The report, which charts the rapid growth in environmental markets between 1990 and 1995, was prepared by consultants Ecotec to update an earlier study for the Government's Joint Environmental Markets Unit (JEMU). While the UK has maintained a healthy trade surplus in environmental equipment, the report shows that its export performance is weaker than that of EC competitors.
UK exports of environmental equipment increased by 50% to $1,165 million over the period, while imports grew slightly faster, by 64%, reaching $664 million. Among the environmental industry sectors, the UK had a $186 million trade surplus in air pollution control equipment and services in 1995, $115 million in waste water treatment, and $152 million in environmental monitoring and instrumentation.
But other EC countries are outperforming the UK. As a proportion of environmental exports from all EC countries, the UK's share fell from 19% in 1990 to 15% in 1995 (see table ). This compares with the UK's 17% share of the EC's GDP.
"France and Germany have eroded or eliminated the UK's relative lead in key markets and have achieved a more balanced distribution of trade than three years ago," the report concludes.
The original report, which was based on data for 1990, found that the UK had a leading or level-pegging position in all non-European markets (ENDS Report 230, pp 5-6 ). But this position had been eroded by 1995, with Germany becoming the EC's clear front runner in South East Asia, Japan, North America and South America.
Germany has also capitalised on growing demand for environmental equipment in central and eastern Europe, where its exports grew from $124 million in 1990 to $267 million in 1995, compared with UK exports of $31 million in both years.
Ecotec predicts that western Europe's environmental market will grow at 5-6% per year over the next decade, rising from $79 billion in 1997 to $165 billion by 2010. The global market is projected to increase from $280 billion in 1997 to $640 billion in 2010.
The report also presents estimates of the industry's "total turnover", which includes exports, in-house environmental work and public sector activities - particularly relevant in waste management services. The industry's total turnover in the EC is put at $103 billion for 1994.
Waste water treatment ($43 billion), waste management ($30 billion) and air pollution control ($20 billion) account for 90% of total turnover. Smaller sectors include environmental services such as consultancy ($5 billion) and contaminated land remediation ($2 billion). The figures were prepared by a consortium on behalf of the EC's statistics agency, Eurostat.
Defining the scope of the environmental industry is extremely difficult, particularly in areas such as clean technology where, unlike end-of-pipe approaches, the boundaries between environmental and end-user industries are becoming increasingly blurred. The Ecotec and Eurostat data exclude clean technologies because of these difficulties.
The Eurostat work revealed that environmental industry turnover in the UK was only 1% of GDP, compared with an EC average of 1.4% and 2.0% in Germany. The industry accounted for 0.6% of employment in the UK - quite similar to the EC average of 0.7% but well below figures of 0.9% in both France and Germany (see chart ).
The relative weakness of the domestic market is identified by Ecotec as a handicap for UK companies seeking to export. "Globally, environmental companies, particularly smaller ones, thrive on the basis of their domestic market," the report says. "Due to the slower implementation of regulations, the domestic market [in the UK] has been slow to develop."
However, Ecotec identifies trends that should favour UK suppliers. Domestic market conditions give British firms a price advantage over some competitors, particularly German firms. Ecotec found "surprisingly little evidence of British firms exploiting their clear price advantages in markets like the EU" - though the strengthening pound may force that conclusion to be altered.