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Friends of the Earth

Emissions Caps Could Be Costly For Power Firms

SCMP – Cheung Chi-fai
Jan 08, 2008

Power companies may earn up to a combined HK$476 million a year less under new schemes of control that tie the emission of pollutants to returns, the Environment Bureau has said.

The companies which exceeded the emission cap of any single pollutant by between 10 and 30 per cent would have their rate of return cut by 0.2 per cent, the bureau said yesterday.

If emissions go beyond the caps by more than 30 per cent, the rates of return will be cut by 0.4 per cent. Based on 2006 assets figures, this means CLP Power (SEHK: 0002) may earn HK$290 million less and Hongkong Electric (SEHK: 0006) HK$186 million less.

Conversely, if the power companies achieve emission reductions of between 10 and 30 per cent below the caps, they will receive extra returns equalling 0.05 per cent.

If emission cuts go below the caps by more than 30 per cent, the companies will get extra returns of 0.1 per cent. That would amount to HK$73 million and HK$47 million for CLP Power and Hongkong Electric respectively. Hahn Chu Hon-keung of Friends of the Earth said it was difficult to assess if the penalty would be a sufficient deterrent.

He said little was known about 2010 or post-2010 emission caps and the limits already given were too lenient. Hong Kong has an agreement with Guangdong to cut emissions by 2010.

“The caps are quite lenient and there seems to be little difficulty for the power companies to meet them,” Mr Chu said. “It is almost guaranteed that they will get extra returns.”

Based on the 2006 emission figures of CLP’s Castle Peak power station and Hongkong Electric’s Lamma power station, the firms had already met the caps for last year, except for particulate pollutants.

Man Chi-sum, chief executive officer of Green Power, welcomed the link between emissions and returns but said the government should set out future caps clearly, especially those for after 2010.

“The precondition for its success is to gradually tighten the caps in the long term,” Dr Man said. “So it is time for us to consider the caps for beyond 2010.”

He said it would be difficult for the power companies to exceed the caps by 30 per cent. But Dr Man agreed that power companies might opt for the emission trading scheme with the mainland in case they faced a serious shortfall in the targets. He said the cost of buying credits from mainland power plants might be lower than the penalties imposed.

Apart from the penalties on exceeding emission caps, the new schemes will require the two power companies to carry out a combined 200 energy audits for clients and encourage them to adopt energy-saving measures.

They will also set up a loan fund totalling nearly HK$190 million for potential applicants to implement these measures.

If 18 million kWh could be cut, the two firms would get an extra 0.02 per cent in returns, which would equal HK$23.8 million.

But Mr Chu said the saving targets meant almost nothing as they accounted for only 0.0004 per cent of Hong Kong’s electricity consumption in 2006.

He said another scheme implemented since 2000 alone had achieved a reduction of 172 million kW.

CLP Coal in Hong Kong

Patsy Moy and Nishika Patel

Saturday, December 08, 2007: HK Standard

China Light and Power has pledged not to build any more coal plants in Hong Kong while setting a global target to cut its carbon intensity – the amount of carbon emitted per unit of energy used.

CLP, the producer of electricity in six Asian economies, will set a group- wide target of reduction at 75 percent by 2050 to benefit from global emissions trading.

The company has also fixed interim targets for emission cuts for 2010, 2020 and 2035.

As part of its strategy, CLP will boost investments in renewable energy, including an 82.4-megawatt wind farm in India.

The Environmental Protection Department welcomed CLP’s green policies.

But the green initiatives have failed to please local environmentalists who accused the Hong Kong company of “playing with figures and jargon.”

They said the benefits to be brought by the company’s green policies remain uncertain.

Friends of the Earth environmental affairs manager Hahn Chu hon-keung criticized the Hong Kong-based company for declining to specify the amount of carbon to be reduced in the city.

“It doesn’t mean the company should only protect Hong Kong’s environment at the expense of other places. But as a Hong Kong-based company, it should specify its pledge for Hong Kong people,” Chu said.

Frances Yeung Hoi-shan, Green Peace’s climate and energy campaigner, also accused CLP of not spelling out its target reduction rate for specific places except Australia.

CLP has a subsidiary in Australia which has set a standard to cap emissions, according to Yeung.

She also explained that the carbon intensity reduction did not amount to an actual cut in carbon emissions if the company continued to increase its energy production.

“They are playing with figures to give the public an impression that they are a green company,” she claimed, adding that power plants are Hong Kong’s largest greenhouse gas emitters, accounting for about 70 percent of total CO2 emissions in the city.

