In-Depth Investigation | Garbage Incineration Plants "Not Operating at Full Capacity" Draws Attention

Are Chinese waste incineration plants really facing a “hunger” crisis?

“Right now, waste incineration plants still have more waste than they can burn,” said Yang Bo (pseudonym), who has worked in the waste management industry for over ten years. He is employed at a waste incineration plant in South China and has personally seen the city transition from a “garbage siege” to some incineration plants being forced to shut down due to “not enough waste.” The industry has even seen cases of “fighting over waste” and paying to buy waste.

Data shows that there are currently over 1,000 waste incineration plants in China, with more than 2,000 incinerators. These plants were originally built to solve the “garbage siege” problem, so why are some now facing the new challenge of “not enough waste”? A review of public information from several listed waste-to-energy companies, along with interviews with industry insiders and experts, attempts to uncover the truth behind the current shortage of burnable waste.

Whose waste is not enough?

At a waste incineration plant in South China, a massive reinforced concrete closed pit is piled high with household waste, mixed with plastic bags, paper scraps, debris, and industrial construction waste, creating a chaotic and dense visual impact. On-site, a large mechanical grab is seen moving back and forth, collecting waste to be sent to designated locations and ultimately to the incinerator. “To keep the incinerator running, we need a continuous supply of waste,” Yang Bo told reporters. He explained that his plant is currently operating at a tight capacity utilization rate, and many other incineration plants are also experiencing a shortage of waste to burn.

This phenomenon is supported by data. According to the 2024 Urban and Rural Construction Statistical Yearbook published by the Ministry of Housing and Urban-Rural Development, in 2024, China’s 1,129 urban and county waste incineration plants burned a total of 268 million tons of waste, with an overall capacity utilization rate of about 63.22%, roughly the same as 2023’s 63.93%. This figure is below the national standard GB/T 18750-2022 “Household Waste Incineration Boilers and Waste Heat Boilers,” which requires a minimum incineration capacity of 70%, indicating that China’s waste incineration industry is generally in a state of overcapacity.

Further analysis of the yearbook data shows that in 2024, Xinjiang, Sichuan, Ningxia, and Qinghai had capacity utilization rates above 80%, with Tibet even experiencing overloading. Conversely, Hainan, Jiangxi, Guangdong, Hebei, Zhejiang, and Tianjin had rates below 60%. This indicates significant regional differences, with the “Hu Huanyong Line” (a demographic boundary in China) serving as a dividing line: the northwest region’s waste incineration is relatively saturated, while the southeast region faces overcapacity and potential “not enough waste” issues.

Moreover, even within the same province, disparities exist due to differences in economic development, population density, waste generation, and collection systems. For example, Guangdong’s overall capacity utilization rate was 54.41%, ranking fourth from the bottom nationwide. However, according to local government disclosures, in 2024, Shenzhen’s five waste incineration plants had a combined designed capacity of 18,025 tons per day, but the actual processing capacity reached 18,722.7 tons per day, with an overall utilization rate of about 103%. Three of these plants were operating over capacity. In contrast, several projects in western Guangdong, such as the Yangchun Haishuo collaborative waste incineration project, had a utilization rate of only 54.2% in 2024.

At the corporate level, the situation also varies. Some leading waste incineration companies are relatively saturated in capacity utilization. Financial reports from several top firms show good performance in the household waste incineration sector. For example, Hanlan Environment (600323) reported a net profit of 627 million yuan in the first half of 2025 from its household waste incineration business, a 13.25% increase year-over-year, with waste incineration volumes steadily rising in recent years.

A relevant executive from Weiming Environmental told Securities Times that by the end of Q3 2025, the company operated 56 wholly owned and controlling waste incineration projects, with a designed daily processing capacity of about 38,800 tons. Based on full-year operational data, the company has not experienced a significant “not enough waste” problem.

“We are also aware that in some regions, mismatches between capacity planning and population distribution have caused temporary supply-demand imbalances. However, these are more regional and structural phenomena rather than a widespread overcapacity issue.” The executive added that, from international experience, as the economy develops, per capita waste production may increase further. Currently, domestic waste incineration capacity still leaves room for future waste processing needs.

Overcapacity is the main reason

Why do some areas face a “lack of waste”? Some believe that technological improvements have increased incineration efficiency. By the end of 2024, China’s daily waste incineration capacity exceeded 1.1 million tons, accounting for about 60% of the global total, far surpassing the combined capacity of Europe, America, and Japan, making China a global leader.

However, some experts argue that this is not the fundamental reason for the “waste shortage” in certain regions. “The technology for waste incineration has been mature for a long time,” said Professor Dang Yan from Beijing Forestry University. He pointed out that the main cause of the recent “waste shortage” is not technological innovation but the surge in new waste incineration plants nationwide over recent years, leading to an oversupply of incineration capacity.

The introduction of the BOT model and national subsidy policies in the early 2000s attracted many companies into the waste incineration sector, leading to a golden period from 2012 to 2019. Even after subsidies declined in 2020, the number of incineration plants continued to grow rapidly. According to the Ministry of Ecology and Environment, by 2024, China had over 1,000 waste incineration plants with more than 2,000 incinerators.

“Because waste incineration is a profitable industry, capital keeps flowing in, but inaccurate capacity assessments before construction have led to a situation where processing capacity exceeds actual waste generation,” Dang Yan explained.

Overcapacity has pushed the industry into a phase of “competition for existing waste,” with fewer new projects and multiple companies vying for waste collection and transportation rights. Over the past five years, the number of successful bids, new capacity, and investment in domestic waste-to-energy projects have all declined. Guoxin Securities (002736) data shows that the peak of project bids was in 2021 with 75 projects, then sharply decreased to 20 in 2024. Although there was a slight rebound in 2025, competition remains fierce.

