spending is allocated to air pollution activities, and water and wastewater projects. Waste management activities are the third largest priority area when spending is considered. The large share of water and wastewater treatment and air pollution control projects arises for two main reasons:
- Protection of water resources, and supply of quality drinking water is the major priority in every country. New water protection regulations force municipalities to invest in water and wastewater treatment, and the sector has become the main recipient of municipal money invested in the environment. The trend is expected to continue in the near future.
- Air pollution from large stationary sources is still considered the most important cause of environmental damage, and money is continuously allocated for air protection projects in the energy and power generation sector. The installation of desulfurization units and other equipment in the largest coal-burning power plants is under way, and accounts for a major portion of investments in air pollution control.
Several universal issues were frequently noted by respondents that apply to most environmental sectors and will influence project opportunities. The most common problems include: lack of money for environmental projects, incomplete or changing legislation and inconsistent enforcement, and lack of awareness of environmental issues.
In general, significant project opportunities are expected in wastewater treatment and air quality protection, and in the energy sector.
Air and Energy
The energy and power generation sector is the main source of air pollution, especially with respect to SO2, NOx, solid particles, and CO emissions. As the surveyed countries are signatories to international agreements on the reduction of long-range transboundary air pollution, and the emission of greenhouse gases and substances damaging the ozone layer, major initiatives are underway to curb the emissions.
Priority areas in the energy sector include the conversion of most of the current small and middle-sized heat generating stations from coal-burning to gas use; modernization of industrial boilers (e.g., use of fluidized bed boilers); reconstruction of larger heating stations for use also in electricity generation; and modernization and construction of new smaller energy generating sources. Construction of installations for reduction of dust and gaseous emissions (especially sulfur dioxide, dust particles, nitrogen monoxides, carbon oxides) is also a priority area. In the long term, energy saving measures will be a significant opportunity area.
Another significant source of local air pollution in cities is domestic heating, largely based on individual fireplaces which are not fitted with any pollution control equipment. Construction of central (district) heating systems in urban areas is the most common way of addressing this problem, although gas heating is also gradually being introduced in individual family houses, and, in some areas, in businesses as well.
Emissions from the transport sector have also become a growing source of air pollution, especially in big cities. Traffic-related air pollution in urban areas is among the most frequently cited environmental problems.
Finally, control of process and fugitive air emissions at industrial plants is another area frequently cited as a priority. Most countries are preparing legislation aimed at reducing air emissions of volatile organic substances, hydrocarbons (including benzo-a-pyrene), heavy metals and other air pollutants.
Water and Wastewater
Currently, there exists a large gap between the percentage of population with access to municipal water supply, and that connected to sewage systems. The most critical environmental problems are related to poor quality drinking water, and the pollution of water resources. Discharge of untreated industrial and municipal wastewater has led to contamination of surface and groundwater resources. Approximately half of all generated sewage is discharged untreated. A number of major cities do not have wastewater treatment facilities, or treat only a fraction of their sewage (e.g., Warsaw, Budapest). Uncontrolled runoff from agriculture further exacerbates the problem.
Another frequently mentioned priority is the elimination of shortages in high-quality drinking water supply in urban areas, mainly through the construction of additional water treatment works, construction of wastewater treatment plants in cities located along major rivers, and the reduction of pollution loads discharged by industry and the municipalities into rivers.
The main project opportunities in the water management sector are related to the construction of new, and modernization of existing water supply and wastewater treatment systems. Contamination of groundwater resources (especially by oil-based substances, organic solvents, and heavy metals) is also a significant problem. Another important field is the improvement of sanitary conditions in rural areas by supplementing village water supply systems with adequate sanitation.
Interestingly, in practically all countries, the management of sludge from wastewater treatment was a major unresolved issue.
Waste Management
Municipal waste generation has increased sharply over the last decade, in some cases even two-fold. This growth, however, has not been accompanied by improvements in waste management practices. The bulk of municipal waste (between 80 and 95%) is landfilled, while most existing landfills do not meet required environmental standards. The problem is compounded by the illegal dumping of waste. The rate of recycling and process waste utilization are low, with only a few firms active in the field.
The disposal of hazardous waste is one of the most pressing problems. Frequently, significant amounts of hazardous waste are stored on-site at the source in so-called temporary storage facilities. There are few modern facilities for the disposal of hazardous waste. Incineration of hospital waste is generally carried out in small and obsolete facilities.
For some bulk industrial waste (e.g., phosphogypsum, “red mud” from aluminum production), no feasible treatment technology is available. Other high volume industrial waste which needs to be better managed includes waste from coal mining and open pit excavation.
Governments are undertaking a number of actions to address the problem of waste management. New waste legislation is being prepared (e.g., Waste Act in Poland and Hungary) or has been adopted recently (hazardous waste regulations in Hungary). Product fees (“green taxes”) have been imposed on some products, such as fuels, tires, refrigerants, car batteries and packaging materials.
Until now, waste management projects tended to focus on landfill construction. While this tendency will continue in the near future, (especially hazardous waste sites and sanitary landfills), other waste management activities are expected to grow in importance. Waste minimization and recycling of waste (e.g., reducing generation of industrial wastes, increasing the rate of their utilization) are high on the priority list in all countries. Construction of modern hazardous waste incinerators is another likely opportunity area. Composting of municipal waste is of interest in Poland, while a significant number of projects relating to site remediation and decontamination are under way, especially in Slovakia and the Czech Republic. In Hungary, the government intends to establish a nationwide waste collection and recycling system. In Slovakia, the government puts high emphasis on construction of regional incineration plants for hospital waste, and remediation and revitalization of old landfills.
Other Areas
A significant number of projects relating to site remediation and decontamination are under way. The area is a strong priority in the Czech Republic and Slovakia, mainly because of liability issues prominent in the privatization process. With time, the area is expected to grow in importance in Hungary and Poland.
Revitalization of damaged soils and landscape is a priority, especially in heavily industrialized areas. Intensive reforestation programs, particularly in watershed areas and on land unsuitable for agricultural use, are underway in Poland and Slovakia.
Comprehensive environmental programs have to be developed for some of the most contaminated or threatened areas in the countries. North Bohemia in the Czech Republic, Dunavaros and Varpalota in Hungary, Silesia in Poland, and the Kosice region in Slovakia are examples of areas strongly polluted as a result of heavy industrialization.
Noise and vibration affecting the general public does not seem to be a major area of interest in most countries, and was not perceived a significant project opportunity area. Generally, the required measures are costly, and there are other more pressing environmental priorities for cash-strapped investors. Noise-related problems play a significant role only on a local scale, for instance in the vicinity of major highways, and industrial plants with high noise levels. The latter, however, is a particularly significant issue in Poland, where legislation sets strict standards for acceptable noise levels.
Occupational health & workplace safety does not seem to be a major priority area at present, although it is likely that with the introduction of stricter OHS regulations comparable with those in the EU, and with the increased direct liability of employers for workers’ safety, the demand will grow. Also, requirements related to risk management stipulated in the ISO certification process are likely to influence the situation in this field.
Future Developments
Air pollution control will continue to be a major priority area, although there is expected to be a gradual shift of focus towards small and medium air pollution sources. Air pollution from traffic will grow in importance, and, in general, environmental impacts of the transport sector are expected to be more vigorously addressed.
Water management, and particularly wastewater treatment, are likely to remain priority areas in the near future. Pollution of potable water sources from agriculture, and from contaminated sites is a likely target area in the future.
Currently, end-of-pipe technologies are mostly used to address major environmental problems, but the significance of preventive solutions is expected to increase with time. In the long term, waste minimization and pollution prevention should become the prevailing approach. Increasing environmental fees, better enforcement of regulations, and growing costs of waste disposal are major driving factors. Price liberalization is also expected to stimulate demand for energy efficiency measures, resource recovery, and water reuse projects.
The construction of modern landfills is an expected long-term opportunity area. Accumulated hazardous waste that needs treatment and removal, and waste disposal sites that need remediation are likely to remain a significant priority.
