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Market News

 August 24, 2006
Environmental Technology Markets in Turkey

 There is a potentially very large market for environmental technology products in the rapidly developing Turkish economy. Despite having a relatively effective environmental law, Turkey was not able to implement many environmental protection measures until recently due to scarcity of resources and the underdeveloped nature of its economy.

However, with the start of the accession talks with the European Union, Turkey has adopted a new environmental law to initiate the harmonization of its environmental regulations with EU standards. Alignment with the EU standards is creating an environmental infrastructure and technologies market that will ultimately be worth €70.5 billion. The alignment is planned for completion by 2024.

Market Demand

Turkey is one of the fastest growing economies in the world, the result of many factors, including:
  • A young population composed of 70 million people with a rising consumption level,
  • Real GDP growth of 5.2 percent in 2005 which is expected to maintain at least this level in the coming years,
  • Growing industrial production and new industrial investments,
  • Decreasing inflation and interest rates which trigger investments,
  • Increasing level of Foreign Direct Investment which reached $10 billion in 2005, and
  • Active participation in international trade, with an export volume of $73 billion and an import volume of $116 billion in 2005.
Typical of all growing economies with increasing industrial production, environmental protection issues have become highly controversial in Turkey. On the one hand, the state and the local authorities are trying to protect the environment with the limited resources they have; on the other, the industrialists are trying to grow their businesses in a competitive environment and do not always respect standards for environmental protection. This has been the vicious circle the Turkish environmental market has been in until lately.

Environment protection is being addressed through the following directives:
  • Directive for Environmental Impact Assessment
  • Directive for Solid Waste Control
  • Directive for Hazardous Waste Control
  • Directive for Air Quality Control
  • Direction for Sea Pollution Control
  • Directive for Medical Waste Control
However, the fact remains that insufficient fines for environmental infractions and inadequate site inspections have significantly slowed the progress of environmental protection.

On the investment side, harmonization with the EU will necessitate €70.5 billion in the coming twenty years. In a recent statement to the Turkish Daily News, the Minister of Environment and Forestry, Mr. Osman Pepe, said that €68 billion of this volume would be spent on capital investment and the rest would be on technical support programs and personnel expenses. The total investment value may increase to €90 billion when the investments required by the 'chemicals directive' are added to the total picture.

The amount that would be spent by the state on the capital investment would be €50 billion, whereas the private sector would spend €18 billion. The largest portion of this chain of investment, €35 billion, would be for wastewater and drinking water facilities. This would be followed by investment in solid waste management and prevention of air pollution.

As far as the timeline for the investments is concerned, it is estimated that €30 billion would be spent by 2014 and the rest would be spent by 2024. Sixty-five percent of solid waste is targeted for disposal in controlled fashion by the end of 2012. EU funds are expected to provide for 15 percent of this total investment, which means that there will be need for financing from other international institutions.

Best Prospects

There are many opportunities for foreign companies in the quickly developing Turkish environmental market. There are not enough hazardous waste and medical waste treatment plants in Turkey, and there are national plans to build new ones. Environmental companies actively engaged in the consultancy, engineering or equipment sides of hazardous/medical waste treatment field can be very profitable in Turkey in the near to medium term.

In order to generate alternative energy, initial steps are under way in waste-to-energy projects at some of the landfills in Turkey. This is another potentially fruitful area for North American corporate participation.

There are not enough landfills for storing solid waste across Turkey. The construction of new ones will start incrementally, and companies interested in the construction and management of new landfills could be instrumental in this area. Solid waste handling equipment for use in collection or at the landfills is also needed.

There is only one composting facility in Turkey but many others are already needed. Likewise, recycling at the source or at the further stages is not at desired levels; equipment used for recycling is likely to be in demand here. Manure disposal is a problem at farms; manufacturers of manure disposal equipment should consider marketing their products here.

Development of municipal water/wastewater treatment is taking place more rapidly than the other areas of environmental protection. There are still thousands of municipalities that do not have proper water/wastewater treatment system. Some of the smaller towns, due to their limited financial capability, may not be able to undertake large projects with international players, but there are still cities with 250,000 + populations without a treatment facility. There are also plans to use bioreactor membrane technology in wastewater plants.

As far as the treatment of industrial wastewater in concerned, a small portion of industry fully complies with the rules and regulations on treatment of the wastewater generated at their own facilities. Foreign consultancy or equipment manufacturers may find business in this area as well.

There is a market for manufacturers of emission control devices in Turkey, as there are only about 1,000 facilities that comply with air pollution protection regulations. One large municipality is planning on-line monitoring of the emission levels of factories in a particular region. Very recently, the municipalities of large cities have started working on installing air quality monitoring systems. This effort is expected to spread country-wide.

Excerpts from Turkey: Environmental Technologies Market, US Commercial Service, July 2006.