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China Can Forge Ahead In Developing Renewable Energy

Green power

Michael Richardson – Updated on Oct 03, 2008 – SCMP

The latest tally of greenhouse gas emissions blamed for warming the world shows that China has emerged as the top polluter, ahead of the United States, by an increasingly big margin. Released last week, the scientific findings of the Global Carbon Project show that, last year, more than half the world ‘s emissions came from the high-growth economies of developing countries, led by China and India, and that this share is rising because emissions from developed economies are growing less fast.

The project’s Australia-based executive director, Pep Canadell, said that China alone accounted for 60 per cent of the emissions growth last year. This was due to its heavy reliance on coal for generating electricity and oil for transport fuel. Yet the world’s most populous nation is also a global leader in harnessing renewable energy, particularly hydro, wind, solar and biomass power.

As recession and the credit crisis in the west crimp lending and investment in relatively expensive alternative energy, can China seize the initiative and keep funding its drive to become less dependent on fossil fuels? This assumes, of course, that China’s banking system will remain immune from the contagion afflicting the US and Europe. If normal lending continues and business can take advantage of incentives put in place by the government, China could forge ahead of competitors in developing renewable power. This would strengthen its energy security and international efforts to prevent disastrous climate change.

China invested more than US$10 billion in new renewable energy capacity last year, second only to Germany, according to the Worldwatch Institute in Washington. Most of the money was for small hydropower projects, solar hot water and wind power. Meanwhile, annual investment in large hydropower schemes continues at a somewhat lower level. A renewable energy law, effective from the start of 2006, requires power grid operators in China to buy electricity from registered producers of renewable energy. It also offers tax incentives and subsidies to promote investment in the sector.

China gets 8 per cent of its energy and 17 per cent of its electricity from renewables – shares that will rise to 15 per cent and 21 per cent, respectively, by 2020, if the government’s target is met. The European Union, which wants to be the world’s pace-setter in combating climate change, is aiming for a somewhat more ambitious target of getting 20 per cent of its energy from renewable sources by 2020.

China is not alone in the developing world in seeking a more sustainable energy future. As a group, developing countries have more than 40 per cent of the world’s renewable power capacity, over 70 per cent of solar hot-water capacity and 45 per cent of biofuels production.

In China, wind power is the fastest-expanding technology for generating electricity. With many onshore turbines working, the first offshore wind farm started in November.

China is also a manufacturing powerhouse for solar photovoltaic energy, third only to Japan and Germany. It is the world’s largest market for solar hot water, with nearly two-thirds of global capacity. More than 10 per cent of Chinese households rely on the sun to heat their water. When Chinese firms turn to exporting, the lower costs of their units – some seven times less than in Europe – could reshape global supply and demand.

However, Steve Sawyer, secretary general of the Global Wind Energy Council, says Beijing’s efforts to rein in rash lending and curb inflation are hurting financing for wind power projects in China and may prevent it from emerging as the world’s fastest-growing wind energy market.

A report last year from consultants Frost & Sullivan cautioned that China’s wind and biomass industries were not nearly as developed as their western counterparts. As a result, they had “less experience in installing, maintaining and servicing renewable facilities”, wrote analyst Linda Yan. A key restraint on growth of China’s renewable energy markets was a lack of homegrown technology and dependence on imported equipment, she added.

Even if Beijing meets its renewable energy target for 2020, it will rely heavily on fossil fuels. That is a problem not only for China but also for the world – it is expected to overtake the US soon after 2010 as the world’s top energy-consuming nation.

Michael Richardson is an energy and security analyst at the Institute of Southeast Asian Studies in Singapore. mriht@pacific.net.sg

Mainland Firms To Increase Emission Reduction Projects

Mainland Firms To Increase Emission Reduction Projects
Future Of Carbon Credit Trade Dim As Global Pact Nears End

Eric Ng – Updated on Oct 02, 2008 – SCMP

The mainland is expected to supply more than half the credits for greenhouse-gas emission trading worldwide until 2012, but the future of such trade remains uncertain as no agreement has been hammered out for when the current global pact expires.

