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Government Gave Power Plant Right To Pollute More

Oct 8th, 2008
by AdminCTA.
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SCMP – Friday October 8 2004

China Light and Power omits certain details in the letter from Daisy Chan (‘CLP has made significant cuts in emissions’, October 6).

Compare the CLP-ExxonMobil coal power plant at Castle Peak to Hong Kong Electric’s most recent Lamma Island coal plant (built in 1997). You will see that CLP has been given the right by Secretary for Labour and Economic Development Stephen Ip Shu-kwan to generate twice the amount of one pollutant (particulates), three times another (nitrogen oxides) and 10 times a third (sulphur dioxide) as the Hong Kong Electric plant.

Moreover, the actual emissions from the Castle Peak plant are kept secret by the government at the request of CLP. At any time since 1997, CLP could have spent a fraction of its profits to clean up this plant, but it has instead waited for seven years – and now it has sent a letter to Mr Ip asking that it be allowed to earn 15 per cent profit on its investment to clean up the sulphur dioxide. This is unconscionable. The Star Ferry only asks seven per cent profit for its shareholders.

And the real question is why Mr Ip has allowed CLP to force us to suffer for seven years when the technology has existed for more than 10 years to reduce the sulphur dioxide by more than 90 per cent.

The public is not allowed to see or have an opinion on CLP’s letter. We believe that we are entitled to know what profits Mr Ip thinks are acceptable to CLP and that he will be hard-pressed to justify more than a seven per cent return for the shareholders of CLP-ExxonMobil, the single biggest polluter in Hong Kong.

CHRISTIAN MASSET, Clear The Air

CLP Eyes Mainland For LNG Terminal

Sep 12th, 2008
by AdminCTA.
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The Financial Times By Tom Mitchell in Hong Kong – September 12 2008 02:51

China Light and Power, Hong Kong’s largest energy company, has signalled its willingness to invest in a new liquid natural gas-receiving terminal on the Chinese mainland, possibly with ExxonMobil.

CLP and ExxonMobil, which jointly operate three power plants in the self-governing territory, had planned to build a $1bn terminal on an ecologically sensitive island, angering local environmentalists.

EDITOR’S CHOICE
 CLP upbeat on UK deal in spite of Beijing move – Sep-01
Lex: Oil and the city – Jun-22
China Biodiesel plant to start production – Jun-05

Last month, however, the Chinese and Hong Kong governments signed a memorandum of understanding allowing state-owned energy companies to sell gas to CLP from offshore oil fields and via an overland pipeline.

The MoU also called for the construction of an LNG receiving terminal in Guangdong province, averting the need for CLP’s planned receiving terminal in Hong Kong.

“Having a role in that [Guangdong] LNG terminal would be very important for us,” said Richard Lancaster, CLP commercial director, on Thursday, adding that the company had axed plans for a Hong Kong terminal.

The Guangdong project would be led by a Chinese state oil company and possibly also involve ExxonMobil. The US oil major confirmed that it would participate in a feasibility study for the proposed Guangdong terminal.

Both CLP and ExxonMobil have substantial investments in China but participation in the LNG terminal would be their first such venture on the mainland.

Mr Lancaster also reiterated CLP’s intention to finalise a provisional LNG supply agreement reached earlier this year with BG Group of the UK, which would be delivered to the terminal in Guangdong. In June, BG Group agreed to supply CLP and ExxonMobil with 1.3bn cubic metres of gas a year from 2013 to 2033.

CLP estimates that its gas requirement will reach 3.4bn cu m per year by 2013 and 6bn cu m by 2023.

According to Mr Lancaster, China National Offshore Oil Corp has indicated that it could supply another 2bn cu m per annum from gas fields in the South China Sea.

Under the terms of last month’s Sino-Hong Kong energy MoU, PetroChina will also examine the feasibility of supplying Hong Kong from its second west-east pipeline, which transports gas overland from fields in China’s northwest and central Asia.

