One of the key strategies in China’s Circular Economy (CE) initiative
is to use eco-industrial parks to help generate much higher
productivity and efficiency of resource utilization. This paper
summarizes some of the key features of an EIP directly supporting the
transition toward a more circular economy. It is a companion piece to
our Defining Eco-Industrial Parks paper.
An ideal EIP has the
and buildings are designed, constructed, and managed in accordance with
environmentally sound practices, equipment, systems, and materials.
- EIP tenant
enterprises agree to follow international standards in regards to the
minimization of pollution and the reuse, recycling, conversion and
disposal of waste.
manage their resources using a life cycle framework so as to optimize
their use of water, energy, and materials and minimize environmental
damage. Their practices will include recycling and reuse as well
as minimizing waste products that can not be used by other enterprises
located in the vicinity.
linkage of the various enterprises to minimize the use of materials,
energy, water, and transportation for a given output of production.
Where possible, enterprises exchange by-products not recycled
- Learning within
and between tenant enterprises is an essential aspect of the EIP.
To that end, the EIP operates as a learning center on site.
- The EIP serves as
a node for the region’s eco-industrial network of operations pursuing
sustainable development and the responding to the LCEP.
- EIP Management
provides services and leadership to assure that all of these
characteristics are reflected over the life of the park.
The Circular Economy
plan for Liaoning Province (and other provinces) explicitly sets
objectives and tasks in regards to the role of EIPs. The relevant
objectives and tasks include the following:
- “To apply the
concepts of industrial ecology and recycling economy into building
EIPs, increase the level and competition of economic development zones
. . . and advance the economic transition of resource depleted areas
and old industrial areas.” (Second of Major Tasks)
- “To carry out the
EIP construction planning in four Liaoning Economic and Technological
Development Zones, establish the chain connections among those
enterprises to enter the park, and promote industrial upgrade in the
park . . .
- “To build . . . a
group of regional waste and used materials reproduction bases; and
build bases for renewable resource recycling and reuse in equipment
processing and manufacturing. (Near-term specific objective #4.)
efficiency of energy, water, and materials use and waste reduction in
enterprises (near-term major targets # 2 and 3).
- Industrial water
reuse reaching as high as 85 percent. (near-term major targets #2)
- Integrated use
rate of industrial solid wastes reaching 50 percent, among which that
for flying ash to 55 percent and for coal gangue to 50 percent.
(near-term major targets #2)
The EIP design
described below addresses all of these objectives and targets.
Summary of a Circular
Economy EIP Concept
1. EIP Tenants Match CE Requirements
recruitment should emphasize three major industrial clusters and an
additional supply chain group:
- Resource recovery
firms: These enterprises produce value from major product and material
waste flows. They include niche collection, recycling, equipment
re-manufacturing, reuse of products and materials, bio-energy
generation, composting, etc.
energy firms: Tenants offering products and services to increase
efficiency of energy use directly serve achievement of Circular Economy
objectives. Renewable energy firms produce such products as bio-gas and
bio-fuel, equipment for wind and solar energy, hydrogen fuel cell
transportation and power generation, and energy system integrators.
Their presence in the EIP could further a long-range goal of increasing
the efficiency and reducing the environmental burdens of energy
generation. R & D and business development in this field could
create a platform for emerging sustainable technologies and build the
technological know-how required to be competitive.
- Water technology
and service companies: These companies support development of more
efficient and integrated water management systems in public
infrastructure, commercial buildings, and industrial plants.
- Companies in the
supply chain of major industries: This recruitment target focuses on
local suppliers of environmentally superior materials, components, or
services to international and Chinese private firms and state-owned
enterprises. In the case of components or sub-assemblies local access
reduces transportation costs and environmental burdens.
2. Support to the
Region in Meeting Targets of the Circular Economy
The Eco-Industrial Park
would have a clear mission to support the business and social community
of its region, including other industrial parks, development zones, and
stand-alone firms and public infrastructure. This support could include
marketing packages of products and services to State Owned Enterprises,
multinationals, and government operations; facilitating creation of
environmental and energy companies outside the EIP; managing chain
connections or by-product exchanges among industries; and furthering
social programs that benefit the citizens of the region.
