CLEANER INDUSTRIAL PRODUCTION IN DEVELOPING COUNTRIES:

MARKET OPPORTUNITIES FOR DEVELOPED COUNTRIES AND

POTENTIAL COST SAVINGS FOR DEVELOPING COUNTRIES

prepared by

Ralph (Skip) Luken

and
Ann-Christin Freij *

Environment and Energy Branch

Industrial Sectors and Environment Division
United Nations Industrial Development Organization
Vienna, Austria

For the OECD Workshop on Development Assistance

and Technology Cooperation for Cleaner Industrial Production
in Developing Countries, Hannover, Germany
28 to 30 September 1994

22 September 1994
Revised: 6 October 1994
* Senior Environmental Advisor and intern, respectively, Environment and Energy Branch, Industrial Sectors and Environment
Division, UNIDO.

UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

CLEANER INDUSTRIAL PRODUCTION IN DEVELOPING COUNTRIES:

MARKET OPPORTUNITIES FOR DEVELOPED COUNTRIES AND
POTENTIAL COST SAVINGS FOR DEVELOPING COUNTRIES

prepared by

Environment and Energy Branch

Industrial Sectors and Environment Division

For the OECD Workshop on Development Assistance

and Technology Cooperation for Cleaner Industrial Production
in Developing Countries, Hannover, Germany
28 to 30 September 1994

22 September 1994
Revised 6 October 1994

CONTENTS

Executive Summary

Introduction

I. Market opportunities for developed countries

A. Global overview
B. The Netherlands
C. Denmark
II. Potential cost savings for developing countries
A. Global Overview
B. Tunisia: lead-acid battery manufacturing
C. India: agro-based pulp and paper
D. China: fine chemicals
E. Czech Republic: carpet production
III. Recommendations

10
10
11
12
12
13
13

Annex I

Leather and tanning industry: areas for

international cooperation

15

Annex II

Pulp and paper industry: areas for

international cooperation

16

Annex III Cleaner production in the textile

industry in developing countries

17

References

18

-lEXECUTIVE SUMMARY
This paper explores the potential size of the export market for cleaner industrial technology from
developed to developing countries as well as the potential cost savings that are possible for industries in
developing countries when they utilize, to the extent possible, cleaner industrial production to comply with
environmental norms.
Technology for cleaner industrial production already exists and is part of the export market of
electrical and non-electrical machinery, chemicals and services sectors from developed to developing
countries. Even so, not much is known about the size of the market. The literature on this topic is scanty
and is mainly in the form of reports and papers, for example, from OECD, The OECD environment
industry: situation, prospects and government policies (1992) or from the United States Congress, Office
of Technology Assessment, Industry, technology and the environment: competitive challenges and business
opportunities (1994). These reports deal with the trade in the environment industry between developed
countries and do not specifically deal with trade to the developing part of the world,
This paper compares estimated values of the exports of end-of-pipe and cleaner process technologies
(fewer residuals per unit of output) from developed to developed countries. The value of the exports of endof-pipe technologies is extracted from an OECD report and is estimated to be US$6.7 billion in 1990. The
value of exports of cleaner industrial technology is an indirect estimate based on the embedded share of
cleaner processes in the export of electrical and non-electrical machinery for a selected group of OECD
countries. The export of these two sectors amounted to US$ 132.5 billion in 1990 (47.6 per cent of the total
manufacturing). If only 5 per cent of the value of the export of these two sectors alone had been embedded
cleaner technology, it would have been equal to the value of the export of end-of-pipe technology. The paper
proceeds to compare, in a similar fashion the relative size of the value of exports of end-of-pipe and cleaner
industrial process technologies from the Netherlands and Denmark to developing countries.
Next, the paper compares how much developing countries would have to spend to achieve industrial
compliance with environmental norms with the traditional approach to pollutant reduction and with one that
places a heavy emphasis on cleaner industrial production. The paper estimates that industry in developing
countries would have to spend approximately US$ 16.0 billion in the year 2000 to achieve compliance with
environmental norms for conventional pollutants. This estimate is based on the traditional approach for
achieving compliance with environmental norms, which has been, according to the U.S. experience, an 80
per cent investment in end-of-pipe technology and a 20 per cent investment in process controls. If,
developing countries incorporate cleaner production processes in the significant turnover in their capital stock
in the next 10 to 15 years, they could reasonably expect to reduce the annual expenditures on compliance
by 25 to 50 per cent. This section of the paper then provides a few examples from developing countries of
the potential for cleaner industrial processes to reduce environmental compliance costs and to secure other
benefits for industry.
The paper concludes with a few recommendations on how to expand the export market for cleaner
industrial technology and how to increase the utilization of cleaner industrial technology in developing
countries. These recommendations are: (1) bilateral assistance programmes in developed countries need to
assess the potential of their private sector to supply cleaner technology; (2) they need to help this sector
(particularly small and medium-size industries) export technologies that have a significant cleaner process
potential; (3) international organizations must do more to help developing countries to take advantage of
cleaner technology; (4) because developing countries cannot always afford the cleaner production
technologies of developed countries, they need to build up their own domestic capabilities with partnerships
with the private sector in developed countries; and (5) since demand in developed countries for
environmentally sound products can affect the market for products from developing countries, there should
be more life-cycle analysis and research on environmentally compatible products.

