PEST (political, environmental, social & technical) analysis of the development of the waste-to-energy anaerobic digestion industry in China as a representative for developing countries

Abstract

Anaerobic digestion (AD) is one of the most promising technologies for treating municipal solid waste (MSW) to produce clean energy in the form of biogas. Although AD has been efficiently employed in developed countries, however, its application in the developing countries is still far from enough. This paper for the first time identifies the detailed prospects of the development of the AD industry in China by applying the political, economic, social, and technical framework followed by an in-depth cost–benefit analysis which can be used as a case for other developing countries. The findings of this study revealed that incentive policies such as feed-in tariffs (FIT), credits for carbon reduction and tax exemptions ensure progress in AD application on a large scale. Furthermore, MSW treatment capacity using harmless treatment facilities including anaerobic digestion will rise from 21.6 thousand tons per day in 2015 to 36.4 thousand tons per day by 2020 in China. Moreover, the social capitals have been stimulated by the higher investments from the government for the development of the AD industry. AD plants have low cost of operation due to their smaller sizes, water saving capacity and higher digestion efficiencies, which makes anaerobic digestion a competitive alternative for the treatment of MSW in the near future. The cost–benefit analysis revealed that AD projects have good market potential with an attractive net profit margin and an internal rate of return (IRR) of 31% and 12%, respectively. The industry has enormous potential for attracting foreign investment, while generating considerable revenue. The information provided in this study is helpful to advance the implementation of AD systems in China and other developing countries.