Emission reduction projects on the mainland would cut 116.83 million tonnes of carbon dioxide discharged in each of the next four years, or 52.17 per cent of the global total, according to United Nations data. That represents a sharp increase from 16.61 million tonnes in May 2006, or 30.67 per cent of the global total.

So far, 1,551 projects have been approved by Beijing while 269 projects have also been accepted by and registered at the UN, accounting for 23 per cent of the global total.

Developers of pollution-cutting projects earn so-called carbon credits that can be sold to polluters in countries with mandatory emission limits, primarily in Europe and Japan, which are committed to reduction targets.

Annual greenhouse-gas emission credits from the mainland would amount to more than US$2.5 billion under the Clean Development Mechanism (CDM), according to a report by World Wide Fund for Nature on China’s emission reduction credits market.

Beijing also collects a levy from a percentage of the credits depending on the type of project.

Feng Shengbo, an associate researcher at National Development and Reform Commission Energy Research Institute’s CDM Project Management Centre, said the government had so far collected more than 100 million yuan (HK$112.48 million), which would be used to help the nation combat climate change.

The most popular projects on the mainland include the replacement of ozone-depleting refrigerants, wind and hydro power generation and energy efficiency improvement.

Of the emission reduction volume in projects approved by the central government, about 23 per cent or 27.45 million tonnes came from the five national state-owned power generation firms.

China and India are among the developing nations that have ratified the Kyoto Protocol, a global pact on greenhouse gas reduction, but they are only required to report their emissions and are not committed to any targets.

The United States rejects emission limits set by protocol, but it is widely expected the country, together with China and India, which are among the world’s largest polluters, will commit to some form of reduction after the protocol expires in 2012.

However, Merrill Lynch director of Asia-Pacific commodities solutions Jennifer Jiang Hongbo said uncertainties over the regulatory environment after the protocol expired and Beijing’s ban on credit sales beyond that meant no such credits had been sold so far.

“This has brought valuation challenges for such trade,” she said. “In addition, the sellers prefer to save the credits for themselves ahead of potential emission reduction commitments by China.”

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.

Power Struggle – Human and Environmental Cost For Chinese Booming Economy

Simon Parry – Updated on Sep 28, 2008 – SCMP

On average, 10 mainland coal miners die each day and while the government recognises the dangers posed by privately run mines, it needs to keep a booming economy supplied with fuel. Simon Parry reports on the human cost of doing so

The grubby, ramshackle clinic for injured miners is hidden away like a guilty secret at the end of a dirt track in a village near Datong, Shanxi province, China’s coal capital. Outside, Zhu Jiaching hobbles along on crutches and speaks through broken teeth about the day last September when luck was on his side.

“I was working underground when the scaffolding collapsed on me. My legs were broken and my teeth were smashed when I fell face down into the coal.” He points to his black and swollen upper lip. “I still have pieces of coal lodged in here.”

Zhu was carried unconscious out of the mine. He was one of the lucky ones. Last year, 4,000 mainland miners were killed in underground accidents. “A fortnight after my accident, there was another scaffolding collapse in the same stretch of mine,” the 39-year-old father of two says with a grimace. “Four miners were killed. All were from my home province.”

With no salary and only hospital meals to live off, Zhu is waiting to be well enough to return to his wife and children hundreds of miles away. “The mine manager came to see me a few weeks after my accident and offered me 10,000 yuan [HK$11,390] compensation if I took the money and went straight home,” he says.

“I refused. At the time I couldn’t even walk.

“The manager left and hasn’t been back. He won’t discuss the matter and I’ve been living in the hospital ever since. I want him to pay for the treatment to repair my broken teeth and give me proper compensation – then I’ll go home for good.”

In nearby Ganzhong village, Wan Mingyong, 35, smokes and chats with friends as he waits to begin his eight-hour underground shift. Luck was on his side too when, in another privately run coal mine in May last year, a wall of coal exploded in his face. Wan’s face and neck are still peppered with tiny lumps of coal.

“There was a roar and a bright flash and then I was blinded. Pieces of coal shot into my face like bullets and I was covered in blood. My first thought was `Am I blind?’ I spent a month in hospital but I was very lucky. I could have been killed,” he says.

