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Failure to Dump Polluting Vehicles

Tax-break plan fails to put more green cars on the road

Few take up cost-saving scheme to dump polluting vehicles

Daniel Sin – Updated on Feb 22, 2009 – SCMP

Tax breaks offered to buyers of environmentally friendly vehicles in an effort to improve air quality have failed, Environmental Protection Department figures show.

In fact, the value of tax discounts given under one scheme is just 15 per cent of what the government forecast when it was launched in April last year.

That scheme allows buyers of commercial vehicles to save between 30 and 100 per cent of first registration tax if they bought various classes of goods vehicles, taxis, light buses or non-franchised buses that meet the Euro V emissions standards.

Just 196 vehicles have been registered under the scheme, representing tax forgone by the government of HK$4 million, as opposed to the HK$26 million annual budget for the programme.

There are more than 150,000 commercial vehicles registered in the city.

It was the third such scheme put in place since Chief Executive Donald Tsang Yam-kuen promised to reduce emissions in his October 2006 policy address.

The first, which began in April 2007, offered cash grants of between HK$17,000 and HK$173,000 to people who replaced their old commercial vehicles with new, more fuel-efficient ones.

Of the HK$3.2 billion committed to that initiative, just HK$451 million has been granted for 10,763 applications. There were 74,367 vehicles eligible for that grant.

The second scheme targeted petrol-powered private cars. It offered a 30 per cent reduction in first registration tax, up to HK$50,000, if people bought environmentally friendly cars.

With 420,729 private cars on the roads, just 6,763 applications have been approved. The cost of the scheme was about HK$160 million.

Even the government was not interested in its own green tax-break scheme, with just 600 environmentally friendly vehicles among its fleet of 5,236.

Friends of the Earth environmental affairs officer Angus Wong Chung-yin said the schemes were failing because they offered only “carrots” and no “sticks”.

As a result, there was nothing to encourage vehicle owners to scrap their polluting vehicles.

“That explains why the response has been low,” he said.

On the commercial vehicle replacement scheme, Mr Wong said that although owners were encouraged to choose low-emission and fuel-efficient models, there was no requirement to take the old ones off the road.

So while newer and cleaner vehicles were hitting the road, their old, smoke-belching predecessors were going into the second-hand market, remaining on the road and continuing to pollute.

An Environment Bureau spokeswoman tried to put a positive spin on the figures, noting that the response to the private car initiative had been encouraging.

“These environment-friendly petrol private cars account for 11 per cent of all newly registered private cars since the introduction of the scheme,” she said.

She blamed the limited availability of Euro V emission-standard commercial vehicles for the low response to the third scheme.

Mr Wong said the government should set a deadline for the phasing out of pre-Euro and Euro I vehicles, and designate low-emission zones where heavily polluting vehicles would be denied access.

“To deal with private cars, the government may require [aged] private cars to be checked twice a year rather than once a year,” he said. “The licence fees of [aged] cars should be increased.”

Green Policy A Problem

Green policy a problem, says expert

Cheung Chi-fai – Updated on Jan 31, 2009 – SCMP

The government has wrongly believed that environmental protection was just about saving energy, and its green policy might create long-term problems, a leading academic says. Ron Hui Shu-yuen, of City University’s department of electronic engineering, said that banning fluorescent light bulbs could save energy but, without a proper way to dispose of them, would exacerbate another environmental
problem: mercury pollution.

He urged environmental officials to think before introducing energy-conservation policies, and to provide sufficient backup measures to address the side effects of such policies.

“Clearly the government has an incorrect understanding of environmental protection by equating it with energy saving,” Professor Hui said.

He said that without an effective recycling system for mercury-laden fluorescent light bulbs there would be increased toxins in the air caused by used bulbs breaking when they were improperly collected.

Professor Hui said the current recovery system, which relied on waste producers to take the bulbs to the Tsing Yi chemical waste treatment facility, was neither sufficient nor effective.

