"Available land for landfills is not only very few but also expensive due to rapid urbanization. Plus, power can be generated from waste-to-energy plants which will suit China's increasing demand for energy," he said.

At Beijing Gaoantun Waste-to-Energy Company, for instance, 198 million kilowatt-hours of power was generated from 750,000 tons of solid waste in Beijing's Chaoyang district last year.

The company, located on the East Fifth Ring Road, is the only household waste incineration plant in Beijing, treating more than 50 percent of the garbage from 4 million residents in Chaoyang district every day.

"Using incineration to treat garbage is a way to reuse those seemingly useless stuff. The garbage can turn into power and even the sludge can be reused in the construction industry," said Wang Xiaoguang, general manager of the company.

Wang said that people will have to deal with garbage as long as they live in the world, which makes garbage management an enduring industry.

Investors seem to agree. Hou Yuxuan, an analyst of the environmental protection industry with Shenzhen-based CIConsulting, said that investment in the incineration industry was around 50 billion yuan in 2010.

Hou said that figure will jump to 70 billion yuan a year by 2015.

Hou said that the rising level of investment is a result of increasing demand and more subsidies from local governments along with preferential policies from the central government.

The central government, for instance, offers an extra 0.25 yuan for each kWh power generated by waste-to-energy plants. It also offers tax breaks for garbage treatment facilities.

Many investors have flocked to the industry due to these perks offered by the government.

For Mora, the main challenge to Veolia in China is the so-called fly-by-night companies.

"A lot of people are getting themselves involved in this business because they believe they could make good and fast money at the expense of the environment," Mora said.

But some industry insiders say that unreasonably low bidding price and cutthroat competition are the main hurdles of the industry.

Chen Zefeng, chairman of Zhongde, does not believe the problem will haunt the incineration industry in the long run.

"China's incineration industry is still emerging. With the promising development of the industry, I am more worried about the shortage of talent as more companies enter into the business," he said.

China Daily