Hong Kong will fail to honour its agreement with Guangdong to improve air quality by 2010 if the power suppliers cannot meet emission caps to be imposed by the government, an official source warned yesterday. The warning came as CLP Power and Hongkong Electric said they would only meet the targets in 2012 and 2011 respectively under their just-approved financial plans, which also include new anti-pollution investment. 'The power suppliers have to comply with the new caps as we have a deal with Guangdong,' a government source said, adding that Guangdong producers had been 'vigorously retrofitting' their polluting power plants to honour the agreement. Under the cross-border agreement, both sides would cut sulfur dioxides (SO2), nitrogen oxides and respirable suspended particles by 40, 20 and 55 per cent from the 1997 level by 2010. So far, Hong Kong is not close to any of the targets, with the SO2 level at least 40 per cent higher than 1997 due to more reliance on coal-based power generation. The two power suppliers will play a critical role in meeting the targets because they account for 92 per cent of SO2, 58 per cent of nitrogen oxides and 46 per cent of particles emitted in Hong Kong. The source urged the suppliers to speed up the implementation of the clean-up programmes or risk being prosecuted and heavily fined under the air pollution control ordinance. The ordinance requires the power plants to renew their specified process licences regularly. The environmental watchdog will impose new emission cap conditions in licence renewals between this year and 2010. 'They will have no choice but to satisfy the emission cap conditions,' the source said. However, CLP Power will still have two of four generator units not equipped with desulfurisation devices by 2010 under its $3 billion retrofitting programme from 2007, according to the source. CLP planning director Chan Siu-hung said the 30-year-old Castle Peak plant did not have enough space for the equipment and the programme had to be completed gradually from 2009 to 2012. 'It is very challenging to meet the government's high standards,' he said. Informed Hongkong Electric sources said yesterday that the company would spend $2 billion to install low-nitrous-oxide burners and desulfurisation devices at its two generation units and planned to convert an oil-fired unit to gas-fired. As it was very expensive to cut particle emissions, the source also expected that it would be necessary for the two suppliers to engage in a pilot emission trading scheme with Guangdong power plants.