He said a major overseas light bulb manufacturer was close to commercial production of mercury-free energy-saving bulbs, and they would eventually replace fluorescent light bulbs on sale.

Professor Hui said television sets would similarly lead to more pollution because they also contained numerous toxic substances, particularly the older models that used cathode ray tubes.

A spokesman for the Environmental Protection Department said it would “give due weight to relevant
environmental considerations in formulating relevant policy and implementation proposals” of phasing out the light bulbs.

Call For TVs To Carry Energy Labels

Green group pushes for flat-screen televisions to show power use by law

Cheung Chi-fai – Updated on Jan 31, 2009 – SCMP

Flat-screen televisions should carry mandatory energy-efficiency labels, a green group says, as concern grows about how much power the sets use. The call comes as the European Union considers banning plasma television sets that waste energy and requiring other types of sets to carry energy-use ratings.

In the United States, a new standard measuring the power consumption of televisions was introduced in November. Sets are not given an Energy Star label unless they attain prescribed limits.

The US standard was introduced amid rising concern about a surge in power usage as televisions became bigger, with screen sizes up to 70 inches. This is coupled with rising television ownership per household, the introduction of digital broadcasting and changing viewing habits.

In Hong Kong, while televisions consume less electricity than air conditioners and refrigerators, they still accounted for about 5.5 per cent, or 547 gigawatt-hours, of aggregate power use in homes in 2006. They used more power than electric heaters, washing machines, rice cookers and clothes dryers, which accounted for 0.8 to 4.5 per cent, according to the Electrical and Mechanical Services Department.

Hahn Chu Hon-keung, environmental affairs manager of Friends of the Earth, said televisions should be given priority to carry mandatory energy labels since they had become essential appliances in the home.

“We have seen a growth of household power consumption attributed to different sorts of electronic products at home,” Mr Chu said. “Digital broadcasting has triggered a wave of TV replacements and it is good timing to expand the labelling scope.”

He said the current voluntary energy-efficiency labelling scheme for televisions was insufficient as the products only had to meet minimum standards on standby power mode. Even so, the label’s penetration rate was just 15 per cent, meaning fewer than two out of 10 televisions had been labelled. In shops, picture quality is usually highlighted and little is explicitly stated about power performance.

The city passed a law last year requiring producers and importers of air conditioners, fridges and compact fluorescent light bulbs to report energy usage levels under a mandatory labelling scheme.

A spokesman for the Environmental Protection Department said it had yet to decide the coverage of the second batch of products in the scheme. He said the department had noted that some countries were considering plans to restrict the sales of plasma televisions, and it had also been monitoring the development of energy efficiency standards for television sets.

“We will keep a close watch on relevant developments and review the position of Hong Kong, taking into consideration local factors including market demand and availability of substitutes,” he said.

The Electrical and Mechanical Services Department also said it was still reviewing the new US standards and corresponding test procedures. It advised consumers to buy lower-wattage sets or ones with smaller screens if they wanted to save energy.

A Little Knowledge Goes A Long Way In Saving Energy

Updated on Jan 31, 2009 – SCMP

Television has long been regarded as something that no home can do without. Yet most people know little of what it costs. It may come as a surprise that TVs add more to Hong Kong’s household electricity bills over a year than any other common appliances except air conditioners and refrigerators.

Environmental activists want consumers to have more information on the energy efficiency of the new generation of larger, flat-screen TV sets. As we report today, the green group Friends of the Earth has called for mandatory energy labelling along the lines of a law passed recently covering air conditioners, refrigerators and compact fluorescent light bulbs. The United States, for example, has adopted a new TV power consumption standard and the European Union is considering tighter regulations, including calls for a ban on plasma TVs, which use more power than liquid crystal displays.

The Environmental Protection Department has yet to decide what else to bring under the new labelling scheme, but environmentalists have a point. Few households have a need for more than one refrigerator, dryer, toaster or rice cooker. What sets TV and peripheral electronic products such as video and game-players apart is the increasing occurrence of multiple sets per household. Without information on energy efficiency, consumers focus on screen size and image resolution, without knowing the energy-cost implications over a long period of time.

