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March, 2008:

CLP Total Carbon Emissions

13th March 2008 – SCMP

I refer to the article (“Power firm plans major cut in carbon emissions”, March 10).

It was reported that CLP Holdings (SEHK: 0002) planned “to eliminate 75 per cent of carbon emissions by 2050 in its drive to reduce global warming”. However, it should be made clear that CLP is only committing itself to a carbon intensity target, which is a not real emissions cut. CLP announced a climate strategy last December, saying that it would reduce the groups’ average carbon intensity by 75 per cent by 2050. Carbon intensity means the average amount of CO{-2} emitted for output of each kilowatt-hour of electricity. In other words, even though CLP reduces carbon intensity, its total CO{-2} emissions can still go up if it generates more and more power. A carbon intensity target is different from a CO{-2} reduction target.

In fact, CLP’s intention to continue expanding its coal-related business means its total carbon emissions will increase. The second phase of CLP’s Vung Ang coal-fired plant (installed capacity, 1,200MW) in Vietnam has been confirmed. The second phase of Fangchenggang , with 3,600MW in Guangxi region on the mainland is under negotiation. Scientists tell us that in 50 years, we have to cut global greenhouse gas emissions by 50 per cent from the 1990 level. We must not increase greenhouse gases.

TRUenergy, CLP’s subsidiary in Australia – announcing its climate strategy – not only promised to reduce carbon intensity in the short term but also to reduce its total CO{-2} emissions in the long run (a decrease of 35 per cent from 1990 levels). CLP should set up a CO{-2} emissions target for the group as a whole which is similar to the one set by its subsidiary, in order to show its real commitment to the climate.

The company’s plan to invest in large hydro and nuclear projects to meet its carbon intensity target should not be seen as a solution. Although these two fuels do not emit CO{-2}, their threats to the environment are long-term. Therefore, the company should shift its investment to renewable energy like solar and wind energy.

Frances Yeung, climate and energy campaigner, Greenpeace

CLP Carbon Output Hits 15-Year High

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

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

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

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

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

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

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

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

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

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

Back To Square One On Energy Roundabout

Updated on Mar 13, 2008 – SCMP

The decision to establish an energy commission brings efforts nearly back to a full circle, writes Eric Ng in the first part of a series looking at reforms

The State Council’s decision to establish a national energy commission instead of a ministry puts China’s energy administrators just short of completing a full circle.

And, as in most government restructuring, it has raised more questions than answers, with bureaucrats still fighting for whatever power they can grab before the dust settles.

“As the power and responsibilities of various regulatory bodies have not been unveiled, it is hard to tell what will be in store for us,” said Xie Yifu, a senior engineer at the planning and development department of China Power Investment Corporation, one of five state-owned electricity firms.

“However, the establishment of the energy commission has elevated the importance and independence of energy in the government structure, which should be positive to the industry as it theoretically would help balance the interests of different energy sectors.”

History suggests reform is a never-ending cycle.

China first established a ministry of energy in 1988, amid strong opposition from leaders in the then ministry of coal. But the “super regulator” only lasted five years and was disbanded in 1993, with the ministry of coal reinstated.

In 1998, the ministry of coal was again hammered, downgraded to the coal industry commission. It was subsequently abolished in 2001.

The former state development planning commission, now the National Development and Reform Commission (NDRC), assumed overall regulation of the oil, gas, power and coal sectors.

Calls for the re-establishment of the ministry of energy surfaced as early as 1999.

It was suggested that it should be complemented by an independent energy regulatory commission, modelled after the United States’ Federal Energy Regulatory Commission, as China explored the deregulation of energy pricing and the establishment of free markets to enhance efficiency.

However, no energy ministry was formed during the last major government reshuffle in 2003. Beijing decided instead to set up the State Electricity Regulatory Commission (Serc), allowing power prices to be the first subject of the deregulation experiment. It maintained its tight grip on petrol and gas prices.

Once again this week, the idea of a ministry was too much for the factions within the energy sectors to swallow. The latest reshuffle involves the amalgamation of functions from the NDRC’s Energy Bureau and the State Council’s Office of the National Energy Leading Group.

The Energy Bureau is responsible for industry policy and setting prices as well as project approvals, while the leading group has taken charge of the drafting of the long-awaited energy law and the mainland’s foreign energy co-operation strategy.

