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SCMP Reporter

Power company wants to build terminal for LNG, reducing its reliance on coal

Hong Kong's biggest air polluter, CLP Power,  plans to build a giant liquefied natural gas terminal and storage facility to fuel its generators, a move that could help cut its reliance on coal and reduce emissions.

The proposal is understood to be part of a multibillion-dollar investment package CLP submitted to the government in its new financial plan to take effect next year.

Facing likely emissions caps when the scheme of control - which governs the company's profits and investment - is revised in 2008, the company also proposes to install flue-gas desulfurisation devices and dust-collection equipment at its coal-fired Castle Peak power plant.

But the company says there is a limit to the extent that its reliance on coal can be reduced.

The proposed gas store will act as a buffer to stabilise supply for its 2,500MW Black Point power station. It will enable CLP to source gas from reserves around the world by sea and may serve as a re-export centre for the gas.

The capacity and cost are not known, but if it goes ahead, it is expected to operate from 2011.

Partly because of supply problems, which the storage facility should alleviate, the company's gas-fired capacity is under-used, contributing about 20 per cent of total production instead of the potential 29 per cent.

As well as closing this gap, the gas store may enable CLP to convert some of its coal-fired generation to gas-fired to help meet the new emissions caps.

The caps will regulate total emissions, rather than the concentration of specific pollutants as at present, and will be lower than current emissions levels. The LNG storage proposal comes after CLP suffered declining supply from a gas reserve in Hainan, which was found to have smaller capacity than expected.

This forced the power supplier to change its fuel mix - ideally about equal proportions of coal, gas and nuclear - to rely more on coal.

The increase in coal use caused its sulfur dioxide emissions to almost double to 51,000 tonnes in 2003 from a year earlier.

Power generation accounts for 89 per cent of Hong Kong's total sulfur dioxide emissions, 45 per cent of nitrogen oxides and 37 per cent of respirable suspended particles.

CLP Power commercial director Richard Lancaster said coal was indispensable to ensure reliable electricity supply, given that oil and gas supplies were more likely to be disrupted by events such as political instability.

'We must have diverse fuel supply to ensure a reliable electricity supply,' he said.

Mr Lancaster also warned that any emissions reduction proposals or standards should not compromise affordable and reliable supply and feasible technology to reach such standards should be available.

'As long as we are not compromising reliable and affordable supply, we want to get the best environmental performance we can. There is always a balance and this needs to be struck by ourself and our regulator,' he said.

Mr Lancaster said cross-border pollution was a main cause of deteriorating air quality, saying CLP's plants accounted for only 5 per cent of sulfur dioxide emissions in the Pearl River Delta.

A CLP spokesman said the LNG terminal and storage plan was still at an early stage.



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