Sectoral Data

The approach of this overview is to describe the various sectors based on the characteristics of the productive fabric. Without being exhaustive, the aim is to provide an overview of the areas in which eco-enterprises operate.
The presentation is structured around the four sectors defined by COSEI: renewable energy, water and sanitation, waste recycling and recovery, and energy efficiency.
In 2010, the production of the sector’s traditional industries (water, sanitation, and waste) represented 37.4% of total eco-activity production, while renewable energy accounted for 12.4%.
Recently developed sectors aimed at reducing greenhouse gas emissions have experienced very strong growth over the past ten years. For example, the average annual growth rate in the renewable energy sector was strong, especially between 2004 and 2010: 17.5%, despite erratic feed-in tariff policies.

The Water Sector

• Water and sanitation
Water is considered a public good in France. The State organizes this public service and thus guarantees each inhabitant’s right to access it. Historically, the management of water and sanitation services involves both public and private operators. Local authorities responsible for this public service can choose how water is managed: either through direct public management or by delegating the service to private operators under signed delegation contracts.
This mixed (public-private) structure has led to an oligopolistic organization of the market: three major private groups dominate the sector—Veolia, Suez Environnement, and SAUR—holding nearly 75% of the private water management market in France.
Together, these companies operate throughout what is known as the “small water cycle,” meaning all the activities involved in drilling and capturing water, producing drinking water, distributing it, and, after use, collecting and treating wastewater before returning it to the natural environment.
More specifically, the industrial structure of this sector includes:
• Water capture and drilling companies, mostly very small businesses. These activities require significant investment in equipment. Their scope is local due to the size of the drilling machines and the wide variety of soil types, which require equipment adapted to each specific condition,
• Companies that design and build water treatment facilities, which are predominantly large firms,
• Engineering firms that design and support project owners in the construction of water treatment infrastructure,
• Manufacturers of equipment required for the construction and operation of these facilities or for water transportation. When it comes to manufacturing equipment for integrated technologies in water treatment facilities, the majority of companies belong to large groups with highly developed R&D departments; for water transport, family-owned SMEs coexist with large French groups,
• Service companies that manage, operate, and maintain these installations,
• Numerous small innovative companies that are developing in more specialized markets, such as phytoremediation of wastewater, pollution detection, treatment of urban and industrial wastewater, diagnostics and network mapping, or emerging markets such as smart water networks and continuous water pollution monitoring.

In this sector, innovation mainly comes from start-ups and SMEs, which are experiencing renewed interest from financial investors.
Let us also recall that French environmental expertise is based, among other things, on this key sector. The “French school of water” is globally recognized and ensures strong international presence for leaders Veolia and Suez Environnement through their subsidiaries or through construction projects of water treatment facilities involving local builders and one or more French experts responsible for project management.
Water and sanitation management is marked by the presence of large groups, as a company must be well-capitalized to engage in operations.

• Ecological engineering, biodiversity
The goal of ecological engineering is to preserve and enhance biodiversity through appropriate actions on ecosystems (maintenance, restoration, rehabilitation…) that take into account their functions, the diversity of habitats, and all the interactions that underpin them (source: UPGE).

The stakeholders in ecological engineering include:
• ecological or naturalist consulting firms
• construction companies
• plant engineering companies
• specialized biodiversity suppliers
• expert researchers

To better define the ecological engineering sector, the Water and Biodiversity Directorate of the MEDDE conducted a survey during the summer of 2012 involving 70 companies. The findings are as follows:
– the vast majority of companies in this sector are very small enterprises (66%), one third are SMEs (30%), and a very small portion are large groups (5%)
– this sector is characterized by the strong presence of relatively young companies, with an average age of about ten years for very small enterprises and around twenty years for SMEs
– 64% of these companies are engaged in R&D activities

