The Hong Kong government has given a strong indication on the method it will use to carry out a trial run of an emissions trading scheme among power plants in Hong Kong and Guangdong in three years time. In the first official document to be released on cross-border emissions trading, which will be discussed by the Advisory Council on the Environment today, the government says a 'cap and trade' method is best for Hong Kong. Under this system, the government would set an emissions cap as well as a timetable for this to be lowered. The capped quantity of emissions would then be distributed to sources of air pollution, including power plants and large factories, in the form of emission allowances or permits. Polluters who fail to meet the requirements of the cap would have to buy emissions reduction credits from others who could successfully lower their emissions below the capped level. The paper said the capped system was the most relevant to the consensus that the government had reached with Guangdong to reduce emissions of four major air pollutants by specific amounts by 2010, the paper said. The government studied three systems being used in the United States - 'open market', 'off-set' and the 'cap and trade' method. The document said the open-market system, which is voluntary in nature, could not achieve specific emissions reduction targets set by the government, while the off-set system, which levels off an increase in emissions by new polluters, was not effective enough. A group of experts comprising officials from Hong Kong and Guangdong has been set up under the Hong Kong-Guangdong Joint Working Group on Sustainable Development and Environmental Protection. The group will study the feasibility of setting up a pilot scheme for emissions trading between Hong Kong power plants and selected power plants in Guangdong by about 2006. Mainland and overseas experiences, the steps, criteria and the technical requirements for introducing the scheme are all being studied. The pilot scheme was advocated by the Secretary for Environment, Transport and Works, Sarah Liao Sau-tung, shortly after she took office last July. The central government has also agreed to give approval to test an emissions trading scheme between Hong Kong, Guangdong and Macau in December. At present, there are no caps on the emissions level of power plants in Hong Kong. The plants have only to meet emissions concentration standards. Carlos Lo Wing-hung, from the management department of the Polytechnic University, supported the capping system, saying a voluntary scheme could achieve little to address the urgent air quality problem. 'If it is a voluntary scheme, it can become a very loose scheme,' he said. Professor Lo said the government must have the political will to introduce the capped system as power companies might be reluctant to join any voluntary scheme.