-2INTRODUCTION
Over the past five years, cleaner industrial production (pollution prevention) has become a significant
component of environmental management programmes in several developed countries. Cleaner industrial
production is distinct from end-of-pipe treatment in that it minimizes wastes and emissions by reducing them
at the source. End-of-pipe technologies, by contrast, act on wastes and emissions that have already been
generated, reducing them considerably.
Cleaner production is now recognized as a cost-effective complement to pollution abatement in meeting
environmental standards. The systematic avoidance of wastes and pollutants reduces process losses and
increases process efficiency and product quality. It also reduces the costs of waste treatment and disposal.
The pursuit of cleaner industrial production in developing countries is a win-win opportunity for
both developed and developing countries. It has the potential to benefit developed countries by expanding
the market for environmental products and services, and has the potential to benefit developing countries by
lowering the costs to industry of complying with environmental standards.
In this paper, cleaner production is limited to industrial processes; cleaner and sustainable energy
production is not considered. A distinction has been made between the exports of hardware (equipment)
and software (expertise) (table 1). The former includes the physical facilities necessary for the production
process, such as instruments, machinery and factories. The latter includes know-how, information and the
services of consultants (1).
Table 1. Types of cleaner industrial production

CATEGORY

EXAMPLE

Hardware
Change in input materials
Technological modifications
On-site recycling
Good housekeeping

Water-based solvents
Automatic chemical feeder
Chrome recovery
Spray nozzles

Software

Consultancy for waste minimization project

Information dissemination

This paper speculates first on the potential export market for developed countries by comparing the
market for hardware and software for cleaner industrial production with that for end-of-pipe treatment, first
on a global basis and then for two countries, the Netherlands and Denmark. It then speculates on the
potential for cleaner production to achieve industrial compliance with environmental standards at lower cost,
for developing countries as a whole and then illustrates the potential with a few select examples from
developing countries. It concludes with a few recommendations on how to increase the export of cleaner
industrial production from developed countries and the utilization of cleaner production in developing
countries.

-3The word speculate is used deliberately in the preceding paragraph, because not much is known
about the export of cleaner industrial technologies. The supply of and demand for cleaner industrial
production techniques and technologies have never been analyzed in the same way as they have been for endof-pipe technologies. This of course has something to do with the fact that the concept of cleaner production
is new. It also has something to do with the supply side of cleaner production: here, the pertinent
technologies are spread out over many more sectors than are end-of-pipe technologies. A thorough analysis
would require collecting and integrating data from practically all sectors. Furthermore, cleaner industrial
production is a complex phenomenon that comprises everything from know-how to expensive turnkey
factories and from small-scale technology (spray nozzles) to sophisticated high technology (computerized
process controls).
The word speculate is also used deliberately in connection with the cost to industry of complying
with environmental standards in developing countries. As far as is known, there is no information on current
industrial expenditures on pollution prevention and abatement or on expenditures needed to bring industry
into compliance with environmental standards in developing countries. Even in developed countries, the data
on relative expenditure for process changes and end-of-pipe measures for achieving industrial environmental
compliance are non-existent or poorly understood.
In spite of these limitations, the authors of this paper present their speculations, because the
speculations suggest that the size of the export market for cleaner production technology is much larger than
the market for end-of-pipe technology and that cleaner production could significantly lower the cost of
achieving industrial environmental compliance in developing countries.

I. MARKET OPPORTUNITIES FOR DEVELOPED COUNTRIES

A. Global overview
In preparing this report, only one estimate of the market size of the global environmental production
sector could be found. The global estimate is the sum of the environmental production sectors (total domestic
production) in individual countries. The environmental production sector is defined as the total production
in a country of environmental hardware and software (consultancy services). It includes exports of hardware
and software, but excludes imports of those items into a country. The environmental market sector, by
contrast, is defined as the total sales (final demand) in a country of environmental hardware and software.
It excludes exports, but includes imports.*
The one estimate is for the OECD environmental production sector. The sector is estimated to have
produced US$ 184 billion of hardware and software in 1990 (table 2). The United States, Germany and
Japan are the main producers of environmental hardware and software, accounting for 90 per cent or more
of the value of OECD output. The estimate is essentially for end-of-pipe hardware and software and does
not reflect the market for cleaner production hardware and software, even though the latter is considered to
have significant potential, according to the Office of Technology Assessment (OTA) (4).

* There are at least two estimates of the global markets by country for the environmental market sector, one from OECD (2) and
one from Ferrier (3). Supposedly these market estimates are for sales of environmental goods and services in the domestic market,
which means that they exclude exports but include imports. The OECD estimate of the market for the environmental market sector in
1990 was US$200 billion; the Ferrier estimate of the global environmental market sector was US$295 billion in 1992. One of the
reasons the Ferrier estimate is significantly higher than the OECD estimate is that it included resource recovery, environmental energy
sources and water utilities, which are apparently not included in the OECD estimate; another reason is the different years for which
the estimates were prepared. This illustrates the problem that arises when terminology and categories are not comparable.

