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Carbon Emissions

Reliance On Coal Hurts Climate Change Fight

Oct 30th, 2008
by AdminCTA.
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Shi Jiangtao – SCMP | Updated on Oct 30, 2008

China’s reliance on coal for economic growth has made it difficult to curb growing greenhouse gas emissions, according to the central government’s first policy statement on climate change.

“Developing the economy and improving people’s lives are imperative tasks currently facing China,” the white paper, issued yesterday, says.

“However, its coal-dominated energy mix cannot be substantially changed in the near future, thus making the control of greenhouse gas emissions rather difficult.”

The paper highlighted the dilemma faced by China, with social ramifications if it curbed economic growth and the grave environmental consequences of fast development, such as frequent natural disasters, ecological degradation and shrinking harvests.

“Climate change has already brought real threats to China’s ecological system and economic and social development,” said Xie Zhenhua , deputy director of the National Development and Reform Commission.

The 44-page paper lists various adverse consequences of climate change on agriculture, river and sea pollution and social and economic sectors.

“Extreme phenomena, such as high temperatures, heavy precipitation and severe droughts, have increased in frequency and intensity,” it says.

If not alleviated, the consequences will reduce grain output, shrink lakes and wetlands, cause desertification of grasslands and livestock epidemics, and accelerate glacial retreat and sea-level rise.

However, it is unlikely that China will break its addiction to coal, the cheapest and most plentiful energy source in the country, any time soon. Coal still fuels about two-thirds of China’s energy needs.

The mainland has set ambitious targets to cut energy waste by 20 per cent and pollution by 10 per cent by 2010. Authorities have closed thousands of small coal mines and coal-fired power plants.

Last year, its use of renewable energy – including wind, solar and hydroelectric power – amounted to about 220 million tonnes of coal equivalent, which equals cutting 500 million tonnes of carbon dioxide emissions.

With the promotion of renewable energy, the proportion of coal in the energy mix has fallen by more than 2 per cent in the past three decades, the paper says.

Pollution-reduction Goals Still Far Away, Admits Official

Oct 29th, 2008
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Agence France-Presse in Beijing | Updated on Oct 29, 2008

Mainland is having trouble meeting energy efficiency and pollution-reduction goals, but the government remains determined to reach the targets, a top official said on Wednesday.

Vice-Minister of Planning Xie Zhenhua also said Beijing will consider controls on the greenhouse gas emissions of its worst polluting industries if the rich world will hand over clean technology to keep poorer nations competitive.

China has a target of reducing the amount of energy it consumes per unit of gross domestic product by 20 per cent over the five years to 2010.

It has also vowed to reduce sulphur dioxide emissions, a key air pollutant, and chemical oxygen demand (COD), a measure of water pollution, by 10 per cent each from 2005 levels.

“Our work over the next three years will be very difficult, but the [government] will not waver in assessing the situation in accordance with these goals,” Mr Xie said.Mr Xie also signalled Beijing’s first nod of approval to the “sectoral approach” to containing industrial emissions at the launch of a policy paper on how the country plans to tackle global warming.

Mainland officials have previously denounced the “sectoral approach” as a scheme for rich, high-tech nations to gain a competitive edge by imposing extra costs on rising challengers in sectors, such as steel, concrete and power.

But Beijing is pushing rich nations to transfer more pollution-cutting technology to poorer nations undergoing emissions-intensive industrialisation, and Mr Xie suggested a focus on polluting industries could satisfy both sides.

“China believes that using a sectoral approach is an important measure for implementing emissions reductions in every country. We can decide this for industries with high emissions levels and then transform the technology that these industries use to cut emissions,” Mr Xie said.

“But in whose hands is this technology? Most of it is in the hands of developed nations. If they take this technology and give it to developing nations, it will without a doubt be able to resolve a large amount of the greenhouse gas emission problem.”

Varying proposals for a sectoral approach to curbing emissions involve setting fixed caps, broader reduction guidelines or incentive systems for firms.

Mr Xie did not delve into such specifics or say which industries could be targeted.

But he stressed that up to a quarter of the country’s emissions bill came from manufacturing goods for export, and urged consumer nations to shoulder some responsibility for this pollution.

“Because we are at the low end of the industrial chain, transferred emissions from goods manufactured from exports stand at between 14.5 per cent and 24 per cent of the total.”

“We are footing other people’s bills,” added Mr Xie, who is vice-chairman of the energy and climate-change policy making National Development and Reform Commission.

