China Galaxy Securities: Policy recommendations to promote comprehensive solid waste treatment capacity and level focus on fields such as waste incineration and power generation

The Zhitong Finance App learned that China Galaxy Securities released a research report stating that the State Council issued a notice on the “Comprehensive Solid Waste Management Action Plan” (hereinafter referred to as the “Plan”), which requires that by 2030, the annual comprehensive utilization of bulk solid waste will reach 4.5 billion tons, and that the annual recycling capacity and level of major renewable resources will reach 510 million tons, and that the comprehensive solid waste treatment capacity and level have improved markedly. The bank suggests focusing on areas such as metal recycling, waste grease, and waste incineration for power generation with strong resource attributes, low degree of marketization, and large market space.

The main views of China Galaxy Securities are as follows:

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The State Council issued a notice on the “Comprehensive Solid Waste Management Action Plan” (hereinafter referred to as the “Plan”), which requires that by 2030, special solid waste remediation in key areas have achieved obvious results, the historical storage of solid waste is effectively controlled, the high incidence of illegal dumping and disposal is curbed, the annual comprehensive utilization of bulk solid waste has reached 4.5 billion tons, and the annual recycling capacity and level of major renewable resources will reach 510 million tons.

The “Plan” is a programmatic document for solid waste management in the 15th Five-Year Plan

Solid waste treatment has multiple values, such as reducing pollution and reducing carbon, increasing resources, and energy security. In the 14th Five-Year Plan, China introduced a number of measures to strengthen solid waste treatment and develop a circular economy, with remarkable results. The “Plan” was introduced at the beginning of the 15th Five-Year Plan, which continued to clarify the main policy tone of solid waste resource utilization, further raised utilization targets, and indicated the direction for the solid waste treatment industry in the 15th Five-Year Plan. The “Plan” focuses on the three major areas of waste production and waste production in industry, towns, agriculture and forestry, controlling and reducing at the source, standardizing collection, transportation and storage, improving the level of resource utilization, enhancing harmless treatment capabilities, and implementing special remediation in key areas such as illegal dumping and disposal of solid waste, domestic waste landfills, construction waste, historical solid waste storage sites, phosphogypsum, etc., to promote the treatment of the entire solid waste chain.

The use of recycled metals is of strategic importance, and the market space is large

In 2024, domestic production of the ten commonly used non-ferrous metals was 79.19 million tons, with a compound growth rate of 6.4% in 2020-2024; in contrast, the output of the main recycled non-ferrous metal varieties in 2024 was 19.15 million tons, and the compound growth rate in 2020-2024 was 7.4%, accounting for the production of ten commonly used non-ferrous metals remained around 24% in recent years, which is an important support for the supply of major metals. On the other hand, the use of recycled copper, recycled aluminum, and scrap steel generally saves more than 60% of energy consumption, and also has obvious pollution and carbon reduction effects, which are of strategic significance for energy security and the achievement of dual carbon goals. The 14th Five-Year Circular Economic Development Plan proposes that by 2025, the comprehensive utilization rate of bulk solid waste will reach 60%, the comprehensive utilization rate of construction waste will reach 60%, the use of waste paper and scrap steel will reach 60 million tons and 320 million tons respectively, the production of recycled non-ferrous metals will reach 20 million tons, and the output value of the resource recycling industry will reach 5 trillion yuan. It is expected that with the further implementation of the “Plan”, the output value of the 15th Five-Year circular economy industry is expected to increase further.

Risk warning: The risk of policy implementation falling short of expectations, and the risk of significant fluctuations in the prices of related resources.