-4Table 2. Estimate of environmental production sector/technology exports

of selected OECD countries, 1990
(Billions of United States dollars)

Note:

It should be noted that the data in this table come from different sources, which may have different ideas about, for example, what
constitutes environmental technology.

a/

Based on OECD, The OECD environment industry: situation, prospects and govermnent policies, Paris, 1992, tables 10 and 11.

b/

Data from UNIDO, Information and Research Division, Studies and Research Branch (Global Database).

cl

Data from Environmental Technologies Development Corporation of Toronto, 1994.

d/

Compare with the OECD source, which on page 22 estimates Germanys exports in environmental products to developing countries
at 34 per cent.

e/

A study by ECOTEC, The UK environmental industry: succeeding in the changing global market, London, 1994, suggests that
at least 28 per cent of the exports of the United Kingdom of environmental technologies go to developing countries. The figures,
however, do not include consultancy.

f/

Grant Ferrier, in a personal communication, suggests that the total U.S. environmental industry performance for 1990 equals
US$ 122 billion. If the resources sector, which consists of water utilities, resource recovery and environmental energy sources, is
subtracted from this, the result is US$ 84.8 billion, which is equivalent to the OECD estimation of the environmental market industry
in the 1992 report The OECD environmental industry: situation, prospects and governmental policies. By subtracting imports but
including exports, OECD arrives at the figure of US$ 80 billion for the United States environmental technology production sector.

g/

The OECD source excludes Australia and New Zealand for lack of data, but the sector in those two countries is in any case small.

h/

From the OECD source, except for data for Italy and other OECD, which are estimates by the authors.

i/

If industrial chemicals, which include fertilizers and pesticides, were included, the total of the selected OECD countries would come
to US$ 148.4 billion and the total for all OECD countries would come to US$ 168.1 billion, which would amount to increases of 25
per cent and 27 per cent, respectively.

-5Of relevance for this paper is the estimate of the export market of the environmental production sector
from developed to developing countries. Table 2 also includes an estimate of the export of environmental
production sector, almost exclusively end-of-pipe technologies and related services, of developed countries
to other developed countries and to developing countries. The export to developing countries is estimated
to be 20 per cent of the total export market or US$6.7 billion.
A direct estimate of the export of cleaner industrial processes is not available for the reasons listed
in the previous section. Theoretically, one could make such a calculation by starting with the export of
electrical and non-electrical equipment. One would have to ascertain by hedonic pricing or attribute analysis
how much of the value of this equipment sector by sector could be considered cleaner industrial processes
as the full value of the export cannot be considered to be cleaner industrial processes. For example, only
some portion of the selling price of a pulp and paper mill exported to a developing country could be
considered to be embedded cleaner technology. That portion would be some share of the selling price of the
new mill. For example, say that the selling price of a new pulp and paper mill were US$100 million. Most
of this value would be assigned to the attribute that produced the jumbo roll of paper (say 50 per cent) and
less portions (say 5 to 10 per cent each) of that value would be assigned to attributes such as decreased
production time, improved product quality, less resource use, fewer pollutants per unit of output, etc. With
this type of sector specific equipment information, collected even as a sample of all equipment exported,
one could then proceed to estimate the value of exports of cleaner industrial technologies.
Given the absence of such data for cleaner industrial production hardware and software, an indirect
estimate was made based on the value of exports of electrical and non-electrical equipment. The authors
started with data on all manufacturing exports in the electrical and non-electrical machinery sectors, from
developed countries to developing countries for 1992 for all the countries included in table 2. They then
asked how much of this export would have to be classified as cleaner industrial technology for it to be equal
in value to the export of end-of-pipe technology. The export of these two sectors was approximately US$
132.5 billion (47.6 per cent of total manufacturing). If, on average, only 5 per cent (range: 1-13 per cent)
of the value of the exports in these two sectors alone had been embedded cleaner technology, it would have
been equal to the export of the environmental production sector (US$6.7). Most likely the percentage was
much larger, given the improvements in resource and energy efficiency over the past decade in these two
sectors. If the value of the embedded share had been as high as 10 per cent, it would have been two times
as great as the value of the exports of the environmental production sector. Note that the estimate of the
value of the export of cleaner industrial technology does not include the software portion of the electrical
and not electrical machinery sectors, which could be a significant component of technology export. Nor
does it include the chemicals sector, which certainly contributes to the export of cleaner industrial
technology.
B. Netherlands*
1. Environmental production sector
The total turnover of the environmental production sector in the Netherlands was US$ 928 million
in 1990 (table 3). The environmental production sector, as defined here, includes both equipment and
consultancy services for waste-water treatment, flue-gas cleaning, soil remediation, waste treatment and
incineration. It does not include the market for renewable energy and energy-saving equipment. The sale of
equipment is the main activity in this sector (65 per cent of the turnover), which is mainly connected with
environmental control technology. It is not known what percentage of consultancy is connected with cleaner
technology, but it is probably small. OECD estimates that the increasing interest in cleaner technologies in

* This section is based on a report prepared in 1994 for UNIDO by P. Doelman and F. Schelleman of the Institute for Applied
Environmental Economics at The Hague. The report is entitled Market opportunities for cleaner technologies to developing countries.

-6European countries will push the environmental production sector towards consultancy, particularly for
process adaptations by companies (2).
2. Size of the export market for cleaner technologies
All exports to developing countries
The total exports (excluding agricultural products) of the Netherlands to developing countries in 1992
are estimated at US$ 9.0 billion (ECU 7.4 billion) (5). They consisted mainly of machinery and transport
(36 per cent), chemicals (22 per cent) and manufactured goods (14 per cent). There are no separate statistics
on the export of second-hand machinery, but it could be a significant component of the machinery and
transport sector. In general, these goods have a less satisfactory environmental performance (relatively high
levels of emissions and energy use) than newly produced goods. They usually, however, have better
environmental performance than existing machinery and transport in developing countries.