Mr Xie said he would like rich nations to spend the equivalent of 0.7 per cent of their economy each year on funding cleaner technology to help poor countries skip the dirtiest phase of industrialisation and urbanisation.

He cited the complicated transformers and bearings used in wind turbines as an example of a key technology that could help mainland rapidly expand an already booming sector that makes a clear contribution to cutting emissions.

True Cost Of Coal To Nation ‘Far Exceeds’ Market Price

Oct 28th, 2008
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Shi Jiangtao in Beijing – SCMP | Updated on Oct 28, 2008

The environmental and social costs of China’s reliance on coal as an energy source have been grossly underestimated, a joint study by environmentalists and economists says.

For each tonne of coal consumed last year, China paid 150 yuan (HK$170) extra in environmental damage, according to “The True Cost of Coal”.

The report, commissioned by Greenpeace, the US-based Energy Foundation and WWF, was written by prominent mainland economists.

The report estimated that the true cost of coal in China last year was about 1.75 trillion yuan, nearly 7.1 per cent of gross domestic product that year.

The figure would be even higher if the impact of climate change were included, according to the report.

“Environmental and social damages are underestimated for using coal in China, as a result of market failures and weakness in government regulations,” said Mao Yushi , lead author of the report and founder of the privately funded Unirule Institute of Economics. “China must count these external costs and make the coal price reflect its true costs.”

The so-called external costs were air and water pollution, ecological degradation, increasing health costs, mining accidents and infrastructure damage.

It also took into account the price distortion caused by government regulations, such as land-ownership policies and poor worker safety and compensation systems, which keep the cost of coal down. Coal accounts for 70 per cent of China’s primary energy consumption and is the biggest single source of air pollution across the country.

It causes 85 per cent of sulfur dioxide emissions, 67 per cent of nitrogen oxide emissions and 70 per cent of airborne particles. Mining has contaminated water, degraded land and caused massive land subsidence.

Coal is also responsible for China’s enormous carbon dioxide emissions, which are believed to have made the nation the world’s largest greenhouse gas emitter.

Quoting the report, Yang Fuqiang , chief representative of the mainland office of the Energy Foundation, urged Beijing to impose energy and environmental taxes.

His view was supported by Professor Mao, whose study showed that the introduction of a coal tax would raise prices by up to 23 per cent and reduce consumption by about 12 per cent.

“But the taxation measures would have little impact on China’s economic growth,” the report said. “On the contrary, it would make China more competitive globally in the long run and increase China’s social wealth by 942 billion yuan.

“The government of China has the opportunity to make a real improvement to the environment by reforming the current coal pricing system.

Yang Ailun , Greenpeace’s climate and energy campaign manager, said recognising the true cost of coal would create incentives to developing cleaner, sustainable energy.

Biofuels “Better” Than Standard Jet Fuel, Says Boeing

Oct 27th, 2008
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NewEnergyFocus – 27-10-08

Aviation experts have said it is now “unequivocally” certain that biofuels could be used to fuel aircraft – and that they could even deliver better performance than standard kerosene.

The government is expected tomorrow (October 28) to include aviation within its proposed tougher climate change emission curbs being added to the Climate Change Bill.

But while airlines would be able to buy surplus carbon emission allowances from other sectors to comply with their new requirements, it now appears that direct emission cuts from greener fuels could be possible.

http://newenergyfocus.com/resources/listimg/news/Bioenergy/Boeing_Virgin_biofuels_test_Feb_2008_sm@body.jpg

Virgin Atlantic flight VS811P preparing for take-off in February this year: the 747-400 aircraft flew from Heathrow to Amsterdam powered by jet fuel that included coconut oil and babassu nut oil

Boeing has revealed that new technology available in the last 12 months has now opened the door to biofuels in aircraft.

Speaking at a conference earlier this month, Boeing Commercial Airplanes’ director of environmental business analysis, Darrin Morgan, said its work with Virgin Atlantic is now spurring the biofuels supply chain to consider the possibilities of aviation demand.

As a result, he predicted that aircraft manufacturers would now get “very involved” in the search for aviation biofuels.

Commenting on the latest tests on biofuels in aircraft, Mr Morgan told the Westminster Energy, Environment and Transport Forum: “Not only do they perform as well, but with some data that you are going to see roll out in the next couple of months from various initiatives and efforts, they actually perform better, just from a technical perspective, in the aeroplanes.”

