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August, 2009:

Ferry operators get assurance on the cost of cleaner diesel

Cheung Chi-fai and Anita Lam – SCMP

The extra cost of using cleaner diesel in Hong Kong’s ferries is likely to be much less than ferry operators have claimed, the environment watchdog says.

Ultra-low-sulphur marine diesel, which went on trial in five ferries yesterday, would cost about 60 HK cents a litre more than conventional diesel, not up to HK$3 as the companies had estimated, the Environmental Protection Department said.

But one of the operators said the cleaner fuel would still push up its operating costs by 10 per cent, increasing pressure for a fare rise.

A department spokesman said clean diesel now cost HK$4.50 a litre, compared with HK$3.90 for conventional marine diesel, subject to oil-price fluctuations.

Hong Kong & Kowloon Ferry said that price difference would lead to a 10 per cent rise in operating costs if all its vessels used the fuel.

“The additional cost would erode our meagre profit and increase pressure for a fare rise,” general manager Nelson Ng Siu-yuen said.

Launching the nine-month trial of the cleaner fuel yesterday, the Environmental Protection Department said it would pay up to HK$10 million in incentives for ferry operators to take part. The money was for fuel subsidies and technical monitoring. The trial would provide data on operating costs, and the impact on maintenance and technical performance to help officials decide whether all ferries should use cleaner fuel.

The fuel, 100 times lower in sulphur, will be supplied to five selected ferries by an oil barge operated by Sinopec (SEHK: 0386) in Cheung Sha Wan.

These are New World First Ferry’s Xin Hui III and VIII between Central and Cheung Chau and Xin Ying running from Central to Mui Wo; Hong Kong & Kowloon Ferry’s Hoi Ming connecting Central and Peng Chau; and a Hong Kong and Yaumati Ferry car-carrier between Kwun Tong and North Point.

The Star Ferry did not join the trial, saying its own trial of cleaner diesel in 2006 resulted in loss of power, higher fuel consumption, and engine corrosion. “We will still keep track of the trial results of other ferry operators,” general manager Johnny Leung Tak-hing said.

The department spokesman said there had been no mechanical problems for government vessels since they started using the cleaner fuel in 2000. He said there were other solutions to resolve the operators’ worries about the lubricating effect of sulphur in the engines.

The spokesman said that if all local passenger ferries switched to the cleaner fuel, the total sulphur emissions from the marine sector could be cut by about 12.5 per cent. Other sulphur emissions come from domestic vessels such as barges and fishing boats, as well as ocean-going vessels and cross-border ferries.

The Marine Department said four local vessel operators were convicted for black-smoke emissions last year, compared with none in 2007

Ferry firms must play part in clearing the air


The unsightly black smoke that pours from ferries as they churn across the harbour tells much about the Hong Kong government’s approach to air pollution. It is a clear sign of the need for greater urgency. Such emissions are from another era, an age when the world had little concern for the environment. Visitors look at the pall and in an instant think our city is out of step with global concerns about climate change, sustainability and public health.

This is not the case, of course. Lawmakers are only too aware of what they should be doing to clean our air. The Environmental Protection Department is staffed with highly skilled officers who are not short of facts, figures and solutions. What is holding up action is an unelected government under pressure from interest groups: in this instance, ferry companies.

A government with a popular mandate could quickly fix the problem by making it law that ferry operators use clean diesel to fuel their craft. There is no reason why our leaders could not also do the same in the name of the common good. We must remember, though, that the companies have been hit hard by the economic crisis and unstable fuel prices. Any move to get them to switch has to involve cajoling, convincing, incentives and help with infrastructure.

The nine-month trial of ultra-low-sulphur diesel involving three ferry companies announced yesterday fits with such a strategy. Passing it off as a technical and economic feasibility study lays the groundwork. The best locations for refuelling depots can be determined during the trial. From the initial five ferries, the programme can be broadened. During the nine months, the benefits that are already so obvious will be made plain to the ferry industry.

Ferry companies have to use cleaner fuel; on this there can be no argument. Higher fares may be necessary to help offset increased fuel costs. The trial will help determine the details. Unlike other schemes, though, this one must not be left high and dry after it ends or is implemented on a voluntary basis. Getting rid of such pollution is an integral part of cleaning Hong Kong’s air

US$41b gas pact eases Australia, China tensions

Staff reporter and agencies, SCMP

China and Australia have kissed and made up to the tune of more than US$40 billion, overlooking recent tensions to seal a gas supply agreement that is the latter’s biggest deal on record.