TV is not to be compared with power hungry air conditioners or non-stop refrigerators. But every little bit of energy efficiency helps save fuel and combat global warming. And greater awareness would help encourage other good conservation habits, like not leaving the TV on in the background when no one is watching and turning off peripheral equipment such as cable boxes and video game consoles when not in use.

Given the revolution in home entertainment, mandatory energy labelling of TV sets is a good idea. It would enable consumers to make informed choices and protect the environment.

Doubts Cloud Gas Deal

Sara Yin – Updated on Sep 28, 2008 – SCMP

The pink dolphins are safe, at least. The memorandum of understanding between Beijing and Hong Kong for gas supplies tied local energy needs and planning to those of the mainland. And although that meant the end of plans for a US$10 billion gas terminal on South Soko Island – which pleased environmentalists – it remains to be seen whether the deal is good for Hong Kong’s long-term interests.

Last month, Chief Executive Donald Tsang Yam-kuen announced an agreement that he had signed with the National Energy Administration, Beijing’s new energy body. It put a significant amount of Hong Kong’s gas needs into the hands of the mainland’s state-owned oil companies.

Under the memorandum, the central government ensures a supply from several sources: offshore natural-gas reserves, piped gas, and possibly an LNG (liquefied natural gas) terminal built on the mainland.

“Hong Kong will see a net increase of at least 1 billion cubic metres of natural-gas supply for clean power generation,” an Environment Bureau spokeswoman said. “This certainly provides for a higher stability and reliability of gas supply in the long run.”

The agreement halted the HK$10 billion plan – more than two years in the making – for local company CLP Power to build the terminal to supply LNG, a costlier but greener fuel, off Lantau Island.

Mr Tsang described the new deal as “extremely good news” for consumers and the environment. Instead of paying for an expensive LNG terminal on South Soko Island, he said, taxpayers would only have to pay for gas pipelines to the mainland.

Local green groups such as Friends of the Earth and WWF applauded the decision to abandon construction in an area populated by pink dolphins and finless tortoises. But many are concerned over what the government’s intervention means for the public.

“This memo is what I would call a potential game-changer,” said Civic Exchange chief executive Christine Loh Kung-wai. “It represents a major departure of Chinese energy policy for Hong Kong.”

Historically, Hong Kong’s two private power companies, CLP Power and Hongkong Electric, have negotiated the securing of raw materials on their own. Thanks to a scheme of control set in the early 1990s, the two utilities have been among the most profitable in the world. The government has tried to undermine this in the past by flirting with new market players. It had been considering a proposal from China Power, a mainland energy giant run by Li Xiaolin, the daughter of China’s former premier, Li Peng.

As well, a new scheme of control that reduces CLP Power’s profit margins begins next month.

“The government always seemed very supportive and positive about the terminal,” said a CLP Power employee. “We were all surprised” by the memorandum. Officially, CLP Power denies being blindsided and remains supportive.

Said Ms Loh: “The government did not let on that it was actively negotiating with the mainland … if [the government] has a new energy policy, it should make an announcement.”

While the memorandum of understanding might have come as a surprise to the public, CLP Power’s new terminal was not a done deal.

The Environment Bureau spokeswoman pointed to a Legislative Council paper dated June 30, available on Legco’s website, saying that due diligence on CLP Power’s plan was still continuing.

As early as 2003, CLP Power, which supplies 25 per cent of the city’s electricity, reported that its gas supply – Hainan Island’s Yacheng fields – would dry up by 2013. This prompted the company to propose building Hong Kong’s first LNG terminal to receive a sufficient amount from suppliers around the world. The facility would import more than 4 billion cubic metres of natural gas a year at a predetermined cost, and take at least four years to build.