Information Channels for Business Opportunities
One of the most critical factors to successfully enter an environmental technology market in Eastern Europe is timely access to information for project opportunities. The findings of the survey indicate, however, that there are no effective formal channels for information about opportunities. Interviewed experts were not aware of any central body or organization collecting information on environmental business opportunities. Personal and professional contacts, participation in environmental fairs, and business and environmental publications are among the primary sources of information used.
Governmental organizations, R&D institutes, and professional associations, etc. generally do not seem to be regarded a useful source. There are no institutions or clearinghouses collecting information about environmental business opportunities. It was often noted that ministries of environment should play a more important role in providing information on project opportunities than they do at present. The majority of businesses expressed disappointment with the inefficiency and changing structure of ministries.
Additional sources included sporadic assistance from governmental agencies and local authorities, annual environmental reports prepared by regional administrations, a “black list” of companies declared particularly damaging to the environment, and the media.
For comparison, Table 1.4 presents the breakdown of major information sources for business opportunities, based on a 1995 survey of about 150 environmental businesses in each country, carried out by the Regional Environmental Center:
Table 1.4: Major Sources of Information for Business Opportunities
| Source of Information | Czech Republic | Hungary | Poland | Slovakia | Average |
| Personal contacts | 96 % | 91 % | 98 % | 94 % | 95% |
| Professional Contacts | 64 % | 92 % | 85 % | 88 % | 82% |
| Trade shows and Fairs | 72 % | 53 % | 91 % | 73 % | 72% |
| Daily newspapers | 61 % | 62 % | 84 % | 76 % | 71% |
| Conference attendance | 58 % | 69 % | 81 % | 69 % | 69% |
| Business Publications | 59 % | 59 % | 77 % | 69 % | 66% |
| Environmental Publications | 55 % | 66 % | 83 % | 51 % | 64% |
| Mailing Lists | 68 % | 34 % | 65 % | 70 % | 59% |
| Professional Associations | 32 % | 84 % | 53 % | 49 % | 55% |
| Environmental Ministry | 34 % | 42 % | 31 % | 51 % | 40% |
| Local and Regional Governments | 6 % | 14 % | 59 % | 47 % | 32% |
| Chambers of Commerce | 11 % | 32 % | 24 % | 34 % | 25% |
Source: REC Report “Emerging Environmental Market” 1995
Personal and professional contacts are by far the major information channel, followed by participation in trade shows, fairs, and conferences. Daily press, and business and environmental publications were also frequently indicated as a useful source.
Major Publications
Based on the above survey, the main environmental and business publications read by environmental professionals include:
Table 1.5: Major Environmental or Business Publications, and Readership (%)
Czech Republic
Hospodarsky Noviny, (69)
Ekonom,(32)
Odpady, (22)
EKO Journal, (16)
Profit, (15) | Poland
Gaz, Woda, and Technika Sanitarna, (43)
Ochrona Srodowiska, (23)
Aura, (20)
Ekopartner, (18)
Ochrona Powietrza, (13) |
Hungary
HVG, (35)
Kornyezetvedelmi fuzetek, (34)
Napi Vilaggazdasag, (28)
Cegvezetes, (15)
Kornyezet es Fejlodes, (13) | Slovakia
Hospodarsky Noviny, (50)
Trend, (38)
Ekonomicky a prany poradca, (36)
Profit, (19)
Odpady, (14) |
Source: REC Report “Emerging Environmental Market” 1995
Information about Available Environmental Technologies
Purchasing environmental technologies does not pose any significant problem because of the wide range of products available on the market. In the opinion of many respondents, the environmental technology market is in fact saturated.
The major ways of gathering information prior to buying environmental technologies include personal and professional relations, which are especially important where previous contacts with a supplier have been established. Another significant source was participation in fairs and exhibitions, brochures and leaflets distributed at trade shows, and catalogues and directories purchased during shows, fairs and conferences. Additionally, representatives of domestic and foreign companies often visit potential clients in person, or contact them by mail, offering products and services.
Industry associations, and information from the foreign owner or a parent company appear another, albeit less common, way to obtain information prior to purchasing environmental technologies. Some companies create their own rudimentary information databases.
Finally, information provided in different specialized journals, or information obtained at fairs in other countries were sometimes used.
Major Trade Fairs
Environmental fairs play an important role as a source of information. Table 1.6 presents those major environment-related trade events held regularly. There is a general trend among environmental firms to reduce the number of exhibitions they participate in, and only to take part in the larger ones, which attract more visitors. In the future, the number of fairs, shows, and conferences is expected to decrease.
For a potential participant, it is advisable to carefully review planned events with an experienced local advisor, and, having considered the costs and benefits of taking part, to focus on those events which offer the best return on the required effort and resources.
Table 1.6: Major Environment-Related Trade Events
| Country | Name of Fair | Approximate Date |
| Czech Republic | Envirbno, Brno
International Engineering Fair, Brno | October/November
September |
| Hungary | Budapest International Fair
Kommunal Expo, Budapest | September
June |
| Poland | Poleko, Poznan
Wod-Kan, Bydgoszcz
International Poznan Fair, Poznan | November
April/May
June |
| Slovakia | Komunal, Zilina
Aqua, Trencin
Racioenergia, Bratislava | April
June
May |
Note: All events held annually
Public Procurement Regulations and Tendering
Each country has recently enacted a Public Procurement Law that requires the formal announcement of tenders for all planned acquisitions involving the use of public money. A tender announcement, including project specifications, selection criteria, and deadlines, must be published in an official public procurement bulletin. Table 1.7 lists these sources.
Table 1.7: Public Procurement Bulletins
Country Year Procurement Official Tender Bulletin
Law Adopted
Czech Republic 1996 Obchodni Vestnik (Commercial Bulletin)
Hungary 1995 Kozbeszerzesi Erteseto (Public Procurement Bulletin)
Poland 1994 Biuletyn Zamowien Publicznych (Bulletin of Public Procurement)
Slovakia 1996 Obchodny Vestnik (Commercial Bulletin of the Slovak Republic)
The above sources of information will play an increasingly important role for news on upcoming projects. However, at this point, most experts were skeptical as to their usefulness as an information source. In practice, under the current rules, deadlines can be set so soon after tender announcement that potential bidders cannot respond in time unless they have advance knowledge of the project. Many opportunities are missed because they are belatedly announced or not at all.
Access to Public Information and the Right-to-Know
It is crucial for foreign companies entering the environmental technology market in Eastern Europe to be aware of some specific factors restricting the flow of information. As discussed above, there is not an effective system in place in any of the countries to ensure wide and publicly available access to information. In fact, the very concept of “public information” is practically unknown.
In general, the following key factors result in the poor information flow:
- Scarcity of quality information - often, environmental data from the past is not available as it was not tracked properly, or may have even been a state secret;
- Poor channels for dissemination - in general, official channels for information dissemination either do not exist or do not function effectively;
- Lack of “traditional” information market. Client-based services have yet to develop, while existing state-run services are ineffective;
- Organizational structures of state institutions are changing frequently, and it is difficult to keep track of current addresses, phones, or even competencies of state organizations;
- Poorly paid officials often treat information as a commodity, offering to make data available at a fee, particularly to commercial clients (despite Freedom of Information legislation);
- Strong legacy of the chain of command system, where no information is released without a formal approval from a superior;
- “Liberal approach” to deadlines and commitments;
- In some cases, information flow is hampered by poor telephone communications and language skills.
Reaching CEE Environmental Professionals
Given the crucial role of personal contacts for a successful presence on the environmental technology market in the surveyed countries, the following facts concerning environmental professionals in Eastern Europe need to be underlined:
- only half belong to any professional association;
- even major associations do not have membership larger than about a fifth of active professionals;
- only one in four would refer to a business chamber;
- no single environmental publication reaches the majority of respondents;
- a few business publications are widely read (more than 50% of respondents);
- two-thirds attend conferences to meet others in the field;
- two-thirds participate in trade fairs and shows;
- personal contacts are crucial.