The EIP’s development
strategy could include programs for its tenants to help meet an
important State and local priority: the increased efficiency and
improved management of State Owned Enterprises (SOEs). With China’s
entry to the World Trade Organization, the Government is concerned with
achieving a stable transition for the SOEs and their large workforce.
The management of the
EIP could work with its tenants to create integrated packages of
products and services to support significant gains in efficiency of
resource use and prevention of pollution by major SOEs in the region.
The social implications of the viability of these firms could be
important in reducing the loss of jobs and avoiding the resulting
impacts on families. Multinationals could also benefit from such local
products and services.
In some cases the EIP
might be home base for tenants that operate facilities located outside
the EIP. For instance, some bioenergy functions need to be close
to the source of materials, such as methane generation from sewage
sludge. A parallel example is manufacture of building products from fly
ash. EIP management should assure coordination in planning between park
tenants and companies in the same industrial clusters outside the EIP.
Another activity of the
EIP and its tenants important to the Circular Economy Plan could be to
establish “chain connections” between plants within the park and its
region. Chain connections might occur through the brokering of company
to company transactions for by-product utilization or through
collection and marketing activities of resource recovery companies.
Such chain connections require electronic databases of materials
available and support needed. With small flows of materials from many
individual plants, an intermediary company might be cost-effective for
the collection and accumulation of usable volumes.
3. Site Planning and
The physical design of
the EIP site, infrastructure, and buildings for the Eco-Industrial Park
would maximize energy efficiency in the design of infrastructure and
buildings through optimal siting, building envelope efficiency,
co-generation, energy or water cascading, and equipment choices. It
would use renewable energy and material sources wherever feasible.
Construction of the park will follow best environmental practices in
materials selection and building technology. The EIP complex would also
include demonstration applications of emerging environmental
technologies to further research and public education.
The whole site will be
conceived to function as an educational showcase for the Recycling
Economy. Signage, exhibits, and classes will enable visitors to see
sustainable design and advanced environmental and energy technologies
Site landscaping plan should
use species native to the region as much as possible. Drought-tolerant
species minimize water consumption. Trees and shrubs improve
micro-climates and energy efficiency by acting as shade and windbreaks.
Enough trees can have a major cooling effect in the whole site.
Carefully designed landscaping also reduces erosion and adds to
biodiversity, which encourages wildlife settlement. Vegetation with
appropriate species in wetlands helps filter pollutants from storm
water runoff. Generally native plant landscaping reduces maintenance
Three aspects of the
EIP’s physical infrastructure would enhance its contribution to the
success of its tenants as well as implementation of CE plans: The
Commons Building and EIP Headquarters, the R&D Center, and the
Business Incubator. We will discuss these facilities below under
Materials Recovery Facility
EIP infrastructure will
incorporate a materials recovery facility (MRF) for sorting of
materials and used products and routing to the appropriate user in the
park. The logistics of internal roads and the MRF will facilitate
distribution and storage of niche materials such as surplus
construction materials. Proximity of the park to a railroad and main
highways will facilitate moving materials in and out of it.
The housing for EIP
employees could demonstrate high performance apartment building design.
This would be a model of integrated resource management applied to
design of habitat. Energy efficient building design would be combined
with a system for sewage and solid waste management and energy
Strategy and Targets
eco-industrial parks must meet the basic requirement of successful real
estate development to fill the land in a timely manner. At the same
time a strong value of eco-industrial development is supporting
development of local firms and not focusing exclusively on
international companies. Many effective Chinese technologies in the
EIP’s target areas are being commercialized. Successful domestic firms
usually contribute more to local economic and social development.
With these values in
mind, EIP recruitment strategy should balance three types of candidates
in the core recruitment clusters:
firms in the target clusters able to set up plants under foreign direct
entrepreneurs with technologies ready for commercialization or
- Chinese ventures
or joint ventures formed with technology and business model transfer
from overseas companies.
