Successful cross-sectoral industry in Munich
(Oct 8, 2018) A 5.5 percent share of all gainful employment in and around Munich, revenues of around EUR 23 billion and dynamic growth rates make the environment industry a significant economic factor in the Munich region – and one with bright prospects for the future. Its standing already compares favorably with Munich's traditional top industries.
These findings are published in Umweltwirtschaft in der Region München [Environment Industry in the Munich Region], a recent study conducted by Prognos AG on behalf of the City of Munich. The study provides in-depth insights into focal areas of innovation in Munich's environment industry. It also looks ahead to forward-looking disciplines that are already visibly taking shape.
In light of global ecological challenges, the environment industry is integral to the far-reaching transformation that is facing up to the pressing needs of our day – from climate change to urbanization, from resource efficiency to decarbonization – with new ideas, innovative technologies and sophisticated services.
Definition of the environment industry
All products and services that generate “direct environmental benefits” and/or that constitute an “ecofriendly substitute” belong to the environment industry. The classification model that underpins the new study is based on this definition (see page 18 of the study). As a cross-sector industry with touchpoints across a broad array of other sectors, the environment industry creates opportunities for all kinds of different companies and provides fertile soil for innovative startups in a wide range of markets. In the Munich region, the environment industry is exceptionally innovative, benefiting from a technology-driven corporate landscape and a rich and variegated scientific and research environment.
Key figures and lead markets
Around 89,500 people earn their living in the environment industry in the Munich region. Of these, 58 percent work in Munich itself and 42 percent in the surrounding area.
Within the city boundaries, energy efficiency, ecofriendly mobility and material efficiency plotted the most dynamic growth trajectories of between five and seven percent in the years from 2010 through 2017. The traditional core markets of the environment industry – the circular economy and water management – also experienced positive development, albeit primarily in the surrounding region.
The lead markets in Munich are:
Energy efficiency (16,000 gainfully employed persons/2,400 companies)
This lead market grew at the very forceful rate of 5.8 percent in the period under review. In Munich itself, the market segment for energy-efficient production predominated. Thanks to a heavy density of industry, both automation solutions and control/networking systems are much in demand in Munich. Other important technologies include heat control, heat recovery and the utilization of waste heat. The second most important segment in Munich is that for energy-efficient buildings, where companies sell construction and installation services as well as smart building systems (see page 24).
Material efficiency (8,000 gainfully employed persons/400 companies)
The rate of growth in the number of gainfully employed persons was an exceptionally vigorous seven percent. The dominant segment in Munich itself is material-efficient production – technologies, processes and services that help reduce material consumption. Low-waste production processes, innovative process control, measurement systems and sensors – many of them assisted by “green IT” – all fall within this category, as does the use of alternative materials (see page 25).
Ecofriendly mobility (15,600 gainfully employed persons/600 companies)
This lead market focuses on the transition away from existing mobility and logistical structures and toward more environmentally friendly mobility. The transition involves alternative drive systems and fuels, technologies to reduce harmful emissions and the expansion of both local public transportation and car sharing – alternatives to individual motorized transportation and road haulage. Gainful employment is strongest – and growing rapidly – in the market segment for ecofriendly logistical and mobility services, with 7,500 gainfully employed persons. This figure reflects the large number of people employed in local public transportation, rail transportation and long-distance bus services. Munich's capabilities in automotive engineering are evidenced in the second most important market segment, ecofriendly mobility and drive technologies, while intelligent traffic management and infrastructure – in third place – is likewise gaining in significance. The latter category includes both software and charging stations, as well as silent asphalt and noise barriers (see page 28).
Ecofriendly power generation and storage (city of Munich: 4,000 gainfully employed persons/350 companies)
In the area of renewable energy sources, companies in Munich focus above all on solar energy, hydropower and biomass. The storage technologies segment is represented in Munich as a research and development topic and is increasing in importance. At the same time, Munich has a sizable footprint – in terms of revenues and gainfully employed persons – in the segment for smart energy systems and grids (see page 29).
Circular economy (3,000 gainfully employed persons/74 companies)
The circular economy) targets a closed cycle of materials in the area of waste collection, disposal, recycling and reuse. In line with the wider economy, Germany is also currently seeing revenues boom in secondary raw materials – a segment serviced primarily by small and medium-sized enterprises (SMEs) in the region around Munich. In the city itself, the predominant segments are waste treatment in general and material recovery and recycling in particular (see page 31).
Water management (2,600 gainfully employed persons/450 companies)
This lead market centers around the ecofriendly use and treatment of water and the associated infrastructure. Gainful employment figures have been in slight decline since 2010, but revenues have jumped by a highly impressive 15 percent. In Munich itself, special importance is attached to the segment for water conservation, which includes hydrological equipment, water sampling and analysis, and services relating to the ecologically sound planning of water infrastructure (see page 33).
Pollution control technologies (1,300 gainfully employed persons/210 companies)
A more than five percent increase in gainful employment has given pollution control technologies by far the strongest growth in the traditional lead markets. Nearly 60 percent of gainfully employed persons in this market work in air pollution control, which includes filtering technologies and catalytic converters, ventilation systems and exhaust gas recirculation systems. Measurement systems and services are especially well represented in Munich, while one smaller segment is noise control. Companies in Munich focus here on attenuating noise in buildings. Other pollution control technologies include soil protection – an area in which Munich firms concentrate on soil decontamination (see page 36).
Minor environment-related segments investigated in the study in the region around Munich include ecofriendly agriculture (see page 36) and sustainable timber and forest management (see page 38).
According to the companies interviewed for the study, future developments in the energy industry and in mobility will have a powerful influence on the environment industry. Digitization, climate change and future environmental regulation were also cited as key factors for the development of this industry. One innovation topic that touches on all the lead markets is the development of smart city solutions.
Among startups whose strong innovation capabilities set them apart from other new businesses, 17 percent are classed as environment-related startups – a far higher percentage than in other branches of industry.
The City of Munich is keen to provide even greater support to environment-oriented innovations and startups. One project initiated to this end in 2018 is an annual innovation prize. Plans exist for further projects to be launched on the basis of interviews and expert workshops conducted within the framework of the study.