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SCMP: Bottom line is missing in fuel debate

from Cheung Chi-fai of the SCMP:

The new energy consultation paper raises more questions than answers, disappointing many who had expected officials to explain the impacts of the two proposed options put forward for the future of the city’s power supply.

The first option involves sourcing 30 per cent of our electricity needs by 2023 from the China Southern Power Grid, while the second requires boosting the use of natural gas at the city’s power plants so that it accounts for 60 per cent of energy production by 2020.

Officials said the costs of generating power would double in both options, but what these costs are and how they will affect household bills are not known. Sources close to the government said there were simply too many unknowns to make even a rough but responsible forecast.

With the document now open to public consultation until June 18, the lack of detail makes it harder for people to reach any conclusions and easier for the debate to descend to a case of “local” versus “mainland”.


Difficulties of establishing biofuels exposes poor thinking of HK policymakers

In 2011, Eric Ng of the SCMP wrote an article about a biofuels plant in Tseung Kwan O Industrial Estate that had to suspend construction, likely due to a lack of funding. At the same time, the article shed light on the difficulties faced by current biofuels producers in Hong Kong: stiff competition on the waste oil market, import levies for feedstocks, lack of mandatory legislation to promote biofuels use, and so on.

One of the main advantages of using biofuels is that it achieves more than some 85% reduction in greenhouse gas emissions. The European Union has already mandated a policy of fuel blending: at least 5.75 per cent of all fuel sold has to be biofuel, with the percentage to increase further in the future, and other countries in Asia also have policies encouraging biofuel consumption. Hong Kong lags behind in such initiatives, and it is not difficulty to see why: Eric Ng, in a recent update on the issue, reports official Mok Wai-chuen of the Environmental Protection Department as saying in 2007 that “biodiesel did little to improve roadside air quality”, backed up by 2002 reports from the US National Biodiesel Board and the US Environmental Protection Agency that “suggested the use of biodiesel would result in a relatively modest reduction in roadside emissions”. The irrelevance of such an analysis – blending 5% biofuel into Euro V standard diesel containing 0.001% sulphur could never have meant reducing roadside pollutants – escapes officials; much of the roadside pollutants are carried by prevailing winds from shipping lanes and industries across the border.

If public policy on biofuels is to be decided on this factor alone, then the real benefits of biofuel would be ignored: once the biofuel industry is established, it can process the city’s waste and convert it to fuel; as mentioned before, biofuels hugely reduce greenhouse gas emissions; more importantly, by helping biofuel operations purchase waste cooking oil, the practice of smuggling waste cooking oil across the border to be converted into ‘gutter oil’ and re-used as cooking oil can be stemmed – which would happen to be quite the moral thing to do, given that such usage of recycled oil is carcinogenic and harmful to human health when ingested.

Click here to read the coverage from SCMP:

SCMP: Energy Policy will be transparent, says CLP chief Richard Lancaster

Hong Kong’s energy policymakers like CLP chief Richard Lancaster defends their continued reliance on unsustainable energy, going about different ‘mixes’ of such sources as coal, nuclear and natural gas to make it seem like they have done much thinking through ‘consultations’.

by Cheung Chi-fai, SCMP:

Chief of largest power firm says consumers will be told implications of each mix of sources

Hong Kong’s energy future will rely on an “open and transparent” public consultation that will tell people the implications of their choices in favouring a particular energy mix, says the chief of the city’s largest power firm.

Richard Lancaster, chief executive officer of CLP Holdings, said all relevant information, from energy security and environmental performance to costs, would be made available.

“All implications should be made as open and transparent as possible so that the community has all the information needed to make a judgment,” he said at the World Energy Congress in Daegu, South Korea, last week.

Environment Secretary Wong Kam-sing, also speaking last week, said the consultation aimed to find out the most acceptable energy mix in terms of the proportion of coal, gas, renewable and nuclear in electricity generation by the power firms.

Any decision on the future mix will have significant bearing not just on cost, but also the environment and reliability.