The end result was the abolition of the leading group and the establishment of a symbolic National Energy Commission, with day-to-day execution carried out by a National Energy Bureau under the NDRC.

The bureau has taken on administrative power over the nuclear energy sector, formerly held by the Commission of Science Technology and Industry for National Defence.

The move will help elevate the importance of nuclear energy in China’s power mix as it strives to reduce reliance on coal to address pollution problems. NDRC vice-chairman Zhang Guobao said this week the commission was studying raising the nation’s 2020 target for nuclear generation capacity to 60 gigawatts, up from 40GW.

Analysts said the latest reshuffle was no big deal.

“The change is not substantial. That said, I think the best that came out of this round of reform was the direction for the NDRC to reduce micro-management and projects approval, and to concentrate on macro planning,” said Lin Boqiang , from Xiamen University’s Centre for China Energy Economics Research.

“In most countries, bureaucrats tend to feel that they have power only if they have the right to approve concrete projects. Setting strategy doesn’t give that sort of empowerment feeling,” he said.

How much power will be siphoned off to lower-level governments remains to be seen.

Beijing-based energy consultant Robert Blohm said: “It’s like they are just putting everything in a sketch just to get the approval of the National People’s Congress. The details will come as the fighting [for power] continues.”

Giant Offshore Wind Farm Planned For Guangdong

Agence France-Presse in Beijing – Updated on Mar 04, 2008 – SCMP

The mainland would build its largest offshore wind farm in Guangdong, media reported on Tuesday, in a bid to alleviate looming power shortages.

The facility, covering a sea area of 240 square kilometres, includes a 1,250 megawatt wind farm, an 8,000 megawatt power plant and a dock construction project, the Xinhua news agency said.

The city of Lufeng, close to the farm’s planned location, and Guangdong Baolihua New Energy Stock last week signed an agreement on the project, according to earlier media reports, which gave no financial details.

A power crunch has plagued Guangdong, the country’s industrial powerhouse, for years, and this year shortages threaten to become the worst in three decades due to demand and also damage to transmission lines caused by prolonged cold weather.

Local government officials said the wind farm was expected to “relieve the energy pressure and optimise the energy structure” in the province, according to Xinhua.

Matsushita Tries Out Home Fuel-Cell Generators

Associated Press in Hiratsuka – Updated on Mar 04, 2008 – SCMP

Masanori Naruse jogs every day, collects miniature cars and feeds birds in his backyard, but he is proudest of the way his home and 2,200 others in Japan obtain their electricity and heat water — with power generated by a hydrogen fuel cell.

The technology — which draws energy from the chemical reaction when hydrogen combines with oxygen to form water — is more commonly seen in futuristic cars with tanks of hydrogen instead of petrol, whose combustion is a key culprit in pollution and global warming.

Developers say fuel cells for homes produce one-third less of the pollution that causes global warming than conventional electricity generation does.

“I was a bit worried in the beginning whether it was going to inconvenience my family or I wouldn’t be able to take a bath,” said the 45-year-old Japanese businessman, who lives with his wife, Tomoko, and two children, 12 and 9. But, as head of a construction company, he was naturally interested in new technology for homes.

Tomoko Naruse, 40, initially worried the thing would explode, given all she had heard about the dangers of hydrogen.

“Actually, you forget it’s even there,” her husband said.

Their plain grey fuel cell is about the size of a suitcase and sits just outside their door next to a tank that turns out to be a water heater. In the process of producing electricity, the fuel cell gives off enough warmth to heat water for the home.

The oxygen that the fuel cell uses comes from the air. The hydrogen is extracted from natural gas by a device called a reformer in the same box as the fuel cell. But a byproduct of that process is poisonous carbon monoxide. So another machine in the gray box adds oxygen to the carbon monoxide to create carbon dioxide, which — though it contributes to global warming — is not poisonous.

The entire process produces less greenhouse gas per watt than traditional generation. And no energy is wasted transporting the electricity where it is actually going to be used.

Nearly every home in Japanese cities is supplied with natural gas for cooking or heating, which could make it relatively easy to spread fuel cell technology there. The potential for widespread use of fuel cells in bigger or more sparsely settled countries is less certain. Many American homes do not have gas service, for example.

“There are not any real show-stoppers for this technology being used in the US,” said electrical engineering professor Roger Dougal at the University of South Carolina.

Mr Dougal said fuel cells were no more hazardous than any stove or water heater. Their major drawback was cost.