PetroChina, the nation’s biggest oil and gas producer, late on Tuesday ordered 2.25 million tonnes of liquefied natural gas (LNG) a year over 20 years from ExxonMobil Corp’s Gorgon plant in Australia in a deal totalling US$41.29 billion.

The deal signals that even as an Australian citizen working for mining giant Rio Tinto languishes in a mainland jail for allegedly stealing commercial secrets from the Chinese, realpolitik is prevailing in both Beijing and Canberra.

China, which received its first LNG cargo in May 2006, plans to build more than 10 terminals on the east coast to meet a government target to double the use of natural gas in five years by 2010.

LNG is natural gas that is chilled to liquid form for transport by ship to destinations not connected by pipeline.

Woodside Petroleum, the operator of the Browse LNG export project in Australia, had already agreed to sell fuel worth about A$45 billion (HK$286 billion) to PetroChina.

“The long-term interests of the two countries will always trump the occasional crisis,” said Michael McKinley, a professor of global politics at the Australian National University. “China’s interest is in obtaining resources at the right volume and price and it’s able to do so in Australia.”

Australian mineral and energy exports to the mainland have been credited with helping the nation of 22 million people avoid a recession, but the country’s growing reliance on China has raised political tensions.

The Gorgon deal brings the value of various mining and energy deals agreed between China and Australia over the past year to more than US$183 billion – more than the gross domestic product of New Zealand.

China now consumes almost 80 per cent of Australia’s iron ore exports by volume, up from less than 60 per cent a year ago and about 20 per cent at the start of the decade.

Fortescue Metals Group, Australia’s third-biggest iron ore exporter, remains in talks with Chinese groups to secure as much as US$6 billion in capital to expand.

The relations between the two nations, which had improved after the election of the Putonghua-speaking Kevin Rudd as Australian prime minister in 2007, have been strained recently. The arrest of the Rio executives and Canberra’s decision to approve the recent visit of exiled Uygur leader Rebiya Kadeer have raised hackles in both capitals, underscoring the vast political divide between the two countries.

But when it comes to energy and minerals, the two sides are on the same wave length – the bigger the deals the better.

“The [PetroChina] deal proves that Rio is just an individual case … and the close trade ties between China and Australia will not be affected,” said Han Xuegong, a professor at CNPC Managers Training Institute in Shanghai.

Officials in both countries have sought to play down the frictions between them.

Australian Resources and Energy Minister Martin Ferguson was quoted as saying the ExxonMobilPetroChina deal was “testimony to the strength of Australia’s continuing trade and investment relationship with China”.

Bloomberg, Reuters

Study urges greenhouse gas caps, peak in 2030

Reuters in Beijing

China should set firm targets to limit greenhouse gas emissions so they peak around 2030, a study by some of the nation’s top climate change policy advisers has proposed ahead of contentious talks on a new global warming pact.

The call for “quantified targets” to cap greenhouse gas pollution marks a high-level public departure from China’s reluctance to spell out a proposed peak and date for it.

“By last year China had become the world’s biggest national emitter of greenhouse gases and faces unprecedented challenges,” says the preface of the 900-page report, setting aside China’s reluctance to say it has passed the United States as the top emitter of carbon dioxide, the main greenhouse gas from burning coal, gas and oil.

“As soon as possible, study and draft relative and [then] absolute targets to cap the total volume of carbon dioxide emissions,” says the preface of the report, obtained by reporters.

“Establishing and acting on quantified targets and corresponding policies to address climate change in the medium to long-term is already a matter of great urgency.”

The 2050 China Energy and C02 Emissions Report proposes that, with the right policies, emissions growth could slow by 2020, with levels peaking around 2030.

If China can reach these goals, by 2050 its carbon dioxide emissions from fossil fuel “could fall to the same emissions levels as in 2005 or even lower”, the report says.

The report in Chinese is on open sale and builds on earlier research exploring pathways to a “low-carbon” economy. It adds to recent signals that Beijing wants to play an active role in seeking agreement for a new international climate change pact.