Table 3. Turnover of the environmental production sector in the Netherlands, 1990 a/

(millions of United States dollars) b/

Application
Waste-water cleaning
Flue-gas cleaning

Treatment of waste

Source: Based on VLM, De milieuproduktiesector in Nederland, 1989 en 1990 hoofdpunten, VLM/FME, Zoetermeer, Netherlands,
1991, cited in P. Doelman and F. Schelleman, Market opportunities for cleaner technologies to developing countries, report prepared
for UNIDO by the Institute for Applied Environmental Economics TME), The Hague, 1994.
a/

H = hardware; S = software.

b/

Based on the official United Nations exchange rate, where 1.78 Dutch guilders = 1 United States dollar and where the numbers arc
rounded off to the nearest million.

c/

Exports to developing countries have been apportioned to application category in the same ratio as total exports. An educated guess
is that 10-20 per cent is being exported to Japan.

Exports of the environmental production sector

Exports of the environmental production sector to the developing countries and Japan are also estimated in
table 3. They amount to approximately US$ 50 million, or 5 per cent of the turnover of the environmental production
sector of the Netherlands. The exports consist mainly (92 per cent) of hardware, particularly for waste-water treatment,
flue-gas cleansing and waste disposal. The share of software is relatively small (8 per cent). It is clear that the exports
of the environmental production sector to developing countries and Japan are basically connected with pollution control
(end-of-pipe) technology.

-7Indirect estimates of cleaner technology exports

In the absence of data on the export of cleaner industrial technologies, a figure was deduced based on regular
exports to developing countries. As stated above, total exports (excluding agricultural products) were estimated at US$
8.9 billion in 1992. Assuming that the export of cleaner technologies is limited to the machinery and transport sector,
one can speculate on what percentage of the export of this sector would have to be cleaner technology to be equal to
the export of the environmental production industry. Exports of the machinery and transport sector amounted to
approximately US$ 3.2 billion (36 per cent of the regular export market). If only 1.5 per cent of the value of that
export had been embedded cleaner technology, it would have been equal to the value of the exports of the
environmental production industry to developing countries. Most likely the percentage was larger given the material
and energy efficiency of Netherlands exports in the machinery and transport sector. If 5 per cent of the value had been
the embedded share of cleaner technology, then the market would have been three times as great as the export of the
environmental production sector.
Development assistance and cleaner technologies
Environment is a priority of government policy on development cooperation. It is estimated that in 1985-1992,
approximately US$ 220 million was spent on environmental technology projects. The funds were used as shown in
table 4. The ratio of equipment to expertise is calculated to be 68/32 in the environmental technology projects of the
Ministry of Development Cooperation. Of the equipment component, about 70 per cent is related to pollution control
technology and 30 per cent to cleaner technology. There are no data available on the relative shares of pollution control
technology and cleaner technology expertise for the software component.

Table 4. Environmental technology in development

assistance of the Netherlands, 1985-1992

Source: Based on TOOL, Environmentally sound technologies: investment flows and technology choices by DGS 1985-1992,
Amsterdam, 1994, cited in P. Doelman and F. Schelleman, Market opportunities for cleaner technologies to developing countries, report
prepared for UNIDO by Institute for Applied Environmental Economics (TME), The Hague, 1994.
g/

Including monitoring projects.

To stimulate environmental improvements in developing countries, the MILIEV programme, which

has a budget of US$ 25 million, was launched in 1993. The programme offers financial support for the
following types of export transactions (7):
l

Direct improvement of the environmental situation (for example, creation of wetlands)

Reduction of pollution to meet environmental standards, often by end-of-pipe technology

Reduction of spillage of raw materials and energy by industry

Renewable energy technologies (for example, solar energy and biomass)

Advice on environmental policy planning.

-8Cleaner technology has been integrated in the MILIEV programme, but thus far only a few projects
are connected with cleaner technology: in the plastic manufacturing industry, in meat processing and in
energy production by wind turbines. Apart from this programme, there are projects on sustainable land use,
the reduction of industrial pollution, energy, biological diversity and forestry.
3. Examples of cleaner production exports
Hardware
There are many opportunities to increase the share of cleaner technologies in exports of the
environmental production sector and in development assistance projects. Some examples of cleaner
technologies (hardware) in the industrial sector are as follows:
Enzymatic bleaching of pulp, reducing the need for chlorine or peroxide
In jeans manufacture, replacement of a mechanical process using pumice by biostoning, a
biotechnical process using enzymes. This reduces the use of pumice and machinery, increases the
life of the textile and decreases water pollution
Enzymatic de-hairing and/or de-greasing of leather
Solvent recovery systems for on-site recycling
Systems for powder spraying/painting
Replacement of ozone-depleting substances with safer substances.
Usually, software is needed to support the introduction of hardware, including the intensive training
of local staff.
The export of hardware from developed countries is basically a short-term option. In the medium and
long term, the main task is to build up the local know-how, research capacity and production facilities for
developing hardware and placing it in service.
Software
Experience in the Netherlands shows that substantial reductions in pollution can be achieved by simple
good-housekeeping measures. To identify and implement such measures, as well as other cleaner production
measures, waste reduction auditing is required. The Netherlands and other European countries have gained
experience and know-how in this field that can be exported to build up expertise on waste reduction auditing
at national cleaner technology centres and other institutions in developing countries.
This expertise can be transferred using a train the trainer approach. In the Netherlands alone,
approximately 25 experts are available to train people from developing countries as consultants. Another
option for developing local expertise is to organize exchange programmes to train these people in the
Netherlands.