While the mix was a matter for policymakers, Lancaster said it should be “flexible” enough to meet challenges, including the volatility of international fuel prices. “It is important we don’t lose our flexibility and close all options,” he said.

In 2010, the Environment Bureau consulted on a climate-change strategy that proposed a plan for half of electricity demand to be met by nuclear fuel, 40 per cent by gas and 10 per cent by coal by 2020. But it decided to reconsider it last year after the 2011Fukushima nuclear disaster. The mix is now 54 per cent coal, 23 per cent from nuclear and 23 per cent from natural gas.

Lancaster said to ensure supply diversity, he opposed closing all coal-fired plants. “Coal is something we can reduce. But to go to the extreme of closing down coal-fired plants, it would be a bad thing for us,” he said.

Lancaster also wanted to diversify local gas supply by building a liquefied natural gas terminal in eastern Shenzhen which could bring in cheaper gas from around the world when international prices dropped.

On nuclear energy imports, Lancaster acknowledged there were “genuine concerns” that needed to be addressed. But he said one way of tackling these concerns was to have a Hong Kong firm involved in developing mainland nuclear stations.

“We have higher transparency, modern Hong Kong management style, Hong Kong standards of governance to apply for nuclear power stations,” he said.

Christine Loh Kung-wai, the environment undersecretary who also attended the congress, said that while “some people” in society hated nuclear, she had heard of no one who wanted to completely drop imports from the Daya Bay nuclear station.

“Instead of just telling us nuclear should not be allowed, there needs to be an objective discussion on how we look at coal and gas,” she said.

Loh, however, said it would be difficult for the government to tell the public exactly what future prices would be for different fuel mixes as even the most authoritative agency in the United Nations could only provide a loose range of prices.

21 Oct 2013

Study urges greenhouse gas caps, peak in 2030

Reuters in Beijing

China should set firm targets to limit greenhouse gas emissions so they peak around 2030, a study by some of the nation’s top climate change policy advisers has proposed ahead of contentious talks on a new global warming pact.

The call for “quantified targets” to cap greenhouse gas pollution marks a high-level public departure from China’s reluctance to spell out a proposed peak and date for it.

“By last year China had become the world’s biggest national emitter of greenhouse gases and faces unprecedented challenges,” says the preface of the 900-page report, setting aside China’s reluctance to say it has passed the United States as the top emitter of carbon dioxide, the main greenhouse gas from burning coal, gas and oil.

“As soon as possible, study and draft relative and [then] absolute targets to cap the total volume of carbon dioxide emissions,” says the preface of the report, obtained by reporters.

“Establishing and acting on quantified targets and corresponding policies to address climate change in the medium to long-term is already a matter of great urgency.”

The 2050 China Energy and C02 Emissions Report proposes that, with the right policies, emissions growth could slow by 2020, with levels peaking around 2030.

If China can reach these goals, by 2050 its carbon dioxide emissions from fossil fuel “could fall to the same emissions levels as in 2005 or even lower”, the report says.

The report in Chinese is on open sale and builds on earlier research exploring pathways to a “low-carbon” economy. It adds to recent signals that Beijing wants to play an active role in seeking agreement for a new international climate change pact.

With its fast-rising greenhouse gas emissions, Beijing’s stance will be crucial in efforts to create a successor to the current Kyoto Protocol, which expires at the end of 2012.

Western nations have pressed Beijing to set specific goals on slowing emissions growth in coming years, leading to early cuts in absolute volumes as part of a new pact governments hope to seal in Copenhagen by the end of this year.

Under current treaties, China and other developing countries need not shoulder the quantified limits on emissions that rich economies must take on.

Beijing has said that principle must not change and resisted specifying when its emissions may peak, pointing out its average emissions per person remain much lower than the average in rich nations.

But the airing of proposals for emissions caps comes after signs that Beijing has become more open to stronger steps against global warming as negotiators struggle to build agreement before Copenhagen.

Early this month, China’s ambassador to the climate talks, Yu Qingtai, said his government wanted to curb greenhouse gas emissions as soon as possible.

