For decades, an industrial area in Kaohsiung has shown the way for sustainable development through a system of sharing resources among competitors.

BY LILLYGOL SEDAGHAT AND CORY HOWELL HAMADA 

At Kaohsiung’s Linhai Eco-Industrial Park, a massive network of pipes snakes through the streets and along local waterways, connecting industrial facilities and processing plants while directly channeling resources among 14 different businesses. 

“Originally, the industries didn’t really have a connection to each other,” says Wu I-min, general manager of the Department of Environmental Protection at China Steel Corp. (CSC), Taiwan’s largest integrated steelmaker. “Now we’ve become like close friends, a collaborative industry.” 

This District Energy Integration in Linhai is an example of “coopetition” – cooperation among entities with competing interests to share resources or make progress toward a shared goal. It’s a model that has recently gained attention on the international stage. 

Earlier this year at the World Economic Forum held in Davos-Klosters, Switzerland, coopetition was introduced as a keyword in the conversation on dynamic political and economic exchanges between global trading partners. As appeals for multilateralism on climate and energy echoed throughout the conference, industry leaders and expert panelists called for what one participant defined as a “net-zero, nature-positive future that regenerates Earth’s finite resources and safeguards its peoples.” 

According to the UN’s 2024 Global Resource Outlook, global resource extraction is estimated to expand by 60% between 2020 and 2060. With progress on the UN’s 17 Sustainable Development Goals (SDGs) moving slowly, the need for immediate climate solutions is becoming increasingly urgent. At the 2024 United Nations Environment Assembly, the International Resource Panel concluded that “the key question is no longer whether a transformation towards global sustainable resource consumption and production is necessary, but how to make it happen now.” 

The decades-long collaboration among the businesses in the Linhai Eco-Industrial Park might just be the scalable solution the world needs.  

In 1993, a major drought threatened the water sources supporting a number of companies at Linhai. The chemical processing complex at LCY Chemical, a Taipei-based petrochemical product manufacturer, was one of the facilities facing a severe water shortage. 

“They needed to use steam, a form of heat energy, for their production process, but without water, there was no way to generate steam,” says CSC’s Wu. “China Steel produces excess heat from our production process, so we thought, ‘Why don’t we just sell the surplus steam to them?’ This became the starting point of a resource cycle.” 

Shortly thereafter, partnerships with the China Petrochemical Development Corp. and state-owned CPC Corp., Taiwan followed. A regional energy integration system has since been developed in the surrounding area to share excess steam and gas, enabling the outputs of one company to become the inputs of another. 

The Linhai Eco-Industrial Park approach was conceived as one of Taiwan’s strategic attempts to increase material and energy efficiency among various industries. Established in 1960 as an industrial park, Linhai made its transition to an eco-industrial park (EIP) in the 1990s. Retrofits were made under the supervision of the Industrial Development Bureau to begin reducing greenhouse gas (GHG) emissions, waste, and air pollutants. 

A Practitioner’s Handbook For Eco-industrial Parks, a World Bank publication, defines EIPs as a community of manufacturing businesses that “seek enhanced environmental and economic performance through collaboration.” Of the estimated 250 EIPs around the world, Taiwan is home to 23 of them. Linhai is famous for being the first domestic example of industrial symbiosis at such a large scale. 

Researchers in a 2017 project spearheaded by the World Bank and the United Nations Industrial Development Organization noted that while the number of EIPs in the world appears high, “on the global scale, few fully developed EIPs exist today.” The researchers noted that EIPs face high start-up costs, managerial and technological deficiencies, and the need for competitive, non-disruptive services. Success, they said, depends on effective planning, internal and external support, and the ability to manage investments and process improvements for long-term sustainability. 

An organic development 

While the EIP concept was first raised at the 1992 UN Conference on Environment and Development in Rio de Janeiro, the first cross-industrial resource collaboration was then already in full swing in Denmark. The country’s Kalundborg Symbiosis, established in 1972, currently involves 17 public and private companies that exchange dozens of materials from waste to water and energy. 

Similar to China Steel’s District Energy Integration, the Kalundborg Symbiosis was initiated in response to the low availability of groundwater and need for a surface water source. The initiative began gradually with bilateral deals before growing into its current state. Now companies in the Kalundborg Symbiosis benefit from annual bottom-line savings of €24 million (NT$830 million) and a reduction of 635,000 tons of CO2 per year, according to the European Union’s Circular Economy Stakeholder Platform.  

“We didn’t design the whole thing,” says Jorgen Christensen, a spokesperson for Novo Nordisk, one of the leading companies participating in the scheme. “It happened over time.” 

Both the Linhai Eco-Industrial Park and the Kalundborg Symbiosis are represented in a 2022 study on EIP implementation as case studies of successful management of the critical factors involved, including geographic requirements as well as stakeholder involvement and dedication. But the two examples remain isolated cases. 

Historically, EIPs in the United States have had high failure rates, often due to lack of trust and unwillingness to depend on other companies for materials.  

“The biggest challenge industries face in this model is whether the two parties match each other,” says Wu. Production cycles must correspond, factories need to be in close proximity, and information sharing and communication among participants are vital. Companies located relatively close together can funnel waste material to each other more easily. The pipe network at Linhai, for example, reaches companies within a 5-kilometer radius. 

Having a diversity of materials, needs, and waste also plays a significant role. To its benefit, Linhai is home to a host of heavy industries, including petrochemical, chemical, cement, steelmaking, aluminum, iron, and chlorine companies. 

“In the beginning, we didn’t know we could further the use of certain byproducts made during the production processes in our factory,” says Wu. “After speaking with other companies, we realized that the same waste materials could be used as an alternative raw material in another factory. If you have factories from the same industry all lumped together, they produce the same waste product but may have different needs.” 

Steam, nitrogen, argon, and oxygen are among the waste byproducts captured and transported throughout the Linhai Eco-Industrial Park. On average, the network reuses between 1.1 and 1.4 million tons of industrial waste and 1.6 million tons of steam per year. According to CSC’s 2022 Sustainability Report, the District Energy Integration has reduced 355,000 tons of carbon dioxide equivalent by selling 1.63 million tons of steam. 

But the system is by no means perfect. CSC still needs to import non-renewable resources, including coke, iron ore, and flux, for raw materials used in its manufacturing processes. In addition, successfully retrofitting existing industrial parks can prove challenging. 

Scholars also point to the importance of government support as a contributing factor to the success of CSC’s District Energy Integration model. Formerly a state-owned enterprise, CSC is now a private company in which the government holds a majority of its shares. The government stake gives smaller companies more confidence to join the network, trusting that the partnership will be profitable and supported long-term. 

Taiwan’s February 2023 passage of a Climate Change Response Act, setting a legally binding target of net-zero greenhouse gas emissions by 2050, offers the potential for Taiwan to be a leader in this global transformation if it can follow through effectively.  

EIPs like Linhai Eco-Industrial Park and the Kalundborg Symbiosis represent unique cases of coopetition done right, providing a framework for future planning and proof of concept that environmental results and economic returns are not mutually exclusive. More importantly, they suggest that to reach a nature-positive future, we might have to find a way to trust our competitors.