With its fast-rising greenhouse gas emissions, Beijing’s stance will be crucial in efforts to create a successor to the current Kyoto Protocol, which expires at the end of 2012.

Western nations have pressed Beijing to set specific goals on slowing emissions growth in coming years, leading to early cuts in absolute volumes as part of a new pact governments hope to seal in Copenhagen by the end of this year.

Under current treaties, China and other developing countries need not shoulder the quantified limits on emissions that rich economies must take on.

Beijing has said that principle must not change and resisted specifying when its emissions may peak, pointing out its average emissions per person remain much lower than the average in rich nations.

But the airing of proposals for emissions caps comes after signs that Beijing has become more open to stronger steps against global warming as negotiators struggle to build agreement before Copenhagen.

Early this month, China’s ambassador to the climate talks, Yu Qingtai, said his government wanted to curb greenhouse gas emissions as soon as possible.

“This report is intended to advise the Chinese government what its options are,” said Deborah Seligsohn, China programme director with the World Resources Institute, a Washington-based organisation promoting policies to fight global warming.

“I think they’re making a pretty concentrated push to move the negotiations forward,” said Mr Seligsohn.

The dozens of contributors to the report included climate policy experts from leading Chinese state think-tanks, including the Energy Research Institute and the State Council Development Research Centre, which advises the cabinet.

Participating scholars stressed that the study was a research exercise, not a definitive policy blueprint, and there was no suggestion that the senior officials listed as its advisers endorsed its specific proposals for targets and a 2030 peak.

But the proposals in the report have been circulated among officials and were echoed in a cabinet meeting last week that urged making “controlling greenhouse gas emissions” an important part of development plans, said an expert familiar with the project, speaking on condition of anonymity.

“I think this report reflects a growing consensus among domestic experts favouring more active steps against climate change, with a peak by 2030,” said Wang Yi, an expert at the Chinese Academy of Sciences who participated in the study.

The report spells out possibly disastrous consequences of global warming, as growing amounts of human-caused greenhouse gases retain more of the sun’s energy in the atmosphere.

“The potential threat to China from climate change exists and it is massive,” states the report, warning of worsening droughts and floods, retreating glaciers, shrinking farm productivity and threats to water supplies for the country of 1.3 billion people.

To curb emissions, China could push financial steps and price reforms to favour clean energy, a “carbon tax” on fossil fuels, emissions targets for local governments and cautious steps towards a “cap-and-trade” system for buying and selling emissions rights, says the report.

Beijing may seek to use such domestic initiatives to show other nations it is serious about fighting global warming, even if the steps are not directly included in any international pact.

“The problem now is not China making its own domestic commitments and targets, it’s how we treat those commitments internationally,” Dai Yande, a deputy director of the Energy Research Institute and one the report’s organisers, told reporters.

Wind farm will cost a lot and generate very little electricity


Director of Environmental Protection Anissa Wong Sean-yee has approved CLP Power (SEHK: 0002)’s proposed offshore wind farm near Sai Kung (“CLP’s Sai Kung wind farm gains approval”, August 4).

She requires the project proponent to, within six months, set up a stakeholder liaison group comprising those relating to the fisheries sector and environmental and hiking groups and advise on the design, construction and operation of the project.

She also requires the proponent to submit a fisheries enhancement plan, including deployment of artificial reefs and ensure the wind farm will cover the smallest area and is as far away from the Ninepin islands as possible. But these requirements are what the Advisory Council on the Environment recommended in its report on the 108th environmental impact assessment sub-committee meeting last month. Clearly, the director has no more input on the approval other than issuing an environmental permit.

In my letter (“A sensible government would say no to expensive wind farm”, June 9), I questioned the practicality of procuring 1 per cent of the city’s total electricity consumption through the wind farm as the amount of electricity generated by it could easily be saved by simply switching off electrical appliances when not in use.

Such a consideration alone will surely render the proposed 200-megawatt wind farm superfluous to the city’s power requirement.

In the 2003 Study on the Potential Applications of Renewable Energy in Hong Kong, the consultant recommended that the target for locally produced renewable energy’s contribution to annual electricity production should tentatively be set at 1 per cent in 2012. This target is so low it is meaningless, but it curiously fits in with the proponent’s present wind farm output.