Boeing’s trial with Virgin Atlantic in February this year saw a 747-400 aircraft flying from London Heathrow to Amsterdam using a blend of babassu nut and coconut oils blended with kerosene jet fuel. The project saw Boeing working with GE Aviation and Imperium Renewables as well as Virgin Atlantic.

The aviation industry had already been working to maximise fuel efficiencies in jet engines, with the greening of the fuel supply itself the next step, with liquid hydrocarbons like biofuels seen as the only option. “We can’t do plug-in hybrids,” said Mr Morgan.

Aviation is only responsible for 5% of global transport fuel demand, according to the Boeing director, but Mr Morgan suggested that a 20% proportion of biofuels within the sector’s jet fuel could be possible – which would represent 1% of global transport fuels switching away from fossil fuels.

Higher proportions of biofuels would be possible, although there are doubts about whether any more biofuels would be available without impacting on oils needed for food supplies.

Standards

Mr Morgan said Boeing was keen to link up with global standards to ensure there were no unwanted impacts from biofuel use.

He said: “We do believe that supply chain can happen in the next three to five years, so bring in the non-governmental organisations and the other public organisations, they are smart about sustainability.”

Groups including Friends of the Earth have been lobbying for aviation to be included within UK climate change targets, although the campaigners do not support biofuel use.

Boeing is now inviting airlines to sign up to a “sustainability pledge” to help further the drive towards renewable fuels, and has already signed up airlines representing 15% of jet fuel demand.

Cinderella Industries Await Their Prince

Oct 27th, 2008
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Potentially Lucrative Projects Devoted To Clean, Renewable Energy Languish For Want Of Financing

Eric Ng – SCMP | Updated on Oct 27, 2008

The United States’ property bust and the subsequent global credit crunch have many investors fretting that the mainland’s economic miracle is coming to an end. Yet, amid the gloom and doom, renewable energy, energy conservation and pollution control are being tipped to become the next wave of high-growth industries.

China, the world’s second-largest energy consumer and one of the most pollution-prone economies, has huge opportunities for projects devoted to energy efficiency improvement and the generation of clean and renewable energy. The question is how they will be financed.

The nation’s energy consumption per unit of economic output amounted to four times the world average, highlighting a dependence on industries that are energy-intensive but low in value addition and inefficient in their use of energy.

With 80 per cent of its electricity generated from air-polluting coal and with power generation capacity rising at alarming rates, the mainland has become the world’s biggest emitter of sulphur dioxide, which causes acid rain, and carbon dioxide, which contributes to the greenhouse effect.

According to the China Energy Conservation Association, electrical machinery on the mainland consume about 40 per cent more energy than their international counterparts, implying a vast market for solutions and products that improve energy efficiency.

The central government has targeted cutting the nation’s energy consumption per unit of economic output by 20 per cent between 2006 and 2010 and principal pollutants by 10 per cent mainly by ordering the phasing out of outdated and inefficient plants.

“This year is a turning point for the mainland economy’s development [given the drastic slowdown in exports], but I think a new growth area is the clean energy sector, which will become a pillar of growth,” said China Energy Investment Network chief executive Zhang Jie, an adviser to the central government on energy policies.

Beijing said last month it had earmarked 41.8 billion yuan (HK$47.4 billion) to fund projects for energy conservation and pollution reduction. Firms with energy-saving and pollution-cutting projects will also be eligible for reductions in profit and value-added taxes, although details are yet to be released.

This is a small drop in the pond. Lily Zhao Ming, secretary general of the conservation association’s committee on energy service companies, says the sector is estimated to require a whopping 1 trillion yuan of investment between 2006 and 2010 to meet government targets.

The committee implements energy conservation programmes on the mainland funded by the World Bank and Global Environment Facility. .

The mainland’s energy consumption per unit of gross domestic product fell 1.79 per cent year on year in 2006, 3.66 per cent last year and 2.88 per cent in the first half of this year. Given the 20 per cent reduction target between 2006 and 2010, it has a lot of catching up to do.

The lacklustre performance, in part, has to do with the tight control on energy prices at levels much lower than international ones to protect consumers and ensure social stability amid inflation that is the highest in a decade.

High prices have proven to be an effective way to drive conservation and efficiency gains, given experience drawn from the oil crises in the 1970s and 1980s in the US, Europe and Japan.