“This report is intended to advise the Chinese government what its options are,” said Deborah Seligsohn, China programme director with the World Resources Institute, a Washington-based organisation promoting policies to fight global warming.

“I think they’re making a pretty concentrated push to move the negotiations forward,” said Mr Seligsohn.

The dozens of contributors to the report included climate policy experts from leading Chinese state think-tanks, including the Energy Research Institute and the State Council Development Research Centre, which advises the cabinet.

Participating scholars stressed that the study was a research exercise, not a definitive policy blueprint, and there was no suggestion that the senior officials listed as its advisers endorsed its specific proposals for targets and a 2030 peak.

But the proposals in the report have been circulated among officials and were echoed in a cabinet meeting last week that urged making “controlling greenhouse gas emissions” an important part of development plans, said an expert familiar with the project, speaking on condition of anonymity.

“I think this report reflects a growing consensus among domestic experts favouring more active steps against climate change, with a peak by 2030,” said Wang Yi, an expert at the Chinese Academy of Sciences who participated in the study.

The report spells out possibly disastrous consequences of global warming, as growing amounts of human-caused greenhouse gases retain more of the sun’s energy in the atmosphere.

“The potential threat to China from climate change exists and it is massive,” states the report, warning of worsening droughts and floods, retreating glaciers, shrinking farm productivity and threats to water supplies for the country of 1.3 billion people.

To curb emissions, China could push financial steps and price reforms to favour clean energy, a “carbon tax” on fossil fuels, emissions targets for local governments and cautious steps towards a “cap-and-trade” system for buying and selling emissions rights, says the report.

Beijing may seek to use such domestic initiatives to show other nations it is serious about fighting global warming, even if the steps are not directly included in any international pact.

“The problem now is not China making its own domestic commitments and targets, it’s how we treat those commitments internationally,” Dai Yande, a deputy director of the Energy Research Institute and one the report’s organisers, told reporters.

CLP To Fire Up Cleaner Generator By Year’s End

Joyce Ng, SCMP – Mar 17, 2009

CLP Power (SEHK: 0002) will fire up its first upgraded lower-emission generating unit at its Castle Peak coal-fired power plant by the end of the year.

The upgrade is part of a programme aimed at meeting the company’s 2010 emission-reductions target. But the whole project, which requires upgrading of four such units, would not be completed until 2011, and the company would have to rely on other measures to meet its 2010 target, CLP Power commercial director Lo Pak-cheong said yesterday.

“We will also have to rely on the use of ultra low-sulphur coal and more natural gas consumption,” he said.

The project started in 2007 and was expected to “considerably” cut nitrogen oxides, sulphur dioxide and respirable suspended particulates emissions, a CLP Power spokeswoman said. She declined to give specific figures until the installations had been tested. Equipment is being installed in the boilers of Castle Peak’s four generating units to reduce nitrogen dioxides emissions during the coal-burning process.

Two limestone absorbers are being built near the coalfield to neutralise sulphur dioxide emissions.

CLP Power said the Castle Peak project would provide jobs for 500 construction workers by the middle of the year.

Under targets set by Hong Kong and Guangdong to improve regional air quality, Hong Kong’s two power companies are required by next year to reduce sulphur dioxide emissions by 54 per cent from 1997 levels, and nitrogen dioxide by 24 per cent.

The government has imposed emission caps on power plants and tightened them over the years to ensure targets are met. Castle Peak Power Plant’s licence renewal in 2007 required it to emit not more than 41,400 tonnes of sulphur dioxide and 27,650 tonnes of nitrogen dioxide in 2008. The caps this year are 39,400 tonnes and 27,300 tonnes.

Beijing To Help Pay For Green Cars

Peggy Sito and Reuters – Jan 28, 2009

Beijing will subsidise purchases of clean-energy vehicles in 13 mainland cities in a move to encourage carmakers to build environmentally friendly vehicles.

The trial scheme would promote the use of electric, hybrid and fuel-cell vehicles by public transport operators, taxi companies and postal and sanitary services in the cities, Xinhua reported, citing a Ministry of Finance statement at the weekend.