Overall, for a foreign firm to compete effectively, it is almost essential to enter the market through an experienced local business partner. In most cases, the technical and environmental skills of local environmental professionals are well developed, and many firms are also increasingly professional in their management and marketing approach.
Demand for Environmental Technologies
Summary
The demand for environmental technologies is closely driven by current priorities in the state environmental policy, and by applicable regulations. Table 1.8 presents an overview of the identified demand in the surveyed countries.
Table 1.8: Summary of Demand for Environmental Technologies
Media Czech Republic Hungary Poland Slovakia
Air moderate moderate moderate moderate
Water and Wastewater moderate moderate high high
Waste moderate high high high
Energy moderate high high moderate
Noise, Vibration and OHS low moderate moderate low
Overall, demand for environmental technologies was moderate. Technologies related to waste management were high in demand in all countries except for the Czech Republic. Energy-related environmental technologies were high in demand in Hungary and Poland, while technologies for water and wastewater treatment were high in demand in Poland and Slovakia. Demand in the category Noise, Vibration, and Occupational Health and Safety was low to moderate.
Considering the priority assigned to air pollution control in environmental policy in all countries, it is surprising that only moderate demand was identified for technologies in the air sector. The moderate demand can be partly explained by the significance of the energy sector as a major pollutant (high demand for energy-related technologies was identified in Hungary and Poland), and partly by the fact that many major air-quality related projects are already underway (in most cases, new and stricter air-quality regulations are either in place already, or are due in the next two years).
Similarly, a high number of ongoing wastewater projects account for the generally moderate levels of demand in the water and wastewater sectors. In other words, when interpreting the results of the demand for environmental technologies, one has to be aware of the fact that some important environmental problems already have been solved, or are currently being addressed.
Table 1.9 presents an overview of sectors where high demand was identified. Environmental technologies related to industrial wastewater and hazardous waste featured prominently among high-demand categories. Municipal wastewater related technologies were also in high demand. It is expected that within the next several years, the focus will remain on end-of-pipe environmental technologies. There will be a growing demand, however, for pollution prevention and waste minimization technologies.
Table 1.9: Overview of High Demand Sectors
Czech Republic
Air pollution control
Municipal wastewater
Hazardous waste | Poland
Municipal wastewater
Industrial wastewater
Hazardous waste |
Hungary
Industrial wastewater
Hazardous waste
Radioactive waste
Energy Energy
OHS | Slovakia
Municipal wastewater
Industrial wastewater
Hazardous waste |
The following sections provide an overview of the demand for specific environmental technologies in each sector.
Air
Table 1.10 presents identified air-related technologies in high demand, and technologies where demand is expected to rise.
Table 1.10: Environmental Technologies in Demand - Air
| Country | Technologies in Demand |
| Czech Republic | Technologies in high demand: #1 air pollution control/flue gas purification equipment
Technologies where demand is expected to rise: #2 air sampling/laboratory analysis (gaseous emissions) |
| Hungary | Technologies in demand: #1 instrumentation and process control/software
Technologies where demand is expected to rise: #2 air sampling/ laboratory analysis (gaseous emissions); #3 air pollution control/flue gas purification equipment |
| Poland | Technologies in high demand: #1 Emission abatement/cleaner production (gaseous emissions)
Technologies where demand is expected to rise: #2 Air pollution control/flue gas purification equipment; #3 Instrumentation and process control (gaseous emissions) |
| Slovakia | Technologies in high demand: #1 Instrumentation and process control/software (gaseous emissions)
Technologies where demand is expected to rise: #2 Emission abatement/cleaner production (gaseous emissions); #3 Air sampling/laboratory analysis (gaseous emissions and ambient air); #4 Air pollution control/flue gas purification equipment |
Respondents generally indicated higher demand for technologies related to gaseous emissions than for those related to ambient air. This seems to be a consequence of national environmental policies focusing on emission sources, with the power generation sector and other large industrial emission sources (e.g., the chemical industry) being the main target of regulations.
Technologies for air pollution control and flue gas purification ranked among the top in most countries, followed by emission abatement and cleaner production. Demand for other technologies varied in individual countries.
Air pollution controls are represented by scrubbers, filters, and by large, technologically sophisticated systems to reduce emissions of solid particles, sulfur dioxide, carbon oxides etc. Currently, the market in the sector is to a large degree based on imports.
Co-generation and combustion conversion technologies that reduce emissions (e.g. conversion to gas and oil fuel for small and medium boilers, or fluidized bed for large coal-fired units) are also in demand. Instrumentation and process control/software were in high demand in Hungary, Slovakia, and Poland.
Technologies for cleaner production are less sought at present, partly because of the existing focus on end-of-pipe measures in industry, and partly because of current regulations oriented to treatment rather than prevention. Demand for cleaner production technologies should grow, however, since many countries are enacting legislation promoting preventive solutions (e.g., introducing preferential financing, tax incentives, etc.).
Air sampling and laboratory analysis technologies were noted in several countries as well. While such technologies were primarily required by industry for gaseous emissions, government sector and local authorities indicated a growing need for technologies for the monitoring and analysis of ambient air. The demand for the latter category was high in the Czech Republic and Hungary.
Water and Wastewater
Table 1.11 presents water and wastewater-related technologies high in demand, and technologies where demand is expected to rise.
Table 1.11: Environmental Technologies in Demand - Water and Wastewater
| Country | Technologies in Demand |
| Czech Republic | Technologies in high demand: #1 pollution prevention/waste minimization (municipal wastewater); #2 spill control and containment/cleanup (surface and ground water);#3 sludge treatment and disposal (municipal wastewater).
Technologies where demand is expected to rise: #4 quality restoration and decontamination (surface and ground water); #5 sludge treatment and disposal (industrial wastewater); #6 construction of municipal wastewater collection networks; #7 monitoring, sampling and analysis of drinking water; #8 water recycling and reuse (industrial wastewater) |
| Hungary | Technologies in high demand: #1 sludge treatment and disposal - industrial and municipal wastewater;
Technologies where demand is expected to rise: #2 construction of collection networks - municipal and industrial wastewater; #3 water recycling and reuse - potable (drinking) water and industrial wastewater; #4 spill control and containment/cleanup - surface and groundwater; #5 instrumentation, process control, and software - Industrial wastewater; #6 standard and advanced treatment - industrial wastewater; #7 inspection and reconditioning of existing wastewater collection networks |
| Poland | Technologies in high demand: #1 Sludge treatment and disposal (municipal and industrial wastewater); #2 Pollution prevention/ waste minimization (municipal and industrial wastewater); #3 Monitoring (municipal and industrial wastewater); #4 Advanced (tertiary) treatment processes (municipal and industrial wastewater); #5 Instrumentation/ process control/software (municipal and industrial wastewater); #6 Cleanup, quality restoration, and decontamination (surface and groundwater).
Technologies where demand is expected to rise: #7 Water recycling and reuse (municipal and industrial wastewater); #8 Advanced (tertiary) drinking water treatment; #9 Spill control and containment (municipal and industrial wastewater); #10 standard wastewater treatment processes (municipal and industrial wastewater); #11 Inspection and reconditioning of existing water supply networks |
| Slovakia | Technologies in high demand: #1 Inspection and reconditioning of existing water supply and municipal wastewater collection networks; #2 Monitoring (industrial wastewater); #3 Cleanup, decontamination, and quality restoration (surface and ground water); #4 construction of municipal and industrial wastewater collection networks;
Technologies where demand is expected to rise: #5 standard wastewater treatment processes for water and wastewater; #6 instrumentation, process control, and software (industrial wastewater); #7 sampling/laboratory analysis; #8 construction of water supply networks; #9 sludge treatment and disposal (municipal and industrial wastewater); #10 advanced (tertiary) treatment processes for water and wastewater. |
Protection of water resources, and improving the quality of drinking water are the major objectives in most countries’ national environmental policies. The primary goals are to: increase the percentage of the population connected to sewage disposal facilities, increase the proportion of wastewater treated in biological processes, and to provide treatment of wastewater from industrial sources.