Economic and investment uncertainties
support taking a balanced approach and testing to see whether domestic
companies with their own technologies and Chinese entrepreneurs
receiving technology transfer from abroad can constitute a significant
share of the tenants in the EIP. At the same time there are likely to
be international firms who are eager to come into a strong market for
their environmental products and services. First rounds of tenants from
international and domestic sources would enable the park to be
successfully operating at the time when international conditions become
more favorable. This success would be a clear demonstration that the
markets are available in China to attract greater foreign direct
The EIP business
services and especially the incubator described below would play an
important role in recruitment. Major firms would see it as a source of
service providers and supply chain partners important to their
successful operation. It would enable smaller firms with innovative
technologies to play a significant role in the development of the
While it is clear that
the Liaoning Circular Economy Plan and the National Cleaner Production
law create markets for companies in the EIP’s target clusters, the
recruitment team will have to conduct market research to indicate the
size of market for different types of companies and identify existing
local firms already serving these markets. The specific demand for
products and services has to be documented in order to successfully
attract firms to the EIP.
The following sections summarize the
three primary recruitment clusters of Resource Recovery, Alternative
Energy, and Water Management, as well as the additional target group of
firms in the supply chains of major companies in the region of the EIP.
Resource Recovery Cluster
cluster for the Eco-Industrial Park will contribute directly to the
goal of developing a Recycling Economy The EIP will promote long-term
business development in the recycling and reuse of now discarded
Resource recovery candidates
to be considered include the following:
- Niche collectors
who gather specific by-product streams like plastics, paper, glass,
food scrap, solvents, cooking oils, and metals will require parking and
companies that process plastics, glass, and metals to generate usable
manufacturing products from recycled materials (for example, a plant to
make mats from tires or to shred tires into crumb rubber and steel; a
factory to make building products from recycled paper, plastics, or
industries that use the outputs of other firms in the EIP to make
recycled glass, plastic, and metal products. For instance, recycled
plastic bins for recycling in factories, public facilities, and homes
could be one major type of product of such industries.
companies that rehabilitate and upgrade used equipment for industrial,
commercial, government, and home customers.
outlets to market used products. A construction yard to sell usable
materials from construction surplus and demolition.
- A computer and
electronics disassembly plant that processes products that can no
longer be used. (Careful process design is required to meet high
environmental and health standards and avoid the pollution often
generated by such facilities.)
The CE calls for
development of eco-chains or by-product exchanges to encourage
utilization of by-products among industries. Experience in North
America has indicated that companies’ transaction costs of trading
outputs not within the normal product range are an obstacle to this. A
possible means of reducing such costs and streamlining utilization of
by-products is to create a by-product utility in the EIP. This company
would manage by-product energy, water, and materials procurement and
disposal for its client companies. Its advantage lies in the capability
and experience concentrated on by-product utilization and the firm’s
ability to accumulate economic quantities of materials. By making this
its core business, the utility could handle the technical, business,
and economic issues of by-product utilization. It also would become a
force in the political economy, supporting regulations and land fill
fees that discourage wasting and increase the value of by-products.
Inclusion of energy
efficiency technologies and services help client firms fulfill
requirements of the Circular Economy directly, while renewable energy
companies relate to it more indirectly. Companies in this cluster help
create a long-range development path that enables the local economy to
evolve new technologies and gain competitive advantage by moving up the
technology learning curve before other cities.
The primary categories
for alternative energy business development include the following:
- Energy service
companies for energy efficiency and conservation
- Manufacturers of
equipment to support energy efficiency
- Manufacturers of
equipment for renewable energy
- Wind energy
generators and support equipment
- Fuel cells for
energy generation and transportation
- Solar water
- Biomass energy
- Ocean energy from
waves and thermal gradient
integration – design, installation, and maintenance
generating renewable energy with many of the technologies outlined
This cluster is
described in greater detail in a separate paper on energy and the circular economy.
Water Management Cluster
Many regions in China
are experiencing a water crisis that calls for much more effective
management of this scarce resource through systems level solutions. A
water management recruitment cluster in the EIP, integrated with other
firms in the region, would manufacture equipment and provide services
to increase the efficiency of water use, re-use and treatment, in
municipal, industrial, commercial, and residential systems.