It was said that the scheme of control agreement with the government provides a framework for monitoring the performance of power companies so as to protect the interests of consumers. By saying yes to the superfluous and expensive wind farm, the government should clarify how consumer interest has been protected.

Alex Tam, Sai Kung

New Advances in Hydrogen Fuel Catalysts

Hydrogen has great potential as a fuel of future because it is an environmentally clean energy fuel and save us from the undesirable side effects of greenhouse gases. Before becoming it a fuel of the masses we need necessary infrastructure to store it and move it. We will also need fuel cells on economical scale. To make hydrogen as a popular alternative fuel some engineers are working on storage factor of hydrogen fuel. They don’t want compressed hydrogen into a tank. They want to store hydrogen fuel into a large molecule. When we want hydrogen out of the molecule we will need a catalyst. Now, researchers have new details about one such catalyst.

Scientists from the Department of Energy’s Pacific Northwest National Laboratory are working on catalysts. They are finding out the characteristics of the catalyst which are a cluster of rhodium, boron and other atoms. The catalyst chemically reacts with ammonia borane to release the hydrogen as a gas. Ammonia borane is a molecule that stores hydrogen densely. PNNL chemist and study author Roger Rousseau shares his thoughts, “These studies tell us what is the hardest part of the chemical reaction. If we can find a way to change the hard part, that is, make it easier to release the hydrogen, then we can improve this catalyst.”

Researchers and engineers are figuring out the hydrogen storage system that is safe and discharges hydrogen easily. They are “storing” hydrogen as part of a larger molecule. Ammonia borane contains hydrogen atoms and serves as structural hold-on. The catalyst’s job is to extract the hydrogen from the ammonia borane.

The PNNL chemists in the Institute for Interfacial Catalysis are banking on the rhodium-based catalyst. The scientists are working on various structural combinations that can give maximum output. Right now they are trying various shapes such as tetrahedron, or a triangular pyramid with four rhodium atoms at the core. To arrive at the ideal combination they are trying both theory and experimental work.

They employed several methods for ammonia borane reaction. They used one unusual technique operando XAFS. They X-rayed the catalysts in action instead of the usual standstill X-ray. They carried out some different experiments too in EMSL, DOE’s Environmental Molecular Sciences Laboratory on the PNNL campus. They collected important data but they require exhaustive analysis before they can make any sense. The research team used computer models to solve this data puzzle so that they can construct a theoretical molecular configuration that accounted for all the data. These computationally challenging models were calculated on computers at the National Energy Research Scientific Computing Center at Lawrence Berkeley National Laboratory in Berkeley, California.

The computer model created a structure that best integrated the experimental data. They tested the authenticity of the data too with computer simulation with the help of an operando XAFS analysis of the catalytic structure reacting with ammonia borane. The next logical step was to compare the simulated data with real data of the catalyst. The two sets of data didn’t have much difference.

The chemical character of the structure and supplementary experimental data helped the team to chart the chemical reaction occurring between the catalyst and the ammonia borane. The catalyst is always in the state of a motion so it is difficult to spot but nonetheless it is a good catalyst.

How this catalyst actually works? First it marks out hydrogen from the ammonia borane molecule. This ammonia borane consists of a nitrogen atom in the molecule holding onto two hydrogen atoms. First, the catalyst picks out one hydrogen atom. This is the hardest part of the reaction. This first step makes the bond between the remaining hydrogen and boron unstable. Now plucking off the second hydrogen atom becomes easier. Same holds true for the last two hydrogen atoms. These hydrogen atoms can be utilized in engines or fuel cells.

The team has yet to figure out the additional details but this study makes a big dent in what they need to know to design a good, inexpensive catalyst. Rousseau elaborates, “An important part about this work is that we have these kinds of DOE teams where we can start with experiments and go to theory and back again. We get a lot more information this way than doing either one alone.”

Clean energy set for massive boost

A scheme to massively boost renewable energy looks set to get the green light – but not without some tinkering.

The federal government wants to have 20 per cent of electricity come from renewable sources by 2020.

A scheme, separate to emissions trading, is before parliament to achieve the Renewable Energy Target (RET).

If passed, possibly as early as next week, it would lead to a boom in the wind and solar power sectors.

A Senate committee report on the draft laws shows strong support from all political parties, but they want some changes too.