The 13 cities are Beijing, Changchun, Changsha, Chongqing, Dalian, Hangzhou, Hefei, Jinan, Kunming, Nanchang, Shanghai, Shenzhen and Wuhan.

Subsidies would be based on the price difference between vehicles with more energy-efficient engines and those with traditional engines, Xinhua said.

Local governments were asked to allocate money to build and maintain facilities for the green vehicles. The announcement is in line with the central government’s plan to promote the development of vehicles using alternative energy.

In November last year, Minister of Science and Technology Wan Gang said the government would launch a massive scheme to promote such cars. Ninety per cent of public vehicles would be hybrid initially, he said without giving a time frame.

China is widely believed to be the biggest source of carbon dioxide and greenhouse gas emissions from its manufacturing, energy and transport sectors, which have been blamed for rising global temperatures.

The central government is urging carmakers to take advantage of a reshuffle in the global car industry to speed up the development of vehicles running on alternative energy.

Local and global carmakers started to invest in green car manufacturing during the 11th Five-Year Programme lasting until next year.

Separately, Honda Motor, a pioneer in environmentally friendly cars, said yesterday it planned to increase its production capacity on the mainland by 23 per cent on expectation of solid demand for its fuel-efficient vehicles, according to a report.

The Nikkei business daily said Honda targeted a total output capacity of 650,000 vehicles per year by making multibillion-yen modifications to existing lines at its Dongfeng Honda Automobile unit, which assembles Civic cars and CR-V sport-utility vehicles.

Output at Dongfeng Honda on the mainland has steadily risen in recent years, producing more than 160,000 vehicles last year, up almost 30 per cent from the previous year, another company official said.

The company is hoping to raise its output to a full capacity of 240,000 vehicles, bringing Honda’s total mainland output to 650,000, she said.

The mainland vehicle sector grew 6.7 per cent last year. While outperforming developed nations, the rate was the country’s slowest in a decade and a sharp fall from 21.8 per cent the year before.

Turmoil Offers Opportunity To Promote Green Cars

Kandy Wong, SCMP – Updated on Jan 07, 2009

The central government will soon announce the rate cut for consumption tax, which is regarded as a move to further boost sales and entice consumers to buy “green” cars in a weak market.

Beijing aims to transform the industry, with zero emissions as the goal in the next decade, using tax policies. It regards the current financial crisis as the right time to encourage fuel-efficient vehicles.

“China needs to take policy steps to help counter a serious drop-off in car sales as a result of the global economic slowdown,” Minister of Industry and Information Technology Li Yizhong has said.

The vehicle industry is lobbying government departments for a favourable consumption tax rate. Mainlanders currently pay a consumption tax of 10 per cent when they buy a vehicle. Analysts said if the tax cut was less than 5 percentage points, there would not be a strong enough effect to boost sales of small-engined vehicles.

Under one set of proposals, the tax for vehicles with one-litre engines or smaller would be lowered to 2 per cent from 10 per cent. Vehicles with 2-litre to 2.5-litre engines and 2.6-litre to 3-litre engines, which are among the most widely bought cars, would be taxed at 7 per cent and 8 per cent, respectively.

Another proposal is to eliminate the consumption tax on cars with 1.6-litre engines or smaller. But it remains unclear how aggressive the government will be in the tax cuts.

The Ministry of Finance has already doubled the vehicle consumption tax in August on large-engined cars of 4.1 litres to 40 per cent from 20 per cent in a bid to fight pollution.

Before the government implements changes to the vehicle consumption tax, the country’s fuel consumption tax has been increased effective January 1, which is seen as a move to prompt the development of fuel-efficient vehicles.

The National Development and Reform Commission announced last month that the tax for petrol would be raised from 20 fen (23 HK cents) per litre to 1 yuan and the diesel tax from 10 fen to 80 fen per litre.

Road maintenance fees levied on motorists will also be cancelled, as a way to offset the higher fuel consumption tax.

The increase in fuel consumption tax has been discussed for a decade and was turned down seven times in the past.

