Local biodiesel on sale next month

PUBLISHED : Sunday, 22 July, 2007, 12:00am
UPDATED : Sunday, 22 July, 2007, 12:00am

Biodiesel - hailed as a 'green' fuel because it is made from waste cooking oil but regarded warily by environment officials because of its emissions - is set to go on sale legally in Hong Kong for the first time next month.

Produced at the city's first licensed plant, a HK$20 million facility in Tuen Mun, the untaxed fuel will undercut the present diesel price by at least HK$2 a litre, posing a potential challenge to the big oil companies.

It will be distributed at four locations, probably in Tsuen Wan, To Kwa Wan, Kwun Tong and Jordan, at a price of about HK$6 a litre, compared with HK$8.70 for ultra-low-sulfur diesel (ULSD) - the only diesel vehicle fuel now available.

If it proves popular, the new fuel could also make a dent in government tax revenues.

But the manufacturer, Dynamic Progress International, does not immediately expect a major shake-up in the energy market as production capacity - about 20 million litres a year - is only a fraction of the total diesel consumed each year.

Biodiesel, refined from waste cooking oil collected from local restaurants, is not subject to the Dutiable Commodities Ordinance because it is not hydrocarbon-based, the Customs and Excise Department said.

Last year the city imported about 1.08 billion litres of ULSD, generating gross tax revenue of around HK$700 million.

There are more than 130,000 diesel vehicles in the city. Apart from heavy trucks, light vans and some minibuses, the biggest fleets are owned by the franchised bus operators and the government.

Setting aside the technical issues and supply volume, the manufacturer believes there would be little incentive for the bus operators and government to switch to the new fuel because they are already using tax-free diesel.

Still, a source said: 'If they are willing to pay one more dollar for the fuel, this will make a real big difference to their emissions.'

The company believed Hong Kong was an ideal place for production, given the ubiquity of waste oil in its 20,000-plus restaurants.

Ready market

Hong Kong's 130,000 diesel vehicles make up only a quarter of the city's total vehicle number of about 550,000