Guangdong 'working hard to create favourable conditions' Guangdong will create the conditions needed to allow emissions trading with Hong Kong while the design of the scheme will enable the city's two power suppliers to 'make a better choice' about whether to take part, a senior provincial environment official said yesterday. These conditions cover legal differences between the two sides, better monitoring of emissions, and the installation of emission reduction devices at power stations. Speaking in Guangdong yesterday, Chen Guangyong, deputy head of the Guangdong Environmental Protection Bureau, said an emissions trading pilot scheme had just been endorsed by a cross-border expert group. Upon approval by the Hong Kong and Guangdong Joint Co-operation Conference's sustainable development and environment taskforce, the scheme would be distributed to power companies in the city and province for consultation by the end of the year. Under the scheme, governments would sell emission rights to polluters. Bigger polluters would be given fixed emissions quotas, and those whose emissions fell under their quota could sell the surplus to others who exceeded their limit. It would allow Hong Kong utilities to save on their emissions-reduction bills by buying quotas from their mainland counterparts, benefiting from lower reduction costs there. But CLP Power and Hongkong Electric have previously poured cold water on the scheme, fearing that Hong Kong may subsidise Guangdong polluters. The pilot scheme will involve thermal power stations in the Pearl River Delta identifying partners to trade emissions rights of sulfur dioxide, nitrogen dioxide and respirable suspended particles at a volume and price negotiated in a deal between the two partners. Both sides have agreed to cut sulfur dioxides, nitrogen oxides and respirable suspended particles by 40, 20 and 55 per cent from the 1997 level by 2010. Mr Chen admitted the mainland lacked fundamentals like comprehensive laws, mature legal and judiciary systems, a free market, and a stringent monitoring system to push forward nationwide trading, but he said Guangdong would work hard to create favourable conditions for a scheme with Hong Kong. 'The two power suppliers have yet to see the details of the emission trading pilot scheme. So before that, it is understandable that they are cautious if they judge it from a market behaviour perspective. But once they see it, they will make a better choice' about whether to take part, he said. Mr Chen said Guangdong was working at full steam to install desulfurisation devices at its coal-fired power plants with a generation capacity larger than 125 megawatts, with about half equipped and the rest ready by 2008. Although Guangdong had seen rising power demand, Mr Chen said there had been improvements, with sulfur dioxide emissions down by 2.9 per cent in the first half of the year.