“I was given 5,000 yuan compensation by the coal mine’s bosses. I wasn’t happy with it but what could I do? I had to look after my family so I got out of hospital as quickly as I could and went back to work at the coal face.”

Wan is well aware of how lucky his escape was. “My brother-in-law was crushed when scaffolding collapsed on him in the same mine in 2004. He should have lived but was left to die in hospital on the orders of the coal-mine owner so that he wouldn’t have to pay more compensation,” he says. “We believe they may have even given him a lethal injection.

“At that time, if a miner died, his employer had to pay the family 50,000 yuan compensation. If a worker was crippled, the amount would be three times as high because he had to be paid disability benefit. So it was much cheaper to make sure that my brother-in-law didn’t survive and that’s what they did.”

The stories of Zhu and Wan are typical. The men are part of an army of workers labouring in privately run mines in Shanxi and Inner Mongolia, in northern China, helping dig up the coal that accounts for nearly 70 per cent of the energy needs for the world’s fastest-growing economy.

China has overtaken the US as the world’s biggest producer of greenhouse gases, according to a University of California study released earlier this year, and 75 per cent of its carbon-dioxide emissions come from the coal-fired power stations that are being opened at a rate of almost one a week.

Greenpeace will this autumn release what is expected to be a highly critical report on China’s overdependence on coal, warning that it is heading towards an environmental disaster unless it increases the price of coal – heavily subsidised to support the booming economy – to restrict its use.

“The price of coal should reflect the full cost of using coal,” argues Beijing-based Greenpeace coal campaigner Liu Shuang. “These power stations are causing serious air pollution. They are not only causing problems for human health but they’re polluting the water and land as well.

“Action must be taken soon. The government did everything it could to stop pollutants during the Olympics but this is a problem that is visible in Chinese cities every day. The Chinese government is taking the coal issue seriously, but it has not done enough.”

It is an industry that exacts a devastating price not only in environmental terms but in human terms. China has 5 million miners and the annual death toll, mostly in smaller, privately run mines, accounts for 80 per cent of all mining deaths worldwide. An average of 10 miners die every day on the mainland. Last Sunday, 37 miners were killed in a gas explosion at a private mine near Dengfeng city, Henan province. The same day, at least 19 miners died after a fire in a coal mine in Hegang city, Heilongjiang province.

Alarmed at the accident rates, the mainland in 2006 announced a series of measures to improve safety, increasing inspections, improving compensation for injury or death and ordering thousands of smaller mines producing less than 90,000 tonnes of coal a year to close. The idea is to concentrate production in state-run mines, which employ tens of thousands of miners and where both safety standards and the quality of the coal are easier to control. The policy has had a degree of success, with death rates in the industry falling substantially from a peak of almost 7,000 in 2002 to 4,700 in 2006 and less than 4,000 last year.

But this year, in the brown and barren hills of northern China, where the country’s biggest coal reserves lie, the huge trucks that move between the privately run mines are once again rumbling back and forth as dozens of mines reopen.

“Since the beginning of this year, when coal shortages became acute, mines everywhere have started opening again,” a retired mining supervisor in Datong says. “The government knows what is happening but provided they allow inspectors to visit every now and again to check on safety standards, they are turning a blind eye to it.”

The reason is overwhelming demand. The mainland needs every last lump of coal to satisfy the demands of its industrial revolution, its booming urban electricity consumption and the additional strain on resources that the Olympic Games in Beijing has had. On top of that, China has just had its harshest, coldest winter in half a century, causing fuel shortages so severe President Hu Jintao travelled to Datong to personally appeal to its 200,000 government mine workers to dig harder to help their snowbound compatriots.

“The president’s visit made us very happy,” says Li Mingxin, 58, a retired miner working as watchman at the Datong’s Xin Zhaoyiu coal mine – known as Government Coal Mine No 5 – where more than 10,000 miners are employed. “We felt very proud. The president of our country had come and asked us for more coal to help save the country, so we all made a special effort.

“Everyone gave up their Lunar New Year holidays. We increased production dramatically and all the coal went to the south for electricity production. We were very happy to be called upon to help at the time of our country’s great need.”

