Revising the SCA in 2018 to reduce coal dependence and to meet 2020 renewable energytargets has to be high priority for all stakeholders. A report by Sylvia Chang.
More than half the volume of pollution in Hong Kong is from burning coal for electric power.That also accounts for 68 percent of the city's greenhouse gas emission in the government'sHong Kong Climate Change Report 2015. In the 2013 mid-term review, the fuel-mix for electricpower stood at 57 percent coal-fired, 21 percent natural gas and 22 percent nuclear power(imported from the mainland).
Power duopoly
Electric power supply in Hong Kong is franchised to a duopoly of HK Electric and CLP Power, ata rate of return of 9.99 percent on assets invested. The 10 year term of the current Scheme ofControl Agreement (SCA) ends in 2018. That arrangement has served Hong Kong well inpower reliability, and in one of the world's lowest tariff rates to consumers.
Both companies invest in and own the power plants, transmission gear and distribution grids intheir franchises: Kowloon, Lantau, Cheung Chau, Outlying Islands and New Territories (CLPPower), and Hong Kong Island, Ap Lei Chau and Lamma (HK Electric). That gives themenormous bargaining power with the government, while locking-in profits.
The power duopoly, guaranteed a high rate of return with no business risk, no marketcompetition, and no accountability for negative externalities, have triggered a clamor forrevision of the next SCA, from consumer watchdogs, legislators and competition advocates.There are no incentives in the SCA for the power suppliers to reduce the negativeconsequences of using coal as their primary fuel.
All profit, no risk, no accountability
The SCA does not hold the power companies accountable for pollution damage, or the healthand economic costs to the community. Business risk is also transferred to the public via the fuelprice adjustment mechanism, which insulates the companies from raw material pricefluctuations.
Air pollution cost the community HK$27 billion in healthcare in 2015, according to the School ofPublic Health of the University of Hong Kong (HKU), using the Hedley Environmental Index.Reduced coal prices gained the two companies a windfall surplus of nearly HK$4.43 billion intothe Fuel Clause Recovery Accounts and the Tariff Stabilization Funds - even after their rebatesto consumers.
Only a smartly revised SCA can bring a fairer deal for the community in the interests of currentand future generations. That may require all stakeholders - the power companies, the public,and commercial users, to share the costs of renewable energy use, reduced pollution and alower rate of return on investment. Above all, it requires effective leadership from the next ChiefExecutive, for a sustainable SCA.
2020 pollution reduction targets
Following the United Nations Framework Convention on Climate Change (UNFCCC), HongKong is pledge-bound to reduce greenhouse emissions. The goal is to reduce sulphur dioxide(SO2), nitrogen oxides and respirable suspended particulate (RSP) matter in the atmosphere.
The targets are achievable if electricity fuel is 50 percent from natural gases, 25 percent fromnuclear power and 25 percent from coal and renewable energy. The government has notconfirmed the volume of renewable energy they envisage using by 2020. The publicconsultation document on the future development of the electricity market states the use anddevelopment of renewable energy will depend on "public views on the tariff implications".
Advocates of clean energy see the SCA revision in 2018 as an opportunity for manufacturersof renewable energy to enter the market for the city to adopt large-scale use of renewableenergy from the sun, wind and waste.
Harnessing power from renewable energy sources costs less than mining, transporting andprocessing fossil fuels. In 2015, solar and wind-generated power accounted for 95 percent ofthe global new investment on renewable energy, a big jump from 55 percent in 2006, accordingto the United Nations Environment Program report.
Renewable energy options
Due to land scarcity in Hong Kong, it's not possible to dedicate large farmlands to generaterenewable energy. However, experts say, there are plenty of "underutilized areas" in HongKong where solar power generating facilities may be installed.
Village house rooftops, the City Hall car parks, and landfills are ideal places to install solarpanels, said William Chung Siu-wai, associate professor with the Department of ManagementSciences at the City University of Hong Kong (CityU). According to Chung, solar panelsinstalled on a 70-square-meter roof of a village house can generate up to 28kWh electricity perday, enough to fully charge an electric vehicle.
The three landfills located in the New Territories, covering about 260 hectares, can also beconverted into solar farms, said Chung. He estimates that solar panels of 200 megawatts canbe installed on the restored slopes of landfills.
Meanwhile, Steve Wong, energy assessor and president of the Hong Kong EnergyConservation Association (HKEnCA), says the existing electricity grid is good enough fordistributing energy generated from renewable sources. The envelopes and rooftops ofbuildings in the city are suitable for facilities to capture solar radiation and wind energy.
Buildings consume about 90 percent of the total electricity supply in Hong Kong, emitting 60percent of the city's greenhouse gases. By installing renewable energy generating facilities,they could run their air conditioners, reducing the costs of buying power by half.
According to a 2013 research report on solar energy, led by Wong Man-sing, assistantprofessor in the Department of Land Surveying and Geo-informatics at the Hong KongPolytechnic University (PolyU), about 233,152 of the 309,606 buildings in Hong Kong aresuitable for implementing solar photovoltaic (PV) systems.
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