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LCQ14: Quality of diesel sold in Hong Kong and on the Mainland
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    Following is a question by the Hon David Li and a written reply by the Secretary for the Environment, Mr Edward Yau, in the Legislative Council today (November 28):

Question:

     The Government has indicated in a press release dated November 17, 2006 that it will continue to work with the Mainland to improve the quality of the diesel sold there.  On the other hand, it has recently been reported that the Government¡¦s $3.2 billion incentive scheme to encourage owners of older diesel vehicles to switch to Euro IV vehicles is not well supported by cross-boundary vehicle owners.  These owners are concerned that the diesel sold on the Mainland does not meet the specifications required for Euro IV diesel engines.  They prefer to use such diesel whenever possible, as it is significantly cheaper than that sold in Hong Kong.  In this connection, will the Government inform this Council:

(a) of the official framework under which the quality of diesel sold in both places is considered; the number of meetings held since November 17, 2006 to discuss diesel quality under this framework; the date of the next scheduled meeting; and the progress made last year on standardising the quality of diesel sold in both places;

(b) whether it knows the quantity of diesel produced by mainland refineries in 2006 that met the Hong Kong ultra-low sulphur diesel (¡§ULSD¡¨) specification, the respective percentages of such quantity in the total diesel consumption in Hong Kong and in Guangdong Province in 2006, as well as the estimated capacity of mainland refineries to produce ULSD mandated in Hong Kong in 2007, 2008 and 2009; and

(c) whether the Government has assessed if the above incentive scheme is not meeting its objectives and; if the assessment results indicate such failure of the scheme, whether it will consider withdrawing the scheme and replacing it with a subsidy on ULSD in Hong Kong for a period of two years, in order to maintain a price equilibrium with diesel sold on the Mainland, while at the same time greatly stepping up efforts to standardise the quality of diesel sold in both places?

Reply:

Madam President,

(a) The Hong Kong - Guangdong Joint Working Group on Sustainable Development and Environmental Protection (the Joint Working Group), which is co-chaired by the Secretary for the Environment and the Director of the Guangdong Environmental Protection Bureau, acts as the official channel for Hong Kong and Guangdong to discuss environmental issues of mutual concern.  Raising motor vehicle emission standards and motor vehicle fuel quality are among the measures being pursued by both Hong Kong and the Guangdong authorities to reduce air pollutant emissions in the Pearl River Delta (PRD) Region.  The subject therefore features regularly in the Joint Working Group¡¦s deliberations on improving regional air quality.  The Joint Working Group last met in December 2006.  The next meeting is scheduled for December 2007.

     In addition, the Joint Working Group has set up, inter alia, an Expert Group and a Special Panel on Pearl River Delta on Air Quality Management and Monitoring where the promotion of cleaner fuels is a regular issue being discussed.  The Expert Group and the Special Panel met recently in November and October 2007 respectively to discuss and review progress of the collaboration efforts by both sides, including the use of cleaner fuels.

     We understand that starting from mid-April this year, all petrol filling stations in Shenzhen would only supply motor vehicle diesel of sulphur content not greater than 0.035%, which represents a 83% reduction in sulphur content as compared with the diesel allowed before April this year.  The reduction is even more significant at 93% when compared with the sulphur content of motor vehicle diesel allowed before 2002.  In addition, Guangdong is working to further advance the introduction of motor vehicle diesel of this quality in the whole province ahead of the national timetable of December 2009.  We will continue to work with our Guangdong counterparts on the continued improvement of motor vehicle fuel quality.

(b) We do not possess information relating to the production of diesel by the Mainland refineries.  

(c) To further reduce vehicle emissions, the Government launched a $3.2 billion scheme on April 1, 2007 to provide a time-limited one-off grant to vehicle owners to encourage them to replace their pre-Euro and Euro I diesel commercial vehicles with those complying with the prevailing statutory emission standards for newly registered vehicles (which is now the Euro IV emission standards) as soon as possible.  As at the end of October 2007, we have approved more than 2,200 applications, involving a total grant of about $90 million.

     We believe the scheme is attractive to the vehicle owners concerned.  Since the scheme will last for three years, many of these vehicle owners may decide to apply for the grant at a later stage.  We will continue to monitor the progress of the scheme and launch further publicity to encourage vehicle owners to replace their old vehicles under the scheme.

     The Legislative Council has just endorsed a proposal to reduce the duty rate for Euro V diesel to $0.56 per litre for a period of two years, starting from December 1, 2007.  The duty concession will advance the supply of this more environment-friendly fuel, which has a sulphur content 80% less than ULSD, on the local market and encourage its use.  At the same time, we will continue to work with the Guangdong authorities on raising the quality of the motor vehicle fuels on both sides.

Ends/Wednesday, November 28, 2007
Issued at HKT 16:36

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