Exxon Investors Rebel Over Climate Change Planning

May 19th, 2008
by AdminCTA.
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Monday 19 May 2008 – by: Andrew Clark, The Guardian UK

A shareholder revolt at ExxonMobil led by the billionaire Rockefeller family has won the support of four significant British institutional investors who will call on Monday for a shakeup in the governance of the world’s biggest oil company.

Guardian.co.uk has learned that F&C Asset Management, Morley Fund Management, the Co-Operative Insurance Society and the West Midlands Pension Fund are throwing their weight behind a resolution demanding that ExxonMobil appoints an independent chairman to stimulate debate on the company’s board.

Exxon is facing a rebellion from its investors over its hardline approach to global warming. The firm has refused to follow rival oil companies in committing large-scale capital investment to environmentally friendly technology such as wind and solar power.

The Rockefeller dynasty, whose ancestor John D Rockefeller founded the original oil business at the core of ExxonMobil, have sponsored four shareholder resolutions demanding changes at Exxon. One of these calls on Exxon’s chief executive Rex Tillerson, to relinquish his role as chairman in favour of an outsider to bring in an alternative point of view.

The London-based corporate governance advisory service Pirc intends to recommend that institutions support this proposal, which is in line with best practice on corporate boards in the UK.

F&C Asset Management’s director of governance and sustainable investment, Karina Litvack, said it could pave the way for a different attitude at Exxon towards the environment.

“Despite top-notch individual directors, the company’s record over the last decade, particularly regarding climate change, demonstrates that debate has been lacking,” said Litvack. “By bringing in an independent chairman, the company can better leverage that creativity and challenge, and avoid over-dominance by management.”

Exxon maintains that present green technologies are not financially viable. But critics on Wall Street and in the City fear that the company’s reluctance to explore alternative energy will prove to be bad business judgment in the long run as rivals such as BP seek to capture public affection by re-branding themselves as environmentally sensitive enterprises.

The Rockefellers point out that Exxon has $25bn (£12.77bn) of capital investment planned in carbon-based fuel but its environmental commitment is centred pn a relatively modest $100m to fund a Stanford University project on climate change.

If the rebellion continues to gather pace, Exxon could suffer an embarrassing defeat at its annual meeting in Dallas later this month. At last year’s meeting, 40% of investors’ votes were cast in favour of a similar call for an independent chairman and the Rockefellers’ involvement this time has raised the profile of the battle.

In the US, three advisory firms – RiskMetrics, Glass Lewis and Proxy Governance – have urged fund managers to support the Rockefellers’ resolution. The result of the vote is not binding on Exxon but the company has said that its board will reconsider any of its policies challenged by successful shareholder resolutions.

An Exxon spokesman last night responded to the British institutions’ stance by re-asserting the company’s position that its board is better placed than investors to decide on the leadership structure.

In a written response to the shareholder resolutions earlier this month, Exxon said its board members possesses “considerable experience and unique knowledge of the challengers and opportunities the company faces”.

THE TOXIC 100: Top Corporate Air Polluters In The United States

Apr 3rd, 2008
by AdminCTA.
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April 2008 – Political Economy Research Institute (PERI)

Each year since 2002, researchers at the Political Economy Research Institute (PERI) at the University of Massachusetts release the Toxic 100, an updated list of the top corporate air polluters in the United States.

The Toxic 100 index identifies the top U.S. air polluters among the world’s largest corporations. The index relies on the U.S. Environmental Protection Agency’s Risk Screening Environmental Indicators (RSEI) project. The starting point for the RSEI is the EPA’s Toxics Release Inventory (TRI), which reports on releases of toxic chemicals at facilities across the United States. TRI data are widely cited in press stories on “top polluters,” but they have limitations that the Toxic 100 addresses.
We deplore to see ranking in 9th position Exxon Mobil, the majority shareholder of China Light & Power
(CLP), Hong Kong’s largest electricity producer.

