LCQ3: Progress of emissions trading pilot scheme

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Following is a question by the Hon Margaret Ng and an oral reply by the Secretary for the Environment, Transport and Works, Dr Sarah Liao, in the Legislative Council meeting today (December 10):

Question:

It was reported that on 3 November this year, the Air Pollution Index (API) recorded at the Mong Kok Roadside Station of the Environmental Protection Department reached 181, which was the highest since 1998. In response to media's questions on that day about the worsening air quality, the Secretary for the Environment, Transport and Works said that it was a regional problem and had to be tackled from the source. In a speech delivered on the same day, she explained the cross-border co-operation measures that the Government of the Hong Kong Special Administrative Region and the Guangdong Provincial Government would take to reduce the emissions of the four major pollutants in the air. She also said that the Government was examining with the Mainland authorities how to take forward emissions trading among power plants in the region using a trading pilot scheme, with a view to launching the scheme in three years' time. In this connection, will the Government inform this Council:

(a) of the progress of the discussions with the Mainland authorities on the trading pilot scheme, and the level of air pollution reduction which the scheme expects to achieve;

(b) as the Secretary has been advocating emissions trading between Hong Kong and Guangdong to reduce air pollution in Hong Kong since she took up the post in July last year, why three more years from now are required for implementing the scheme; and

Reply:

Madam President,

I will attempt to answer parts (a) and (c) of the Honourable Member's question first, followed by part (b).

(a) & (c) I will also take the opportunity to explain the high API on 3 November this year. The cause of that high exposure was the result of a combination of meteorological conditions. In the fortnight preceding that date, the territory was under the influence of a weak anti-cyclone to the north. Between 1 and 3 November, the territory was also affected by Tropical Cyclone Melor that moved very slowly in the Luzon Strait. As a result of these two meteorological systems, air from the upper atmosphere subsided over Hong Kong and the rest of the Pearl River Delta Region, inhibiting the upward movement of air that normally helps to disperse pollutants generated in the Region. The long period of stable atmosphere was joined during daytime by strong sunlight that promoted photochemical reactions of the pollutants accumulated in the air to form ozone and the situation was aggravated. All these factors contributed to the high API on 3 November. Satellite pictures showing pollutant concentrations clearly illustrated the migration of the plume from Guangzhou southwards within a span of 24 to 36 hours.

Hong Kong faces such meteorological conditions and the resultant serious regional air pollution problem only occasionally. The episode referred to by the Honourable Member was the worst the territory has experienced for years. Nevertheless, we are committed to tackling the problem of regional air pollution in conjunction with Guangdong. In this connection, the Hong Kong SAR Government and the Guangdong Provincial Government reached a consensus in April last year to reduce, on a best endeavour basis, by 2010 the regional emissions of the four main pollutants in the ambient air, namely sulphur dioxide, nitrogen oxides, respirable suspended particulates and volatile organic compounds by 20 per cent to 55 per cent, using 1997 as the base year. To achieve those emission reduction targets, the two Governments are drawing of up a regional air quality management plan that will set out in details the improvement measures that Hong Kong and Guangdong will take. For Hong Kong, we already have a comprehensive programme to reduce motor vehicle emissions. To further reduce emissions from other local sources, we have to control the emissions of volatile organic compounds from petrol filling stations, printing operations, paints and consumer products that contain volatile organic compounds. We also have to achieve the emission reduction targets in respect of sulphur dioxide, nitrogen oxides and respirable suspended particulates through reducing their emissions from power plants in Hong Kong. For Guangdong, measures would have to be taken to reduce emissions from their power plants, motor vehicles and various industrial operations such as cement factories.

In the area of reducing power plant emissions, in order to allow our power plants to meet the emission reduction targets in a more cost effective manner, we believe they should be provided with the option of emissions trading. Emissions trading would provide a win-win situation for the power plants and the consumers if the power companies find it cheaper to buy emission credits from other power companies in the Region rather than carrying out their own physical works to reduce emissions from their own plants. As emissions trading is an arrangement not yet tried out in Hong Kong and Guangdong, it is necessary to convince the Mainland authorities that an emissions trading pilot scheme should be introduced as a first step. We have made the suggestion to and obtained the support of the State Environmental Protection Administration for introducing the pilot scheme because it is under their purview. We are currently examining and working out with the Guangdong Provincial Government the details of the pilot scheme. How much reduction in the emissions of the three relevant pollutants will be achieved through emissions trading, as one of the means, will depend on the power companies' level of participation in the scheme.

(b) We have set ourselves a target of working out a detailed emissions trading pilot scheme within three years. We have to sort out a whole host of highly complicated issues with our Guangdong counterparts. For instance, we have to work out a detailed enforcement regime to check that the selling power company honours the emission credits it has sold. We have to determine what penalties should be imposed on it if it fails to honour the commitment. We have to work out and set up a comprehensive continuous monitoring system to check emissions such that effective enforcement can be carried out. Equally important is, of course, the price of the emission credits traded. All these issues are highly complex particularly as the scheme has to be implemented in two jurisdictions. Therefore, we have allowed ourselves adequate time to examine and work out all these details to ensure that the scheme will operate in an orderly manner.

Emissions trading is one of the possible tools for implementing the measures required to reduce emissions of the three relevant pollutants from power plants in a more cost-effective manner. What will bring about the actual reduction in emissions will be the improvement measures themselves. Therefore, while the details of the pilot scheme are being worked out, the Guangdong and Hong Kong authorities are discussing with power companies all other possible options in addition to emissions trading, such as actual physical works to reduce emissions, such as desulfurisation plant which may enable them to achieve the reduction targets. The assessments will help us analyse the option or combination of options that would be the most cost-effective. At the end of the day, some power companies would try to carry out physical works to reduce emissions from their plants, and the works will take time to complete and we need time for preparation.

On the other front, we are pushing ahead with the improvement measures required to achieve the emission reduction in respect of volatile organic compounds. Following consultation with oil companies and this Council's Environmental Affairs Panel earlier, we will introduce legislative amendments to require the installation of vapour recovery system at petrol filling stations to reduce the emissions of volatile organic compounds during vehicle refuelling. We are also working on a public consultation document to control the emissions of volatile organic compounds from printing operations, paints and certain consumer products. We will consult the relevant panels of this Council on our proposals in due course.

Ends/Wednesday, December 10, 2003

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