“Ultimately, I expect that some fraction of homes will use this technology, but it will be a very long time before a sizable fraction does,” he said in an e-mail.

Mr Naruse is paying one million yen (HK$74,000) for a 10-year lease on a test fuel cell for his home southwest of Tokyo from Matsushita Electric Industrial.

Matsushita, which sells Panasonic brand products, plans to offer fuel cells commercially next year.

Other Japanese companies working on fuel cells for homes include Toyota Motor, which is developing fuel-cell vehicles, and electronics maker Toshiba. Vehicle maker Honda Motor is working with Plug Power, a fuel cell company in the US, to test a home fuel cell generator that also provides hydrogen as fuel for fuel-cell vehicles.

Honda hopes domestic use of fuel-cell generators will help make fuel-cell vehicles become more widespread because owners can refuel at home. It plans to start marketing the FCX Clarity fuel-cell vehicle this year in California; it will lease for about US$600 a month.

Fuel cells are expensive in part because they do not last very long. The latest model from Matsushita, for example, lasts about three years.

But the technology is improving. Matsushita says the savings from using fuel cell-generated power will vary by household and climate, but it promises a cost drop of about US$50 a month.

Mr Naruse’s family — with three TV sets, a dishwasher, clothes washer, dryer, personal computer and air conditioner — saves about 10,000 yen a month. At the same time, conventionally generated electricity remains available to them, should the power generated by their fuel cell run low.

The Japanese government is so bullish on the technology it has earmarked 32.4 billion yen a year for fuel cell development and plans for 10 million homes — about one-fourth of Japanese households — to be powered by fuel cells by 2020.

Professor Bruce Rittman, director for the Centre for Environmental Biotechnology at Arizona State University, says the biggest benefit of fuel cell technology is that it emits only water — when there is a clean source of hydrogen.

“Fuel cells are wonderful devices because they provide combustion-less, pollution-free electricity,” he said.

Tomoko Naruse said she might never have chosen a fuel cell if her husband had not insisted.

But she is happy her children are proud of it because they are learning about the threat of global warming in school.

“I think my children are thinking about the future,” she said.

Manufacturers Revert To Dirty Diesel Amid Electricity Crunch

Denise Tsang – Updated on Mar 03, 2008 – SCMP

Mainland snowstorms have caused the worst power crisis in Guangdong in 30 years, hitting tens of thousands of factories. And the worst is yet to come.

Hong Kong manufacturers across the border are racing to have more expensive and more polluting diesel-fired power generators installed or leased to prepare for consumption peaks in the summer.

They have little hope of seeing the power grids rebuilt anytime soon in Guangdong and nearby provinces of Guangxi, Guizhou, Hunan and Jiangxi, after State Grid Corp, the monopoly power distributor for 26 provinces, revealed a reconstruction cost of 39 billion yuan (HK$42.7 billion) two weeks ago.

Hong Kong Small and Medium Business Association chairman Danny Lau Tat-pong said the supply crunch had prompted power rationing of two to three days a week in the manufacturing hub of Dongguan as a provincial policy stipulated residential needs must be met first.

Reversing its importer role, Guangdong now exports electricity to blizzard-hit provinces in the west.

“Power shortage is one of the many problems we are facing,” he said. “The worst time has yet to come,” he said. Mr Lau, also managing director of metal and glass coating firm Kam Pin Industrial, said that to keep production on schedule, the company’s factory in Da Long, Dongguan, had been forced to use diesel-fired generators.

As a result, the factory’s electricity costs had surged by about 50 per cent, on top of extra costs on diesel.

“The yearly cost of renting a diesel generation unit and buying the fuel is equivalent to the price of three smaller diesel-fired units,” Mr Lau said. “Since we have to keep the furnace burning, we have no choice.”

Mr Lau said the cost per kilowatt hour of diesel-fired electricity stands at 1.8 yuan, compared with 1.2 yuan for electricity sourced from power plants in town.

Bondi Luk, whose factory in Shenzhen produces polystyrene lunch boxes for fast-food chain Maxim’s and public hospitals, said electricity supply was relatively stable in Longgang, despite power rationing once a week.

“Touch wood, we are relatively lucky for now, but the peak demand will arrive in the summer,” Mr Luk said.

Some green groups fear air pollution will worsen with the reintroduction of diesel generators banned a couple of years ago.