Toxic 100

Top 10  (ranking 2008)

E. I. Du Pont de Nemours & Co.

Archer Daniels Midland (ADM)

Dow Chemical

Bayer Group

Eastman Kodak

General Electric

Arcelor Mittal

U.S. Steel

ExxonMobil

AK Steel Holding

=========================================================

Hong Kong Power Regulations Based in Part on Emissions

Jan 8th, 2008
by AdminCTA.
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The New York Times
By KEITH BRADSHER
Published: January 8, 2008

HONG KONG — The two electric power companies here agreed Monday to a new regulatory system that sets their annual rate of return, based in part on how much pollution they emit, a carrot-and-stick approach that could some day be a model for mainland China’s giant power industries.

The 10-year agreement between the Hong Kong government and the territory’s two companies — Hong Kong Electric and CLP — authorizes the companies to charge electricity rates that will give them a 9.99 percent return on assets.

If either company exceeds regulatory limits for any pollutant, however, it would be required to charge customers less, reducing its allowed rate of return by 0.2 to 0.4 percentage point.

If the companies manage to cut their pollution more than required, then they are allowed to raise prices to the point where they effectively earn bonuses of 0.05 to 0.1 percentage point on their rate of return.

A complicated formula also allows them to charge slightly more for electricity as they exploit renewable energy sources.

Western regulators increasingly provide complex environmental incentives and impose penalties on power companies. But regulators in mainland China and Hong Kong have tended to rely mainly on fines if companies fail to meet basic requirements.

Particularly on the mainland, though, fines are seldom assessed, and violations are rampant, according to environmental critics.

Mainland power companies also have limited incentives and flexibility to choose fuels that are more environmentally friendly than coal. For instance, only a few provinces allow wind-turbine operators to charge significantly more than coal-fired plant operators for the electricity they sell to the grid. And the rate subsidy for burning agricultural waste to generate electricity is not high enough to make it economical in many areas.

Instead, the regulatory system on the mainland has focused on keeping electricity rates as low as possible, with little regard for the pressure this puts on power companies to choose cheap but highly polluting coal-fired power plants.

Melissa Brown, a specialist in Hong Kong power regulation, who is executive director of the Association for Sustainable and Responsible Investment in Asia, a research group, said the new system in Hong Kong sets a useful precedent for the mainland.

“Anything that is a bonus-and-penalty scheme is a positive,” she said.

But Ms. Brown cautioned that regulators there were unlikely to follow the example soon.

She also noted that the government released too few details on Monday on future allowable levels of specific pollutants to make it possible to calculate the actual effect of the new agreement on air pollution here.

Smog has become a chronic problem in the city. CLP and Hong Kong Electric have denied that they are the main sources of pollutants, hinting that nearby factories and power plants on the mainland are to blame.

Exxon Mobil owns 60 percent of a power-generating joint venture with CLP, and CLP owns the rest plus all of the distribution grid, which serves three-quarters of Hong Kong’s nearly seven million people.

Two officials at the State Electricity Regulatory Commission in Beijing said on Tuesday morning that while the mainland and Hong Kong maintain separate regulatory regimes, the mainland is looking at ways to make power companies more responsive to environmental concerns by encouraging the use of alternatives to coal, notably by allowing generating companies to charge distribution companies extra for electricity from renewable sources.

Edward Yau, Hong Kong’s secretary for the environment, said that the government had set the new regulated rate of return at 9.99 percent after deciding that public opinion strongly favored a rate below 10 percent.

The previous rate, under a 15-year agreement expiring at the end of 2008, was 13.5 percent to 15 percent, and was widely criticized as excessively generous to the politically influential power companies. The new rate of return is still well above the prime rate of 6.75 percent that the dominant local bank, HSBC, charges for loans to companies with strong credit ratings.