Sitting beneath a portrait of Chairman Mao in his watchman’s hut, Li – who spent 41 years working as a miner – frowns as he speaks of the dangers facing workers at the smaller, privately run mines. “Here, we have very few accidents because the attention to safety these days is much greater than in the past.”

“But the private mines are so small and they use mules and oxen to pull the coal carts from underground. There is also the risk of gas explosions because management is poor, ventilation isn’t good and the machinery to test the density of the gas is not good enough,” he says.

In Datong, the vast majority of workers in the 18 government-run mines are locals and in many cases, jobs are passed on from generation to generation, with the sons of miners being given priority for jobs.

Salaries are about 3,000 yuan a month, much higher than the national average, with a pension of 2,100 yuan for retired, long-serving miners such as Li. “Many men of my age have no salary at all while I receive a 2,100 yuan pension and another 500 yuan a month for working as a watchman,” he says. “We are paid like civil servants but we deserve it because of the duty we did for our country.”

Private mines – usually owned by county or village governments but leased to private companies – are staffed by migrant workers from poor provinces who move from mine to mine to find better salaries and conditions. They can earn up to twice the monthly salaries of their counterparts in state-run mines, taking home up to 6,000 yuan, but the high salaries come at a terrible price: accidents in privately run coal mines account for about 70 per cent of China’s mining deaths.

One miner who works as an explosives specialist in a private mine outside Datong rues the day he turned down the chance to work in a state-run mine because he wanted to maintain a higher salary.

“I didn’t realise at the time that if you work in a government mine for 10 years, you get a pension for the rest of your life,” says Yang Hua, 39.

“As migrant workers in privately run mines, we take greater risks and move from mine to mine. I will have to carry on working until I am 60 to support my family. It’s very different for the mine owners. They drive luxury cars and can make 10 million yuan in just one month. Because of the coal shortage, they have never been able to make so much money.”

Stung by the government criticism of their safely standards, private mines now operate amid tight security, behind high walls and fences, with teams of security guards patrolling the premises to keep unwanted observers away. “No one is allowed in without the owner’s written permission,” a security guard at one private mine says.

In the present sensitive climate, even government-run mines are reluctant to let outsiders visit. Even though guided underground tours are advertised on fading billboards outside the showpiece Government Mine No 9, an official at the visitor’s office eyes us suspiciously and says: “Sorry. We can’t take you in. Our visitor insurance has expired.”

When we assure him that our own insurance will cover the visit, he flicks distractedly through a pile of papers before looking up and announcing: “The tour is very time-consuming and expensive and there are only the two of you. I’m afraid we can’t afford to take you inside.”

Reflecting on the accident that crippled him just three months after he began work at a privately run mine outside Datong, Zhu says: “It happened because of neglect. The managers knew there were cracks in the scaffolding but they still made us carry on working beneath it.”

As a relatively new employee, Zhu was earning only 100 yuan a day to work underground, laying explosives to blast into virgin coal faces, and would work 26 or 27 days a month to earn money to send home to his family in western Sichuan province.

“I used to be a farmer but I have a daughter aged 17 and a son aged 14 and I couldn’t earn enough to pay for them to go to school, so I decided to come to the coal mine to work,” he said.

“Now my family is in an even worse situation because of what has happened to me. My wife has had to borrow money to pay for the education of our two children and we also have my parents to support. It is very hard for them. I will go back to farming when I recover – I can never go back to working in a mine.”

His wait for a fair payout could be a long one if the experience of other injured miners is anything to go by. “I’ve been in this clinic for five years since I broke my legs in an accident and I still haven’t received a proper settlement,” says He Yao, 65, from Inner Mongolia. “I’ll never work again now and I have three children to support – so I’m not going home to my family until I’ve got the compensation I deserve.”

For Wan, the trauma of his accident last year and his relative’s death in 2004 have left deep and permanent scars. “My brother-in-law was only 30 when he died and he had a seven year-old son. The family hired a lawyer and proved in the court case that he should have survived. In the end, they got compensation of 180,000 yuan for his death – more than three times what they were originally offered,” he says.

“We have higher safety standards too. The Olympic Games made inspectors stricter and they are doing more to guarantee the safety of workers. If they check a mine and it isn’t safe, they close it down. The government policy is good because the government is more concerned about the situation of mine workers.”