“The government only restricts power plants’ air pollutants at the moment but to combat climate change, it should also regulate their CO2 emissions.

“If power plants exceed the caps, they should be penalized financially,” she said.

CLP on Friday said a major initiative for Hong Kong is to bring in a liquefied natural gas terminal to increase natural gas in fuel mix of up to 50 percent for power generation against the current 30 percent.

Developing an offshore wind farm in Hong Kong is a possibility that the company will also look into.

CLP now operates one coal-fired power plant in Hong Kong at the Castle Peak power station.

The company said it is committed to not building new coal-fired power stations in Hong Kong or in developed countries.

It has plans for a transition from conventional coal to more climate-friendly fuels or technologies.

In developing countries where the company has conventional coal-fired generation plants, it will ensure they can be fitted with carbon capture and storage equipment to tackle emissions.

Green Groups Push For CO2 Caps in Scheme of Control

Nishika Patel

Wednesday, November 28, 2007

Six green groups have accused the government of not doing enough to curb greenhouse gas emissions, saying the new scheme of control will not force power companies into line.

Staging a protest at the Environment Bureau yesterday, members of the alliance urged authorities to cap carbon dioxide emissions for power plants and deduct their profits if the targets are not met.

Greenpeace said CLP Power and Hong Kong Electric are responsible for emitting 70 percent of carbon dioxide in the SAR and are the biggest source of greenhouse gas emissions

The groups are angry that the government only regulates emissions of sulfur dioxide, nitrogen dioxide and respirable suspended particulates, but not the chief greenhouse gas, carbon dioxide .

“While countries around the world are actively fighting global warming, the SAR government simply allows carbon dioxide emissions to damage the climate without regulation. The government should not shirk its responsibility,” Greenpeace climate and energy campaigner Frances Yeung Hoi-shan said.

The alliance also wants a new scheme of control to set targets to reduce energy consumption and sanctions imposed if the power firms fail to meet the targets.

“Energy saving is the most cost- effective means to control greenhouse gas emissions and improve air quality. However, the government has suggested offering incentives to power plants to improve energy saving and demand-side management which, however, are not compulsory and only serve as foil,” Yeung said.

The groups included Friends of the Earth, Greeners Action, Green Sense, WWF Hong Kong and Clear the Air, along with Carbon Dioxide Foundlings.

International Convention On Toxin Control

Wednesday, February 1, 2006

Toxin controls pose fresh challenge to power firms

CHEUNG CHI-FAI

The environment watchdog is poised for another head-on clash with power suppliers as it proposes phasing out old coal-fired generation units to meet an international convention on toxin control.

The plan aims to fulfil the Stockholm Convention on Persistent Organic Pollutants that bans or limits the production and release of 12 toxins, including pesticides and dioxin.

Hong Kong has to submit its implementation plan on the curbs this year via Beijing, a signatory to the convention.

The proposed move comes at a sensitive time as CLP Power is locking horns with the government over plans to reform the electricity market and associated environmental requirements.

At the core of the potential new row is the release and production of cancer-causing dioxins and furans – two by-products emitted into the air and left in the ashes from burning coal.

It is estimated that the power companies could have contributed 26 per cent of the dioxin and furans produced in 2003, following metal production (39 per cent) and land-filling (28 per cent).

In the draft plan, the government says it may propose phasing out old coal-fired generation units and replacing them with gas-fired units within 10 years of the policy being implemented.

Although the plan said switching to gas could reduce dioxin emissions by up to 95 per cent, it also acknowledged that a full-scale switch had to take into account energy policy, economic considerations and the city’s electricity needs.

The proposal is understood to be a “committed direction” of the government, although there is no clear timetable.

It also proposes as a “priority task” an investigation of the dioxin and furans content in coal-burning residues and recycled products containing the residues. Ash products – mixed with concrete or bricks – are widely used in construction projects.

Ash is being stored in ash lagoons in Tuen Mun and on Lamma Island operated by the two power suppliers. But the one in Tuen Mun might need to be moved because the government wants to use the site for landfill expansion.

Friends of the Earth environmental affairs manager Hahn Chu Hon-keung supported a review of the heavy reliance on coal.

“The dioxin emission from coal burning is one of the neglected areas in the electricity market reform and now it is time to deal with it. There is no excuse for the power companies to evade it,” he said.

Mr Chu said he was worried that few studies had been done on ash products, and feared that dioxin residues could be released back into the environment when structures or roads were demolished.

CLP Power said it was studying the implications of the convention.

Hongkong Electric said: “Dioxin emission in coal-fired generation process is negligible due to its high boiler combustion temperature.”