In general, demand in the water and wastewater sector was highest for technologies related to industrial and municipal wastewater treatment, followed by technologies for drinking water supply.
Demand for water recycling and reuse, and pollution prevention equipment was ranked high by many respondents. The demand is expected to grow in the future, driven by tightening regulations, increases in fees for wastewater discharge, and growing prices for drinking water supply.
As regards wastewater treatment technologies, it should be stressed that conventional treatment systems are generally readily available on local markets, largely based on domestic technologies. Therefore, advanced wastewater treatment technologies (tertiary treatment, specialized industrial wastewater treatment, etc.) were often ranked high by industrial users. Many industrial users also indicated their need in the category “instrumentation/process control/software” for industrial wastewater management.
It is worth noting that technologies for the treatment and disposal of sludge also ranked high in several countries (e.g., Czech Republic, Hungary, Poland). Sludge dewatering equipment and comprehensive technologies for sludge treatment and disposal were most needed.
Some experts also mentioned the need for upgrading existing treatment plants, e.g. by adding a biological stage. Technologies for the construction of wastewater collection systems were also mentioned, especially in the context of national programs focusing on smaller towns and rural areas.
As regards potable water, there was a demonstrated need for technologies used in the reconditioning and rehabilitation of existing water supply networks, particularly in Slovakia and Hungary.
Demand was also notable for technologies for the protection and decontamination of surface and groundwater water resources (e.g. spill cleanup, quality restoration).
Finally, monitoring, sampling and laboratory analysis equipment was indicated as a growing demand area by several interviewees. The individual country chapters provide a more detailed picture of the demand in individual categories.
Waste Management
Table 1.12 presents waste-related technologies identified as high in demand, and technologies where demand is expected to rise.
Table 1.12: Environmental Technologies in Demand - Waste Management
| Country | Technologies in Demand |
| Czech Republic | Technologies in high demand: #1 waste collection/transportation and storage (hazardous waste);
Technologies where demand is expected to rise: #2 site remediation /cleanup of contaminated land (municipal, hazardous, and industrial waste); #3 waste collection/transportation and storage (municipal and industrial waste); #4 incineration and landfill disposal (industrial waste); #5 pollution prevention/waste minimization - radioactive waste. |
| Hungary | Technologies in high demand: #1 site remediation/cleanup of contaminated land (hazardous waste); #2 sample analysis/waste characterization; site monitoring; waste collection/transportation and storage (radioactive waste)
Technologies where demand is expected to rise: #3 pollution prevention/waste minimization (industrial and hazardous waste); #4 recycling/resource recovery (industrial waste/ decontamination (hazardous waste) |
| Poland | Technologies in high demand: #1 Pollution prevention and waste minimization (all waste categories); #2 Composting/biomass conversion (municipal solid waste); #3 Recycling/resource recovery (all waste categories); #4 Decontamination, site remediation, and cleanup of contaminated land for radioactive waste; #5 Hazardous waste collection, transportation and storage.
Technologies where demand is expected to rise: #6 Hazardous waste site monitoring; #7 Municipal waste collection, transportation, and storage; #8 Site remediation/cleanup (hazardous and industrial waste); #10 Landfill disposal of municipal waste. |
| Slovakia | Technologies in high demand: #1 Landfill disposal (all waste categories); #2 Site remediation/clean-up of contaminated land (hazardous waste and radioactive waste); #3 Waste collection/ transportation and storage (all waste categories); #4 recycling and resource recovery (hazardous waste); #5 pollution prevention/ waste minimization (hazardous waste and radioactive waste); #6 Site monitoring (hazardous waste and radioactive waste); #7 sample analysis / waste characterization (radioactive waste); #8 hazardous waste incineration.
Technologies where demand is expected to rise: #9 spillage control/ decontamination - industrial, hazardous, and radioactive waste; #10 recycling and resource recovery (industrial and municipal waste); #11 sample analysis/ waste characterization (industrial and municipal waste); #12 Industrial waste site monitoring, remediation, and cleanup. |
Overall, among waste-related technologies, those for hazardous waste and radioactive waste management were high in demand, followed by technologies for industrial and municipal waste management.
Since waste incineration is quite marginal, high demand was indicated for technologies for landfill disposal, both for municipal and hazardous waste. However, most landfills in the surveyed countries are reaching capacity, and there are problems with establishing new waste disposal sites. This is largely due to public opposition and funding shortages.
Aside from capacity problems, the cost of waste disposal is also rising sharply. Therefore, demand for pollution prevention and waste minimization technologies, and recycling/resource recovery technologies for industrial and hazardous waste was estimated as high and is expected to grow. The focus of governmental policies, and available support from state environmental funds are expected to reinforce this trend.
Site remediation technologies, and decontamination and clean-up equipment were in high demand in some countries (Hungary, Slovakia, Czech Republic), partly because of a policy focus on the protection of water resources, and partly because of the issue of environmental liabilities in state privatization programs. Also, site monitoring technologies were indicated as a growing demand area, particularly for landfill sites.
Interestingly, waste-to-energy facilities were not in high demand. Public response to waste incineration is negative and, in general, governments seem to move away from this disposal method. For municipal waste, there was also interest in some countries in composting/ biomass conversion technologies and recycling (Poland, Hungary).
Disposal and waste minimization technologies for radioactive waste, along with technologies for monitoring, waste characterization and site cleanup for radioactive waste were identified as high demand areas in most countries. It is worth noting, however, that despite the high profile and political controversies, in terms of volume, radioactive waste disposal is not a major market sector in waste management.
Energy
Table 1.13 presents energy-related technologies identified as high in demand, and technologies where demand is expected to rise.
Table 1.13: Environmental Technologies in Demand - Energy
| Country | Technologies in Demand |
| Czech Republic | Technologies where demand is expected to rise: #1 retrofitting/rehabilitation of existing systems - energy and power generation, other industrial sectors; #2 alternative (non-CFC) refrigerants - other industrial sectors. |
| Hungary | Technologies in high demand: #1 instrumentation; #2 retrofitting/rehabilitation of existing systems;
Technologies where demand is expected to rise: #3 process management and control; #4 new and efficient energy and heat generation systems; #5 heat recovery and energy savings |
| Poland | Technologies in high demand: #1 New/efficient energy and heat generation systems ; #2 Retrofitting/rehabilitation of existing systems; #3 Heat recovery and energy savings; #4 Process management and control; #5 alternative / renewable energy systems for the energy sector. |
| Slovakia | Technologies in high demand: #1 New/ efficient energy and heat generation systems; #2 Alternative (non-CFC) refrigerants.
Technologies where demand is expected to rise: #3 Instrumentation; #4 Process management and control; #5 retrofitting and rehabilitation of existing systems. |
Similar to the situation in the air pollution sector, demand in the energy sector is driven by national environmental policies focusing on reducing emissions from the power generation sector and from other large industrial emission sources.
By far the most frequently mentioned areas where high demand was indicated were technologies for retrofitting and rehabilitation of existing systems, and new and/or efficient energy and heat generation systems. The trend was similar both in the power generation sector and in other branches of industry. Fuel conversion from coal to alternative sources (e.g., natural gas), introduction of modern furnaces (fluidized bed boiler), as well as the installation of low-emission equipment to reduce SO2, NOx, and particulate emission were often noted in this context.
Another significant high-demand field was process management and control (e.g., boiler tuning, fuel efficiency optimization), where demand was driven by the increasing costs of resources and energy, and by efforts to reduce emissions. The growing cost of energy is also a factor likely to influence the demand for heat recovery and energy savings technologies, which, surprisingly, did not emerge as a significant high-demand area. Only insulation technologies were often noted in this category.
Finally, in some countries (Czech Republic, Slovakia) there was a demand for alternative (non-CFC) refrigerants used in various industrial sectors. Interestingly, the use of alternative sources of energy was generally seen as a marginal issue.