After an exhaustive third-party study to assess the environmental impact of CLP Power’s proposed sites, the Environmental Protection Department chose South Soko Island and granted its approval early last year. Environmental Secretary Edward Yau Tang-wah asked CLP Power to launch a public website detailing its planning efforts, and to find a way to reverse its environmental impact around the site; CLP complied.

The only approval needed then was the Executive Council’s, and even as late as July, Mr Yau seemed to think it was a foregone conclusion. With Hong Kong’s gas supply expected to run out in less than five years, he said the statutory planning process for the Soko Island terminal would start soon “although no final decision had been made”. CLP Power even had a contract with its first supplier, the British gas company BG Group.

In a statement in late June, CLP Power said: “The terminal is expected to start up no later than 2013, subject to final approval by the Hong Kong SAR government.”

Although some observers are applauding the opportunity for the city to be drawn into the mainland’s energy framework, others argue that the National Energy Administration’s policies may clash with Hong Kong’s interests. The mainland energy industry is heavily regulated, and a new, long-awaited law to commercialise the industry is yet to be enacted.

This month, a government source told the oil-industry magazine Platts: “The public consultation of the draft new energy law finished early this year, in late February, but the draft law is still held in the National Energy Administration, which was recently [created] to strengthen the government’s management of the energy sector.”

Industry observers are also wondering how the government’s deal will save consumers more money than CLP Power’s project.

“We don’t know anything about the price of the gas. At least with CLP, they would have entered a long-term contract with a known price … now it’s not clear what price the government has agreed to,” said Bill Barron, an environmental economist at the Hong Kong University of Science and Technology.

“The situation reminds me of the Disneyland thing, where we didn’t know how bad the deal was until years later.”

Baptist University’s director of energy studies, Larry Chow Chuen-ho, said the Soko Island terminal would have insulated Hong Kong from supply disruptions from the mainland.

Like Professor Barron, Professor Chow is concerned about the lack of discussion about price. At least with the Soko Island terminal, he said, “we can have complete control on how much to buy and how much to pay”.

Furthermore, the amount of gas supplied can only be estimated at this point. The memorandum does not define a specific volume of gas imported each year, only a non-legally binding assurance to keep Hong Kong’s level of gas supply “over and above the current level”.

Professor Chow said he trusted Beijing to provide a sufficient supply of gas, but Professor Barron was more sceptical. “Even if everything goes well – like the new wells at Yacheng actually produce gas – the supply won’t add up to the reliable supplies the Soko Island LNG terminal would have provided. We’ll be burning more coal and creating even higher levels of pollution.”

And although the memorandum renews existing contracts with the China National Offshore Oil Corporation and China Guangdong Nuclear Power Holding for another 20 years, these two companies will have to tap new wells in Yacheng. And no one seems to know when these wells will run out (if any gas is found in the first place), according to Professor Barron.

In fact, based on the memorandum, both governments will devote resources to study the feasibility of building an LNG terminal in Guangdong.

But according to the Hong Kong government, fixing price and supply was not the point of the memorandum. It was only meant to provide “new opportunities for collaboration between energy enterprises on both sides, and is by no means a supply contract binding any companies”, said an Environmental Protection Department spokeswoman. “Detailed arrangements for supplying natural gas and electricity to Hong Kong, such as pricing and quantity, will be worked out on commercial principles … on both sides.”

Professor Barron found this point “disingenuous”. With only one country to supply Hong Kong’s gas, he wondered, “How can a power company negotiate price from a strong position? The government has seriously restricted the options faced by the buyer.”

After seeing its gas-terminal plan axed, CLP Power – publicly at least – supports the government’s deal with the mainland.

“CLP, under the guidance of the Hong Kong government, is now working directly with the National Development and Reform Commission and other mainland parties on the implementation of the memorandum,” a company spokeswoman said.

