reportEnvironment
1.6.3 Environment: General Market Description

Brief Market Description

This report considers applications of nanotechnology for environmental applications; specifically in the areas of water and air purification. These should more accurately be considered as two separate markets, each with their own players and dynamics.

The commonality is that both markets involve solutions to contamination of a shared resource; the atmosphere or the water supply. Both also demonstrate ‘tragedy of the commons'-like effects, in which the consequences of action (such as releasing sulphur from power station) affects a whole community, rather than just the actor responsible for this harm. Because of this, government has a central role in establishing common standards for emissions or water cleanliness, and sanctioning individual violations.

Water

Simply put, the water industry involves the supply of fresh water, and the removal and processing of wastewater. The water supplied may come from surface water (lakes and rivers) ground water (from wells) or from the sea (using desalination to render seawater drinkable). Processing wastewater involves the removal of contaminants so that the water can be reused.

Water can also be categorised by use. Globally the majority of water (70%) is used for agriculture. This is followed by 20% for industrial use and 10% for domestic use.[i] The distribution of water usage in Europe is somewhat different, with 50% consumed by agriculture.

In the majority of countries, ensuring a supply of fresh water and the treatment of waste water is the responsibility of public utilities. 54% of the world's population has a piped connection for drinking water, and a further 33% have an ‘improved' source: public taps, boreholes, springs and rainwater collection.[ii] This still leaves 13% of the global population - 884 million people - with an unimproved source.

One of the Millennium Development Goals established at the beginning of the decade was that the number of people without access to clean drinking water should be halved by 2015. The World Health Organization reports that this target is likely to be met globally, but that there are still a number of individual countries which are not track, mainly in Oceania and Sub-Saharan Africa.

A recent trend in developed countries is for water services to be provided by a private company given some form of exclusive licence. Countries are also increasingly open to public/private partnerships between utilities and private companies. This has created a substantial market for water services, provided by companies like Veolia Environnement, Suez Environnement and RWE. Revenues from Veolia's water business were EUR 12.6 in 2008.

The water industry's capital intensity and relatively steady returns have also made utilities an attractive takeover target; Thames Water was purchased for GBP 8bn in 2006 by Macquarie, and Australian investment bank[iii].

Where the water supply has been privatised, the role of government is typically to establish standards for drinking and waste water, and to monitor compliance with these standards by inspections and sanctions if appropriate.

Air

Standards for air quality are set by national or multinational bodies. The most important efforts in this area include the European Union's Air Quality Directive (1992)[iv] which defines a policy framework for the control of a number of pollutants. The UK's Department for Environment, Food, and Rural Affairs (DEFRA) has developed an Air Quality Strategy for England, Scotland, Wales and Northern Ireland in line with this directive. This has the aim of reducing the effects of air pollution, which it states "is currently estimated to reduce the life expectancy of every person in the UK by an average of 7-8 months." Ten pollutants are monitored, which are:

Particulate Matter, which is categorised by size. The most common source of particulate matter in the UK was fuel combustion.
Oxides of Nitrogen are commonly produced by road transport and electricity production.
Oxone is created by interactions between air pollutants (including oxides of nitrogen) and volatile organic compounds.
Sulpher Dioxide is produced by burning coal and heavy oil in power stations and oil refineries
Polycyclic aromatic hydrocarbons (PAHs) are produced by domestic coal and wood burning.
Benzene is produced by combustion and transport.
1,3-butadiene is produced by petrol combustion.
Carbon Monoxide is created by incomplete fuel combustion
Lead is emitted by iron and steel combustion
Amonia is produced by livestock manure and fertilisers.

European and national standards are often brought in line; for example, the UK strategy follows the European directive is setting a target for Nitrogen Dioxide that concentrations of 200μg.m^-3 are not to be exceeded more than 18 times a year.

These standards then directly influence environmental restrictions. Whilst these don't tend to affect the individual consumer, they are important for facilities such as power plants, which have a duty to manage their emissions. A fossil fuel power plant will emit CO2, particulate matter, Sulphur dioxide and Oxides of Nitrogen. To some extent these can be mitigated by technologies which remove harmful matter from emissions.

Companies which produce technology for scrubbing emissions include Siemens, GE Energy, Belco (a DuPont subsidiary) and Ahlstom. Many of these companies also produce other equipment for power plants, including boilers, turbines and control systems.

Nanotechnology Impact

A wide range of research work is being carried out to solve the challenges of providing clean drinking water, of improving waste water recycling, and desalinating sea water. The environment technology sector report described these technologies in more detail at http://www.observatorynano.eu/project/document/184/.

Nanotechnology-based methods for treating drinking water, wastewater recycling and ground water remediation include photocatalysis using Titanium Dioxide nanoparticles, nanofiltration using nonporous membranes, electrochemical oxidation, redox reactions and adsorption using carbon nanotubes (CNTs). This latter technology takes advantage of the hydrophobic nature of CNTs' internal surfaces and the potential for chemical functionalisation. These methods are being designed to increase the effectiveness of water filtration by increasing flow and reducing fouling, and to enhance the ability of filtration systems to remove a range of toxic materials.