-9C . Denmark

1. Environmental production sector

There are no detailed data for the environmental production sector in Denmark that are comparable
to those for the Netherlands. A general estimate for 1990 is that this sector had a turnover of US$ 1.7
billion. Of this, US$ 1.5 billion was for equipment and the remainder was for consultancy services. To
apportion turnover to the various treatment categories, as was done in table 3, it would have been necessary
to turn to a survey from 1987 that is not considered reliable. It is, however, approximately correct to say
that about two thirds of the turnover stems from waste-water cleaning and the remainder from flue-gas
cleaning. Treatment of waste and soil remediation are small applications but have growth potential.
2. Size of the export market for cleaner technologies
All exports to developing countries
The total exports (excluding agricultural production) of Denmark to developing countries are estimated
at US$ 3.4 billion and consist mainly of machinery and transport (52 per cent), processed food (17 per cent)
and chemicals (12 per cent) (5). As was the case in the Netherlands, there are no statistics on the export of
second-hand machinery, but it could account for a significant share of the machinery and transport sector.
Exports of the environmental production sector
Exports of the environmental production sector for 1990 are estimated to have been US$ 600 million.
Of this, US$ 550 million was for hardware and the remainder for software. There does not seem to be any
breakdown of data on exports to developed versus developing countries as there was for the Netherlands.
Consequently, it is assumed that the share of developing countries is similar to the high-end OECD average,
which is 20 per cent of the total turnover of the environmental production sector. This means that exports
to developing countries are approximately US$ 120 million.
Indirect estimates of cleaner technology exports
In the absence of data on the export of cleaner industrial technologies, an indirect estimate was made
based on regular exports to developing countries. As stated above, the total exports (excluding agricultural
products) were estimated at US$ 3.4 billion in 1992. Assuming that the export of cleaner technologies is
limited to the machinery and transport sector, one can speculate on what percentage of the export of this
sector would have to be cleaner technology to be equal to the export of the environmental production
industry. The export of machinery and transport sector was approximately US$ 1.7 billion (52 per cent of
the regular export market). If only 7 per cent of the value of that export had been embedded cleaner
technology, it would have been equal to the export of the environmental production industry. (Note that the
percentage is almost five times as great as in the Netherlands.) If the value of embedded share had been 10
per cent of the value of total machinery and transport sector exports, which is highly probable, it would have
been greater than the value of the exports of the environmental production sector.
3. Examples of cleaner production exports
This section describes some exports of cleaner industrial technology from Denmark sponsored by the
Industry Foundation for Development Aid (IFU). IFU is a sister organization of DANIDA and offers
partnerships for joint ventures, loans or guarantees. It is working on several projects that involve cleaner

* This section is based on a report prepared for UNIDO by K. Kristiansen, senior researcher at the Statens Byggeforskningsinstitut,
Denmark.

-10production and that are interesting because they illustrate some of the problems related to the export of
cleaner production technologies to developing countries:
The Danish company F.L. Smidth is exporting turnkey cement plants to developing countries. In
the case of an export to India, the company had to change the combustion process in its newest
plant to a two-step process to ensure compliance with World Bank guidelines on nitrogen oxides.
The firm Rouland is participating in a joint venture with Hilton Rubbers, which is one of the
largest producers of cone belts in India. The venture includes enlargement and modernization of
the plant, transfer of technology from Denmark, rationalization of the production process and
waste minimization.
Dansk Transfertryk has developed a technique for printing with water-based dyes on synthetics,
an improved process for printing on cotton and a new method for laminating textiles. The firm
has installed a new factory in China and has sold its technologies in several countries in Africa
and Latin America.
NIRO-Separation has developed a process for making paper without using water and chlorine. The
pulp is dissolved in air and transported through the process by means of air. It is made into paper
by use of latex. The process is too expensive for the production of toilet paper or notepaper but
is competitive for napkins, tissues, diapers etc. The firm has sold turnkey factories in Sweden,
France, Italy and the United States and has orders for factories in Taiwan Province and Argentina.
The Danish Technological Institute is engaged in several cleaner production projects at Krakow,
Poland. One project organized six foundries to share the cost of machinery for powderlac, which
eliminates the use of organic solvents. The investment had a short payback period and the
technology was necessary for two firms to secure export orders.
The Institute for Product Development, Technical University of Denmark, has been involved in
a survey of nine textile dyehouses in Poland. The survey found it would be possible to reduce
water and energy consumption by 50 per cent through optimization, chemical substitutions and
savings and utilization of more modern technology from Denmark.

