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LNG Receiving Terminal by Castle Peak Power Company

Date: 22 January 2007

To : Environmental Protection Department

Re: Environmental Impact Assessment under Study Brief No. ESB-126/2005 for Liquefied Natural Gas (LNG) Receiving Terminal by Castle Peak Power Company

Clear The Air Response to EIA based on objectives of the study brief

1. Proposed capacity

“The objectives of the EIA study are as follows:

(ii) to provide information on the intended uses of the LNG and justify the proposed capacity of the facilities;”

Clear The Air

Clear The Air submit that there is no justification for the proposed capacity. Below is a graph of the “fuel mix” as used by CLP in 2004 and a proposed “fuel mix” by Clear The Air for 2013. The need for proposed LNG capacity can be eliminated because the existing gas supply can be extended by the fuel mix below which will also significantly reduce air pollution.

CLP Power can:

a. Eliminate electricity sales to China
b. Eliminate the 50% discount for large users to encourage less energy use
c. Start practicing proper demand management to reduce energy use by 30% using techniques that have been successful in Thailand, South Korea and the US.
c. Invest in renewable energy through
– large scale renewable energy projects
– small scale electricity generation reducing the total annual need for natural gas

Fuel Mix Used by CLP in 2004 and proposed fuel mix by Clear The Air for 2013

2. LNG carrier route

(iv) “to identify and describe the elements of the community and environment to be affected by the Project, including any loss of natural coastline, rocky or sandy shore, the population close to the LNG carrier route, and/or to cause adverse impacts to the Project, including both the natural and man-made environment and the associated environmental constraints;”

Clear The Air:

CLP Power provided an incorrect carrier route. LNG ships going to and from the Black Point site can use existing shipping lanes and the Tong Gu Channel (under construction) If this Channel is extended into Hong Kong waters, as was originally proposed, the route would not be close to any population centres.

3. Alternatives

(v) “to consider alternatives including, but not limited to, location, size of reclamation, scale of development, design layout, with a view to avoiding and minimizing the potential environmental impacts on marine waters and the ecological sensitivity areas and other sensitive uses; to compare the environmental benefits and dis-benefits of each of the different options; to provide reasons for selecting the preferred option(s) and to describe the part of environmental factors played in the selection;

Clear The Air

Clear The Air submit the following alternatives that are not included in the EIA:

  • Extend the existing contract with the Chinese company CNOOC so they can drill new gas wells to provide methane beyond the current contract period. CNOOC has indicated in the press that they are willing to do so.
  • Pursue the energy demand reduction plan shown above.
  • On-board Re-Gasification of LNG instead of terminals – a more flexible and significantly less destructive technology than building terminals.
  • Invest in proven “clean coal” technology
  • Use the Chinese company SINOPEC as a methane supplier as they have shown interest in supplying Hong Kong from an LNG facility they are planning to build on Huangmao Island.

4. Options
(xiv) to compare the environmental merits and demerits of the Soko and/or Black Point Option with other options;

Clear The Air

The merits and demerits of the Black Point Option should have included extending the dredging of the Tong Gu channel in Hong Kong waters so that LNG ships can get to and from Black Point

Clear The Air note that In May 2003, the EPD issued a study brief for the Shenzhen Port Tonggu Channel Developing Office so that they could write an EIA. In March 2005, The Director of the EPD ruled that the EIA submitted for the Tong Gu Channel section in Hong Kong waters did not meet the study brief requirements. In June 2005, just three months later, the study brief for the LNG terminal was released.

With the full knowledge, therefore, of the issues regarding dredging near Black Point, we believe that the EPD is aware that extending the dredging of the Tong Gu channel is an alternative and therefore, we are surprised that this EIA has not been rejected by the EPD as also not meeting its study brief requirements.

5. Methane (LNG) global environmental damage

(vi) to identify and quantify emission sources and determine the significance of impacts on sensitive receivers and potential affected uses;
(xi) to identify the risk due to the transportation and storage of LNG and to propose measures to mitigate the impact;
(xii) to identify the risk to environmental sensitive receivers, including the marine and terrestrial habitats, due to LNG leakage and the consequential fire hazard and to propose measures to minimize the potential risk;

Clear The Air

As a signatory to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, China (and therefore Hong Kong) is responsible for measuring the entire global impact of shipping and using methane (LNG) one of the six greenhouse gases addressed by the treaty. Methane that is lost through the original liquefaction process, evaporation during transhipment from the host country and transfer to the LNG facility, and loss during re-gasification should be included in the EIA. Since the origin of the LNG is unknown, a range of figures need to be supplied given the best and worst scenarios available today.

