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Following is a speech (English translation) by the Secretary for the Environment, Mr Edward Yau, in moving a resolution to impose a concessionary duty rate on Euro V diesel under the Dutiable Commodities Ordinance in the Legislative Council today (November 14):
Madam President,
I move that the resolution as set out in the agenda be passed. The resolution aims to introduce a concessionary duty rate on diesel complying with the Euro V standard (Euro V diesel), which provides a fiscal incentive to encourage early introduction and supply of this more environment-friendly fuel on the local market.
The SAR Government is committed to improving the air quality of Hong Kong. Diesel vehicles are the major cause of roadside air pollution, accounting for 96% of respirable suspended particulates, 88% of nitrogen oxides and 66% of sulphur dioxide emitted by all types of vehicles.
To further reduce vehicle emissions, it has been our established policy to introduce and promote the use of cleaner fuel as far as practicable. Compared with ultra-low sulphur diesel (ULSD), which is the current statutory standard for motor vehicle diesel, Euro V diesel has 80% less sulphur content. Using Euro V diesel could reduce 80% of sulphur dioxide and 5% of particulates emitted by existing diesel vehicles. Should Euro V diesel vehicles be fueled with Euro V diesel in future, they will emit 30% to 40% less nitrogen oxides than Euro IV diesel vehicles fueled with ULSD. As for diesel vehicles up to 3.5 tonnes, their particulate emissions will also reduce by 80%.
In view of the environmental benefits of using Euro V diesel, among the Asian countries, Japan has made it the statutory standard for motor vehicle diesel since January this year. The European Union (EU) has also decided to make it the statutory standard for motor vehicle diesel from January 2009, and to implement the Euro V emission standards for newly registered vehicles in phases from October of the same year. We also plan to implement the same standards in tandem with EU.
Euro V diesel provided by the local fuel suppliers is presently subject to the same concessionary duty rate as ULSD, which is set at $1.11 per litre. We propose to reduce the duty rate for Euro V diesel to $0.56 per litre from December 1 this year, so as to encourage fuel suppliers to introduce and provide Euro V diesel and diesel vehicle owners to switch to this more environment-friendly fuel as soon as possible. The concession period will last for two years. In the first eight months of this year, about 40% of the motor vehicle diesel imported to Hong Kong met the specifications of Euro V diesel. Based on the import prices provided by the Census and Statistics Department during the period, Euro V diesel was more costly than ULSD by up to about $0.1 per litre. However, the future price differential between the two types of fuel will still be subject to market factors such as supply and demand situations. Nevertheless, the proposed concessionary duty rate of $0.56 per litre for Euro V diesel should render the price of Euro V diesel lower than ULSD. I have met with the major oil companies to encourage them to pass on the benefits from the tax concession to the customers. The oil companies have responded positively and pledged to duly reflect the duty concession on the retail price of Euro V diesel after deducting the cost increase. We will review this tax concession arrangement before making Euro V diesel the statutory standard for motor vehicle diesel in 2009.
I hope all Members will support this resolution to bring in a cleaner fuel to further improve the air quality of Hong Kong. Thank you, Madam President.
Ends/Wednesday, November 14, 2007
Issued at HKT 14:49
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