II. POTENTIAL COST SAVINGS FOR DEVELOPING COUNTRIES

The evidence from developed countries is that a combination of prevention and abatement measures
is usually a less costly means of meeting environmental standards than abatement measures alone. In some
cases, the prevention measures may be justified on purely financial grounds (4)(8).
Although the evidence from developing countries is even more fragmented, there are a number of
recently completed studies that suggest the potential for combining preventive and abatement measures to
achieve environmental standards at least cost. The following sections present a global overview of the
potential for industries in developing countries to reduce costs in complying with environmental standards.
This potential will be documented with a few recent case studies from developing countries.
A. Global overview

Substantiated estimates of the costs to industry of complying with environmental standards in

developing countries are not available. There are no estimates of what is now being spent or what must be
spent to come into compliance. The World Bank (9) estimated that the investment costs of compliance by

- 11 the year 2000 would be US$ 10-15 billion per year. This estimate assumes an unspecified mix of end-of-pipe
and in-plant measures.
For this paper, the authors prepared their own estimate based on the documented percentage of gross
domestic product (GDP) and manufacturing value added (MVA) that is being spent on industrial compliance
in developed countries. First, the percentage of GDP spent for environmental compliance is, on average,
1.5 per cent of GDP in developed countries. Of that, one fourth is spent on industrial environmental
compliance and three fourths is spent on municipal, transport and other sectors (10). The GDP of
developing countries in 1991 was US$ 4.2 trillion* and is projected to be US$ 6 trillion in the year 2000.
Assuming that they will spend only 1 per cent of their GDP on environmental compliance and that one fourth
of that will be for industrial compliance by the year 2000, then the annual expenditure would be
approximately US$ 15.0 billion. An alternative estimate is the average percentage of MVA spent on
industrial compliance, which in the United States is 1.74 per cent (4). No similar estimates are available for
Western Europe or Japan, but the overall investment of those countries in industrial environmental
compliance is lower (4). It was assumed that, on average, 1.5 per cent must be spent for industry to achieve
compliance with environmental norms. The MVA of developing countries in 1991 was US$ 750 billion
and is projected to be US$ 1.1 trillion in the year 2000. Assuming that they spend approximately 1.5 per
cent of their MVA to comply with industrial environmental norms, the annual level of expenditure would
be US$ 17.0 billion. For this paper it is therefore assumed that developing countries would have to spend
annually approximately US$ 16.0 billion to reduce industrial pollution to acceptable levels.
The above estimate of US$ 16.0 billion assumes that the pattern of investment in end-of-pipe and
process changes will be the same in developing countries as it has been in developed countries over the past
20 years. For developed countries, approximately 80 per cent of the investment to achieve compliance with
environmental standards has been in end-of-pipe treatment and 20 per cent has been in process controls.
In 1994, it is possible to imagine that developing countries could follow a different investment pattern.
They are not yet saddled with extensive investments in non-productive end-of-pipe technologies and they are
in the process of making extensive investments in new equipment. According to one source, new plant and
equipment in developing countries will account for more than one half of the industrial output of developing
countries in the next 10 to 15 years (11). The combination of new, more resource-efficient equipment and
priority being assigned to prevention rather than control should make it financially attractive to invest in
process controls and less attractive in end-of-pipe treatment. Consequently, the amount that industry needs
to spend every year to comply with environmental standards could well be as low as US$ 8-12 billion, a
potential cost savings of 25-50 per cent.
B. Tunisia: lead-acid battery manufacturing
The Environmental Pollution Prevention Program of the United States Agency for International
Development is funding a two-year programme in Tunisia. One of the first efforts there was a waste
reduction audit in a lead-acid battery manufacturing plant to identify pollution prevention options that would
reduce the quantity of toxic chemicals, raw materials and energy used in the manufacturing process. As a
result of implementing preventive measures identified by the audit, the company will achieve the following:
Reduce its capital investment cost for end-of-pipe equipment by at least 35 per cent and reduce
the costs of treatment chemicals by at least 66 per cent
l

Reduce employee exposure to lead dust

* Data from UNIDO, Information and Research Division, Studies and Research Branch (Global Database)

- 12 l

Reduce energy and water use per unit output

Reduce the amount of lead purchased

Reduce lead-acid contaminated waste water

Improve product quality by increasing service life.

To achieve these results, the plant is implementing 19 pollution prevention options that will save over
US$ 2.2 million in the first 24 months, for an investment of US$ 0.4 million. Options include several nocost actions, such as capturing spilled raw materials and reusing them in the production process, as well as
actions that require the purchase of capital equipment (a liquid lead atomization mill) to reduce lead particle
size and therefore waste.
C. India: agro-based pulp and paper
A joint study by the National Productivity Council of India and UNIDO investigated the potential for
waste minimization in three sectors: agro-based pulp and paper, pesticide formulation and textile dyeing and
finishing. Before the investigation, one of the agro-based pulp and paper mills (30 tonnes per day) had
prepared an estimate of the cost of meeting discharge standards based on end-of-pipe technology. As a result
of implementing preventive measures, the mill achieved the following:
Reduced its capital investment cost for end-of-pipe equipment by 25 per cent and its annualized
operating and maintenance costs by 35 per cent
l

Reduced the discharge of residuals 20-40 per cent

Increased annual output by 22 per cent, improved the quality of the paper produced (specks were
reduced) and made a new product (secondary fuel for brick kilns from the primary clarifier)
Hired nine more employees to cope with increased production capacity
Reduced offsite secondary pollution by reducing the consumption of sodium hydroxide and of
energy (less suspended particulate matter and sulphur dioxide).