Furthermore, since many countries shipping methane are in or near areas of civil unrest, the impact to the environment if the LNG supplies should not arrive because of political reasons – compared to sourcing methane from China, should be included.

End of submission

Gradual Reduction Approach For Emission Caps

Good caps & a good penalty to get the blue sky back

The Environmental Protection Department (EPD) is going to renew the process license for the Lamma Island power plants of Hongkong Electric Company (HEC) very soon. It will also be the first time for the EPD to include emissions caps for the 3 air pollutants in the license. Greenpeace and Clear The Air urge the EPD to make good use of this renewal process to hold HEC accountable for their major role in Hong Kong’s air pollution, by setting yearly emission caps from now till 2010, and raise the penalty of excess emissions to a level that can deter non-compliance.

HEC is the second largest air polluter in Hong Kong. HEC supplies electricity to only 20% of Hong Kong’s population, but it emits 40% of SO2 in the power sector. (Note: appendix 1) Gloria Chang, Greenpeace campaigner, emphasized that, “It is high time for our government to set more stringent emission caps and raise penalty so as to push HEC to clean up our sky.”

Greenpeace and Clear The Air propose a gradual reduction approach for emission caps. The license for power companies should include a set of yearly emission caps that can ensure a decrease in emissions from now up to 2010. This approach can enable Hong Kong people’s ‘right to know’ the progress of planned reductions, whether the power companies are successfully approaching the overall 2010 reduction target and make sure that power companies cannot delay their actions to reduce emissions at the expense of society.

Furthermore, Greenpeace and Clear The Air demand that the EPD raise the penalty of excessive emissions to a level that is high enough to impact shareholder profits, not only to pressure the power companies to reduce air pollutants at a faster pace, but also to cover the social and health costs brought by air pollution.

Greenpeace and Clear The Air support the financial penalty as proposed in the “Future Development of the Electricity Market in Hong Kong: Stage II Consultation”, in which the permitted rate of return of power companies would be reduced if they fail to meet the statutory emission caps. This measure will be much more effective than the existing penalty as stated in “Air Pollution Control Ordinance” which is [a fixed fine of] HKD 100,000. (Chapter 311, Section 10, Claust 7b)

Also, Greenpeace and Clear The Air suggest that the EPD consider the penalty imposed on power companies under the US government’s “Clean Air Act”, where HEC would be fined US $2,000 per tonne of SO2 emission that exceeds the cap. If we use this level of penalty together with our gradual reduction approach, the penalty of HEC last year is estimated to be HKD 70 million. (Note: Appendix 2). Even this penalty would only amount to less than 2% of the total profit of HEC last year.

From 1997 to 2004, SO2 emissions in Hong Kong did not show the slightest decrease, but actually increased hugely – by 50%. (Note: Appendix 3) Only if the government is taking real action to tighten up the emission caps and penalty of power companies, can we have a chance to get the blue sky back.

Appendix 1: HK air pollutants emissions (1997- 2005) – HEC and CLP
Appendix 2: Gradual reduction approach and penalty
Appendix 3: HK air pollutants reduction progress, impacts of air pollution to health

Hongkong Electric – twice as polluting as CLP

Press Release

1 June, 2006

Hongkong Electric – twice as polluting as CLP (per kWh) making 4 times the profit

We need a level playing field instead of special treatment for Cheung Kong

Hongkong Electric is the dirtiest, most polluting, most inefficient, most expensive, most profit gouging power company in Hong Kong. The process license for the Lamma Island plant is due for renewal in 2006 – and it needs to be looked at in comparison to

Hongkong Electric compared to CLP/CAPCO (ExxonMobil) coal power installation:

  1. Charges the public 30% more per kWh ($1.15 vs $0.88)
  2. Generates over twice the pollution per kWh as CLP (see graph) *Note 1
  3. Makes Four times the profit per kWh ($0.57 vs $0.14) **Note 2