Waste

The economic and financial situation of the waste market is reshuffling the cards for French sector players, against a backdrop of low market growth in collection due to volume reduction and new recovery challenges.
A strategic segmentation developed in a recent study helped analyze the issues, strategic orientations, and competitive advantages of key players. Four major strategic groups emerged:
– the integrated leaders face a challenge to their dominance in France and a decline in their operational performance compared to the pre-crisis period. Their priorities include: integrating recyclers acquired in recent years, reducing debt and operating costs, and consolidating their positions domestically and abroad;
– the integrated challengers rely on strong regional brand recognition. Their national expansion remains a priority, as do their diversification strategies into material recovery and sorting center improvement;
– the specialists in a specific link in the chain are reference players in their respective fields. However, they must invest in modernizing their production tools to improve energy efficiency during recovery phases;
– the recyclers, targeted by major waste management firms in recent years, many of whom remain independent and could continue to do so. Their access to specific waste streams and technical know-how provides them with a significant competitive advantage.

• Waste recovery
This area focuses on the material and organic recycling of waste and the energy recovery of waste. The major players in this market are structuring themselves to offer a complete range of services.
The trend is toward a comprehensive reflection on the circular economy of waste, promoting industrial recovery and recycling. This is the objective of the Team² competitiveness cluster, which works on this theme.
Establishing a legal framework adapted to this new circular economy will help structure and develop this still-emerging market with very high potential.

• Waste recycling
According to FEDEREC (Federation for Recovery, Recycling and Valorization), there were 2,150 companies in the recycling sector in 2011. Among them, companies involved in scrap metal (37%), non-ferrous metals (35%), end-of-life vehicles (28%), mixed ordinary industrial waste (26%), and paper-cardboard (21%) are the most represented.
The number of recycling companies did not change between 2010 and 2011, but over a longer period (1999–2011), it declined by 47.5%. This significant sector concentration process can be explained by two concurrent factors:
• companies that failed to strengthen their financial structure to withstand economic volatility and diversify their offerings
• companies where no internal successor could take over, leading to their being put on the market.

The process of sector concentration is not yet complete, but it is unlikely to undergo such significant changes again. This concentration phenomenon is accompanied by a shift in the type of companies characterizing this sector. While structures with more than 20 employees accounted for 7.5% of identified units in 1999, they now represent 40% of the entities in this sector. In 2011, 68% of these companies belonged to a large group.

The territorial anchoring defines this sector, as recycling companies develop near the deposits they exploit, and the variety of recyclable waste has expanded, notably due to regulations.

In 1999, 52% of recycling companies had a single activity. By 2011, that number had dropped to 16%, while 63% of them operated in three or more activities. This diversification, which helps mitigate sectoral difficulties following the economic crisis, accelerated sharply in 2008. This phenomenon is also explained by the globalization of waste management policies implemented by companies to meet increasingly stringent national and international regulations on safety and the environment, which favor recycling over incineration or landfill. For public authorities, recycling has become more than just a waste disposal method—it now aims to valorize resources whose sustainability is taken into account.

• Energy recovery from waste
  This includes composting, methanization, heat recovery from treatment plants, incineration with energy recovery, biogas, and biomass boilers.
  Regarding biogas, production is expected to double by 2015.
  Alongside the major waste groups, several SMEs have developed in the energy recovery sector over the past decade, particularly in methanization.
• Contaminated sites and soils
  The market for contaminated sites and soils is growing due to increased land pressure, rising land prices, and local authority initiatives promoting site reconversion to limit urban sprawl. In ten years, spending on rehabilitating polluted sites has more than doubled.
  The brownfield remediation sector includes 200 companies and accounts for 2,500 jobs.
  The data regarding players in the contaminated sites and soils market comes from UPDS (Professional Union for Soil Remediation), which represents around 70% of the market with 42 members divided as follows:
  – 24 companies in the engineering group, representing 70% of the contaminated sites and soils engineering market. This group is mainly composed of consulting firms, 56% of which are French. Among them, two companies are major French groups.
  – 18 companies in the construction group, representing 55% of the remediation works market. These are mainly subsidiaries of large construction groups.