The government-dominated committee wants the RET, which is expressed in units of energy rather than a percentage, to be increased if total energy consumption rises faster than expected.

The committee wants to make sure that a penalty fee for electricity generators which do not buy the required amount of renewable energy is harsh enough.

The most contentious issue is the government’s decision to link the RET to the troubled emissions trading scheme (ETS).

The committee did not support separating the two, but in a minority report, the coalition said it would seek to decouple them in the parliament.

The coalition also wants the aluminium industry – which uses lots of electricity – to be spared 90 per cent of their share of paying for the RET.

And the waste gases from coal mining should be designated a renewable source, the coalition says.

The Australian Greens want the RET increased to 30 per cent, a gross national feed-in tariff for renewable energy producers, and an end to exemptions which spare industry the cost of the RET.

Independent senator Nick Xenophon also wants the RET and the ETS decoupled, and he wants air-sourced heat pumps to be removed from the RET.

The report was issued by the Senate’s Economics Legislation Committee.

© 2009 AAP

Pollution pays off for billionaire

Marian Wilkinson and Ben Cubby

Michael Kadoorie, left, in Hong Kong. Photo: AFP

A HONG KONG billionaire will receive millions of dollars in compensation under the Rudd Government’s emissions trading scheme – but would get almost twice as much under the Opposition’s plan.

The tycoon and philanthropist, Michael Kadoorie, is the chairman of CLP Holdings, formerly China Light and Power. The company, partly owned by his family, has power stations in Hong Kong, China, India and Thailand but one of its most heavily polluting plants is Yallourn in Victoria.

Under the Government’s scheme, Yallourn would share in $3.9 billion in free permits and assistance allocated to electricity generators to help them when companies and consumers begin to pay for emissions from 2011.

But under the scheme the Opposition Leader, Malcolm Turnbull, is advocating, the amount of compensation for generators such as CLP would more than double.

Mr Turnbull is demanding the Government raise the amount of assistance to between $8 billion and $10 billion.

The author of the Frontier Economics report Mr Turnbull released on Monday, Danny Price, has been one of the NSW Labor Government’s top-paid energy consultants for a decade and helped design the failed plan for privatising the state’s electricity industry.

Last year the federal Climate Change Minister, Penny Wong, promised that electricity generators would get the $3.5 billion assistance spread over five years because it was ”a necessary and important contribution to support essential new investment in the Australian electricity generation sector”.

Apart from Sir Michael’s company, which owns Victoria’s TRUenergy, British power giant International Power will also benefit through its ownership of the Hazelwood and Loy Yang B plants.

The British company owns generators in Indonesia, Britain, Pakistan and Europe and recently sold its Czech power plants for a reported $US1.24 billion ($1.48 billion).

The investment company, Innovest, in a report for the Australian Conservation Foundation, says International Power could receive about $84 million, Sir Michael’s company, CLP Power International, $55 million and Japan’s Tokyo Electric Power $31 million for its partial ownership in the Loy Yang A station.

The companies declined to comment yesterday on the Opposition’s latest commitment but both have been vocal in demanding Senator Wong increase the assistance.

The head of the Energy Supply Association, Brad Page, told the Herald the foreign generators’ claims were not exaggerated.

”There is a genuine, serious issue here”, he said. ”It’s not about who owns these companies and assets. This is about the sovereign risk that is attached to Australia.”

Enova Delivers Hybrid Drive Systems to First Auto Works for Hybrid Buses


Enova’s Pre-Transmission Parallel Hybrid System locates the electric motor between the engine and transmission. Click to enlarge.Enova Systems, Inc. has delivered the first 70 pre-transmission hybrid drive systems to First Auto Works for application in a hybrid bus. FAW has ordered an additional 150 hybrid drive systems for delivery in 2009. Enova Systems and FAW have executed an agreement to supply a further 800 pre-transmission hybrid drive systems in 2010.


Enova’s Pre-Transmission Parallel Hybrid System locates the electric motor between the engine and transmission. Click to enlarge.

First Auto Works is one of China’s largest vehicle producers, manufacturing in excess of 1,000,000 vehicles annually. The Enova drive system will be integrated and branded under the name of Jiefang. The Jiefang 12-meter hybrid bus can carry 103 passengers and travel at a maximum speed of 85 km/h (53 mph). The bus meets Euro III emission standards. It will consume 30 liters of fuel every 100 kilometers (7.8 mpg US) and discharge 20% less emissions.