HK Gas Terminal On Hold In Green Move

Robin Kwong in Hong Kong, The Financial Times Limited – August 28 2008

The Hong Kong government has backed away from approving a controversial natural gas terminal in an ecologically sensitive area, in what is seen as its first serious attempt to tackle air pollution in the territory in recent years.

China Light and Power, Hong Kong’s biggest energy company, has long argued that it needed to build an HK$8bn ($1bn) liquid natural gas receiving terminal to ensure a stable future gas supply for the territory.

Having more natural gas was also a prerequisite for improving Hong Kong’s air quality, according to CLP, which said it now had to burn more coal to conserve its dwindling gas supplies.

However, environmental activists claim that the terminal, which CLP proposed to build on two small islands on the edge of Hong Kong’s territorial waters, will endanger marine life, particularly the rare pink dolphins and finless porpoises that are Hong Kong’s only indigenous marine mammals.

Edward Yau, environment secretary, said on Thursday that the need for the terminal was greatly reduced after Hong Kong signed a series of energy deals with Beijing that will ensure a stable supply of gas to the territory for the next 20 years.

Under the agreement, the state-controlled China National Offshore Oil Corporation will renew its supply agreement to Hong Kong for another 20 years, and Petro­china will still study the feasibility of supplying gas to Hong Kong from central Asia via pipeline as well as an LNG terminal that Petro­china is planning to build in neighbouring Shenzhen economic zone.

A senior government official, who preferred to remain anonymous, said the government expected that, with this agreement in place, CLP would increase its use of natural gas from a third of its fuel mix to half, thus improving Hong Kong’s air quality. CLP is the biggest polluter within Hong Kong, though the territory also suffers from pollution generated by factories across the border.

Andrew Brandler, chief executive of CLP, said he welcomed the agreement, but the new supply will only “partly fill the gas shortage being faced by us”.

“Imports of LNG will still be needed to meet our full requirements as our need for clean natural gas continues to grow,” Mr Brandler said.

While the new gas supply is still subject to CLP reaching a commercial agreement with CNOOC and Petrochina, the senior official said it was “an obvious choice” over CLP building its own terminal within Hong Kong.

The lack of government support for a Hong Kong terminal also calls into question a 20-year gas supply deal that CLP had initially agreed on with BG Group, the UK gas company, in June. CLP declined to comment on the impact the latest developments would have for the BG deal.

Shedding Light On A Hot Topic

A night tour of Nathan Road discovers the array of flashing neon is not as cool as it might appear.

Yau Chui-yan – Updated on Jul 20, 2008 – SCMP

Twenty people gather in Nathan Road and look up at the same flashing advertising sign for a minute.

The 20, all from different professions, none of whom know each other, have joined a “Nathan Road tour” with the same purpose – to see the world famous thoroughfare’s dazzling array of neon signs.

They are trying to count the flickering frequency of a four-storey advertising sign. Some estimate that the sign is flickering 10 times a minute, others 20 times, but most give up early because the sign is too bright to look at for a whole 60 seconds.

When told that the flickering frequency is 40 times a minute, the group is amazed. “How do you live next to a flickering light like this?” is the common response.

The first stop on the tour is St Andrew’s church on Nathan Road in Tsim Sha Tsui. The group stands next to the church, which is dimly lit. They are told that there are regulations governing the lighting used on important buildings in countries like Britain.

“There are stars, in Tsim Sha tsui,” one group member says in amazement pointing at the sky. “The weather is much cooler than we expect,” another says.

But after leaving the church area, there are no more stars to be seen, just the flashing advertising signs.

The first blow is a big advertising box located at the intersection of Nathan and Austin roads.

“The lighting of the advertising box made me feel so hot,” says Leung Pak-wai, a social work student. His friend Cheung Siu-shan, a geography student, agrees.

According to Elsie Yuen Oi-chi, the group’s escort from Friends of the Earth, the difference in temperature between the city and rural areas is 10 to 12 degrees Celsius. “These advertisements contribute to the temperature,” Ms Yuen says. “When 1 watt of electricity is consumed, 1.3 watts will be consumed to use an air conditioner to lower the temperature.”