However, despite the new level of official concern, coal mining in China is like a game of Russian roulette. “I do this work because the salary is better than working in a factory but I risk my life earning the extra money,” says Wan, speaking at the end of his shift in the communal miners’ home outside Datong where he lives with his wife and 12-year-old son.

“Every day when I go to work, my family worries about me, especially after the accident last May. It is only when I come back home at night that they can relax, knowing that another day’s work is behind me and that I am safe from harm.

“I keep doing this because I need to pay for my son’s education. I became a miner because I didn’t have a choice. I want my son to go to university and find a good job. I don’t want him to suffer the same hardships as me.”

Red Door News

China Is No Leading Light In Energy Efficiency

JIM LANDERS jlanders@dallasnews.com – Dallasnews | Tuesday, August 19, 2008

BEIJING – China’s ballooning appetite for energy has helped push global prices higher for oil and coal, much of which is wasted.

Energy efficiency in China is just a fifth of U.S. levels. The government has put a priority on improving that by closing hundreds of small, coal-fired power plants and steel mills, raising fuel economy standards and consumption taxes on gas-guzzling cars, and pushing stores and apartment owners to replace incandescent bulbs with green ones.

But energy policy made through government fiat will only take you so far. Even as Beijing issues decrees about reducing the amount of energy used, it still subsidizes gasoline and electricity, and it’s falling short of its conservation targets.

Free-market economists – including some Chinese advisers to the communist government – argue that price is the best way to save energy. High prices have pushed down U.S. oil consumption about 3 percent this year, the biggest drop in a generation.

China’s motorists pay about $3.40 a gallon for gasoline – up 17 percent in the last two months – but that’s less than U.S. prices, and it hasn’t done much to slow oil consumption or car purchases.

(The price is also far less than the $8-a-gallon price in Hong Kong, where the government is trying mightily to discourage people from buying cars.)

China’s government finds it difficult to let go of price controls because some companies say higher energy costs are forcing them to close factories and move to cheaper locations such as Vietnam, eliminating thousands of jobs, said Huang Fanzheng, a senior adviser to the Chinese government and one of China’s most respected economists.

“So we should not only consider the influence of price on consumption, but also consider how much companies can bear, including foreign companies,” he said.

Price controls have other distorting effects. China imports most of its oil. China’s refiners pay world prices for those imports but collect far less from gasoline consumers. The losses are usually covered by government cash, but that’s no sure thing.

One result is an incentive to sell cheap, low-quality gasoline. It also discourages refiners from investing in expensive technology to eliminate pollutants such as sulfur, which automakers say ruins their more advanced emissions controls.

So while Beijing has ordered China’s governors to cut air pollution by 20 percent over the next decade, the oil refiners won’t be much help.

Nor will the power companies. China leads the world in renewable energy used for electricity generation, with 152 gigawatts of power from sources including wind, nuclear and hydro. (One gigawatt is 1,000 megawatts, or roughly the size of a large power plant.)

But China is the world’s biggest consumer of coal. Eighty percent of its electricity comes from coal-fired power plants. Although coal is the country’s most abundant energy resource, China has been a net coal importer since 1992. Smoggy Beijing has giant coal smokestacks peeking out among the city’s skyscrapers. Most of those power plants are shut for the Olympics, but they’ll fire up again once the games are over.

Wang Jiacheng, deputy director of the government’s Academy of Macroeconomic Research, says China’s per-capita electricity use has climbed an average of 10.28 percent a year since 1990.

Coal importers, like oil importers, pay world prices for supplies but get discount payments from customers. So China is going through a coal shortage. That’s pushing companies to curb production or switch to diesel-powered generators, one of the most energy-inefficient ways to produce electricity.

Australian Carbon Trade To Boost Affordable Energy

Reuters in Sydney – Updated on Jun 23, 2008

Australia’s emissions trading scheme starting in 2010 should make energy more affordable in the long-term, but short-term price hikes could see the government facing an A$1.8 billion (HK$13.2 billion) a year compensation bill.

The Climate Institute report on energy affordability and emissions trading released on Monday found energy price rises could easily be offset through the auction of carbon permits, estimated to exceed one percent of GDP or about A$10 billion.

