China now leads the world in the green energy market, recently overtaking the U.S. for the first time. In fact, the money China invested in clean energy reached $34.6 billion in 2009, a sum dwarfing the $18.6 billion invested by the U.S., and far surpassing any other major economy in the world. Looking forward, I expect China will keep its solid lead as the country continues to spend 34% of its massive $586 billion stimulus package on green projects.
Although China’s economic growth in the last decade has enabled the nation to surpass the U.S. in green energy investment, pollution still remains rampant in China. In fact, recently China reported its first-ever nationwide census of pollution sources, and the results revealed that its industry is producing far more waste than previously realized.
Overall, the data found that China has a long way to go before it can enjoy clean water and clean air. But the positive side of China’s clean deficit for investors is that there will likely be a boom in companies positioned to profit from China’s clean-up efforts. Let’s take a closer look at three companies leading the charge toward a cleaner, greener China: Puda Coal (PUDA), Tri-Tech Holding (TRIT) and RINO International (RINO)
Puda Coal (PUDA)
In light of the growing environmental concerns and increasing demand for coal with the least possible amount of harmful sulfur dioxide emissions, there is enormous need for so-called clean coal. But coal isn’t a substance that’s clean by nature. Coal needs to be “washed” before it gets clean, and coal washing is what Puda Coal (PUDA) is all about.
Puda is one of the largest coal companies in China, but it doesn’t just mine for raw coal. The company is primarily in the coal cleaning business. Essentially, Puda purchases raw coal from coal mines and processes it into clean coal that is then used to make coke for steel production and other applications. Puda has operated coal washing plants for over 15 years, and it currently owns three plants that produce customized, cleaned and finished coal products.
Puda also is benefiting from government regulations. Over the past two years, the Chinese government has closed a large number of small coal companies in an effort to address environmental and safety issues. These coal mines are being consolidated, restructured and sold to companies with strong capital, clean technology expertise and experience in this industry. In other words, they are being sold to Puda. In fact, Puda was recently awarded the exclusive rights to purchase eight fully operational thermal coal mines, and what this means is that the Chinese government has selected Puda as its number-one name in the battle for cleaner coal.
RINO International (RINO)
China has been the “factory of the world” for decades, and as such its manufacturing facilities and plants have filled the skies with a dense fog that primarily consists of sulfur dioxide emissions from coal. Now, in addition to encouraging coal washing, the Chinese government is also requiring that companies reduce their sulfur dioxide emissions and have wastewater treatment equipment in place within five years. Enter RINO International Corporation (RINO).
Since 2003, RINO has grown to become one of the leading providers of environmental protection equipment for China’s iron and steel industry. With products and services designed to reduce industrial production or improve energy utilization, the company focuses on four business segments including gas desulphurization equipment, wastewater treatment systems, high temperature anti-oxidation systems and heavy machinery and outsourcing services.
As the leading provider of pollution control and clean technology to iron and steel producers in China, RINO’s brand recognition and reputation have enabled it to gain significant market share while cross selling its products to a large existing customer base. In addition, its proprietary and patented technology has created an effective barrier to entry for potential competitors and their products. Moreover, low manufacturing and installation costs in China make RINO’s products approximately 50% cheaper than most imported solutions. With the Chinese government requiring iron and steel companies to reduce their sulfur-dioxide emissions, RINO’s business is benefiting greatly.
Tri-Tech Holding (TRIT)
Did you know that in China, more than 70% of the country’s lakes and rivers are polluted? Unfortunately, this number continues rising as more sewage and industrial effluents are disposed of in these natural water sources each year. As a result, the Chinese government has started throwing money at the problem. About $200 billion is spent each year at tackling the country’s water pollution and water shortage problems. Much of this money is being used to enact stricter environmental standards as well as fund water treatment projects to provide its citizens with clean, purified water. Enter Tri-Tech Holding (TRIT).
This water management and consulting firm has two primary lines of business, wastewater and tail gas treatment, and water resource management. Tri-Tech is basically a solution and services company that designs and implements water treatment systems that help local and regional governments electronically control and monitor their water resources. The types of systems that Tri-Tech offers include computer software, information management systems, enterprise resource planning and processing systems.
The company’s technologies also are particularly helpful in solving many of China’s complex water management problems, such as irrigation and agricultural water conservation, and the problems of annual drought in Northern China and annual flooding in Southern China. Because of China’s renewed focus on cleaning up its waterways, managing its current water resources and proving its citizens with clean water, Tri-Tech’s business will likely continue flourishing.
