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February, 2008:

Hong Kong Power Subsidies

Power subsidies to be credited to accounts in instalments

Paggie Leung – Updated on Feb 29, 2008 – SCMP

Electricity subsidies announced in the budget will be credited to households’ power accounts in three or six instalments, Financial Secretary John Tsang Chun-wah said yesterday.

The government would map out the details with the two power companies.

Lawmaker Audrey Eu Yuet-mee questioned if the HK$1,800 electricity subsidy would raise environmental concerns. Mr Tsang said the initiative would encourage people to save energy.

“Any unspent amount can be carried forward, so it will encourage them to use less power, thus the money can be used over a longer period,” he said.

He did not impose any eligibility criteria because those would drive up administrative costs.

Democratic Party vice-chairman Sin Chung-kai said he appreciated the move. He told Mr Tsang that “you are excellent as you can think of granting an electricity subsidy which even covers the grass roots” that could not benefit from rates and tax rebates, as well as the increase in the Comprehensive Social Security Assistance.

2008 Hong Kong Government Budget

An article on the government’s plans to subsidise electricity rates can be viewed on our news blog here:

2.4m To Get HK$1,800 Electricity Windfall

Cheung Chi-fai and Agnes Lam – Updated on Feb 28, 2008 – SCMP

More than 2 million residential power users – rich and poor – will be given a one-off HK$1,800 electricity subsidy under the government’s HK$4.3 billion scheme to help the public fight inflation.

The money, which will not be means-tested, will be added directly to 2.4 million household power accounts in instalments, and any unspent amount will be carried forward until the subsidy is spent. It is the first time the government has provided such a direct subsidy.

About 15 per cent of households, which pay less than HK$150 a month, will not have to pay electricity bills for a year.

The subsidy will partially and temporarily offset the 4.5 per cent power tariff rise introduced this year by CLP Power and the 6 per cent rise by Hongkong Electric, though both firms are also set to lower their basic tariffs later – possibly by double digits – under new regulatory regimes.

Hahn Chu Hon-keung, environmental affairs manager of Friends of the Earth, urged the public to remain vigilant about conserving energy despite the subsidy. He said a better way to spend the money would have been to subsidise buyers of energy-efficient appliances, which could help cut power bills over the longer term.

Ho Hei-wah, director of the Society for Community Organisation, said residents of caged homes or cubicles would get nothing, as they did not have separate power meters and the subsidy would go directly to the landlords.

Defending the scheme, Financial Secretary John Tsang Chun-wah said there was no better way to distribute the subsidy than across the board. Introducing eligibility criteria could mean high administrative costs. He said waiving water bills was no better option since at least 20 per cent of households pay nothing for water because their consumption is low.

Mainland’s Energy-Efficiency Gains More Than Doubled

Plant closures help to more than double energy-efficiency gains

Eric Ng – Updated on Feb 28, 2008 – SCMP

The mainland’s energy-efficiency gains more than doubled last year after the country shut more inefficient power plants than targeted and more economical ones started operating.

The mainland used 3.27 per cent less energy to generate 10,000 yuan of gross domestic product last year, compared with a reduction of 1.33 per cent in 2006, Xu Dingming, the deputy director of the National Energy Leading Group, told Bloomberg.

The better result came after the mainland failed to reach a 4 per cent reduction target set for 2006, raising concerns about whether it could achieve the 20 per cent cut between 2006 and 2010.

The mainland generates about 70 per cent of its energy from coal, and the electricity sector accounts for about 50 per cent of national coal consumption.

No official goal was published for last year, but given a 3 per cent year-on-year reduction in the first three quarters of the year, a greater saving was achieved in the fourth quarter.

To promote energy conservation, Beijing has ordered banks to curb lending to energy-intensive and pollution-prone sectors. It has also cancelled export tax rebates on some products and raised pollution charges for coal-burning.

“The power sector is a major contributor” to energy efficiency, said Gary Chiu, ABN Amro head of Asian utilities research. “Last year the government set a goal to close 10 gigawatts of small and inefficient plants, but it actually shut 14GW.

“The power sector should exceed the 13GW small plant closure target this year. It could meet the broad objective of an annual 4 per cent unit energy reduction this year.”

Annual energy savings of almost 6 per cent will be needed between this year and 2010 to achieve the 20 per cent target. Power demand grew 15 per cent last year, faster than GDP growth of 11.4 per cent.

China Huaneng Group, the parent of listed Huaneng Power International and the nation’s top power producer, said earlier it saved one million tonnes of coal by cutting its use by 2.24 per cent to 337.37 grams per kilowatt-hour last year. It aimed to cut it a further 9 per cent by 2010.

The newest generation of 1,000 MW generation units deployed by Huaneng’s Yuhuan plant in Zhejiang province consumes only 283 grams per kilowatt-hour.

Energy savings also were reported in the oil and gas and metal smelting industries.

China National Petroleum Corp, the parent of listed PetroChina, said it saved 1.5 million tonnes of coal in 2006, up from 940,000 tonnes in 2005, and aimed to conserve a total of 4.38 million tonnes between this year and 2010.

Aluminum Corp of China said it saved 427,000 tonnes of coal by improving its energy efficiency in last year’s first half. Electricity costs account for about 35 per cent of its direct production cost.