With inflation easing to a 15-month low last month, all eyes are on Beijing to introduce a new round of price increases for fuel and electricity to ease losses at energy producers. The mainland energy conservation industry’s output, measured as the value of contracts to save energy plus the cost of equipment installed, rocketed to 21.6 billion yuan last year from 1.7 billion yuan in 2003.

The industry is expected to see further explosive growth as more people discover its profit potential, Ms Zhao said on the sidelines of the China Power Oil & Gas conference in Guangzhou last month.

On the renewable energy front, the central government has estimated that it will take 2 trillion yuan of investment to realise its targets for generation capacity in 2020.

So far, wind power has seen the biggest growth, with installed generation capacity expected to surpass 10,000 megawatts this year and reach 20,000 MW by 2010, compared with 5,600 MW last year and 2,600 MW in 2006.

Given the mainland’s less developed markets for bonds, private equity and venture capital – and the fact that the equity market is primarily for companies with established track records of profits – bank loans are the main financing channel for energy efficiency and renewable-energy projects.

However, these are considered nascent, non-mainstream and more risky ventures that are not normally inside the comfort zone of bankers.

Daniel Zhu, president of Transpacific Resources China, an investor in renewable energy and energy efficiency projects, says companies are struggling to find enough funds to tap mushrooming market opportunities.

“At the moment, developers are scrambling to grab hold of projects, but their funding demand is far from being met,” he said. “There is a chicken or egg problem.”

Financiers are cautious about funding start-up projects, but if projects do not get funded, the sector cannot reach maturity.

Venture capital funds, a traditional capital source for start-ups, tend not to be keen to energy efficiency improvement projects because they prefer to invest in highly profitable projects that can be scaled up in size rapidly, Mr Zhu said.

Private equity funds and banks have taken greater interest. A multitude of domestic and overseas funds are seeking opportunities to invest in renewable energy and energy efficiency projects.

While some banks are willing to entertain loan requests, industry insiders say commercial bankers have yet to fully appreciate the business model of energy efficiency projects and tend to be cautious.

“Unlike the construction of fixed assets, such as railways and buildings, energy conservation is often intangible, and its risk and return are a new topic for bankers,” Ms Zhao said. Her association has provided seminars and training courses to commercial bankers to familiarise them with the nascent sector, spurring the likes of Beijing Bank, Huaxia Bank, Industrial Bank and Shanghai Pudong Development Bank to set up specialised departments to tap the sector, she said.

Even so, banks, the main supplier of funds to the sector, require guarantees and collateral based on future cash flows from projects.

Despite the general lack of understanding of energy efficiency projects among outsiders, industry practitioners say energy efficiency projects can be extremely lucrative. They say return on investment can reach as high as 200 per cent, although the norm is closer to 30 per cent.

“People say property is a sector with extravagant profits. I’d say profits in the energy conservation industry are even more extravagant,” Ms Zhao said.

Wang Shaohong, director of the Energy Saving Investment Promotion Centre, cited the mainland’s seventh-largest steelmaker, Shougang, as an example. He said the company spent less than 100 million yuan on nine energy-saving programmes but was able to save more than 118 million yuan a year on energy expenses.

Mr Wang said the fundamental problem with a lack of financing for energy efficiency projects lies in their complexity.

“As energy conservation virtually involves all industries, it is very difficult to find financial experts who also know the industries well,” he said.

In other cases, state banks are often constrained by blanket orders from Beijing not to lend to highly pollution-prone, energy-intensive industries and those with over-capacity problems, even though such companies may want to use the money to enhance energy efficiency.

Chan Ka-keung, head of Greater China investment for Climate Change Capital, a financier of clean-energy projects, said: “Mainland bankers may not be sophisticated enough to understand the ins and outs of energy conservation projects. Sometimes they just cut lending to the banned sectors entirely without taking into account energy conservation projects.”

This is partly mitigated by guarantee programmes provided by development agencies such as the International Finance Corp, a unit of the World Bank, and Asian Development Bank. These agencies act as guarantors whose participation supports the business case for commercial banks to lend to project developers.

There are other ways for companies engaging in renewable energy and energy efficiency improvement projects to apply for financial subsidies. One of them is the so-called Clean Development Mechanism (CDM), a United Nations-led scheme that allows polluters in developed nations subject to pollution caps to meet their obligations by providing funding to projects for the reduction of greenhouse gas emissions in developing nations instead of cutting their own emissions.

