Power companies may earn up to a combined HK$476 million a year less under new schemes of control that tie the emission of pollutants to returns, the Environment Bureau has said. The companies which exceeded the emission cap of any single pollutant by between 10 and 30 per cent would have their rate of return cut by 0.2 per cent, the bureau said yesterday. If emissions go beyond the caps by more than 30 per cent, the rates of return will be cut by 0.4 per cent. Based on 2006 assets figures, this means CLP Power may earn HK$290 million less and Hongkong Electric HK$186 million less. Conversely, if the power companies achieve emission reductions of between 10 and 30 per cent below the caps, they will receive extra returns equalling 0.05 per cent. If emission cuts go below the caps by more than 30 per cent, the companies will get extra returns of 0.1 per cent. That would amount to HK$73 million and HK$47 million for CLP Power and Hongkong Electric respectively. Hahn Chu Hon-keung of Friends of the Earth said it was difficult to assess if the penalty would be a sufficient deterrent. He said little was known about 2010 or post-2010 emission caps and the limits already given were too lenient. Hong Kong has an agreement with Guangdong to cut emissions by 2010. 'The caps are quite lenient and there seems to be little difficulty for the power companies to meet them,' Mr Chu said. 'It is almost guaranteed that they will get extra returns.' Based on the 2006 emission figures of CLP's Castle Peak power station and Hongkong Electric's Lamma power station, the firms had already met the caps for last year, except for particulate pollutants. Man Chi-sum, chief executive officer of Green Power, welcomed the link between emissions and returns but said the government should set out future caps clearly, especially those for after 2010. 'The precondition for its success is to gradually tighten the caps in the long term,' Dr Man said. 'So it is time for us to consider the caps for beyond 2010.' He said it would be difficult for the power companies to exceed the caps by 30 per cent. But Dr Man agreed that power companies might opt for the emission trading scheme with the mainland in case they faced a serious shortfall in the targets. He said the cost of buying credits from mainland power plants might be lower than the penalties imposed. Apart from the penalties on exceeding emission caps, the new schemes will require the two power companies to carry out a combined 200 energy audits for clients and encourage them to adopt energy-saving measures. They will also set up a loan fund totalling nearly HK$190 million for potential applicants to implement these measures. If 18 million kWh could be cut, the two firms would get an extra 0.02 per cent in returns, which would equal HK$23.8 million. But Mr Chu said the saving targets meant almost nothing as they accounted for only 0.0004 per cent of Hong Kong's electricity consumption in 2006. He said another scheme implemented since 2000 alone had achieved a reduction of 172 million kW.