Noise, Vibration, and OHS
Demand in this sector was low to moderate. Table 1.14 presents those Noise, Vibration, and OHS-related technologies where demand is expected to rise.
Table 1.14: Demand for Environmental Technologies-Noise, Vibration, and OHS
| Country | Technologies in Demand |
| Czech Republic | Technologies in demand (moderate at best) #1 Protection equipment-occupational health and safety; #2 Abatement-occupational health and safety |
| Hungary | Technologies in high demand #1 Abatement-OHS; #2 Protechion equipment-OHS
Technologies where demand is expected to rise Abatement-Noise and Vibration |
| Poland | Technologies where demand is expected to rise Noise and Vibration abatement (insulation,absorption), and instrumentation/measuring and control devices (noise and vibration) |
| Slovakia | None |
Clearly, little attention is given to the sector at present. Only in Hungary two technology categories related to occupational health and safety were found to be in significant demand.
Some prospects identified in the OHS sector included protection equipment, and abatement technologies. Both sectors recorded a degree of interest in instrumentation, measuring, and control devices. The construction industry, and the transport sector were sometimes mentioned as potential clients driving demand, but this has still to materialize.
Some comments indicated demand in the OHS category may grow, driven by greater attention being accorded to worker’s exposure and risk assessment procedures at industrial facilities as ISO 14000/EMAS procedures are implemented throughout the region.
Major End-users of Environmental Technologies
The rationale for the question concerning the major end-users of environmental technologies was to give an indication of who the major potential buyers of environmental technologies are. However, there was a clear tendency among the respondents not to point to the more lucrative sectors. Even within their own field of expertise, many respondents were either uncertain about the major end-users of environmental technologies, or were not willing to reveal the major customers. As a result, there were frequent references to very general and non-descriptive categories, such as “production” or “industry.”
The major end-user of environmental technologies as indicated by the survey are municipalities, the energy and power generation sector, and the chemical industry. The energy and power generation sector, and the chemical industry are the major end-users of environmental technology for the category “Air.” In “Water and Wastewater,” “Waste Management,” and “Energy” categories, municipal services, including municipal power generation, were indicated as major end-users of environmental technology. In the categories of “water and wastewater,” and “waste management,” the municipal services were followed by various industries, such as mining, chemical, paper, wood, and food processing. As might be expected, the transport sector is the major end-user in the category “Air” and “Noise and vibration.” Industry in general is also an important user of environmental technologies related to energy.
Worth noting here is the trend for municipalities to be the major end-user of environmental technologies. This is largely because of the decrease in industrial production in most countries since the late eighties when several factories (otherwise the most likely user of environmental technologies) had to stop production because of financial problems. In addition, some major environmental problems arising from industry have already been addressed. Therefore, the focus is shifting now on pollution from the municipal sector, which was neglected in the past.
The ranking presented in tables below gives an indication of the major end-user groups in specific areas of environmental technology in individual countries.
Air
Table 1.15: Major End-Users of Environmental Technologies - Air
| Country | Major End-user Group |
| Czech Republic | Power plants and heat generating stations; Industrial companies |
| Hungary | Energy sector; Power plants; Chemical industry; Transport; Waste incinerators; Metallurgy |
| Poland | Energy and power generation sector; Chemical industry; Various types of manufacturing; Transport |
| Slovakia | Energy sector; Chemical industry; Transport. |
The major end users of environmental technologies in air pollution protection are operators of power plants and heating stations. Most power plants are owned by the state, through a majority share, while local heating stations have various forms of ownership - some are owned by former state enterprises that have become joint-stock companies. Other heating stations are private, or are owned by municipalities. The significance of the power and energy sector as clients is bound to increase in the next few years, as more stringent regulations on air pollution from stationary sources are introduced and enforced.
Other significant end-users of air pollution control equipment included the chemical industry and transport, followed by various other industries - metallurgy, pharmaceutical, paper etc. Notably, neither small, stationary pollution sources (family housing), nor the automotive sector (private vehicles) are among major end-users, as for the most part they are not affected by regulations.
Water and Wastewater
Table 1.16: Major End-Users of Environmental Technologies - Water and Wastewater
| Country | Major End-user Group |
| Czech Republic | Municipalities; Municipal sewage treatment and drinking water suppliers; Remediation companies; Hospitals; Food processing. |
| Hungary | Municipal water and wastewater service companies; Chemical industry; Energy sector; Mining; Food industry; Pharmaceutical industry; Textile industry, Agriculture (diluted manure) |
| Poland | Municipalities/ municipal services; Chemical industry; Various types of manufacturing; Energy and power generation sector; Mining |
| Slovakia | Municipalities; Chemical industry; Manufacturing in general. |
Note: The difference between “municipalities” and “municipal services” - “Municipalities” are town administrations who order and purchase various technologies and services. On the other hand, “municipal services” are companies that are either controlled by municipalities, or are contracted to a private company provide town administrations with specific services (e.g. water supply, waste collection).
Municipalities (or operators of municipal systems) are the major end-users of both water and wastewater treatment systems. Considering the neglects of the past, this situation is expected to last well beyond the year 2000. With time, individual housing units, especially in more remote areas, may become a frequent buyer of compact wastewater treatment units, as prices for the removal of sewage increase.
Other important customers for wastewater treatment technologies are the chemical industry, manufacturing, the food processing industry and mining. The mining sector is still dealing with the unresolved problem of saline water disposal, and treatment of wastewater from raw ore cleaning.
The above groups are followed less frequently by other industrial groups and agriculture. Notably, the issue of non-point sources of water pollution is still uncharted territory in most countries, and can be expected to increase in the future.
Waste Management
Table 1.17: Major End-Users of Environmental Technologies - Waste Management
| Country | Major end-user group |
| Czech Republic | Municipal services; Municipalities; Mining; Public cleansing services; Landfill operators and waste processing companies; Transportation |
| Hungary | Municipal public utility companies; Mining; Energy sector; other industries (construction, textile, paper, food); aluminum industry (red mud); Agriculture |
| Poland | Municipalities/ municipal services; Chemical industry; Energy and power generation sector; Manufacturing; Mining |
| Slovakia | Chemical industry; Municipalities, Mining; Energy sector. |
Municipalities and municipal service providers are the major end-users of waste disposal technologies such as waste collection, landfilling, or incineration. The most frequent end users of technologies for hazardous waste disposal (incineration, landfilling, re-use technologies,) are the chemical industry, machinery, engineering, pulp and paper industries, and others.
Other significant categories of end-users are the energy and mining sectors, including the processing of raw materials. There is still an unresolved problem of the disposal of massive amounts of phosphogypsum, slag and ash from energy generation, and pit excavation materials.
The mining and energy sectors are among significant end-users of technologies for site remediation and soil reclamation work. The state (e.g., privatization agencies) was also a frequent customer of remediation technologies.
Energy
Table 1.18: Major End-Users of Environmental Technologies - Energy
| Country | Major End-user Group |
| Czech Republic | Power plants, Heat generating stations; Municipalities; Municipal services; other industrial companies. |
| Hungary | Energy sector (production and service), Raw material processing industry (steel, aluminum); Chemical industry; Municipalities |
| Poland | Energy and power generation sector; Chemical industry; Municipalities/ municipal services; Mining; Transport |
| Slovakia | Energy sector; Chemical industry; Mining and processing of mineral resources. |
As can be expected, the major end-user of energy-related environmental technologies is the power and energy generation sector. Retrofitting of existing systems, along with process management and control were the major areas of interest within this field.
Energy saving technologies, or alternative energy sources are not currently in great demand, but may experience a boom within the next few years. At present, energy producing companies are not pressed to undertake any energy-saving measures, since they are paid for energy produced, not that saved. Alternative energy sources may become of interest to municipalities and private individuals if they become more affordable, and the price of energy rises as expected.
Other industrial branches (e.g. chemical) may also become more significant end-users for heat recovery and energy savings technologies, as prices of energy go up and industrial activity increases.