The UPDS member companies had a combined turnover of €348 million and 1,980 employees in 2011. This turnover increased significantly (6%) in 2011 after four years of stagnation.
Companies working in the contaminated sites and soils sector are generally relatively young (less than 20 years old). The oldest (“pioneers”) started working in this field in 1985.

• Deconstruction
  This sector includes nearly 80 players in France with a turnover exceeding €1 million, more than half of whom generate less than €5 million in this activity, which is often linked to asbestos removal and/or earthworks. The deconstruction sector is mainly driven by subsidiaries of large groups.
  This sector is expected to grow and organize itself within the framework of the circular economy and the reuse of construction and demolition waste in urban areas.

Renewable Energies

• General context
  This sector currently represents 100,000 jobs and a turnover of €10 billion.
  
  Considering the entire value chain, the renewable energy sector involves a wide range of very diverse actors. For example, in photovoltaic solar energy, research plays a major role early in the value chain, while downstream, private distributors include both individuals and large groups. The value chain is broken down as follows:
• Research: From fundamental research to finalized projects and industrial prototypes, the focus is mainly on the crystalline silicon sector, which dominates production. However, second- and third-generation technologies are also being developed: thin films, organic or hybrid photovoltaic cells, and high-efficiency concepts. The main laboratories include CEA, CNRS, universities, and engineering schools.
• Machine tool manufacturers: They supply the equipment for production lines.
• Module or cell manufacturers: There are 17 manufacturers of modules and/or cells.
• Solar material manufacturers: These companies produce materials used in module manufacturing.
• Electrical equipment manufacturers: These actors manufacture interconnection equipment, DC routing, supervision, safety, DC/AC conversion, etc. There are 46 active companies.
• Support structure manufacturers: These include manufacturers of building-integrated or simplified-integrated support structures. There are 64 companies in this segment.
• General contractors: These actors manage project development (administrative procedures, legal and financial arrangements, design and implementation studies, installation and electrical work, operation, and maintenance).
• Electricity producers: A diverse group of actors including private investors such as individuals (residential installations), farmers, companies, general contractors, and major energy providers.

Most of these actors are concentrated in a few French regions: Île-de-France, Rhône-Alpes, and the Mediterranean rim (PACA and Languedoc-Roussillon). Some large cities are also notable, such as Toulouse, Nantes, Poitiers, Bordeaux, Limoges, and Strasbourg.

• Solar
  Solar energy has progressed globally, and its cost has dropped to the point where “grid parity” (cost equivalent to fossil-fuel-based market prices) is approaching. However, the sector still relies on public subsidies. In France, subsidy reform led to layoffs and bankruptcies, affecting both the few domestic panel and cell manufacturers and installers. One example is the bankruptcy of the Isère-based group Photowatt, a pioneer of “Made in France” photovoltaic cells.
  The instability of the regulatory framework (four tariff decrees in five years) did not allow the sector to consolidate. According to the Renewable Energy Association (SER), over €100 million had been invested since 2007 to create around fifteen factories, employing about 25,000 people in the photovoltaic sector by the end of 2010 (6,500 in manufacturing, 19,000 in installation). The reform led to the loss of approximately 10,000 jobs in 2011.
  To promote French production, several labels have been launched: AQPV (Photovoltaic Quality Alliance), Qualité PV (for residential roofs), Qualibat (small commercial), and QE (PV electrical capacity).
  In this difficult context, companies are turning to exports, diversification (especially into biogas, biomass energy), and innovation (photovoltaic tiles, high-end cells).
• Wind energy
  Wind power is essential to meeting the 2020 targets of the Grenelle Environment Round Table: it must account for a quarter of the 20 million tonnes of oil equivalent to be produced by renewable energies. The wind power goal is 25 GW, including 19 GW onshore.
  However, onshore wind has struggled in France since mid-2011. This slowdown is due to a financing crisis and increasingly heavy administrative burdens on wind farms.
  The Renewable Energy Association launched the Windustry France platform in late 2010 to help structure the wind energy sector by networking companies and improving visibility abroad. It brings together over 300 companies covering the entire value chain, from component manufacturing to project development and wind turbine operation, including electrical and civil engineering, transportation, assembly, and maintenance.
  While onshore wind is hampered by complex regulations, France aims to build a strong offshore wind industry, despite lagging behind countries like the UK and Germany. However, France has geographical and industrial advantages. It has the second-largest geographical potential in Europe and can rely on major industrial groups willing to invest heavily in this promising market where technologies are not yet mature.
  The challenge in the coming years will be the development of very large turbines over 5 MW. So far, only three manufacturers are delivering these gigantic machines, including one French company.