The report studied three carbon price outlooks of low (A$15-100), moderate (A$30-163) and high (A$45-225) by 2050.

“For most Australians, the affordability of energy is likely to improve substantially over coming years, notwithstanding the introduction of emissions trading and the associated increase in energy prices,” said the report.

But it said that under a high carbon price scenario, and if world oil prices continued to rise, there would be a deterioration in energy affordability in the short to medium term, especially among low income families.

Australia’s centre-left Labor government won power last November, immediately ratifying the Kyoto Protocol on climate change and promising a carbon trading scheme by 2010 to give business a financial incentive to cut pollution.

The government is expected to release an options paper on the emissions trading scheme next month, with legislation expected by the end of 2008.

Australia is responsible for about 1.2 percent of global carbon emissions, but remains one of the highest polluters per capita because of the nation’s reliance on coal and other fossil fuels. Australia is the world’s largest coal exporter and relies on coal to generate about 80 percent of its electricity.

COMPENSATION

The average Australian family spends around 9 percent of its budget on energy, low income singles spend about 15 percent and high income families spend 5 percent.

The report found average families could face price rises of up to A$10 a week for electricity, gas and petrol in the short term, but over time energy affordability would rise as energy prices plateau, incomes rise and energy efficiency improves.

Under a high carbon price by 2050, the average family would spend less than 6 percent of its budget on energy, low income singles around 10 percent and high income families less than 4 percent.

“The Climate Institute believes that in next year’s federal budget the government should establish a multi-year, multi-billion dollar financial package to offset price increase impacts in low income groups,” said the report.

To compensate low income families for higher energy prices would cost the government around A$360 million a year by 2020, while compensating all Australians would cost A$1.8 billion.

“Additional funds should also be targeted at energy efficiency and affordability programmes to build long-term national resilience to future price increases.”

The report said energy efficiency could fully address the impacts of emissions trading on energy affordability and living standards over the medium to long term, but it was likely energy efficiency will take some years to be fully implemented.

“The introduction of a carbon price does not need to involve a social cost. Australia can make deep cuts in our greenhouse emissions without reducing our living standards … even if emissions trading involves high carbon prices,” it said.

Amended Air Pollution Law Will Lead To Drastic Emissions Cuts

Updated on May 02, 2008 – SCMP

I refer to David Renton’s letter (“Change in pollution law relaxes controls over power plants”, April 19), regarding our proposed amendment to the Air Pollution Control Ordinance.

Quite contrary to what he thinks, the proposed amendment is an important step towards achieving the 2010 emission reduction targets agreed with the Guangdong provincial government. Through the amendments, the Hong Kong government proposes to establish the necessary control mechanism to ensure a timely and transparent implementation of the emission caps for the power sector and to cater for possible tightening of the caps in future.

To achieve the 2010 emissions caps, which provide for a radical scaling back of the key air pollutants produced by the power sector by 24 per cent – to 54 per cent of the emission levels in 1997 – the two power companies will have to install additional emission reduction facilities, such as an advanced flue gas desulfurisation system and low-nitrogen-oxides technology. These facilities should be completed in phases starting next year. The amendment bill also proposes to allow the power companies to participate in cross-border emissions trading as an alternative to meeting the emission caps.

The emission trading scheme requires the seller of emission credits to embark upon additional emission abatement projects to achieve further emission reduction beyond statutory limits. Only then will emission credits be generated for trading. This trading framework will offer a flexible and potentially more cost-effective option for power plants in the region to meet the emission limits, thereby help improve the air quality of Hong Kong and the region. To ensure no adverse impact on the local air quality in the vicinity of the power station, the director of environmental protection may also impose any necessary terms and conditions upon the approval of the use of these emissions credits.

Power generation is the largest emission source in Hong Kong. Emissions must be reduced greatly if we are to improve air quality. The proposed legislative amendments aim to do just that.