Noise, Vibration and OHS
Table 1.19: Major End-Users of Environmental Technologies - Noise, Vibration and OHS
| Country | Major End-user Group |
| Czech Republic | Large industrial companies; Construction companies |
| Hungary | Transportation, Manufacturing industry, industrial sites in residential areas, Energy sector, Textile industry, Airports |
| Poland | Manufacturing; Heavy industry; Mining; Transport; Energy and power generation sector; Chemical industry |
| Slovakia | Manufacturing in general; Construction; Chemical industry |
Technologies reducing noise and vibration generally were not in great demand, and specifying major end-users was most difficult for all categories. Noise protection technologies for indoor workplaces are important in chemical, metallurgic, mining, and heavy machinery industries. Outside noise pollution was a burden in some municipalities, and in transport. The construction industry may be one of the best clients. Technologies against vibrations are of concern in heavy industries. There was no single dominant end-user for Occupational Health and Safety equipment.
Advantages and Disadvantages of Foreign Suppliers
This chapter of the survey was intended to determine purchasing preferences prevalent on the domestic markets, to identify the strengths of foreign environmental technologies, and to examine the barriers to their wider entry to CEE markets.
Please note that the term “foreign technologies” was widely interpreted as “Western technologies.” TechnologieProducts from other CEE countries are generally not considered very competitive - they usually fall in a similar price range, and have quality comparable to that of domestic products. Hence, local technologies are preferred.
Purchasing Preferences
The country of origin (domestic vs. foreign) of a particular environmental technology clearly is not the key factor behind purchasing decisions made among CEE buyers. Most experts (about two-thirds) only rely on the use of best-technology or best-practice criteria when making purchasing decisions. Among some participants (between 10 and 20%), a preference for domestic products prevails.
There was a slight preference (60-70%) for buying foreign-manufactured environmental technology from domestic representatives compared with buying directly from the producer abroad. An important factor behind the purchase from an in-country dealer was the availability of after-sales service. Customers buying directly from abroad generally tended to be either foreign-owned companies, or clients requiring very specialized and customized solutions.
Product quality and reliability, warranty conditions, good value for money, lowest possible cost outlay in achieving the required standards, previous experience with a supplier, and references, are determining factors in purchasing choices. Additionally, preferential credit or financing from the supplier significantly increased the chances of selling products. In the case of R&D institutions, product quality and references clearly take priority over price.
According to respondents, due to the pervasive lack of money, most environmental technology end-users (municipalities, business) select the cheapest technology available on the market that enables them to meet the required standards. Both municipalities, as well as businesses must meet environmental standards (and corresponding deadlines) set by environmental enforcement bodies. At the same time, they are coping with pressing economic issues which are usually perceived as more important. Thus, they try to find the cheapest environmental technology providing a minimum level of compliance.
From this point of view, local manufacturers of environmental technologies enjoy the unparalleled advantages of cheaper products, lower installation costs, and availability of local technical service. It is important to also note that in many countries of the region, public tendering provisions give preference to domestic technologies if they are of similar quality and technological efficiency compared to the foreign competitors.
Strengths of Foreign Environmental Technologies
When asked to comment on the advantages of foreign environmental technologies compared to domestic products, by far the highest proportion of respondents indicated the high quality (50-80%), and the reliability and durability of products (50-70%). Somewhat puzzling here is the fact that only between 15% and 30 % of interviewed parties indicated “good value of money” as a strength of foreign products. This is most likely an indication that price levels can be so high that the technological advantage of foreign products in comparison with domestic products is neutralized by the major increase in price.
Other, albeit less significant advantages, included “user-friendly technology” (30-50 %), and “easy to customize and adapt for specific local needs” (30- 50 %). Frequently noted in the latter category was the advantage of equipment which could be used for a variety of purposes, e.g., measuring equipment, or waste transport trucks.
“Available credit/funding” was a significant factor among a third of the respondents. Interestingly, some experts mentioned that, in practice, such financial support was often rather illusory, because no domestic financing institution would become a funding partner, or, when they did, the preferential foreign funding was made as expensive as a regular commercial credit. Incidentally, state environmental protection funds in some of the countries can often provide investors with financial support by covering a part of the interest payments on commercial credit
“Good after-sales service” was rarely indicated as a strength of foreign environmental technologies (20-30%). As a matter of fact, several environmental companies complained about the superficial and careless approach of foreign companies to after-sales service.
Not a single expert mentioned low price as an advantage of foreign technologies compared to domestic products. There were comments, however, that some foreign suppliers had the low price advantage compared to other foreign technology providers.
Some experts also considered the fact that a foreign technology has been verified by several users in other countries as an advantage domestic products. An interesting comment was made regarding the advantage of foreign technologies which can use locally produced products to replace spare parts or used substances (e.g. filters, chemical substances for water and wastewater treatment systems, lab chemicals). Such an approach reduces costs, delivery time, and the service need.
Another strength of foreign producers was that they provided specialized technologies that could not be manufactured locally due to the limited demand and size of the local market, e.g. equipment for the handling, transport, and storage of nuclear waste.
Generally, local producers have the advantage of offering cheaper technologies. However, the major shortcomings of such local technologies were that they are not available in all categories, and their warranty period tends to be shorter. Many end-users solved this problem by importing only the crucial “hi-tech” components (e.g., pumps, aerators), with the bulk of construction work and low-tech technologies based on domestically-produced equipment. This approach was frequently used in wastewater treatment and water supply projects.
Barriers to Buying Foreign Environmental Technologies
In general, survey respondents perceived foreign products as expensive, and were concerned about the reliability of suppliers (little information available), and about the access to professional technical services for products sold on the domestic market. Other important barriers included the lack of reliable product information, and poor suitability of products to the local conditions and technical culture.
When asked to identify the greatest barriers to buying environmental technology from abroad, between 70% and 100% of interviewees stated that foreign technologies are too expensive. In some sectors (e.g. municipal water supply, and wastewater treatment systems), the price is seen as uncompetitive in advance. On the other hand, many highly sophisticated foreign technologies (e.g. systems reducing air pollution from power plants, incinerators, technologies for waste reuse or recycling, instrumentation) have found a market niche. In some cases, the disadvantage of high price was offset by high product quality, life-span, or even good after-sales service (e.g. landfill liners, tap water purification systems, etc.).
A single comment reflected the fact that state-controlled prices in the energy and water utilities sector do not really permit the repayment of effective, but expensive, foreign environmental technologies. However, as the prices do increasingly reflect actual production costs, and utilities become increasingly responsible for their own investments, this obstacle to purchasing will gradually diminish in the near future.
Between 30 and 40% of respondents were seriously concerned about the access to technical services, and considered it a disadvantage of foreign technologies (note here that only between 20 and 30% of respondents indicated “good after-sales service” as a strength of foreign technologies). Some interviewees commented on the arrogant attitude of some foreign representatives. Clearly, the quality of customer service, and access to technical support will need improvement.
Two marketing-related problems were indicated as significant barriers by respondents, namely: “little information about suppliers” (15-40% of respondents), and “lack of reliable product information” (20-50% of respondents).
The remaining obstacles presented did not appear to be very important Between 20% and 30% of experts indicated that products were not suited to the local conditions and technical culture, e.g., differing standards. “Import restrictions / high customs duties,” indicated by about a quarter of respondents (15-25%, except for 40% in Slovakia) were not considered a major barrier. In some countries the customs system was confusing, with different customs rates and border taxes being applied to similar products from different countries. It should be stressed, however, that the problem is expected to be eliminated (at least with respect to EU products) by the year 2000.
“Changing environmental regulations” was identified as a problem by some 15% of respondents. The system of tax and customs exemptions for environmental products is still undergoing changes, and there are occasional problems with product certification. Changing environmental regulations have been an obstacle in the past, but the transition is proceeding rapidly, and regulatory change should pose little problem to technology purchases in the future. Import restrictions and associated high customs duties and communication problems with foreign suppliers are also expected to become less important in the future.