• Marine energy
With its coastline and overseas territories, France has assets to develop marine energies and aims to become one of the sector’s leaders. However, other countries, such as the United Kingdom, the United States, and Norway, have already positioned themselves in this market.
In this field, where technologies are not yet mature, France can become competitive by continuing its research and development efforts and relying on industrial players.
Marine renewable energy (MRE) comes in several forms:
• tidal energy,
• current energy with underwater turbines (tidal stream generators),
• ocean thermal energy, which exploits the thermal difference between surface and deep water,
• wave energy captured by mechanical buoys,
• osmotic energy, based on the difference in salt concentration between fresh water and seawater.

• Biomass
Biomass is the leading source of renewable energy in France, representing more than one-third of the potential development of renewable energy by 2020, with the wood-energy sector leading the way. Although the feed-in tariff dropped in 2011, ADEME’s Heat Fund helped launch 1,638 installations between 2009 and 2011, including 357 in biomass. Pellet production is expected to be driven by the commissioning of large facilities in the coming years.
Two major players dominate the market, alongside smaller operators and industrial companies (e.g., in the paper industry) that are installing power plants on their production sites.

Energy Efficiency

• Low environmental impact buildings
The building sector is diverse, involving a wide range of stakeholders from planning through to management, including design, construction, and operation.
Actors can be categorized by profession: project management, architects, design and engineering firms, economists, industrial players, manufacturers of eco-designed materials or those with thermal and environmental properties, distributors, implementation companies (contractors and artisans), service providers (operation, diagnostics, etc.), and companies involved in waste collection and demolition or deconstruction management.
Around these core professions, small businesses with highly specialized skills are active at specific stages of the design, construction, or operation of low environmental impact buildings: airflow modeling, acoustics, thermal calculations, energy and environmental data measurement and management, renewable energy integration in buildings, stormwater management, biodiversity preservation, etc.
Construction companies are typically small: 93% of establishments have fewer than 10 employees. Micro and small enterprises account for 88% of the sector’s revenue.
Generally, the motivation of stakeholders in environmentally responsible building is driven by regulatory changes, user expectations, and market trends. However, the main driver of business involvement in sustainable building is the regulatory framework, which directly affects all actors in the building and construction sector.
Large groups have seen this trend as strategic and responded by developing new offerings related to energy efficiency and improved living conditions in both new and existing buildings.
In this vast market of energy efficiency, the lighting segment—particularly with LEDs (light-emitting diodes)—is especially promising. Several French start-ups have entered this field.

• Smart grids
A smart grid is an intelligent electricity network designed to rationalize consumption and optimize electricity distribution.
Smart grids are closely tied to energy efficiency improvements and overlap with other cleantechs, such as renewable energies (to optimize connection), electric vehicles (to integrate charging into the grid), and smart buildings.
Because they require extensive infrastructure, smart grid systems—from high-voltage line control to residential meters—represent significant investments.
This fast-growing sector is undergoing many adjustments, mergers, and acquisitions globally and remains dominated by international giants. However, many start-ups are emerging, particularly in the field of grid management software development.