Castle Peak Power Objection

Jan 25th, 2007
by AdminCTA.
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PRESS RELEASE – January 25, 2007

Clear The Air objects to Exxon/Mobil attempt to take over Soko Island

Yesterday, Clear The Air submitted its objection to the Castle Peak Power Environmental Impact Assessment for the building of a facility to store methane gas.

Methane is a major greenhouse gas. It is called liquefied natural gas or LNG when chilled.

Exxon/Mobil is the majority shareholder of Castle Peak Power.

Our submission shows that we can meet our energy needs and reduce pollution significantly without this facility. (graph shown on our submission). Exxon/Mobil has the following options:

a. Stop burning coal to create electricity to sell to China
b. Eliminate the 50% discount for large users to encourage energy savings
c. Start practicing proper demand management to reduce energy use by 30% using techniques that have been successful in Thailand, South Korea and the US.

The following options are also available for LNG supply

1. Extend the existing contract with the Chinese company CNOOC so they can drill new gas wells to provide methane beyond the current contract period. CNOOC has indicated in the press that they are willing to do so.
2. Use ships that warm up the methane on-board instead of on land.
3. Invest in proven “clean coal” technology
4. Use the Chinese company SINOPEC as a methane supplier as they have shown interest in supplying Hong Kong from an LNG facility they are planning to build on Huangmao Island. (map included in submission).

Don’t Let Big Oil Bully You, Hong Kong

Nov 18th, 2004
by AdminCTA.
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Annelise Connell, SCMP – Thursday November 18 2004

As we choke on filthy air, behind the scenes, our government and one of Hong Kong’s oldest families are facing off against the largest oil company in the world, ExxonMobil, and certain large wasteful energy users who do not think that the ‘polluter pays’ principle should apply to them.

The financial plans of the two local power companies, China Light and Power (CLP) and Hong Kong Electric are on the desk of Stephen Ip Shu-kwan, Secretary for Economic Development and Labour. The Environmental Protection Department has been silenced by the simple bureaucratic expediency of not being asked its opinion about the proposals.

Meanwhile, on the board of CLP, representatives of the Kadoorie family who are trying hard to achieve some sustainable development in the market, stare into the face of ExxonMobil executives across the table. The oil company owns the majority 60 per cent stake in the Castle Peak power plant – one of the two largest coal power plants in China. As the rest of the world looks to renewable energy, ExxonMobil’s stated corporate policy is opposed to this. Instead, it favours the same key revenue generator as every oil company in the world – getting consumers to pay for the infrastructure and investment needed to extract, ship, store, burn and transmit electricity from fossil fuels.

In Hong Kong, we have put one of our key engines of the economy into the hands of a multinational corporation. If the corporation is, indeed, the best in the world, then that is a wise decision.

But we have lost our leverage to make it perform in a way that does not destroy the health of the people. ExxonMobil made us believe that it would make steady progress towards the use of cleaner-burning gas, and the company began by getting gas from a pipeline which runs to Hainan Island. But they gambled – and lost – regarding the amount of gas that was available. We have been told that instead of a 20-year supply, there is ‘only’ 10 years’ worth of gas. However, rather than absorbing the shortfall because of the high 15 per cent rate of return they receive from us, they have reduced the amount of gas they use in order to make it last 20 years, and have returned to burning more coal – and creating a lot more pollution.

Meanwhile, the Kadoorie family is trying to establish investment in sustainable development, such as through massive outlays in wind farms in the mainland. ExxonMobil’s global policy is preventing us from breaking free of the chains of coal, oil and gas.

ExxonMobil has been playing this game for too long. With the ‘scheme of control’ under which it operates due for renegotiation in three years, we will not sit by without challenging the company. It should make public its financial plans and justify its suspect position that investment is more important than conservation, especially since investment has failed to deliver, as in the case of the Hainan gas pipeline.

The people have had enough of the pollution. We will no longer allow our health and the health of our children to be held hostage by the world’s largest oil company.

Annelise Connell is vice-chairwoman of Clear the Air

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