Project developers in developing nations can sell emission reduction credits to polluters in developed nations but must demonstrate that without the subsidies their projects would not be viable.

The emission rights trading industry is set for big changes. Reduction commitments under the Kyoto Protocol, to which the CDM is linked, are due to expire in 2012, and negotiators want to seal a new pact at a UN conference in Copenhagen in December next year.

James Graham, commercial director of Camco Group, a company based in Britain that finances and develops greenhouse gas emission reduction projects internationally, expressed optimism about progress towards a global deal.

“The US has indicated that it would like to see larger and industrialising developing nations such as China, India and Brazil make some form of commitment to emission reduction. It is still open as to what form the commitment will take, but hard negotiations are going on at the highest level of governments,” he said.

If China agrees to some form of self-imposed emission reduction target, it would be a boon to the growth of the domestic renewable energy and energy efficiency industry. Mr Graham believes the country will bargain for transfers of technology – such as carbon capture and storage know-how – in exchange for binding commitments, beyond voluntary emission cuts via CDM projects.

The driving forces for greater development of renewable energy and energy conservation projects – higher energy prices, increasing pressure to reduce emissions to avert climate change, and greater government incentives – appear to be in confluence. There could well be a silver lining in the dark clouds of the global economic slowdown.

eric.mpng@scmp.com

Should There Be Laws To Control Light Pollution?

Oct 25th, 2008
by AdminCTA.
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SCMP | Updated on Oct 25, 2008

You see neon lights all over Hong Kong. It does not matter where you are – Mong Kok, Central or Causeway Bay – you cannot escape them.

These neon [and other kinds of] lights sometimes illuminate advertising billboards and your attention is drawn to the product being promoted. But they are also a major cause of light pollution.

A simple solution would be to introduce laws restricting the size of neon lights and the length of time they can be turned on.

However, there is a problem with passing such laws. Hong Kong is famous for its neon lights. Many tourists look forward to seeing the harbour at night, with its neon signs on top of the high-rise buildings.

If strict regulations are imposed, this spectacular view could disappear and some people might decide not to visit Hong Kong.

Economic factors are always considered to be a high priority, but what about environmental factors? Light pollution may not be a serious problem for some residents, but it does adversely affect animals. Nocturnal animals are especially sensitive when it comes to the intensity of some lights.

If lights are too bright, it can affect their life cycle. For example, it must be very difficult for owls, which hunt when it is dark.

I think we do need to enact some laws to control this form of pollution. Apart from helping animals, it can ensure those residents who are affected by strong lights can enjoy a good night’s sleep.

B. Leung, Lai Chi Kok

I strongly support the idea of expediting legislation to ease the severe light-pollution problem in Hong Kong.

The reason is twofold. First and foremost, we cannot tolerate a deteriorating situation.

Even at midnight in Mong Kok, you can still see neon lights on. It does not even feel as if it is night. How can residents have a proper night’s sleep with all these billboards lit up?

These upmarket fashion firms which use the lights to advertise their products do not seem to care about our Earth. They care more about making a profit than trying to be environmentally friendly.

The government should take prompt action now to stop shops from keeping exterior lights on at night and lit-up billboards.

Our officials can no longer turn a blind eye to this problem.

Zalon Wong, To Kwa Wan

I strongly support the introduction of laws to control this form of pollution.

Many lights in the city are kept switched on when they are not needed, for example to illuminate advertising billboards throughout the night.

How many people will actually look at these billboards at 1am?

The excess of neon lights, floodlights and other lights near residential buildings is not good for the city. They consume a lot of electricity which in turn increases carbon dioxide emissions and these emissions are a cause of global warming. They disturb residents living nearby who have difficulty sleeping.

Even badly designed street lights are a problem. They should be modified so the beam of light is directed to the ground and not upwards. I am interested in astronomy and it really saddens when my efforts to stargaze are impeded in the name of development. This is not progress, it is just the building of more flats so property developers can line their pockets. I believe a reasonable regulation should be introduced, which would mean all floodlights on buildings (for example IFC and Bank of China) should be switched off after midnight.

Virginia Yue, Tsuen Wan

Report Warns Of Greenhouse Gas Leap

Oct 22nd, 2008
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Chris Buckley – Reuters | October 22, 2008

BEIJING (Reuters) – China’s greenhouse gas pollution could double or more in two decades says a new Chinese state think-tank study that casts stark light on the industrial giant’s role in stoking global warming.