Enova’s Pre-Transmission system locates the electric motor between the engine and the transmission. Both the electric motor and the existing vehicle’s engine operate simultaneously to drive the wheels during acceleration. As the vehicle slows, during braking, the electric motor functions as a generator to recharge the batteries. Because the electric motor is placed directly between the engine and transmission, the system typically requires modification to the engine installation and thus is suited to OEM applications, as opposed to retrofits.

These hybrid power buses are part of China’s initiative to produce 500,000 electric and hybrid power vehicles. The initiative will account for 5% of the automobile market, which is in accordance with China’s three-year development plan for the auto industry, released in February.

China is offering subsidies in 13 trial cities, including Beijing, Shanghai, Changchun, Dalian and Shenzhen. Each energy-saving or new energy vehicle used in public services attracts a subsidy of up to 600,000 yuan (US$87,780), according to a new policy jointly issued by Ministry of Science and Technology and Ministry of Finance.

The municipal government of Dalian and the city of Changchun has ordered many of the hybrid buses. Fifty buses will be running in the city during the Summer Davos event, all of which will incorporate Enova’s drive system.

Enova produces four drive configurations (Pure Electric, Series Hybrid with Diesel Generator, Pre- and Post-Transmission Parallel Hybrids) for customers including Navistar’s IC Bus Division, Smith Electric Vehicles and the China FAW Group Corporation.

© 2005-09 Green Car Congress

Hongkong Electric Plans Overseas Growth as Net Falls (Update3)

By John Duce, Bloomberg

Aug. 5 — Hongkong Electric Holdings Ltd., controlled by billionaire Li Ka-Shing, plans to expand overseas after a government agreement in the city limiting returns led to a decline in first-half profit.

Net income fell 16 percent to HK$2.67 billion ($345 million) from a year earlier, the company said in a statement to the Hong Kong stock exchange today. That’s better than a median estimate of a HK$2.52 billion profit in a Bloomberg survey of five analysts. Earnings from operations in the city dropped 35 percent.

“We will continue to look for investment opportunities outside Hong Kong,” Chairman Canning Fok said in the statement, without elaborating. The utility expects electricity sales in Hong Kong to remain little changed in 2009.

Under a Scheme of Control agreement introduced in January, the rate of return on fixed-asset spending by Hongkong Electric and bigger rival CLP Holdings Ltd. was reduced to 9.99 percent from between 13.5 percent and 15 percent. The agreement, valid until 2018, links power companies’ returns to efforts to cut pollution for the first time.

“The results reflected the new limits on returns,” Michael Yuk, an analyst at Sun Hung Kai Financial, said in Hong Kong. “The company will have to continue its policy of investing in businesses overseas to try to lessen the impact and achieve more growth.”

Overseas Projects

The city’s second-biggest electricity supplier has invested in projects in mainland China, the U.K., Thailand, Australia and New Zealand to offset reduced earnings from Hong Kong. Earnings in its home market fell to HK$1.8 billion in the first half, while profit from overseas operations more than doubled to HK$883 million, today’s statement said.

Higher contributions from abroad have helped to counter the impact of the lower rate of permitted return, said Fok.

Shares fell 0.4 percent to HK$42.20 in Hong Kong. The Hang Index dropped 1.5 percent. The stock has declined 2.6 percent this year, while the Hang Seng gained 44 percent.
Electricity sales in Hong Kong in the first six months fell 0.6 percent, today’s company statement said. Directors have declared an interim dividend for this year of HK$0.62, the same as given in 2008.

Hongkong Electric said in March, when it announced its annual results for 2008, that 2009 would be “challenging” and the revised Scheme of Control would likely cut earnings.

Domestic operations posted a HK$7 billion profit in 2008, before the revised limits on returns were introduced, while earnings from overseas projects exceeded HK$1 billion.

The utility’s more recent overseas acquisitions include the HK$5.68 billion purchase of three power stations in mainland China from parent company Cheung Kong Infrastructure Holdings Ltd. The supplier of 20 percent of the Hong Kong’s power also acquired a 50 percent stake in the electricity distribution network in Wellington, New Zealand, last year and increased its holding to 35 percent in Northern Gas Networks in the U.K.