Christophe MAQUET, Chairman of Veolia China, expressed that China’s CCUS (Carbon Capture, Utilization and Storage) market has great potential, but the current cost of CCUS is still high, it is necessary to find ways to use the captured CO2 in value to reduce the cost significantly.
The merger of Veolia Group (hereinafter referred as “Veolia”) and Suez Group (hereinafter referred to as “Suez”), the largest and second largest giants of the global environmental protection industry, is coming to an end. Chairman of Veolia Asia, Christophe MAQUET said in an interview with Caixin and other media recently that Veolia expects to complete the merger transaction at the end of this year or early next year. As for China, Veolia will acquire most of Suez’s solid waste business after the merger, Suez will retain its water business, and the competition between the two in Chinese water market will continue.
Both Veolia and Suez are French environmental companies that entered the Chinese market earlier and are known for their technical capabilities. Veolia entered the Chinese water market in the early 1990s, and expanded its business to solid waste and energy management. It currently operates more than 100 projects in over 40 cities in China, such as the water supply project in Shanghai Pudong, the comprehensive hazardous waste treatment center in Tianjin, energy management project in Harbin, etc. Similar to Veolia, Suez’s business in China mainly includes water and waste treatment. For example, it provides raw water, sewage and sludge treatment equipment and technical services for Hengli Group in Huizhou in Guangdong Province, Suzhou in Jiangsu Province and Dalian in Liaoning Province, and provides process equipment and related technical services for industrial water treatment for Xi’an Aerospace City in Shaanxi.
According to Christophe MAQUET, Veolia acquired 29.9% of the capital of Suez from Engie, the largest shareholder of Suez in October 2020. In April 2021, Veolia, Engie and French government reached an agreement of the merger that Suez will be divided in two parts: Veolia will retain nearly EUR 10 billion of Suez’s revenues, and about EUR 7 billion of activities which will constitute a “New Suez”. This offer, approved by the Boards of Directors of SUEZ and Veolia on June 29, 2021. It is expected to complete the merger transaction at the end of this year or early next year.
Christophe MAQUET introduced that for Chinese market, after the merger, the New Suez will retain its water business and two hazardous waste projects in China, the rest will be placed under Veolia. The integration and division of Chinese business is the result of negotiation between Veolia and Suez. The Suez management hopes to retain some of its international business. Therefore, Veolia and New Suez will still maintain a competitive relationship in Chinese water treatment market.
He said that the Chinese market is very important to Veolia, not only for the market size, the most important is the speed of market development. In the past 5 years, Veolia’s revenu has doubled due to Veolia’s continuous cooperation with Chinese industrial and municipal partners in ecological transformation. At present, China’s legislation and enforcement of environmental protection are as strict as those of European Union. China’s standards are even more stringent in China than in Europe: in terms of emissions from coal-fired power plants, China’s limits for SOx and NOx are half of those in Europe; in terms of sewage discharge, the limits of chemical oxygen demand in many place in China are also less than half of those in Europe.
He believes that China’s current goal is not only simple environmental protection, but also focuses on the development of a low-carbon and circular economy. In 2020, China announced that it will peak carbon emissions by 2030 and achieve carbon neutrality by 2060. For reference, carbon emissions in France peaked in 1991 and the government pledged neutrality in 2050. There are 59 years in between. America reached carbon emissions peak around 2007 and it pledged neutrality also in 2050, meaning there are 43 years in between. To achieve carbon neutrality, China needs very strong efforts to achieve the goal in 30 years.
China is enthusiastic about the CCUS (Carbon Capture Utilization and Storage) project. Veolia also operates a CCUS project in India in which it can convert the captured CO2 into soda ash, and sell carbon products to the local market. Total Energies and Veolia have joined forces to accelerate the development of microalgae cultivation using CO2 with the long-term goal of producing next-generation biofuel. Christophe MAQUET said that China’s CCUS market has great potential, but the cost of CCUS at present is still high. To effectively reduce costs, it is necessary to find ways to use the captured CO2 in value, in different areas such as food, industry, fertilizers and new materials, etc,. The upcoming carbon market in China will also encourage companies to carry out CCUS projects.
In addition, he believes that EV battery treatment will be a priority area for Veolia’s development in China. China is the biggest market of EV and the biggest market of EV batteries, which are under full speed to grow. Veolia currently operates a comprehensive recycling project for used power batteries in Jiangmen, Guangdong.
In the past 30 years since Veolia entered China, the environmental market has changed rapidly. In recent years, the rapid development of Public-Private Partnership (PPP) projects requires a very healthy balance sheet of the participating companies, as well as very strong financing and risk resistance capabilities. Due to the advantages of State-Owned Enterprises in financial and market resources, the State-Owned Enterprises can gradually occupy a leading position in PPP, while private enterprises are obviously insufficient in this regard. But it is not necessary to oppose private enterprises, foreign companies and State-Owned Enterprises. Veolia will continue to cooperate better with the two.
Source: Caixin; July 15, 2021