Motorists have said they would drive less and use more public transport because of the higher fuel consumption tax.

Stimulus Package Boosts Green Efforts

Matthias Voss and Matthew Bisley, SCMP – Updated on Jan 05, 2009

The 4 trillion yuan (HK$4.55 trillion) stimulus package announced last month by the central government gives impetus to energy efficiency development and opportunities on the mainland.

The 2007 Energy Conservation Law came into force on April 1 last year against a backdrop of a fast-growing economy and rise in demand energy and fuel prices, a growing awareness of environmental issues and increasing world pressure on developing economies including China to use environmentally friendly and technologically advanced energy sources. While economic circumstances have since changed, the stimulus revitalises opportunities in the energy sector arising from the Energy Conservation Law.

The law has three principal goals: to promote policies for energy conservation and environmental protection; to restrict the development of high-energy consumption and high-pollution industries; and to encourage the development of energy-saving and environmentally friendly industries.

It proposes many policy initiatives to achieve energy conservation ranging from passive measures – education, energy efficiency labelling, accreditation systems for products, publication of energy use statistics and awards systems for energy conservation achievement – to more direct measures such as government funding, tax incentives, subsidies, prohibitions on the use of high energy consuming or polluting technologies, introduction of maximum emission standards for motor vehicles and focused government procurement of energy-saving products.

The law is supported by regulations in specific sectors. Banks, for example, are required to monitor and actively support energy-efficiency projects while developers must incorporate energy-efficient technologies into new projects.

The present economic environment is vastly different from that existing when the law was introduced, threatening the opportunities expected to arise from the new law. There has been a general slowdown in the Chinese economy and oil prices have dropped, making the introduction of energy-efficient technologies relatively more expensive.

However, the State Council’s announcement that one of the 10 measures of the stimulus package is the enhancement of environmental and ecological development makes the prospects of this sector brighter.

The law supported by the stimulus package creates opportunities for participants in the energy sector, including manufacturers of energy-efficient products and technologies, real estate developers, architects, banks, leasing companies, project sponsors, consultants and advisers.

The new regulatory environment should also foster collaboration. For example, manufacturers may link up with financiers or leasing companies to promote sales of their products, and manufacturers and financiers may co-operate with government entities for particular government initiatives. Independent of the new regulatory environment, the energy-efficiency market has already started to develop with support from international financial organisations such as International Finance Corp and Asian Development Bank.

Matthias Voss is a partner of the banking practice at Allen & Overy in Shanghai and Matthew Bisley is a counsel of the banking practice in Shanghai

TRUenergy Puts On Hold A$2b Plan

Bloomberg in Sydney – Updated on Dec 12, 2008

TRUenergy, the Australian electricity and gas supplier owned by CLP Holdings, said it had A$2 billion (HK$10.25 billion) of proposed investments that hinged on the design of the nation’s emissions-trading system.

The spending on gas-fired power plants would not proceed if the design of the carbon-trading plan meant the company was forced to write down the value of its existing coal-fired plant, affecting its ability to refinance debt, managing director Richard McIndoe said yesterday.

On Monday, Australia’s government will announce the details of the carbon-trading system, expected to start in 2010, and national targets for reductions in greenhouse gases.

The plans had the potential to shut down as much as 23 per cent of power generation capacity on Australia’s eastern coast, depending on the targets, the Energy Supply Association of Australia said in July.

“For any investor in the electricity sector this is a critical issue; if we’re given clarity and the level of transitional assistance that keeps us whole, then there’s a raft of new generation investments that’s ready to go,” Mr McIndoe said.

“If it’s not a positive outcome and it causes massive impairments, then frankly there are many other markets that we would invest in.”

All TRUenergy’s investments had been put on hold by the board pending the details of the trading system, Mr McIndoe said.

The company owns the 1,480MW brown coal-fired Yallourn generator in Victoria, which is the most polluting of the state’s five biggest plants after International Power’s Hazelwood site, according to a 2005 report by Environment Victoria and the Australian Conservation Foundation.