To achieve these results, the mill implemented 28 preventive measures at a capital cost of
US$ 100,000 and an operating cost of US$ 40,000. The total savings from these measures were US$
400,000, giving a payback period on capital investment of less than four months.
D. China: fine chemicals
A recent cleaner production project in China, funded by the World Bank and implemented by the
Industry and Environment Office of the United Nations Environment Programme (UNEP) and the
Environmental Research Institute (IVAM) of Amsterdam University, looked at the potential for cleaner
production at seven companies. One of the plants is a major manufacturer of fine chemicals in China,
specializing in the production of additives for the processing of high-polymer materials. As a result of
implementing preventive measures, the mill achieved the following:
l

Reduced its capital investment cost for end-of-pipe equipment by 25 per cent and annualized costs
by 15 per cent

Reduced water use by 80 per cent and chemical oxygen demand by 95 per cent

- 13 l

Increased output by 25 per cent

Increased the expenditure for labour by 40 per cent.

To achieve these results, the plant has implemented nine low-cost options and it is now considering
four high-cost options. The investment needed for implementing the first batch of nine cleaner production
options was less than US$ 1,200. The annual savings due to increased efficiency and decreased materials
and water consumption was US$ 30,000, giving a payback period of less than two weeks. The investment
needed for the four high-cost options would be US$520,000. The annual savings will be US$ 750,000,
giving a payback period for the capital investment of less than nine months.
E. Czech Republic: carpet production
A Czech-Norwegian cleaner production project, supported by the Norwegian Society of Chartered
Engineers, has completed waste minimization studies at 11 plants. One of the plants is a producer of carpets
with a yearly production of 1,500,000 square metres. Before the investigation, the plant disposed of 660 tons
annually of solid/hazardous waste at a communal waste incinerator. As a result of implementing preventive
measures, the plant achieved the following:
Eliminated its expenditure for solid waste disposal, US$ 1.3 million
l

Reduced the amount of solid waste by 100 per cent, water use by 30 per cent and steam use by
10 per cent

Improved the quality of the output by introducing changes in the dyeing process and process
controls in spinning, twisting and weaving workshops and made new by-products from recycled
materials

Reduced off-site air pollution from solid waste incineration.

To achieve these results, the mill implemented 15 preventive measures at a total capital cost of
US$ 2,275,OOO. The total annual savings from these measures was US$ 1.3 million, giving a payback period
for capital investment of approximately two years.

III. RECOMMENDATIONS

The above speculation on the invisible environmental goods and services market has revealed two
things. One is that there is probably already a significant export of cleaner industrial technology from
developed to developing countries, although the magnitude of this commerce is unclear. The other is that
cleaner industrial technology has the potential in certain cases to reduce the cost to industry in developing
countries of complying with environmental standards. How can this potential be exploited? The authors of
this paper propose five ways.
First, bilateral assistance programmes in developed countries need to clarify the potential of their
private sector, particularly small and medium-size enterprises, to supply cleaner industrial technology. The
managers of these programmes do not appreciate this potential to the same extent that they appreciate it with
regard to the supply of end-of-pipe technologies. The supply of cleaner industrial technology involves not
only equipment but also expertise (consultancy services). Without this understanding, the countries in
question cannot promote the sector.

- 14Second, their bilateral assistance programmes need to help their private sectors (again, particularly
the small and medium-size enterprises) to promote the cleaner technology aspects of their exports. One step
in this direction would be to prepare sector-specific reports on the potential for international cooperation.
Two lists, one for leather and one for pulp and paper (annexes I and II) suggest the extent of this potential.
They were prepared by UNIDO sector experts based on their experience working with industry in developing
countries.
Third, the activities of UNIDO, UNEP, the World Bank and numerous bilateral organizations with
respect to information dissemination, training and education, the preparation of information materials and
local capacity building seem an appropriate way to help developing countries to take advantage of cleaner
industrial technologies. These activities should be expanded, both on a bilateral and multilateral basis, and
regional banks should be involved. An assessment should be done of the inputs necessary to build local
capacity for the implementation of cleaner production outreach programmes in developing countries,
including the inputs needed from developed countries. The assessment could lead to an international
programme for cleaner production, taking regional needs and priorities into account.
Fourth, multilateral and bilateral institutions need to encourage cooperation between the private
environmental market sectors in developed and developing countries. The environmental market sector in
developing countries is mainly confined to ordinary end-of-pipe hardware and software. Neither it nor the
machinery sector in those countries is able to supply clean production hardware and software, which are
often too expensive to import. Thus, local capabilities have to be built up, and for this, cooperation in the
private sector so needed (licences, franchises etc.).
Fifth, there is need to expand life-cycle analysis and research on environmentally compatible products
to increase the market demand for environmentally sound products from developing countries. An example
of how this can be done is a life-cycle analysis of cotton garment production (annex III). There are two
possible areas of investigation: What will be the impacts of life-cycle analysis and ecodesign on industrial
and agricultural production in developing countries? How will the demand for environmentally sound
products in industrialized countries affect the potential for new export markets for developing countries?

