Hong Kong should hold reserves of natural gas to ensure a stable supply and cost if the government decides to boost domestic production from local sources.
Kenneth Leung, of the Professional Commons, warned that the government lacked a comprehensive energy policy and had not considered the importance of a long-term energy reserve despite recently drawing up plans for the future of the city’s energy supplies for public consultation.
Its consultation paper put forward two options, which boiled down to boosting local gas-fired generation capacity to 60 per cent or importing 30 per cent of the city’s energy needs from the mainland grid. The consultation, which drew 86,000 submissions, ended on June 18.
Leung said the natural gas option would offer Hong Kong more “energy autonomy and security”, while the option to tap the mainland power grid compromised the city’s energy security.
“We need to secure more than just one source to maintain our energy autonomy,” said Leung. “If natural-gas consumption goes up, importers will automatically find other suppliers and this will diversify our sources of energy supply.”
Leung said natural gas needed to be placed under the Reserved Commodities Ordinance to ensure stable supply in periods of shortages or price volatility.
“In such a small city with such high electricity consumption, we will need a reserve and we cannot just have one source of energy imports – not just the mainland, or Australia, or just one gas field.”
But storing reserves may prove difficult. Despite government backing for a liquefied natural gas terminal on the Soko Islands, it was shelved by CLP Power – one of the two local electricity suppliers – due to cost and concerns from environmental groups . A 25-year gas deal with the mainland was signed instead.
World Green Organisation chief executive officer William Yu Yuen-ping said the idea of building up LNG reserves was “worth exploring” but finding a location to build them would be the key.
The city currently keeps a 30-day strategic reserve supply of fuel oil, which is managed by the Electrical and Mechanical Services Department. The Reserve Commodities Ordinance, which covers rice, cereals, flour and powdered formula for infants, is managed by the Trade and Industry Department.
It is unclear which department natural gas reserves would fall under.
Leung said the city should follow Singapore’s example in expanding its portfolio of LNG suppliers and investing in floating LNG storage facilities.
“It would be worth studying Singapore. The costs are lower than building terminals on land and it is much safer,” Leung said.
About 90 per cent of Singapore’s energy is fuelled by natural gas, with most piped in from Malaysia or Indonesia.
The Environment Bureau said it would not comment on individual suggestions.
Fuel for thought
Hong Kong’s proposed fuel-mix options:
Buying more electricity from mainland power grid
- Large-scale purchases are untested
- Some worry that the supply won’t be reliable
- Concerns that the city could become captive to a mainland supplier
- Would lower local emissions; could diversify fuel types
- Is expected to let the city tap into cleaner fuels
- Offers the city a more sustainable option to meet its power demands.
- Does not require new sites
Using more natural gas from local sources
- Could make the city more susceptible to natural gas tariffs
- Further environmental improvement may be limited
- Will increase heavy reliance on one fuel type
- May not provide the flexibility to let the city meet rising demand, because of difficulty finding suitable sites for future power plants
Source: Hong Kong Environment Bureau