Shell Hong Kong today becomes the first oil major in the city to commercially launch the 5 per cent biodiesel blend product, targeting corporate customers seeking to meet their greenhouse gas emission reduction and development sustainability goals. But the unit of European international oil major Royal Dutch Shell has no plan to launch the cleaner-burning fuel at its network of fuel stations, citing uncertain demand and limited storage capacity at this stage. Local mass transport market demand is almost non-existent since there is no mandatory blending requirement of local diesel supply, leaving only voluntary demand from the government, industrial and commercial sectors to support experimental usage. "Demand from the commercial sector does exist since corporates are increasingly aware of the importance of sustainability development and environmental protection," said Shell Hong Kong chairman Daniel Ng Ngai-hung. "The key [to mass commercialisation] is for the government to legislate policies or offer other support such as subsidies." Mandatory biodiesel blending ranges between 5 and 10 per cent in the United States and 7 per cent in Europe. Indonesia, Malaysia, the Philippines, South Korea and Taiwan also have mandatory blending requirements. Shell has previously been working with Gammon on trial sales and distribution in the city, including the construction of a fuel blending facility for a sum that Ng declined to disclose. Shell sources its biodiesel from Middle East-funded ASB Biodiesel, which this year started operating in Tseung Kwan O at a HK$1.36 billion, 100,000-tonne-a-year plant that makes biodiesel from waste cooking oil and grease trap waste sourced from restaurants and caterers. The plant sources only about 30 per cent of its waste oil locally and the rest from Southeast Asia. A lack of regulation of waste oil disposal in Hong Kong means much of the waste oil here is exported at high prices for recycling into cooking oil by traders. Owing to a lack of mandatory blending requirements, ASB sells only 5 per cent of its output locally, with the bulk exported to Europe and the mainland. Gammon's head of procurement Susan Siu Kit-ling said the company "is willing to bear the small price premium" of blended biodiesel compared to traditional fossil diesel, to help it meet its sustainability targets. The company in 2011 set a target to "become the industry leader and an agent of sustainable construction" by 2020, with a goal to cut carbon dioxide emission intensity by half compared to 2005. After surging 90 per cent between 2009 and 2011 due to increased work volume after the global financial crisis, Gammon's greenhouse gas emissions have fallen 11.3 per cent in the past two years. Diesel accounted for 59 per cent of its emissions last year. Siu said Gammon used 6.5 million litres of the 5 per cent blended biodiesel last year - about one-third of its total diesel usage, resulting in a reduction of 931 tonnes of carbon dioxide. In the first 10 months of this year, blended biodiesel accounted for 60 per cent of its diesel usage, with consumption of 15 million litres cutting carbon dioxide emissions by 2,300 tonnes. Blended biodiesel does not result in much carbon emission reduction in the combustion process itself, but the "well-to-wheel" emission - from the time when crude oil is extracted to the time when diesel is used by engines - is where most of the reduction is seen. According to Siu, diesel plant and equipment accounted for 53.7 per cent of Hong Kong's carbon dioxide emissions last year, compared to 37.6 per cent by the electricity sector. Shell Hong Kong general manager of communications Frandy Chu said the firm planned to discuss with other big diesel users such as bus operators to see if they would be interested in using biodiesel. The larger the consumption volume, the lower would be the cost, said Ng. A spokesman for KMB, the largest bus operator in the city, said the firm was keeping a close eye on the development of biodiesel and its application possibilities. Its key concerns were the quality of biodiesel in terms of consistency and composition, and whether it worked well with its buses' engines.