- 15 Annex I
Leather and tanning industry: areas for international cooperation

Activity
Preservation

Equipment

Use of green hides from abattoirs without the need

for temporary preservation

Use of safe biocides in curing hides and skins and

wet blue leathers
Beamhouse

Tanyard

Wet and dry

finishing

Advisory
Chemicals services

Partial salt elimination by using a drum-type shaker

Special drums

Green fleshing

Modified fleshing
machine

Hair-saving, unhairing-liming, especially enzymatic

unhairing of skins

Eco-drum, instruments for

process control

Ex-lime instead of ex-wet blue splitting

Highly accurate splitting

machine

Ammonium-free CO, deliming for light pelts,

combined with the use of ammonium-free bates

Specially equipped drums,

instruments for process
control

Use of biodegradable surfactants instead of organic

solvents; reuse of solvents

Limited direct recycling of chrome floats

Specially equipped drums,

instruments for process
control

Chrome recycling with precipitation

Filter press, instruments

Use of high chrome exhaustion systems primarily for

lime-splitted hides

Use of heavy metal-free and benzidine-free dyes

Use of non-halogenated fat liquors

High-level exhaustion of syntans, dyes and fat
liquors

Instruments for process

control

Use of water-based finishes; at least base and middle Advanced spraying

coats are made of aqueous polymeric dispersions and equipment
contain safe cross-linking agents

Utilization of byproducts

Use of roller coating technique

Roller coater

Manufacture of glue, gelatin, animal feed, fertilizer

etc.

Processing equipment

Source: UNIDO, Industrial Sectors and Environment Division, Agro-Based Industries Branch, 1994.

- 16 Annex II
Pulp and paper industry: areas for international cooperation

Process
Preparation of
fibrous non-wood
raw materials

Preparation and de-dusting system

Pulping

Optimization of pulping conditions for

non-wood fibrous raw materials

Dry and wet cleaning of straw

Process control instrumentation for

digester
Use of weak black liquor in the digester

pressure and temperature control

Use of blow tank and recovery of blow

steam

Belt washer with 5-6 countercurrent

Washing/separation Use of belt washer for countercurrent
stages
washing instead of potcher (belt washer
of black liquor/
needs more space)
screening/pulp
fractionation
X
Screw press or other type for removal of
liquor before washing
Fibre fractionator to remove fines

Better control of bleaching (using

chlorine and hypochlorite)

Bleaching

Change from calcium hypochlorite to

sodium hypochlorite

Stock preparation
and paper machine

Elemental chlorine-free bleaching (ECF)

Total chlorine-free bleaching (TCF)

Mixers, bleaching towers, washers

process control instrumentation for each

bleaching stage

On-line
control

Refining of non-wood pulps

Adequate plate pattern of refining

elements

Control of freeness of refined pulp

Schopper Riegler or Canadian

Standard Freeness Tester

Consistency control of the pulp being

refined

Consistency controls

pH/temperature/consistency

Better control of operating variables of

centrifugal cleaners
Better control of blending various pulps
Consistency control in the paper-machine
approach system
Better control of chemical additives
(retention aids, fillers etc.)
Improve headbox and flowspreaders
Improve foils and vacuum boxes in
paper machine
Improve press section of paper-machine
Improve drying section and condensate
removal and reuse of condensates
Improve shower nozzles

X
I

Close white water system

Waste paper
treatment

Improve waste paper treatment system

(pulper, screens, cleaners)

Simple methods for de-inking

Source: UNIDO, Industrial Sectors and Environment Division, Chemical Industries Branch, 1994.

- 17 Annex III
Cleaner production in the textile industry in developing countries

There is a growing interest on the part of consumers, authorities and companies in the environmental impacts
of garments. Several retail companies in the Netherlands have introduced green garments into their collections.
The garment production chain is primarily located in developing countries (for example, India, Thailand,
Indonesia and China) and newly industrializing countries. In the production chain for cotton garments, the
following steps can be distinguished:
Process

Environmental issue

Cleaner technology

Cotton growing

Use of pesticides, fungicides etc.

Use of fertilizers

Biological pest treatment and fertilizers

Integrated pest management (IPM)

spuming/weaving/
treatment/dyeing

Water pollution (dyes, salts,

detergents, bleaching agents)

Bleaching with peroxide. Biological bleach

clean up reducing water consumption.
Biostoning. Use of more efficient
bi-reactive dyes.

Sizing and desizing agents

Formaldehyde emissions
Energy and water use
Garment industry

Wastes
Use of accessories

Optimize material use

Accessories of natural materials

Distribution

Transport

Reduce/optimize transport
No air transport
Reduce packaging material

Packaging
Usage

Washing and cleaning

Use phosphate-free detergents

Use CFC-free dry-cleaning agents

Disposal

Waste

Reuse garments or fabrics

The most serious environmental impacts occur in cotton growing (pesticide and fertilizer use) and in textile
treatment/dyeing. As these steps are mainly located in developing countries, these countries will be confronted
with an increasing demand for environmentally sound products and semi-manufactures. To improve the
environmental performance of the textile industry in developing countries, process adaptations will be required,
including the following:
Clean cotton growing

Biopesticides/Integrated Pest Management

Textile dyeing/finishing

Advanced bi-reactive dyes

Enzymes for desizing, biostoning and/or bleach clean-up process steps.
Use of peroxide instead of chlorine.

These products and technologies are available in developed countries, which creates new market opportunities
for the exports of software and hardware to developing countries. The growing demand for environmentally
sound products can be a driving force for cleaner production in developing countries. On the short term this
potentially leads to a growing force for cleaner production in developing countries. On the short term this
potentially leads to a growing export of cleaner technologies (both software and hardware) from developed
countries to developing countries.

Source: P. Doelman and F. Schelleman, Institute for Applied Environmental Economics (TME), Market opportunities for cleaner
technologies to developing countries, The Hague, 1994, p. 6.

- 18References

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