Nanotechnologies for air purification include using photocatalytic materials (such as TiO2) as building coatings or road surfaces. Interaction between the Ti02 and Nitrogen Dioxide causes the reduction of the latter substance, enabling cleaner air.

Drivers and Barriers to Innovation

Drivers

Demand for water.

A number of dynamics increase the demand for water; growing populations, urbanisation, and economic growth). Water consumption has a close relationship to population growth: approximately 4000 km2 of water were consumed globally in 2000, and this is expected to rise to over 5000 km2 by 2025, mirroring projections of growth in the world's population. (http://www.sam-group.com/downloads/studies/waterstudy_e.pdf).

With up to 60% of the worlds population expected to live in cities by 2030 (presently 50%), there is pressure on water systems not only to deliver fresh water, but also to remove and process substantial quantities of wastewater safely. Energy production is another driver of water usage. The WaterCAMPWS indicates a number of regions in the North-Eastern and Mid West United States in which electricity generating power plants account for over 50% of all water used.[v]

The effects of water shortages can already be seen; drought in Australia's Murray Darling Basin forced the Federal Government to establish a new coordinating body to manage the water supply.

To increase access to water, new supplies have to be enabled. One of the ways of doing this is to recycle a greater proportion of wastewater. Veolia Environnement projects that wastewater recycling capacity will increase by 10-12% per year to 2015. This will result in a recycling capacity of 55 million m3 per day. New technologies are needed to provide more cost-effective means of large scale wastewater remediation.

For areas in which aquifers are being depleted or surface water is scarce, desalination may provide an answer. Global desalination capacity is expected to increase from 51 million m3 to 109 million m3 per day by 2016, representing a potential market of €5bn per year. Desalination is a particularly popular approach in the Middle East and California, driven also by a drop in cost enabled by reverse osmosis technology. Continued improvements of desalination technology are required to reduce costs in order to make desalinated water cost competitive with ground water sources.

Demand for Clean Water Supplied in the Developing World

The Millennium Development Goal of halving the number of people without access to clean water by 2015 has resulting in increasing development aid targeted to this problem. The NGO Water Aid estimates that USD 14 billion is being spent annually on increasing access to clean water - though they believe that this would need to increase to USD 30 billion for the target to be met. [vi]

Increasing access to clean water in the developing world requires the development of technologies which are effective, inexpensive, and suitable for use in a developing world context; one which is likely to be lacking a mains power supply, advanced technical skills, and access to replacement parts.

Water Contamination

Water supplies are also becoming increasing contaminated, driving new technologies which are capable of large-scale water purification. Contamination may occur as a result of run-offs of pesticides, phosphates and other agricultural chemicals, and leeching of radioactive materials. Contamination may affect aquifers as well as surface water. Even after use of a chemical has been phased out, contamination may continue, as in the case of polychlorinated vinyls (PCVs) - a banned industrial coolant which persists in the US water supply.[vii]

Improving Water Infrastructure

Water infrastructure in the developed world is aging, which means either that systems can no longer cope with increased demand, or that performance becomes inefficient due to a lack of capacity or excess leakage. London's aging water system has prompted the local water supplier, Thames Water, to carry out one of the countries largest and most expensive civil engineering projects, the London Tideway Tunnels. This is intended to prevent the overflow of London's sewers and the release of wastewater into the River Thames. The WaterCAMPWS argues that a one trillion dollar investment programme is required to upgrade the United States' existing water infrastructure.

This presents a driver for the development of more cost effective technologies, given that large scale infrastructure projects are unable to win taxpayer approval in light of the current economic contraction.

Regulations

The primary driver of development in air purification technology is regulation. An emissions regulation - such as limiting the amount of NOx that can be produced - compels a company to introduce technology which is capable of satisfying this requirement. There are also instances in which recycling flue gas can improve an energy production process, but this is very much a secondary motive.

Barriers to Innovation

Local Monopolies in Water Supply

To some extent the industrial structure of the water industry mitigates against innovation. Water supply contracts are typically local monopolies, generating no incentive for improvements in excess of those mandated by law. The impetus to improve performance by enhancing water quality or preventing leakage comes from a regulatory body which grants these contracts, but this is externally imposed rather than organic to the utilities themselves. However, when winning new contracts, water supply companies do have an incentive for technological and performance improvement, as this may provide cost or other advantages in competitive bidding.

Lack of Customer Drivers

As stated above, regulation provides the main driver for companies to invest in air purification equipment to remove particulate matter and other substances from their emissions. Because this is perceived as essentially being a matter of regularly compliance, there is little strategic interest in developing air purification technologies; it is a cost, rather than an opportunity to achieve a cost saving.

Relevant Sector Segmentation and Applications

For the purposes of this report, nanotechnology applications for the provision of clean water and clean air will be considered. Nanotechnologies for soil remediation will be reviewed in a future report.

	Commercially Available	1-3 years	3-5 years	5+ years
Water Purification	Nanofiltration systems	Nanostructured membranes for purification	Ion precipitating bacterium. Titanium dioxide based methods
Air Pollution Control	Nanoscale titanium dioxide additives		Nanostructured membranes for CO2 removal