“Communication problems with a foreign supplier” was indicated by between 10 and 15% of respondents. The specific problems raised included long transfer of payments, and the language barrier.
In conclusion, the environmental technology market in the surveyed countries is quite open to foreign suppliers. The majority of purchases are based on the best-technology criteria, and the country of origin is not deemed a critical factor. Suppliers can expect market success if their products are of high quality and reliability (including warranty conditions).
There clearly is room for improvement in marketing and circulating information on foreign environmental technologies and suppliers. This is directly related to opening an in-country representative office. An additional benefit from such an approach would be overcoming concerns about the availability of technical service, indicated as an important factor for buyers.
However, by far the major problem with buying foreign environmental technologies was their high cost. Therefore, foreign suppliers should consider creating conditions that would offset the disadvantage of the high price tag. It may be possible to offer longer payment periods, better credit conditions, or even, in some cases, to enter “shared savings scheme” agreements.
Major Foreign Suppliers in the Environmental Technology Market
This section of the work had three objectives. First, it examined in-country perceptions of foreign technologies depending on the country of origin. Second, it surveyed major foreign companies active in the region, portraying the actual situation in various market sectors. Finally, information was gathered on specific experience with American environmental technologies.
Perception of Environmental Technologies from Selected Countries
Environmental technology industry in the surveyed countries is clearly limited, and a common perception is that most high-quality products come from abroad. Generally, Austria, Germany, and the Scandinavian countries are considered to be quality producers. Table 1.20 provides an overview, by media and by country, of which are the major “quality” foreign environmental technologies.
Table 1.20: Perceptions of Foreign Environmental Technologies from Different Countries
| Czech Republic | Hungary | Poland | Slovakia |
| Air | 1) Germany
2) Austria
3) US | 1) Germany
2) Austria
3) Japan | 1) Germany
2) Scandinavia
3) US, Japan | 1) US
2) Germany
3) Austria, Scandinavia |
| Water and wastewater | 1) Germany
2) Austria
3) UK | 1)Germany
2) Austria
3) Holland, France, US | 1) Japan
2) Austria
3) US, Germany | 1) Germany
2) US
3) France, Holland,
Scandinavia |
| Waste | 1) Austria
2) Denmark
3) Netherlands | 1) Austria
2) Germany
3) France, US | 1) US,
2) Germany
3) Austria
4) Scandinavia | 1) Germany, US
2) France, Scandinavia
3) Japan |
| Energy | 1) Germany
2) Austria
3) US | 1) Germany
2) Holland
3) US | 1) Austria
2) Holland
3) Germany, US | 1) Scandinavia
2)Germany
3) US, Holland |
| Noise, Vibration, and OHS | N/A | 1) Denmark, Sweden
2) Japan
3) US | N/A | 1) Scandinavia
2) Germany
3) Austria, Japan, US, Holland |
Note: the question was formulated “rank how environmental professionals in your country perceive environmental technology from different countries” using the following scale: 5 = excellent reputation, 4 = good reputation, 3 = average reputation, 2 = poor reputation, 1 = very poor reputation, blank- no opinion
Austria and Germany enjoy good or excellent reputations for the quality of their products in almost all countries and technology categories. The reputation of German technologies was particularly high in the Czech Republic and Hungary, the traditional CEE markets for German suppliers. A very similar situation existed with perceptions of Austrian technologies.
Waste management, and water and wastewater were the sectors where Austrian technologies scored well. German products were ranked near the top in practically all categories. American technologies were also perceived well in most categories.
Technologies from other countries enjoyed a good reputation only in certain sectors (e.g. Japan in air protection, France in waste management, Holland in energy). Interestingly, technologies from some countries enjoyed good reputation despite their limited actual availability on the local markets. Notably, Holland, Japan, and the US are cases in point.
Significantly, in most cases the perception of domestic technologies was considerably below that of Western products. Nonetheless, some experienced local customers did not always share this opinion. With the wide range of products available, local buyers have grown more experienced and selective. Also, increasingly sophisticated, and still cheaper, local competitors will play a larger role in the environmental technology market.
It is worth noting many respondents were either unwilling or unable to address the perception issue, either because of a limited knowledge of the foreign technologies available, or because they regard the country of origin as insignificant, with the specific producer much more important. Many respondents favored particular countries, but had problems with naming specific firms from that country. This indicates that the judgment was based more on common wisdom than on personal experience. The following section examined in more detail the firms which are active in the domestic market.
Major Foreign-owned Suppliers in the Market
This section was to determine the major foreign companies active locally, rather than to elicit perceptions of environmental technologies. In general, however, perceptions corresponded well with the actual market situation, i.e., those countries whose technologies were perceived best, were also very active on the local environmental technology markets.
A significant number of Western environmental technology firms are active in the surveyed countries, through a permanent local presence, or by direct sales of their equipment. The foreign presence is particularly strong in the waste management sector, water supply, and wastewater treatment. A smaller number of companies are active in the energy sector and air protection.
One clear finding from the study was that no single company dominates in any single country - individual foreign firms usually hold a minimal share of the market. The presence of technologies from specific countries varies substantially according to the media, and according to the region. Even within a single environmental technology field, several companies serve the market, as demonstrated by the fact that most interviewed experts referred to several different companies as the major supplier.
Table 1.21 lists the major suppliers by country of origin, rather than by name. market(see individual country chapters for specific company listings). The table is based on the number of foreign companies from a specific country active on the local market.
Table 1.21: Major Foreign Environmental Technology Suppliers
| Czech Republic | Hungary | Poland | Slovakia |
| Air | Germany | Germany | Germany, Austria,
Switzerland | N/A |
| Water and Wastewater | Germany, Slovakia, France | Germany, Austria | Germany, France, Austria, Sweden | Germany, Czech, US |
| Waste Management | Germany, Austria, Denmark | Austria, Germany, US, France | Austria, Germany | Denmark, Austria, France |
| Energy | US, Sweden | Germany, US, Austria, Sweden | Scandinavia, Austria, Germany | Germany, US |
| Noise, Vibrations, and OHS | N/A | Denmark, Germany | N/A | Scandinavia, Germany |
Note: Many respondents had difficulties naming specific companies, which indicates poor knowledge of the foreign technologies available.
The environmental technology market in all the countries is well penetrated by foreign suppliers, with firms from Austria and Germany most active and best known across all major technology sectors. German and Austrian firms hold the lead in supplying environmental technologies in terms of both quantity and quality.
Other major foreign competitors varied depending on country and sector. French, and Danish companies had a strong local presence. French companies, along with American and Scandinavian, were well represented in the water and wastewater sector. Scandinavian (primarily Swedish) and American firms played an active role in the energy and air sectors.
In waste management, Austrian, German, French and Danish firms are strong, particularly in the waste incineration sector. Waste recycling is primarily dominated by German firms.
Wastewater systems are introduced by a large number of foreign firms including German, Austrian, French, Scandinavian, and a few American, British, and Dutch ones. Interestingly, in the Czech Republic and Slovakia, each other’s companies were actively present and well known on the market.
Energy and air pollution sectors are primarily occupied by German firms, with Austrian firms following close behind. American, Japanese, and Scandinavian (notably Swedish) firms were also active, although not nearly as much as companies from the first two countries.
The foreign presence in the Noise and vibration, and OHS sector is minimal. The leaders included Scandinavian companies (notably from Denmark) and German firms.
Most of the big companies’ headquarters are located in the capital or in other major cities. Joint-ventures and joint-stock companies are a common way for foreign suppliers to enter the local market. Some large foreign firms have established their subsidiaries as legal local entities, and are very active in waste disposal, including recycling practices. Interestingly, some foreign firms in this sector established joint-stock companies with municipalities. The Danish firm Marius Pedersen, or Austrian A.S.A. in the Czech Republic may serve as good examples.
Aside from the quality and the range of the technological offer, two major factors seem to drive the current foreign presence. One is geographic proximity - Germany and Austria are best examples; the other factor is a long tradition of cooperation - e.g., French water supply systems in Poland. However, as no firm is considered dominant in any product line, there are opportunities for any firm to provide quality products at Western-competitive prices.