2003 Pollution from Power Plants

Data sources:

www.clpgroup.com/clp/Abt/Res/Pub/FinancialReport2005.htm?lang=en

http://www.hec.com.hk/hehWeb/InvestorRelations/FinancialReports/AnnualReports/AnnualReport2005_en.htm

Sources:

CLP Scheme of Control Statement 2005
CLP Ten-year Summary: CLP Group Financial & Operating Statistics
CLP Ten-year Summary: Scheme of Control Financial & Operating Statistics
HEC Ten-Year Scheme of Control Statement
HEC Ten-Year Balance Sheet
HEC Ten-Year Operating Statistics

*Note 1:

Year 2003 CLP/CAPCO HKE
SO2 51059 32765
NOx 28202 17018
RSP 16970 16860

**Note 2:
Year Net return (HK$ m) Electricity sent out (kWh)
CAPCO HEC CAPCO HEC
2005 3,542 6,134 24,877 10,755

Demand management

The proposed measures in the renewal of the HEC process license, due in September 2006, are not enough. We need to know – real time – when the dirtiest turbines are going to be turned on so that we, the public, can take action to reduce our peak demand and the pollution.

Organizations like the Hospital Authority should be given the financial incentives needed to reduce energy at the time it will cause the most pollution. Then they save money and reduce pollution. e.g. High peak – three times the price, Normal peak – current price, Low – half price.

Turbine graph

Turbines turned on based on demand Hong Electric allowed pollution by turbine - 2004

Summary:

1. HEC is so much worse than CLP that its emissions caps should be much tighter than CLP/CAPCO to renewal their process license.

2. HEC must show us the daily usage demand figures so we can “shave the peak” and use less power – and save the most money – when HEC uses its most polluting turbines.

3. We should profit from reducing our demand based on the pollution we prevent – we demand that HEC offer “demand pricing”.

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.”

Order for Coal-Fired Power Plant

Order for Coal-Fired Power Plant from BLCP Power of Thailand

Tokyo, September 19, 2003 — Mitsubishi Heavy Industries, Ltd. (MHI), jointly with Mitsubishi Corporation, has been formally awarded a contract by BLCP Power Limited of Thailand for construction of a 1,434 MW (megawatt) coal-fired power plant. All conditions for implementing this contract, including project finance closure, have been totally completed.

BLCP Power is an independent power producer (IPP) jointly owned by Banpu Power Limited and CLP Power Asia Limited. Banpu Power is a wholly owned subsidiary of Banpu Public Company Limited, Thailand’s largest coal supplier. CLP Power Asia is a wholly owned subsidiary of CLP Holdings Limited, one of the largest investor-owned power businesses in Asia.

The newly ordered plant will consist of two subcritical pressure boilers and two 717 MW steam turbines, all to be manufactured by MHI. Subcritical pressure boilers are engineered to operate at or below the critical pressure level. With a total generation capacity of 1,434 MW, the plant will be constructed in the Map Ta Phut Industrial Estate in Rayong Province, approximately 200 kilometers south of Bangkok. The No.1 unit is planned to start operation in October 2006, and the No.2 unit in February 2007.

In Thailand, leading ASEAN economic development, demand for electric power has been increasing rapidly in line with its economic growth, and the plant is planned to respond the base demand. All electric power to be generated at the new plant of BLCP Power will be sold to EGAT (Electricity Generating Authority of Thailand) and supplied to Bangkok.

Thailand, natural gas producing country, is heavily depending on it as fuel. About 80% of the electricity is produced by firing natural gas. Construction of the new big coal-fired power plant particularly corresponds with Thai government’s initiative to diversify fuel sources for power generation, and will be one of the largest modern coal-fired power generation facilities in Thailand when completed.

MHI, with Mitsubishi Corporation, has previously delivered a number of large-scale power plants to EGAT, including Rachaburi gas/oil fired power plant, Nong Chok and Sai Noi gas turbine power plants and Wang Noi gas turbine combined-cycle power plant. With those plenty experience and high appreciation of the customers in the country, MHI now has established another new record in Thailand’s IPP sector, which will be a major driver of the power generation industry in the country.