Leading companies continue to strengthen their advantages, while smaller firms face shrinking opportunities, signaling an industry in consolidation. For example, Hanlan Environment, after acquiring Yuefeng Environmental in June 2025, reached a waste incineration capacity of 97,590 tons per day, ranking among the top three in China and leading A-share listed companies. In July 2025, Zhongke Environmental acquired all shares of Guigang Environmental and Pingnan Environmental for 303 million yuan and 51.75 million yuan, respectively. Weiming Environmental also stated that the industry offers consolidation opportunities; after acquiring Guoyuan Environmental and Shengyun Environmental (300090) in 2021-2022, the company plans to actively pursue further domestic project integration.

Is waste sorting still necessary?

Besides structural issues, many companies have noted that after implementing waste sorting policies, the amount of waste suitable for incineration has decreased. Weiming Environmental said that, based on their operational experience, waste sorting has reduced direct incineration volumes, although the amount of organic waste like kitchen scraps has increased.

Does the reduced waste for incineration mean waste sorting is no longer needed? From the perspective of healthy plant operation, Dang Yan emphasized that waste sorting remains essential. “Unsorted waste directly fed into incinerators is not ideal. Kitchen waste accounts for over 60% of total waste weight, with moisture content up to 80%. Burning such wet waste affects incinerator efficiency and lifespan, and increases costs for leachate treatment.”

Additionally, compared to direct incineration, kitchen waste has higher resource utilization potential. “Currently, there are two main technologies for processing kitchen waste: one involves aerobic microbial fermentation to produce high-value organic fertilizer, and the other uses anaerobic microbes to convert organic matter into biogas. Both rely on waste sorting.”

Weiming Environmental also believes that although the volume of waste entering plants may fluctuate in the short term, the long-term benefits include resource savings and environmental protection, which are signs of improved industry quality.

Apart from “fighting over waste” and paying for waste, another significant source is stockpiled waste buried underground for years. In recent years, many cities have begun excavating early landfills to promote land reuse and supply more environmentally friendly raw materials for incineration plants. Shenzhen Yulong Landfill is a typical example.

According to Huafu Securities, in 2024, 44 waste incineration or landfill projects involving the incineration of old waste through open bidding or single-source procurement were completed, with a total bid amount of nearly 4.3 billion yuan.

“Old buried waste, under microbial action, has been sufficiently degraded in some parts, with water drained as leachate, leaving behind less degradable, moisture-reduced waste suitable for incineration. This can help alleviate overcapacity issues and also serve as ecological restoration,” Dang Yan said. However, he noted that solving the overcapacity problem permanently requires market-driven structural adjustments, not just this approach.

“Downstream” and going abroad

What if waste incineration plants still “can’t get enough”? In July 2025, the Central Urban Work Conference emphasized shifting from large-scale expansion to quality improvement of existing urban infrastructure. The meeting called for proactive adaptation to changing circumstances and transformation of development ideas and methods. This provides new perspectives and actions to address the “waste shortage” dilemma.

On one hand, companies are expanding diversified business models based on existing facilities, such as combined heat and power (CHP) and direct green power connections, to enhance resilience. Huayuan Securities reports that in the first three quarters of 2025, Green Power (601330) increased its heating supply by 112%, Hanlan Environment and Sanfeng Environment increased by 40% and 15.5%, respectively, and Yongxing Shares and Chengfa Environment (000885) also saw significant growth. In the first half of 2025, Sanfeng Environment successfully bid for the Youyang waste incineration heating project, which mainly provides heating and is a benchmark for small-scale county projects.

On the other hand, efforts are underway to explore intelligent waste incineration paths. Hanlan Environment established an AI joint research institute in 2025, creating China’s first “superbrain” for environmental protection. Several projects by Sanfeng Environment have successfully implemented smart incineration. Wangneng Environment introduced Alibaba Cloud’s Industrial Brain, aiming to further reduce secondary pollution and improve equipment stability and unit power generation from household waste.

Additionally, listed companies are actively expanding into county and overseas markets. Since late 2022 and early 2023, multiple government departments, including the National Development and Reform Commission and the Ministry of Housing and Urban-Rural Development, have issued documents supporting “waste incineration in counties.” Many companies are responding by targeting counties and towns. Hanlan Environment’s financial reports show service coverage for 77 counties and districts nationwide. To address lower waste collection volumes in counties, some companies are developing small-scale facilities suitable for counties and below, avoiding further overcapacity. Sanfeng Environment has developed and commercialized small-scale incineration equipment for counties. Everbright Environment is developing 200-ton-per-day small incinerators, currently in installation in Hebei’s Guangzong project.

In overseas markets, Southeast Asia, especially Indonesia, has become a key target. In March 2026, Weiming Environment won bids for waste-to-energy projects in Bali and Muar, with investments not exceeding $175 million each. Wangneng Environment also secured a project in Indonesia’s Muara Gembong. In February, Zhongke Qingfeng signed an investment agreement for waste-to-energy projects with PT. Sumber Kamulyan Nusantara in Indonesia.

A company executive told reporters that going abroad is a strategic choice based on their technological advantages and long-term planning. “Indonesia, with its large population, has a huge demand for waste treatment facilities. The government plans to build 33 waste-to-energy plants, creating a vast potential market and a new development platform for us.”

According to E20 Research Institute, China’s overseas waste incineration projects—built, under construction, or signed—exceed 50,000 tons per day. By May 2025, 79 projects had been completed, with many located in Southeast Asia, South Asia, and Central Asia.