In conclusion, there are many foreign companies either directly present in the environmental technology market in the surveyed countries, or entering the market through their products. The strengths of foreign companies (reliable and high quality technology), are diminished by the high price, and are sometimes further offset by the lack of patience, lack of knowledge of local conditions, or by communication problems with environmental bodies, municipalities, and local businesses.
However, experience shows that those foreign firms which learn more about business practices in the region, and which think in terms of a long-term horizon, can find a solid basis for their future activities. ABB, Flygt, Danfoss, Grundfoss, or Marius Pedersen are the cases in point.
Experience with US Environmental Technologies
The prevailing picture emerging from the survey is that American environmental technologies are not widely known in the surveyed countries. Despite generally competitive prices compared with other Western providers, the active US presence through numerous assistance programs, and the favorable historical and political context, American suppliers have not been able to establish a very strong foothold in the markets of the region.
Overall, except for a few large companies (e.g., Westinghouse, Honeywell) US companies are not very active in the CEE environmental protection market, especially in comparison with major European competitors, and do not seem to have a long-term comprehensive strategy to secure a stronger position in the market.
However, American environmental technologies are generally considered reliable, durable, and of good quality, although many interviewees agreed that a multitude of environmental technologies can be purchased from the US, ranging from those now obsolete to many excellent and modern. Particularly well received were American laboratory analytical and monitoring equipment, instrumentation, and process management and control. Also frequently mentioned were technologies for waste treatment and air pollution control.
In cases when the purchase was considered but not realized, objective circumstances (e.g., large distances, lack of references) was the main barrier cited. Several potential buyers were also concerned about the availability of after-sales service, as US companies generally do not open permanent in-country offices. Other negative issues cited were difficulties in ensuring the timely delivery of spare parts and professional service. Another disadvantage was that some products are not well suited to local conditions (different standards), or are not easy to adapt (e.g., to a different measuring system).
Interestingly, the limited actual experience of US environmental technologies in the region was not reflected in the general perception of US environment-related products. When asked to rank their perceptions of US environmental technologies, a significant proportion of interviewees responded with a positive attitude and high scores (“good-excellent reputation”). This factor certainly facilitates market entry of US environmental technology companies, although it should be borne in mind that the market is well supplied by foreign providers.
One frequent comment was that American businessmen are not familiar with the local conditions, especially with the bureaucracy, and all-too-often contact local bodies expecting quick and fruitful negotiations. However, municipalities and other potential customers are often reluctant to make rash decisions. As the procedure to get a final approval for the use of technology in many countries is time-consuming and involves obtaining a high number of permits, a US technology producer or distributor all too easily becomes frustrated and leaves without securing a sale.
It is crucial to know who, how and when to approach, and to realize that negotiations may take a long time to complete. One potential solution is to set up joint ventures with local companies or experts of high caliber. Thus, familiarity with the local market will make it possible for US businesses to market their products more successfully, and to benefit from the technological expertise, low wages, and a high qualification and skill of the local work force.
Recommendations for American Companies
Competition in the environmental technology market is high in all the surveyed countries. Foreign companies are most active in the water and wastewater, and waste management sectors, followed by the energy and air protection sectors. American firms face a number of market access obstacles, including:
- Major European competitors (Germany, Austria, Scandinavia, France) have more in-country presence, including staff, offices, joint ventures, and consultants;
- Exporters from neighboring countries have the advantage of geographical proximity;
- EU exporters enjoy reduced import tariffs due to countries’ association agreement with the EU;
- European goods have the advantage of being better designed for local technical conditions and standards, such as metric measurement and voltage electrical rating;
- Foreign firms generally face a lack of transparency in the procurement process;
- American companies are not as aware of project opportunities as their European competitors.
The major competitive advantages of domestic suppliers are significantly lower costs of labor, combined with a high standard of technical knowledge, and better familiarity with the local market where most of the information flow is based on established personal and professional contacts.
Based on the comments and observations in the preceding sections, the following should be considered by American environmental technology firms in order to improve their share of the local market.
Increased local presence
To better explore the market and take advantage of existing project opportunities, American companies should increase their direct presence in the country. The following are the major reasons:
- competition from European suppliers (especially Germany, Scandinavia, Austria) is strong;
- two-thirds of potential buyers of foreign environmental technologies prefer to buy from a local representative, and local buying is on the rise;
- many buyers are concerned about the availability of after-sales technical service, and the issue is a significant factor affecting purchasing decisions;
- up to a half of respondents indicated that there was limited information about foreign suppliers, which underlines the need for local presence and better product marketing;
- access to information on environmental business opportunities is to a large degree based on personal contacts.
The most cost-effective method to enter the local market is through a joint venture or other strategic partnership with an experienced local company specialising in a similar product line.
Forming a joint venture with a local partner would also provide assistance in following the basic procedures of the procurement process and in overcoming the language barrier. In some countries, it would also give the American company the benefit of equal treatment of its price bid with that of purely domestic competitors.
Another possibility might be for American exporters to take part in projects supported by American or international institutions, which are generally able to cover the project costs at standard Western prices. To that end, the significant numner of various US assistance programs in environmental activities should also help the transfer of American environmental technologies. There are already a number of ongoing demonstration programs based on US environmental technology in the region (e.g., Nitrokemia in Hungary, and Honeywell in Czech Republic and Poland, etc.).
Competitive financing package
High price was identified as the main barrier to purchasing foreign environmental technologies in all countries. Between 80 and 100 percent of respondents perceived foreign products as too expensive (even though American products are generally competitive with other foreign products). At the same time, a third of respondents indicated that the availability of preferential credit or other attractive forms of financing can be a significant advantage of foreign products. Many potential end-users of environmental technologies have serious cash flow problems, and are looking for co-financing partners.
Therefore, it is important to prepare an attractive and competitive financing package to increase the overall competitiveness of an offer. Possible options include low-interest credit lines, partial refinancing of foreign deliveries, etc. To this end, US government assistance and export promotion programs are of importance.
End user identification
Public procurement regulations require that calls for tender be announced in advance for projects involving the use of public funds. However, the tenders are very competitive, and price bidding may greatly reduce the profit margin. Also, the time available for bid submission is often too short for an overseas exporter to calculate the offer thoroughly. Furthermore, American exporters must allow for transport delay, payment of import duties, the price disadvantage caused by domestic competitors, and finally, long-distance transport in comparison with EU suppliers.
Therefore, an alternative to the already prepared and announced public tenders may be the exporter’s own initiative in end-user identification, and effort in determining the end-user’s specific needs and requirements. This can be combined with an offer of technical assistance possibly funded by US government export assistance programs, assistance with a loan application, etc. With respect to the latter, cooperation between the exporter and an experienced local partner (e.g., through a joint venture) is essential for domestic co-financing programs.
Growth sectors
In each of the surveyed countries, certain priority areas have been identified where environmental technologies are in high demand. Good examples include hazardous waste management, industrial wastewater treatment, retrofitting of energy systems, etc. Major project opportunities are expected in the water and wastewater treatment, and in the energy generation sector.
Focusing on growth sectors where environmental technologies are most needed, should be a priority for American exporters, and some areas where technologies are in high demand are identified in individual country chapters. In cases where more product-specific market research is required, the Regional Environmental Center can provide further assistance.
In concluding, it is important to stress that, in many cases, American environmental technologies are competitive with West European products in terms of price and quality. However, increased exports are hampered by the limited direct market presence of US suppliers, and the low level of knowledge of the CEE markets compared to suppliers from the EU. Other, less significant barriers, include compatibility problems resulting from differences in measurement systems, and the lack of reduced tariffs which are applied to EU products. The key factor for a successful sale of American environmental technologies is an in-country representative office, and a dependable technical service. Further improvements in sales prospects can result from an attractive financing package, such as low-interest foreign credit lines, partial refinancing of foreign deliveries, etc.
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