Beijing has not released recent official data on greenhouse gas from the nation’s fast-growing use of coal, oil and gas. Researchers abroad estimate that China’s carbon dioxide emissions now easily outstrip that of the United States, long the biggest emitter.

But in a break with official reticence, researchers from the Chinese Academy of Sciences and other major state-run institutes have concluded that, without dramatic counter-steps, their nation’s emissions will tower over all others’ much sooner than an earlier government forecast.

The projected leap in emissions underscores the pressures that China will face in looming climate change negotiations, and the immense challenges it would face in meeting any commitments.

By 2020, China’s burning of fossil fuels could emit carbon dioxide equal in mass to 2.5 billion metric tonnes of pure carbon and up to 2.9 billion tonnes, depending on varying scenarios for development and technology. By 2030, those emissions may reach 3.1 billion tonnes and up to 4.0 billion tonnes.

That compares with global carbon emissions of about 8.5 billion tonnes in 2007. Emissions are also often estimated in tonnes of Co2, which weighs 3.67 times as much as carbon alone.

The report does not give its own estimate of China’s current Co2 emissions, but cites data from a U.S. Department of Energy institute that put them at 1.4 billion tonnes of carbon in 2004.

The U.S. Oak Ridge National Laboratory estimated that the United States emitted about 1.6 billion tonnes of carbon in 2007, compared to China’s 1.8 billion tonnes.

The “China Energy Report” for 2008 warns of drastic risks from inaction in the face of this projected growth, and yet also says economic development must not be hobbled.

“No matter how historical responsibility is defined, our country’s development path cannot repeat the unconstrained emissions of developed countries’ energy use,” states the Chinese-language report, which recently went on public sale without fanfare.

“Therefore, we must soon prepare and plan ahead to implement emissions reduction concepts and measures in a long-term and stable energy development strategy.”

The main author, Wei Yiming, has participated in a U.N. scientific panel to assess global warming. He was not immediately available for comment on the findings and why they appeared now.

BUILDS PRESSURE

The study may add to contention over China’s response to global warming at a time of accelerating international negotiations. Beijing will be at the heart of efforts to forge a treaty next year to succeed the first phase of the Kyoto Protocol, which expires at the end of 2012.

The European Union this week said developing countries should accept a 15-30 percent cut in their greenhouse gas emissions from “business-as-usual” levels.

But under the Protocol, a U.N.-led pact, poor nations do not assume targets to cap emissions. And Washington has refused to ratify Kyoto partly because it says the treaty is ineffective without Beijing’s acceptance of such mandatory caps.

Carbon dioxide and other greenhouse gases trap solar radiation, heating the atmosphere and threatening to stoke worsening drought, disrupted rainfall and more wild weather.

But China points out that per capita emissions of its 1.3 billion people are much lower than rich countries’ and says the developed countries bear overwhelming responsibility for the dangerous accumulation of greenhouse gases.

The new study backs that argument.

Beijing officials have also often said they will not sacrifice hard-won economic development to greenhouse gas caps.

For China, “relative to reducing carbon dioxide emissions, economic development is even more important,” the study says.

HK Aims To Raise Proportion Of Clean Fuels To 50% At Power Plants

Oct 15th, 2008
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Thomson Financial News – 15 October 2008

The government aims to increase the proportion of clean fuels in the power generation sector to 50 % of generated output to combat pollution, Hong Kong Chief Executive Donald Tsang said.

‘As electricity generation is a major source of pollution in Hong Kong, I pay special attention to ways of reducing coal-fired power generation and promoting the wider use of clean fuels while maintaining secure supplies of energy,’ he said.

He noted in his annual policy address that 28 % of electricity generated by power plants in Hong Kong comes from gas-fired facilities at present.

‘To improve air quality and address the challenges posed by global warming, we will actively explore ways to gradually increase the use of clean energy by, for example, increasing the proportion of natural gas for local electricity generation to 50 percent,’ he said.

Tsang did not provide a specific timeframe for achieving the objective.

Raising The Bar

Oct 9th, 2008
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Updated on Oct 09, 2008 – SCMP

In return for receiving assistance, Hong Kong has a responsibility to return the favour. As the most economically advanced city in China, it should be a high environmental achiever. In exchange for receiving some of the natural gas the mainland desperately needs, under a new memorandum, Hong Kong should commit itself to an aggressive low-carbon programme to help meet national goals.