Pang Sik-wing, principal environmental protection officer, Environmental Protection Department

Regulate CO2 from Power Plants Now

Hong Kong green groups’ joint campaign

Filed under: Hong Kong Climate change — Jacqui Dixon @ 20:28 pm – CSR Asia

Six green groups in Hong Kong have been running a campaign over the last few weeks to encourage the Hong Kong government to incorporate carbon dioxide into the Air Pollution Control Ordinance, which limits air pollutants from the two local power companies CLP and HEC. The groups argue that “the government only regulates power plants’ so called ‘conventional’ air pollutants, such as sulphur dioxide, nitrogen oxides and continues to turn a blind eye to capping their CO2″.

Regulate CO2 from Power Plants Now!

Six Green Groups Urge You to Sign a Petition to the Government

Dear friends,

Climate change is accelerating! Hong Kong Observatory said our winter will disappear after 20 years. The government is amending the Air Pollution Control Ordinance to limit air pollutants from the two local power companies, CLP and HEC after 2010. Yet emissions of carbon dioxide (CO2), the major greenhouse gas (GHG) causing climate change, is not regulated at all. Six green groups now urge for your support to combat global warming by escalating the urgency for the government to restrict CO2 emissions from the power plants.

The two power companies are the biggest local sources of GHG emissions, accounting for 70% of the total CO2 released. They definitely contribute to climate change. However, the government only regulates power plants’ so called ‘conventional’ air pollutants, such as sulfur dioxide, nitrogen oxides and continues to turn a blind eye to capping their CO2.

Send the following letter to the Chief Executive and the Secretary of Environment Bureau today. Request for CO2 emission caps for power plants in the Air Pollution Control Ordinance. Let’s stop allowing the power companies to cook the climate!

Friends of the Earth (Hong Kong), Greenpeace, Greensense, Greeners Action, WWF Hong Kong, Clear The Air

http://write-a-letter.greenpeace.org/407

Make Carbon Dioxide A Statutory Air Pollutant

Apr 11, 2008 – SCMP

Electricity tariffs might go up by as much as a third if power suppliers are to cut their carbon emissions significantly, a government source has hinted.

The rough estimate was revealed to the South China Morning Post (SEHK: 0583, announcements, news) yesterday as lawmakers and green groups were pressing the government to make carbon dioxide a statutory air pollutant, and set carbon caps for power plants.

Officials have made it clear that any such a move is not imminent but could not be ruled out in the future.

The source said power-station carbon emissions could be lowered if natural gas was made the dominant fuel, but whether it should be achieved “at all costs” was subject to further debate.

The fuel mix could change, he said, and “the remaining two options are either retrofitting [existing plants with technology that cuts carbon emissions] or emissions trading”.

The source did not say exactly what emissions reduction a 30 per cent rise in power fees would achieve.

At the first scrutiny of a proposed amendment to the Air Pollution Control Ordinance yesterday, legislators from major parties asked why officials had failed to take the opportunity to regulate carbon emissions in the bill. The amendment is aimed at including in the bill statutory backing for emissions caps on power plants in relation to three air pollutants that have a direct impact on the health of the population.

It also spells out the general rules of emissions trading in case power firms fail to meet caps.

Lawmaker Alan Leong Kah-kit, of the Civic Party, said it would do no harm if a carbon cap were imposed on power plants even if it were frozen until the government felt comfortable about tightening it.

“At least we can cap the carbon emissions at existing levels and ensure that the power plants will not do worse than that,” he said.

Benny Wong Yiu-kam, the assistant director of environmental protection, said at the meeting that electricity costs could see sharp increases if the power companies were asked to scrap their coal-fired power stations and replace them with gas-fired plants.

He said gas prices had increased greatly in recent years.

Greenpeace activist Frances Yeung Hoi-shan said the cost for cutting power-plant carbon output might not be as high as officials claimed.

She said power plants could use a mix of strategies simultaneously – energy conservation, emissions trading, use of renewable energy and more use of natural gas.

Members Of The Environmental Group Greenpeace Protest

Monday, 07 April 2008 – Macau Daily Times

Members of the environmental group Greenpeace protest over power plant C02 emissions by releasing balloons into the air in front of the skyline in Hong Kong yesterday. According to Greenpeace, the Hong Kong Observatory – the government weather agency – has warned that winter will disappear in two decades, yet the environmental group says the government is showing no signs of capping carbon dioxide emissions from power plants in its latest amendment to the Air Pollution Control Ordinance.