Statistics Canada recently released its latest biennial survey of the environment industry. The most recent report provides data from 2002 and should be of interest to industry players looking at trends and opportunities for future growth.
A comparison of data from 2002 to the last study year, 2000, reveals:
A big industry (made up of small firms)
A comparison of data from the recent report to that generated in 2000 reveals that Canada’s environment industry is continuing to grow in revenue and number of companies, but employment remains flat. In 2002, Canada’s total revenues from environment-related activities were $15.8 billion, an eight per cent increase from 2000. The number of companies in the industry grew six percent to 7,967. However, total employment in firms that reported environmental revenues in 2002 was 159,720 — a difference of only 451 people compared the employment in 2000.
In 2002, the environment industry had 76 large companies (greater than 500 employees), 494 medium sized firms (between 100 and 499 employees) and 7,397 small establishments.
There were 25 mergers and acquisitions among the surveyed establishments in 2002. This may account for the fact that small firms represented only 93 per cent of the industry in 2002 compared to 96 per cent in 2000.
Over all, exports represented the source of 9 per cent of environmental revenues. Although exports to the United States represents 78 percent of the $1.4 billion of the export market for the environment industry, the fastest growth market for environmental exports was Asia at 45 percent. However, the Asian market still remains relatively untapped with only $113 million in revenue.
Surprising, the exports of environmental goods and services to Europe fell 45 percent between 2002 and 2000 (from $127.1 million to 121 million). Readers of this magazine will be interested to learn that the top exports were goods and services related to waste and remediation $405 million.
With respect to export, 670 small establishments (with revenues of $163.5 million), 133 medium-sized firms ($594.9 million) and 11 large companies ($657.2 million) provided environmental goods and services abroad. It’s somewhat surprising that only 11 of the 76 large companies in the environment industry export.
Trends in solid waste and recycling
There were 1,938 companies that categorized themselves as offering waste management and remediation services. The $3.74 billion in environmental revenue generated by this category was broken up into environmental goods ($43 million), environmental services ($3,672 million), and environment- related construction ($27.3 million).
The $3.74 billion in environmental revenues from waste management and remediation services in 2002 was up from $3.02 billion in 2000. Statistics Canada stated the 24 per cent increase in revenue was the result of increased waste generation by Canadian businesses and households; higher reclamation and decommissioning expenditures by the mining, oil and gas and petroleum and coal products industries; and, various initiatives directed at brownfield redevelopment.
The environmental goods market generated $3.6 billion in revenue generated in 2002. The sale of recyclable materials by the wholesale trade industry netted 55 per cent ($1.98 billion) of the total environmental goods market. Some of the recyclable materials were collected through municipal recycling programs.
A new category added to the 2002 survey was an examination of revenues from the sales of technologies to reduce greenhouse gas emissions. Companies involved in cogeneration/methane capture/waste-to-energy generated a measly $8.6 million in revenues compared to relatively robust revenue of $112 million for solar/wind companies and $118 million for firms receiving income from fuel cells and alternative fuels.
Statistics Canada reported a total of 13 waste management and remediation services companies received $76.8 million in revenues through the export market.
In 2003, The World Trade Organization estimated that global expenditure on the environment was approximately US$525 billion per year and likely to exceed US$600 billion by 2005. With only nine percent of revenue generated from the industry coming from export, there is lots of room for growth. Asia represents the greatest opportunity for Canadian companies and the 45 percent increase in trade between 2000 and 2002 should be a sign of future growth.
With the move in Canada toward the banning of specific waste streams from landfill, future revenues will likely come from companies that pursue composting and IT/electronic equipment recycling. Also, firms that create technologies that recover valuable byproducts will see growth potential.
The combination of increased energy costs and the reluctance to site new landfills will provide an opportunity for energy-from-waste facilities.
Statistics Canada data and global indicators point to continued growth in the environment industry. As the North American market for environmental goods and services saturates, there will be a need to focus attention on overseas markets for growth.
John Nicholson is a management consultant with Environmental Business Consultants based in Toronto, Ontario. E-mail John at email@example.com