When Sarah Liao Sau-tung proposed an emissions trading scheme between Hong Kong and Guangdong in July, even before she formally became Secretary for Environment, Transport and Works in August, her idea was greeted with scepticism. Critics wondered if she was showing signs of having a loose tongue by making a policy promise without touching base with her colleagues in the government on the feasibility of putting such a scheme in place in three years, as she hoped. Dr Liao has now revealed that she has succeeded in obtaining permission from the State Environmental Protection Administration to include Guangdong, Hong Kong and Macau in experimental schemes on emissions trading on the mainland. That would seem to lend credence to the minister's ability to deliver. As a former environment consultant who helped the Beijing municipal government win the right to host the Olympic Games in 2008, Dr Liao has built up connections at the highest echelons of the central government and appears to have put those to good use in her new post. What remains to be seen is whether she will be equally successful in turning the central government's blessing into concrete policies to reduce air pollution in the SAR. Although Dr Liao is upbeat about support from CLP Power and Hongkong Electric, the SAR's biggest air polluters, the two power companies are understood to be lukewarm about an idea which has not really taken off yet. While pilot schemes on the mainland have helped to cut emissions, the trading of standardised 'emissions contracts' through an exchange is still largely untried. Even the much talked about Chicago Climate Exchange, due to become operational early next year with the support of more than 20 major US corporations, is still hype for the time being; it has been on the drawing board for almost a decade. For Hong Kong and mainland polluters to trade successfully, a first step would seem to be the establishment of a mutually accepted and enforceable regime to determine the scale and nature of emissions. But nothing of the kind has been mooted so far. No wonder even the chairman of the Advisory Council on the Environment, Peter Wong Hong-yuen, is cautious about Hong Kong's involvement in an emissions trading market. It would also be wrong to overlook the fact that the main government agency responsible for monitoring the power companies is the Economic Development and Labour Bureau, not Dr Liao's office. Yet there is a case for including emissions trading as a means of reducing air pollution when the two power companies' scheme of control agreements, which monitor their financial planning, come up for review next year. The government is already committed to further lowering emissions. Rather than allowing the power companies to make costly investment in new plants that would mean higher tariffs for consumers, they should be encouraged to help Guangdong power plants clean up their acts because the same amount of money could do a lot more on the mainland. After all, air pollution is a regional problem. The SAR would benefit from any attempt to assist the worst polluters in the region to replace their obsolete plants with new ones. Where there is a will, there is a way. If the search for an economical means of reducing emissions succeeded in driving all concerned to develop workable ways of monitoring emissions in Hong Kong, Guangdong and even China as a whole, that could lay the groundwork for setting up a nationwide emissions trading market. If that proves successful, then there is nothing to stop it extending its reach to allow polluters in the region to participate in an innovative way of combating air pollution. That should help clear the skies faster and more cheaply than conventional means, with positive economic, social and health implications.