So far, the Tsang administration has only focused on the benefits we accrue – lower tariffs and cleaner air. Hong Kong should appreciate that, despite all Beijing’s efforts to secure energy supplies, there will still be a shortage of cleaner fuels to power development.

Since the late 1990s, China has been building a network of natural-gas arteries. Today, there are around 24,000km of pipelines; by 2010, this figure should increase to 36,000km. From now, until 2020, we will see the rapid development of China’s natural-gas industry.

Yet, the mainland will continue to have inadequate supplies. The shortfall will have to be met through imports via land pipelines from Central Asia, as well as liquefied natural gas imports from elsewhere.

Hong Kong needs to view Beijing’s willingness to give us some of its natural gas in the context of the country’s overall energy profile. Energy is a finite global commodity, and its supply and demand affect us all. Policymakers in Hong Kong need to do their best not just to secure supplies but also to conserve energy and use it efficiently.

For example, Hong Kong undoubtedly has the capacity to substantially improve the energy efficiency of buildings. It can also use demand-side tools to get the electricity companies to find innovative ways to work with customers, so that reducing consumption and improving efficiency are rewarded financially. The utilities should be allowed to earn more from energy savings, and customers can also benefit by paying less. Currently, the schemes of control have weak demand-side incentives.

The government had said it has an open-market energy policy and is paving the way for the possible opening up of the electricity market. And it will look into enhanced interconnection between the two power companies’ grids. The administration sees this as a way to promote competition in the future, as well as possibly opening up the electricity market to others.

What might this mean? Will the government consider a compulsory purchase to buy the grids, in the public interest? There may well be good reason for the power grid to be a public asset, like the airwaves. Anyone who generates power could then use the grid.

Does the government see a future in distributed power – that is, on-site, decentralised power generation that can reduce transmission loss and increase supply security? Imagine buildings generating their own power using renewable technologies, and only tapping into the grid occasionally.

A low-carbon economy will probably involve all these efforts, and more. It is time for Hong Kong to show real appreciation for Beijing’s generosity.

As the nation’s most developed city, Hong Kong should be best placed to align its regulatory, management, financial and technological capacities to define how a city can grow but emit a lot less carbon and other pollutants.

With traditional financial services in a bad state, it is also a good time to test new ideas. For example, now that projects in Hong Kong can earn carbon credits, under the Kyoto Protocol’s clean development mechanism, what advantage can be gained from that?

So, it will be disappointing if the chief executive gives us another “business as usual” policy address next week that ignores environmental needs and the consequences of climate change.

Christine Loh Kung-wai is chief executive of the think-tank Civic Exchange. cloh@civic-exchange.org

Businesses Need To Join China’s Green Revolution

Oct 5th, 2008
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Oct 05, 2008 – SCMP

The mainland may be at the beginning of a transformation to a low-carbon economy. In reality, it does not have a choice. People may see little evidence of this at the moment when they stroll down the streets of major mainland cities. For example, Beijing’s infamous smog, which disappeared temporarily during the Olympics, soon returned. Temporary measures to improve air quality ended with the Paralympics and the old polluting ways have come back. But in the top echelon of government there is growing awareness of the environmental catastrophe that awaits the nation unless its turbocharged growth engine can change from high-carbon to low-carbon.

John Ashton, a senior British official on climate change policy, was in Hong Kong last week to talk about this change in mindset not only among mainland officials but among entrepreneurs. He also warns that Hong Kong investors may be missing out on the business potential. Mr Ashton said mainland businesses know they will eventually pay heavy penalities for polluting practices. So, for them, the issue becomes one of controlling business risks. As part of this trend, the Guangdong and Hong Kong governments are co-operating on the use of cleaner energy and have signed a deal to secure 20 years’ gas supply to encourage power companies to switch from coal to gas, Hong Kong’s environment secretary, Edward Yau Tang-wah, said yesterday. This is welcome, but the government and local businesses should promote environmentalism not only as a green cause, but as a business opportunity for green infrastructure and technology and for carbon trading.

On the mainland, it is not just a business issue. The political legitimacy of the central government and authorities in the rich provinces has rested on economic growth and the improvements it brings to people’s lives. That will be under threat unless officials can reverse the terrible environmental damage that has resulted. This is why Guangdong Communist Party chief Wang Yang harps on so much about low-carbon production as part of his “mind liberation” programme for cadres. It is time our city’s businesses joined China’s green revolution.

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