Light pollution and energy wastage from flashing advertising signs is not a new topic in Hong Kong. The situation has become serious since Kai Tak airport closed in 1998 and restrictions on blinking lights were relaxed.

From January last year to June this year, the Environmental Protection Department received 67 complaints about external lighting. The department’s response is to advise the management firm or owners of the lighting to reduce the intensity or adjust the angle of spot lamps to minimise the impact on nearby residents.

The government also issued letters last September to chambers of commerce and trade associations appealing for their support in reducing unnecessary lighting and using more energy-efficient lights.

However, what is still missing is legislation directed at light pollution.

Friends of the Earth tried to highlight the problem last month with its “dim light” campaign, in which some building owners agreed to turn off their lights for one night.

James To Kun-sun, a Democrat lawmaker representing Kowloon West, has had complaints from people living in the district.

“There is no such legislation and affected people have no way to ask for help,” Mr To says.

“Also, in some cases, the main tenant, who owns the rights to the outer area of the building, will pay some of the affected residents as compensation. This also complicates the issue.”

He has tabled questions in the Legislative Council a few times, but his request for legislation on light pollution has not received a positive response from the government.

“I don’t understand,” he says. “The government didn’t even want to research this topic. Maybe the government thinks this is business operation and the number of people affected is small.”

Mr To may be right. To most people in the city, flashing lights are advertising and nothing more.

Cathy Yu Sin-ping used to be one of those people, but she changed her mind after inspecting the flashing light boxes close up.

“At first I felt this was remote and nothing to do with me,” says Ms Yu, who spends her daylight hours working as a clerk

“After this tour, I now understand the meaning of `those who have more power create more destruction’.”

Walking along Nathan Road, Ms Yu found it was most comfortable in Yau Ma Tei, because that is the section with the fewest advertising signs.

“It is much cooler,” she said.

The group agrees that the neon signs have a powerful advertising impact. However, they started to wonder at the wastage while looking at a blank advertising sign shining brightly.

“It is understandable that businessmen want to have better exposure by having an advertisement. But is there a need to switch on all the lights?” Ms Yu asks, while looking at a building in Mong Kok, which has about 70 lights shining brightly. When the tour gets moving again, there is discussion about Hong Kong’s well-worn image as the sparkling, brightly-lit Pearl of the Orient.

“I think that image is a construction, because there are lots of lights shining across the harbour,” says Mr Leung, the social work student, who plans to bring a friend on a Nathan Road tour.

“But I believe it is not necessary for this to be the image of Hong Kong. It can be something else. We have to think about it,” he adds, to general agreement.

Carbon Caps Demanded

Peter So – Updated on Apr 07, 2008 – SCMP

Greenpeace wants the government to impose a legal cap on carbon dioxide emissions from power plants after a survey found more than 80 per cent of people agreed with the move.

Of the 514 people polled, 70 per cent were concerned with the effects of global warming on Hong Kong.

Activist Frances Yeung Hoi-shan said the government should regulate emissions from power plants.

The group urged electricity companies to cut their emissions by 15 per cent from 2006 levels by 2020.

Research by the Environmental Protection Department shows power plants account for more than 60 per cent of the city’s carbon dioxide emissions, which had increased 14 per cent in the past decade.

On Thursday, the Legislative Council will discuss an amendment to the Air Pollution Control Ordinance to regulate emissions from power plants, including sulfur dioxide and nitrogen oxide.

However, emissions of carbon dioxide will not be regulated, according to government proposals.

“The government refused to regulate power plants’ carbon dioxide emissions, saying that it would increase electricity costs and bring technical problems,” Ms Yeung said.

Meanwhile, the Democratic Party has called for the government and bus companies to speed up measures to reduce air pollution.

Party legislator Sin Chung-kai said there was no government policy to regulate the phasing out of old diesel buses and state subsidies were needed. Kowloon Motor Bus, the city’s largest bus company with 4,000 buses, plans to phase out its dirtiest vehicles in six years, including more than 500 buses predating Euro emission standards.