Recruitment would focus
on companies with products and services for:
commercial, and home equipment that reduces water demand
- Secondary water
distribution systems (gray or middle water)
- Ecological water
treatment systems, including constructed wetlands and Living Machines
purification technologies, including toxic cleanup and home
- Coastal energy
systems for water treatment (salt gradient solar ponds, tidal and wave
- Integrated water
management consulting and engineering.
Companies could provide packages of integrated solutions to industrial,
government, and commercial clients. These could include audits and
systems of water efficient hardware, conservation management practices,
and system engineering.
Supply Chain Group
This recruitment target
focuses on local suppliers of environmentally superior materials,
components, or services to international and Chinese private firms and
state-owned enterprises. Companies in this group could be competitive
with overseas suppliers because of their knowledge of local conditions
and reductions in shipping costs for components and sub-assemblies.
Reduction of transportation requirements yields another environmental
benefit. These tenants would serve major firms in the region, e.g. food
processing, pharmaceutical, automotive, electronics, petrochemical
EIP Service Facilities
The Commons Building and EIP Headquarters
A commons building will
house EIP management and provide space for meetings and training, a
testing laboratory to meet client’s special needs, offices for service
firms and public service organizations, and other common resources. A
restaurant and dining hall would serve quality meals from organically
grown meat, produce, and fruits.
The R&D Center
Ideally this could be
established as a regional Circular Economy Research Laboratory, located
in the EIP. The Lab might operate at three levels:
- Development of
concepts, definitions, methodologies and policy studies to support
evolution of the concept of the Circular Economy;
- Research and
development to support emerging technologies and new enterprises vital
to achieving the Circular Economy;
- Capacity building
programs for public and private sector managers in integrated resource
management and the Circular Economy.
In addition, this
Center would track advances in the technologies represented by the park
tenants and conduct market research. Its applied research would
support the evolution of these companies and the establishment of new
ones based on emerging technologies.
The EIP complex will
feature a business incubator for start-up firms as well as ones ready
for major expansion. These companies may be joint ventures between
Chinese entrepreneurs and smaller foreign companies in the industrial
clusters of the EIP. The incubator would enhance the business success
of startup and expanding firms in the EIP’s target clusters through
business services, access to capital and experienced guidance, and
synergy among its tenants.
Development of the business
incubator through a Public Private Partnership mobilizes direct
financial and in-kind support from stakeholders who will benefit from
the new businesses it supports.
An incubator in the EIP
could help entrepreneurs in several areas:
- Support in
venture financing through business plan development or evaluation,
access to venture capital funds and public sources of venture funding,
and dedicated funds structured for the EIP.
- Support in
marketing, legal services, accounting, organization design and other
- Access to common
legal, secretarial, and bookkeeping services and office and
among businesses in the shared facility.
- Access to timely
information on markets and emerging technical opportunities.
- Access to
managerial training and coaching in business skills onsite and through
- Mentoring from
entrepreneurs in the region.
see participation in an effective incubator as a factor that will
increase the success rate of new ventures. Research by the US-based
National Business Incubator Association indicates a very high success
rate for incubator supported enterprises, compared to startups without
this systematic support.
The EIP development
agency or company would mobilize a combination of public and private
sources to provide startup funding for the incubator. Local utilities
and banks have significant self-interest in seeing new businesses
succeed and have helped seed the development of incubators in many
areas. The usual sources of public grants are industrial development
agencies and international development banks. The Ministry of Science
and Technology, the State EPA, and province-level counterpart agencies
may be sources, along with agencies such as the Ministry of Commerce.
The budget for the incubator needs to cover:
- Forming of
strategic public/private partnerships;
planning and design, giving a focus and timeline;
- Feasibility study
and budgeting of the operating entity;
and due diligence on candidate ventures;
- Space and
“Such a system can
nurture start-up and newly established firms by providing the
above-mentioned services and office space on a shared, affordable
basis. However, at its core is the financial, marketing and design
support and the managerial training it gives to the emerging
entrepreneur. Another by-product of a business incubator is the
internal dynamics that come from working together in a shared physical
space: the joint and cross-disciplinary learning that takes place and
the opportunity to form the business networks and contacts are also
critical to the launch of successful ventures.” UNIDO incubator
web site: http://www.unido.org/stdoc.cfm?did=300456
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