Additional reporting by Bloomberg

Green Buildings To Receive Subsidies

Bloomberg in Beijing – Updated on Feb 27, 2008 – SCMP

China, the world’s largest oil consumer after the US, plans to pay the construction industry 1 billion yuan a year in subsidies for buildings that use renewable energy sources.

The funds would encourage the use of solar, geothermal and biomass energy in buildings, said the vice-minister for construction, Qiu Baoxing. “The subsidy will continue for several five-year plans.”

Beijing is promoting the use of renewable energy to cut fuel costs. Premier Wen Jiabao aims to reduce the amount of energy used for each unit of production by 20 per cent in the five years ending 2010.

Each year, the mainland constructed buildings with about 2 billion sq metres of floor space – nearly half of the world’s total, Mr Qiu said. The government would promote the use of solar and geothermal sources to generate heat, and garbage to produce electricity, he said.

The cost of renovating existing buildings to make them energy efficient was about 100 to 200 yuan per sq metre, Mr Qiu said. Residents would take at least five years to make a return on the investment, he added.

Property owners would be required to reduce energy use in buildings, leading to at least 1.5 trillion yuan in renovations by 2020 and increased scrutiny of new projects, Mr Qiu said in January last year.

Most of the mainland’s 43 billion sq metres of existing building space fail to meet energy efficiency standards. Government planners expect to save 350 million tonnes of coal by 2020 by improving insulation and temperature control in existing and future buildings, Mr Qiu said last year.

Hong Kong Targets Power Supply

By Robin Kwong in Hong Kong – Financial Times

Published: February 19 2008 01:34 | Last updated: February 19 2008 01:34

Hong Kong’s environment secretary has warned the city’s power companies to reduce emissions of sulphur dioxide, a big source of air pollution, by a substantial amount within two years.

“Contrary to the common belief that we are producing power in a cleaner fashion, as of today that is not the case,” Edward Yau ­told the Financial Times on Monday as he prepared to impose stringent emission regulations.

The Hong Kong government is to propose legislation on Wednesday to allow China Light & Power and Hong Kong Electric, the city’s two power companies, to meet targets by trading emission credits with counterparts in neighbouring Guangdong province.

As part of the proposal, Mr Yau will lower the cap for sulphur dioxide emissions by Hong Kong power companies to 25,000 tonnes in 2010. Power generation accounts for nearly 90 per cent of sulphur dioxide emissions in the city; in 2006 the power groups pushed out 65,000 tonnes of the gas.

“These [2010 targets] are ambitious targets,” he said. “These are targets that are achievable if there is true commitment and good investment and application of technology. I think they are achievable but it will take effort.”

Rapid industrialisation of Guangdong province in recent years has meant smoggy skies are the norm in Hong Kong and international investors, as well as local residents, are calling for the government to rectify the situation.

“No one [in Hong Kong] would ask [whether air pollution is a serious problem or not] any more because they all consider it as one of the most serious concerns that affects their livelihood,” Mr Yau said.

He said the legal framework for emissions trading on Hong Kong’s side could be ready within a year, pending approval by legislators. He did not, however, give a date for similar legislation in Guangdong.

The move to introduce emissions trading comes soon after the Hong Kong government reached an agreement with the two power companies on a regulatory system that will for the first time link their maximum allowed profits to their environmental performance.

The government has also recently launched a HK$93m (US$12m, €8m, £6m) drive to help local businesses with factories in Guangdong province clean up production.

Mr Yau remained coy on when the public could expect to see improved air quality. “Even if, within the year, there is a single day when we see a smoggy sky, people will still ask why and whether we can do better,” he said. “There is no limit for people’s aspirations for clean air.”

Air Pollution Control Regulation Planned For Hong Kong

February 14, 2008 – China CSR

Hong Kong’s government plans to introduce the Air Pollution Control (Amendment) Bill 2008 into the Legislative Council to ensure implementation of emission caps for the power sector.

“Power generation is the largest local emission source. The SAR Government has therefore imposed stringent caps on the emissions of sulphur dioxide, nitrogen oxides and respirable suspended particulates from all power plants since 2005,” a government spokesman said in a prepared statement. “We are progressively tightening the caps to ensure that Hong Kong can meet the 2010 emission reduction targets as agreed with the Guangdong Provincial Government in April, 2002. The accomplishment of these targets is instrumental in meeting the Air Quality Objectives of Hong Kong, as well as in alleviating the visibility and photochemical smog problems in the Pearl River Delta Region.”

The bill will propose to bar a public officer from serving as a member of an appeal board, to further enhance the independence and impartiality of the appeal system under the Air Pollution Control Ordinance (Chapter 311). It will also remove the provision in APCO which enables the Director of Environmental Protection to refer an appeal board’s decision for review by the Chief Executive in Council.

“The SAR Government places air quality improvement high on its policy agenda. Following the inclusion of incentive and penalty arrangements in the new Scheme of Control Agreements signed with the two power companies on January 7 this year to encourage them to reduce emissions, the introduction of this bill will further underline our commitment to achieving the 2010 emission reduction targets,” the spokesman said.

The bill will be introduced into the Legislative Council on February 20.