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Raising The Bar

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.

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