CLP Carbon Output Hits 15-Year High

Cheung Chi-fai – Updated on Mar 13, 2008 – SCMPCLP Power’s carbon dioxide emissions rose 8.5 per cent last year, hitting a 15-year high as it generated power for the city using more coal and less natural gas.

The city’s biggest power supplier also emitted a quarter more nitrogen oxide – a smog-inducing air pollutant – after reductions were achieved in the previous two years.

The company blamed depleted gas reserves in Hainan for the greater reliance on coal.

CLP Power did not rule out using less gas this year unless its liquefied natural gas terminal project – which the government is still studying for feasibility – was approved soon.

Natural gases accounted for just 23 per cent of the company’s fuel mix last year, down from the 31 per cent in 2006. Coal use increased from 40 per cent to 48 per cent, while the share of nuclear power remained at 29 per cent.

Greenhouses gas emissions from the Castle Peak and Black Point power stations hit 19.5 million tonnes, the highest since 1993, and 8.5 per cent more than 2006. The increased reliance on coal saw nitrogen oxides in the air surging to 30,500 tonnes, although this was still within emission caps imposed by the Environmental Protection Department, CLP Power said. Sulfur dioxide emissions fell by 3 per cent to 35,100 tonnes last year, but the level of particulates rose by 5 per cent to 1,500 tonnes.

Lo Pak-cheong, station manager of the Castle Peak Power Station, said the LNG terminal project was needed if the company was to deliver on its pledge to increase gas use to 50 per cent of the fuel mix.

He said they could not import more energy from the nuclear plant in Daya Bay as the supply was capped.

A department spokesman said it had urged CLP Power to find alternative gas supplies.

Frances Yeung Hoi-shan, a Greenpeace energy campaigner, said the emission caps for power plants were either too lenient or tailor-made for the power operator.

CLP Plant Can Flout Pollution Cap

Cheung Chi-fai
Updated on Jan 01, 2008 – SCMP

Limits on the amount of pollution CLP Power’s gas-fired power station may emit have been renewed, but with the proviso that the company may breach them if it reduces pollution from its coal-fired turbines.

The Environmental Protection Department said the proviso was intended to encourage the company to use more gas.

“This offsetting arrangement will ensure a greater net reduction of the overall emissions from power generation, which is the biggest local source of air pollutants,” a spokeswoman for the department said.

However, CLP Power says it faces a shortage of gas supplies – the reason for its application to build a liquefied natural gas terminal on South Soko Island, in a marine reserve off Lantau, to receive overseas gas supplies shipped by tanker.

There are no figures for its output of pollutants last year, but it announced in December 2006 that the proportion of electricity it would generate in 2007 from gas would drop by a third to conserve supplies from its Yacheng gas field off Hainan , and that it would burn more coal, pushing up emissions.

The power station at Black Point, Tuen Mun, will be allowed to emit 520 tonnes of sulfur dioxide, 5,200 tonnes of nitrogen oxides and 65 tonnes of particulates per year this year and 2009. In 2006, the latest year for which figures are available, emissions of sulfur dioxide and nitrogen oxides came in far below the caps, at 180 tonnes and 1,962 tonnes respectively, but particulate emissions, at 70 tonnes, breached the cap.

The cap extension was announced as the deadline for agreement between the government and Hong Kong’s two electricity suppliers on new scheme-of-control agreements regulating profits on their investments passed without a deal.

“The talks have been very difficult. So far there is no comprehensive and concrete agreement,” a source close to the negotiations said. The source would not say whether the talks would be extended.

The government had said earlier that if the deadline passed without agreement, it intended to draft a law to regulate the companies.

Tso Kai-sum, managing director of the other power generator, Hongkong Electric, said three weeks ago that a deal was close.

Both companies were tight-lipped yesterday over the talks.