Environment Bureau Environmental Protection Department ENVIRONMENT HONG KONG 2008
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12 Energy

 
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Mission

 

To ensure reliable supplies of energy at reasonable prices, promote its efficient and safe use, and at the same time minimise the environmental impacts in the production and use of energy.


GREENING OUR ENERGY SECTOR


Highlights in 2007
  • Negotiations for the new Scheme of Control Agreements to regulate the power companies were concluded. For the first time the Agreements will include emission reduction incentives/penalties.
  • The Energy Efficiency (Labelling of Products) Bill was introduced into the Legislative Council in April 2007.
  • A public consultation was launched on the proposed mandatory Building Energy Codes.
  • The Government pledged to reduce Hong Kong's energy intensity by at least 25 per cent by 2030, a goal adopted in the APEC Leaders' Declaration on Climate Change, Energy Security and Clean Development.

Responsibility for energy policy was brought under the Environment Bureau (ENB) upon its establishment in July 2007, marking a significant development in the Government's efforts to improve the environment. Electricity generation is the largest source of polluting emissions in Hong Kong. The new arrangement enables us to dovetail the need to ensure that energy supplies are safe, reliable, efficient and reasonably priced, with our responsibilities to the environment. We took important steps during the year towards enshrining environmental controls in the regulation of the electricity market and enhancing energy efficiency and conservation.

Renewable energy

Reducing consumption

Hong Kong is committed to fulfilling its regional and international obligations to reduce air pollution and greenhouse gases. One of our major goals in this respect is to improve energy efficiency. While our electricity consumption is low in comparison to other economies of a similar scale of development (about 5 700 kilowatt hours per person), there remain opportunities to enhance and promote the efficient use of energy.

Mr Edward YAU, Secretary for the Environment, at an event to promote energy efficiency.

Mr Edward YAU, Secretary for the Environment, at an event to promote energy efficiency.
In September 2007 the Government pledged to reduce Hong Kong's energy intensity by at least 25 per cent by 2030 (using 2005 as the base year), a goal adopted in the Asia-Pacific Economic Co-operation Leaders' Declaration on Climate Change, Energy Security and Clean Development. It is a challenging goal, but our initiatives on regulating power companies and enhancing energy efficiency, described here, will help lay the ground for achieving it.


Regulating the power industry

On the energy front, one of the foremost major tasks for the new ENB has been to conclude negotiations on the post-2008 economic regulation of the two local power companies. The Scheme of Control Agreements (SCAs), which stipulate permitted rates of return and other terms for the power companies, are up for renewal. The timing has provided an opportunity to promote a more environmentally friendly power industry.

The focus of negotiations for the new SCAs has been on three key features. Two are economic in nature: the permitted rate of return would be reduced to 9.99 per cent from 13.5 - 15 per cent so that basic tariffs could be lowered, and the duration of the SCAs would be shortened from fifteen years to ten years to allow for the introduction of competition into the market when the requisite conditions are present. The third feature is of particular benefit to the environment. The permitted rate of return would be linked to the achievement of emission caps, with incentives for over-achievement and penalties for under-achievement. Moreover, the power companies would be allowed a higher 11 per cent rate of return for renewable energy facilities.

The two power companies in Hong Kong, CLP Power Hong Kong Ltd (left) and HongKong Electric Company Ltd (right).

The two power companies in Hong Kong, CLP Power Hong Kong Ltd (left) and Hongkong Electric Company Ltd (right).

The SCAs were negotiated on the back of two public consultations in 2005 and 2006 that showed general support for these measures, and they will be signed in early January 2008. The new arrangements are expected to help Hong Kong reduce power plant emissions and meet its targets for cleaner air (see Air for details).


Improving energy efficiency

Room air-conditioners, refrigerating appliances and compact fluorescent lamps.

Emission caps address pollution at source. On the other hand, we also encourage consumers to make more efficient use of energy. Legislation on a mandatory Energy Efficiency Labelling Scheme was introduced in April 2007 to promote the use of energy efficient products. The first phase would cover room air-conditioners, refrigerating appliances and compact fluorescent lamps, which would have to carry labels on their energy performance. These three products account for more than 70 per cent of electricity consumption in the residential sector, and switching to more energy efficient products would save 150 gigawatt hours per year – or about $135 million in electricity bills. The bill on the mandatory labelling scheme is expected to be approved by the Legislative Council (LegCo) in 2008. We plan to extend the scheme to other products in phases.

Poster

Another energy efficiency initiative involves building energy codes. Buildings account for 89 per cent of electricity consumption in Hong Kong. If we can improve their energy consumption, we can reduce air pollution and carbon dioxide emissions. Voluntary Building Energy Codes have been in place since 1998, but tougher measures could achieve more for the environment. A public consultation on proposed mandatory implementation of the Building Energy Codes for certain new and existing buildings was launched in late December 2007. The Government will take into account the views received to formulate a legislative proposal for enhancing building energy efficiency.

Energy consumption can have direct and long-lasting effects on the quality of our environment. Hong Kong, like many other jurisdictions, understands that if we integrate policies and decisions on energy and the environment more closely, we can minimise adverse impacts. By improving the performance of power plants and making more efficient use of energy, we hope to contribute to the universal goal of securing cleaner skies and a greener planet.


Looking Ahead
Looking Ahead
 
  • The first phase of the mandatory Energy Efficiency Labelling Scheme will be rolled out and plans made for coverage of the second phase.
  • A legislative proposal for mandatory implementation of the Building Energy Codes will be formulated, incorporating views received from the public consultation.
  • Regulatory arrangements for the post-2008 electricity market will be implemented.

Topical Issues