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21.
The government’s energy policy objective is “To
ensure the public can enjoy reliable, safe and efficient energy
supplies at reasonable prices, and to minimize the environment
impact caused by the production and use of energy”.
The statement itself shows how inseparable energy is from
the environment, and likewise, energy policy from environmental
policy.
22. From the
environmental point of view, we fully support stringent emission
requirements for power plants.
At the same time,
Hong Kong
needs a clear and effective energy policy that ensures that the
territory continues to be supplied with the energy that we need
with full regard to reliability, quality, social values and
affordability, now and for the long term.
23.
Now that environment and energy both come under the
responsibility of the same policy bureau, there is an
opportunity to re-formulate our energy policy so that it meets
both energy and environmental objectives concurrently.
In addition to a statement of aspiration, the energy
policy should be truly comprehensive with clear philosophy
and principles, e.g. an integrated approach across sectors; influencing energy choice at
the production or consumption level; promoting efficiency, etc.,
as well as explicit goals and objectives.
In this paper we would
like to put forward three policy aspects which should be
addressed by such an energy policy, namely, clean fuel, energy
conservation, and cross-border relations.
24.
The demand for clean energy means we have to contend with
the reality that all fuel-generated energy gives out emissions.
Large scale renewable energy is not a practical option for
Hong Kong
, given our high population density and scarcity of land.
This does not mean we give up on developing renewable
energy – we support setting ambitious targets and Hong
Kong’s geography does favour the development of some wind
power and photovoltaic systems in certain locations; but we
recognize that conventional combustion-generated electricity
will remain the mainstay of
Hong Kong
’s energy supply. The
key question for a “clean” energy policy thus lies in the
right fuel mix and emission control.
25.
Currently,
Hong Kong
maintains a balanced fuel mix including coal, natural gas and
nuclear energy, to ensure supply reliability.
The need for energy security requires that the fuel mix
remain diversified. The
more specific question is how far the more polluting fuel,
namely coal, should be retained in the fuel supply for
Hong Kong
. Should we switch
completely to natural gas and nuclear energy?
26.
If this is put in the global context, demand for energy
continues to be strong for major developing nations like
China
and
India
. In Mainland
China
, electricity demand for the next 15 years is expected to grow
by 6% per annum, as compared to 2.6% for the world as a whole.
By 2030 energy consumption is expected to increase by
164% in
India
, and 100% in
China
, over today’s levels. However,
like the advanced countries before them, coal is likely to
remain the dominant fuel for electricity for both
China
and
India
, given that they have limited reserves of oil and natural gas,
and in any case global demand for the cleaner fuels is going to
be increasingly competitive.
27.
Given this reality and the need for fuel diversity, it
seems coal will still remain part of
Hong Kong
’s fuel mix, at least in the medium term.
Instead of giving up coal altogether, there should be
renewed investments to reduce emissions from coal-fired
generation plants such as flue gas desulphurization facilities
(to reduce SO2 emissions) and selective catalytic
reduction plants (NOx emissions).
For the longer term, to facilitate increasing use of
natural gas, a reliable and sustainable supply of liquefied
natural gas must be secured. (14)
28.
The second issue on energy policy has to do with the
demand side, how to reduce energy by end users.
From 1990,
Hong Kong
’s population has increased by more than 20% (1.2 million),
vehicle number has increased by almost 50% (by 200,000
vehicles), GDP by 78%, and electricity consumption by 65%.
The increase in energy consumption, though less than GDP,
has been much greater than population increase.
Put simply, every citizen is using more energy than
before. The most
effective way of reducing emissions is thus for every one to use
less electricity.
29.
In terms of electricity generation, the new Scheme
of Control
Agreements
between the government and the power companies have
incorporated
incentives for renewables and energy efficiency, which should be
recognized.
Elsewhere in this paper
below, we have made some suggestions on demand side management.
From the point of view of energy policy, we believe it
important for the government to adopt the right regulatory
approach to tariffs.
Government’s current approach is to regulate and limit
the power company’s profits, and to return the gains on
efficiency to the public in the form of lower tariffs.
While we agree with the policy intention, we have doubts
over whether tariff reduction is the best means of returning the
benefits to the public.
If tariffs were to be a regulatory tool, it should be
employed not just to contain the power company’s profits, but
also to encourage energy conservation by end users.
Indeed, a drive to lower tariffs is inherently
conflicting with the objective to conserve energy.
Within the confines of affordability, therefore, tariffs
should be higher, not lower, in order to induce energy
conservation.
We are reminded of the situation of the cross-harbour
tunnel: when the franchise expired, the government did the right
thing by not reducing the fee to “return the benefits to
consumers”, but instead collected the same fee both to
regulate traffic and to contribute to general revenue.
30.
This raises the issue of a possible “energy tax”, on
which the Chamber does not yet have a set view.
In principle the Chamber is skeptical of any changes to
our current tax regime; on the other hand we have not ruled out
simple, specific and well-designed charges for environmental
purposes, and have indeed supported the sewage charge, landfill
charge and plastic bags levy. (15)
31.
The third issue in energy policy is the cross border
dimension. Here we
reiterate the suggestion earlier in this paper that the emission
trading scheme with the Mainland be developed further and
consideration given to a local trading scheme for green house
gas emissions. The
HKSAR government and the
Guangdong
government should jointly establish an emissions monitoring
system as a matter of priority, so as to establish the capacity
limits on emissions and to enable regulation of the trading
scheme and subsequent target setting.
For the long term, our energy policy should also address
the question of regional integration, tackling subjects such as
possible opening of the energy market in
Hong Kong
to competition and liberalization of the utilities sector in the
Mainland. (16)
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