Eco-Industrial Parks

Eco-Industrial Parks (EIPs) cluster manufacturing plants in a single location where the by-products of one facility contribute to the inputs of other onsite facilities.  Seeking to create circular economies that recycle waste and encourage the sharing and integration of resources and infrastructure, EIPs facilitate “cleaner production within companies and design of both primary and by-product chains among companies.”  By promoting closed systems manufacturing, these parks encourage the local consumption of goods and recycling of by-product waste.  Incorporating a systems approach to these processes, EIPs can revolutionize sustainable industrial development.

Traditional industrial parks capitalize on the economic benefits of clustering.  The clustering of related business activity leads firms to gain additional productive advantages through increased specialization (in terms of human capital and physical infrastructure) and through efficient infrastructure networks.  Industrial parks typically concentrate like-businesses and companies around a common economic sector to capture these efficiencies. 

Instead of concentrating businesses based on a single industry, EIPs take clustering one step further – they create closed “waste-to-feed” resource systems.  EIPs assemble groups of companies based on waste production and inputs.  Planners and management teams organize eco-industrial parks by first identifying the by-products of large anchor tenants.  “If a major by-product supply stream will be an attractor to companies that can use it,” observes Ernest Lowe in an EIP case study, “then [EIPs] use that in recruitment.”   Planners and management teams embark down a successive chain of recruiting businesses that use the anchor tenants’ by-products as inputs and subsequently search for others who could utilize the next set of industrial by-products.  EIPs thus foster the development of closed resource systems and the perpetuation of circular economies.

At Hemaraj Eastern Seaboard Industrial Estates (HESIE) , an EIP located along the Gulf of Thailand, an automotive cluster sustains a 420-factory circular economy.  Anchored by Thailand’s automotive production lines, excess scrap metal is sold to parts manufacturers, to electronics companies, and to building-material factories within the industrial complex.  Plastics firms and agrochemical businesses reuse by-product gases produced at an electrical generation plant and at the automotive factories.  Co-generation heat capture powers additional energy throughout the industrial park.  

Similarly, the Industrial Symbiosis park in Kalundborg, Denmark houses 20 integrated firms.  Centered on a coal-fired power plant, excess heat from cooling water is directed to local fish farms and excess steam routed to the biotech facilities for enzyme production.  Both the fish farms and the pharmaceutical companies produce agricultural fertilizers as bi-products for pig feed in the nearby farms, which then feed Kalundborg’s residents.  Ash from the power plant is also used by the local cement company.  And a plasterboard manufacture utilizes the power plant’s sulfur dioxide and gypsum bi-products.

In Thailand and Denmark and other like countries that have EIPs, industrial clusters provide vast competitive advantages.  EIP waste exchanges increase revenue streams, decrease industrial input and transportation costs, integrate business/social networks, diminish energy expenditures, lower raw material purchases, provide cheaper dumping/waste removal solutions, and expand agglomeration benefits – which all make EIPs economically desirable and provide competitive advantages.  Symbiotic relationships sustain a self-perpetuating system with naturally built productive advantages.

For example, shared infrastructure, focused on sustaining by-product exchange and group waste management, reduces marginal costs for each company involved.  In China, the Shanghai Chemical Industrial Park (SCIP) constructed an onsite wetlands to absorb and naturally filter/treat wastewater and industrial park runoff.  Through pooled action, onsite wetlands lower dumping costs and lessen individual responsibilities.  Wetlands are a relatively cheap investment and do not require large amounts of maintenance or operational costs.   SCIP’s low cost, high efficiency closed-loop water plan also includes a project to recycle grey water for factory reuse.   Used mostly as a coolant and lubricant in industrial settings, water needs not be treated to drinkable quality.  By separating a large enough area to disaggregate the two water uses, SCIP lowers energy use, as well as costs, related to clean water filtration and wastewater treatment.

The SCIP wetlands is one of six specialized infrastructure projects on the Shanghai site.  With a highly integrated and intelligently planned infrastructure system, SCIP improves the competitive advantages of companies located on premise.  SCIP realizes these benefits by attracting an impressive $8 billion in total investment for only 40 resident firms.  

In a study of Matamoros, Mexico, the Research Triangle Institute and Indigo Development calculated the net annual economic benefit of converting commerce in a spread-out port town to an efficient EIP.  The study’s analysis includes the clustering in a single physical location with shared infrastructure and joint services.  The resulting economic benefits of transitioning to an EIP resonate at $8.1 million – a 59% return on investment – and would have the short payback period of only 1.69 years.   The change would also result in landfill waste reduction of 130,000 pounds of plastic, 730,000 pounds of asphalt, and 120,000 tons of gypsum.

Unfortunately, limited numbers of EIPs sprout in Western economies.  While heavy environmental regulations (and ancillary tax benefits and sustainability certifications) may make EIP participation profitable, it is often still cheaper for companies to import industrial inputs from far-away natural resource hotbeds like Africa, China, or Indonesia.  Of ten EIPs in the US (2004), only one was funded by private development.   The lack of private investment suggests that Americans cannot extract sufficient economic benefit from EIP association.  It is still too cheap for companies to dump their waste and too expensive for them to exchange bi-products for reuse.

The Western EIPs that do arise (notably in Scandinavian Europe) revolve around energy production and reuse of petroleum bi-products.  While EIP incorporation of energy production represents a closed system, reliance on petro-based anchors leads to a lack of diversity across EIPs.  They all tend to include similar tenant compositions.  This lack of diversity restrictingly limits the reach of EIPs and stunts further, widespread application.

Theoretically, EIPs add economic and environmental benefits to industrial clustering.  They offer a systems approach to improving the reuse of waste products.  In practice, however, EIPs are not easily replicable. 

On a small (industrial park-sized) local scale, EIPs must be closely monitored and managed by planners and developers.  Since few companies can economically capture and pass on by-products that are of use to other firms, EIPs repeatedly rely on power plant and petro-based tenants.  By focusing attention on integrating firms based on waste production and locally produced inputs, companies must be willing to forgo the typical industrial park clustering effects of like-business concentration.  Based on the low market demand for EIPs, the business community signals disappointing economics with this structure.

In all cases of successful EIPs, government sponsored economic incentives make sustainability and waste exchanges viable.  The most frequent locations of EIPs are in Denmark, Austria, Finland, and the rest of Nordic Scandinavia, a region with some of the highest amounts of environmental regulation.  Only when government incentives make EIPs financially sustainable do businesses elect to participate.

Other “large scale applications of EIPs” liberally apply the title to any circular economic structure or environmentally conscious business cluster.  For instance, plans for the currently under construction Tianjin Eco-Industrial Park envision a mini-city that employs 10,000 workers.  Instead of acting as a small scale, closed circuit industrial park, Tianjin Eco-Industrial Park ultimately represents special economic zone with tax benefits for firms that manufacture green technology.  The zone will fabricate energy efficient appliances and machinery, but the firms themselves are not applying closed system principals, nor is the developer actively pursuing integrated planning design.  For Tianjin, EIP is just a sustainable-sounding name to promote investment in a special technology sector.

Ideally, EIPs have carefully crafted selection processes and tenant lists directed at connecting “waste-to-feed” linkage chains.  They seek to capture environmental and sustainability benefits and consciously work towards building a sustainable industrial ecosystem – not at the source level, as in Tianjin, but at the systems level.  EIPs do have the potential for planners to create sustainable industrial ecosystems.  But until stricter regulations make sustainable industrial parks economically viable, an integrated systems approach to improving industrial park sustainability will have to wait for widespread application.

Eco-Industrial Parks