The plant emits about 14 million tonnes a year of carbon dioxide.

Climate Change Minister Penny Wong in July proposed a one-off bonus to the most-affected coal-powered generators, without releasing details.

Australia’s power plants fuelled by brown coal, a more polluting variety of the fuel, might be the “worst sufferers” under the trading system, Fitch Ratings said on October 1.

The investments at stake comprised three potential gas-fired power projects each costing A$600 million to A$700 million, including an expansion of the Tallawarra plant that was expected to start operating this month in New South Wales, and two new power stations in Victoria over the next five years, Mr McIndoe said.

The board would also cut spending of as much as A$200 million a year at Yallourn, he said.

Degrees of Comfort

SCMP – Updated on Dec 12, 2008

Of the government’s initiatives to get us to be more environmentally responsible, perhaps the most effective has been the one espousing that office air conditioners be set at 25.5 degrees Celsius. It is a number many people seem to be aware of, as a quick straw poll proved. Whether the knowledge is put into practice is another matter, of course, but the fact that it seems the message has been widely disseminated is impressive. Here the praise must end, though: the information is only partly right.

This is one of those cases where authorities have only done half their job; 25.5 degrees is a summer setting, not applicable to the other nine months of the year. During colder weather, thermostats should be lowered according to the outside conditions. If outdoor temperatures are less than those inside, we are on average doing more environmental harm than good. Every extra degree of cold or heat raises usage – and fuel bills – by 10 per cent, after all.

The government announced in October 2004 that air conditioners in all public buildings should be set at 25.5 degrees during summer. It launched a “no freezing summer” campaign the following June to encourage the private sector to follow suit. The figure has since been frequently bandied about by officials, most emphatically by Chief Executive Donald Tsang Yam-kuen in 2006 when he removed his jacket and trademark bow tie in front of legislators to promote his “Action Blue Sky” policy.

His clear message was that dressing more casually meant rooms did not have to be so cold. Less electricity would be needed, meaning lower bills and less pollution from power plants. It was a strategy that cost nothing to implement and would save money and the environment. Brilliant.

The rare image of a dressed-down Mr Tsang could well be the reason so many of us have “25.5” memorised. I am sure it flits subliminally through our minds whenever we drift near an office thermostat. A quick check, an adjustment if necessary, and the working environment is as it should be, we tell ourselves. We get back to our duties, satisfied that we have done our bit for Hong Kong.

Gerry McMahon, the director of the specialist building services company Facilities Analysis and Control, put the problem in a nutshell: attaining a 25.5 degree temperature in winter would, in most cases, mean heating a building to a point where the majority of people would feel uncomfortable. Ambient conditions naturally determined indoor temperatures, so when they changed, air conditioners should be adjusted accordingly. Some heating may still be required to achieve desired temperatures, but the notion of pushing the target up to 25.5 degrees in winter was ridiculous. Why waste energy in winter just because someone had decided the setting would save energy in summer, he rightly asked.

I have been unable to find out exactly where that 25.5 figure comes from. Authorities have attributed it to “overseas research”; I assume this means work done by the American Association of Heating, Refrigeration and Air-conditioning Engineers, whose standards are widely accepted. To be fair, the government has suggested it for summer. It has not made clear, though, that it is inappropriate for mild or damp conditions – as Hong Kong generally experiences from the end of August to the start of June.

Lantau environmental campaigner Eric Spain has long argued that it is wrong to make firm rules. The only solution for comfort and economy should be indoor and outdoor sensors and controllers, to automatically ensure appropriate settings, he says. Based on extensive research, he suggests that depending on humidity, comfortable summer office temperatures are generally between 24 and 27 degrees and, during winter, 20 and 23 degrees. Public transport settings should be at the upper end of the scale during hotter, more humid months, and between 18 and 20 degrees at colder times because of air flows.

I can see the convenience of settling on the 25.5 figure. But authorities have done no one – or the environment – a favour by failing to make clear what should happen at other times of year.

Peter Kammerer is the Post’s foreign editor.