Scheme for trading pollution quotas unveiled

PUBLISHED : Wednesday, 31 January, 2007, 12:00am
UPDATED : Wednesday, 31 January, 2007, 12:00am
 

The government yesterday unveiled a pilot cross-border scheme for trading in power station emission quotas, and said it could be a more cost-effective way of cutting Pearl River Delta air pollution than investing in costly facilities such as a liquefied natural gas (LNG) terminal.


The scheme, which has been under discussion for more than four years, is seen by the Hong Kong and Guangdong governments as a means to meeting their joint target for reducing emissions by 2010.


But Hong Kong's two electricity generators are still lukewarm about the scheme, saying it raises more questions than answers. 'Unless all the questions are addressed, it is impossible to decide whether or not to participate in the scheme,' a senior executive from one of the power firms said.


The scheme will involve around a dozen big power plants.


It targets emissions of sulfur dioxide, nitrogen oxides and respirable particles.


Esmond Lee Chung-sin, deputy director of environmental protection, said power companies weighing whether to trade emission quotas should consider their commercial interests and their ability to meet the 2010 emission targets.


Cutting emissions on the mainland is cheaper than in Hong Kong because companies' costs north of the border are lower.


Mr Lee believes the scheme will be attractive to CLP Power and Hongkong Electric, though it has not been decided whether credits they buy will be counted as part of their assets under the scheme of control which regulates the firms' profits based on their investments.


Asked about the widely held view that the trading scheme is a way to make Hong Kong pay for cleaning up Guangdong, Mr Lee said meeting the city's emission reduction targets was not cost-free.


'Even if the power companies opt not to join, they might still have to invest in alternatives like LNG [as CLP proposes] or low-sulfur coal that might be more expensive than emissions trading,' he said. And that could mean higher tariffs.


Mr Lee dismissed worries about the scheme's transparency, saying details of quota trades would be made public regularly.


Hong Kong's power plants already have equipment for continuous monitoring of emissions and reporting to regulators, and Mr Lee said many big plants in Guangdong were similarly equipped.


He said smaller, heavily polluting power plants in Guangdong would be phased out as bigger, cleaner plants come on stream.


Julia Tao Lai Po-wah, director of the Governance in Asia Research Centre at City University, said the scheme was a significant step in regional co-operation on the environment. But she urged the government to clarify how breaches of emissions trading contracts would be dealt with and compliance with targets monitored.


'Whether power companies will feel confident to join the scheme will also depend on addressing the differences in legal and judicial systems in the two places in case there are disputes,' she said.


Dr Tao also said the scheme should spell out clearly who is qualified to work as consultants to power plant operators.


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