• Indoor air quality
Indoor air quality has become a public health issue in recent years. The market is growing and becoming more structured due to new regulations (notably the July 12, 2010 Grenelle 2 Law), which established indoor air monitoring in public buildings or those frequented by sensitive populations, and labeling requirements for materials, furnishings, and coverings based on their VOC (volatile organic compound) emissions.
Regulatory developments are giving rise to new economic players and services to meet the obligations of property owners and asset managers.
Addressing this public health issue is complex and involves many stakeholders who were not initially part of the environmental sector.
For real estate professionals, air quality challenges lie in two main areas:
• choosing and recommending materials and coatings,
• rehabilitation aimed at improving energy efficiency without compromising air quality.
The indoor air quality sector, previously led by equipment manufacturers, is now opening up to diverse players—from innovative micro-enterprises leveraging new technologies to well-established companies seeking to enter this booming market.

• Hydrogen and fuel cells
The French Hydrogen and Fuel Cell Association (AFHYPAC) was reorganized at the end of 2011 with the goal of accelerating commercial activity in France.
Its members include 6 large industrial groups and 9 French SMEs/SMIs: 2 in consulting, 6 in the design and manufacturing of innovative technical devices (often in collaboration with public laboratories), and one joint venture (Green Access) specialized in marketing green certificates. These small businesses have between 5 and 50 employees.

Several key insights can be drawn from this sectoral approach to the French eco-enterprise industrial fabric:
– The economic fabric varies by sector. The oldest companies are mostly in established and mature fields like water and waste (excluding large groups), having gradually developed with family-held capital.
– Some environmental service markets are only accessible to large companies due to high investment needs (water management, waste, energy, etc.).
– Public-private partnerships (PPPs) lead to industry concentration as they require substantial financial resources, favoring large companies and excluding small ones from major projects.
– Newer companies often emerge from low-carbon or resource-saving strategies. These service firms specialize in areas like GHG reduction consulting, climate change adaptation, renewable energy, and sustainable building. Most of these companies are less than 20 years old.
– Two main growth trajectories for small businesses are emerging:
 hyper-specialization to become a leader in a niche activity, with growth driven primarily by innovation and exports,
– development or addition of related skills to meet increasingly cross-cutting needs.
– The environment is seen as strategic and a growth lever by most major groups. They are developing new offerings and entities to meet these new challenges; thus, historic giants in water and waste are being joined by large players in construction and energy.

The **water sector** is France’s leading eco-industry in terms of activity and jobs, dominated by two global champions. This sector is gaining renewed interest with smarter water management trials from both major players and a pool of startups attracting investors.
The **waste sector**, nearly as large as the water sector, is continuing to consolidate collection and material recycling operations. Many small recyclers, whose margins were hit hard by the 2008 crisis, have been acquired in recent years. The two development priorities are **value creation** and **innovation**, supporting the rise of specialized SMEs.
The **renewable energy sector** is still young, and its growth mainly depends on regulatory frameworks and support mechanisms. Due to uncertainties—especially in wind and solar—only large groups can plan for long-term growth, as they have the means to invest. They support extensive subcontractor networks (civil engineering, bearings, etc.).
The greatest growth potential lies in **marine energy**, **offshore wind**, **biomass**, and **geothermal**.
The **energy efficiency sector** is one of the most promising. This vast market includes a wide array of players—from construction giants and energy management leaders to highly innovative start-ups working on smart grids and lighting.

“Eco-activities and environmental employment in 2010: first results”, *Figures and Statistics*, MEDDTL/CGDD, No. 301, March 2012
Survey of 70 companies in the ecological engineering sector, MEDDE, September 2012
Recent study by the Xerfi firm titled *”The Waste Management Market – Rethinking the Value Chain to Sustain Performance”*.
Idem
Study conducted in 2010 based on information collected via SNED, SYRTA, and company reports available online.
Sources: SER White Paper
Idem
(Source: Major economic aggregates of the construction sector, 2006, MEDDTL)