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Following is a question by the Dr Hon Lam Tai-fai and a written reply by the Secretary for the Environment, Mr Wong Kam-sing, in the Legislative Council today (December 4):
Question:
The Chief Executive has stated in the 2013 Policy Address that diesel commercial vehicles (DCVs) are a major source of roadside air pollution in Hong Kong, and proposed to set aside subsidies to owners of over 80 000 heavily polluting DCVs meeting pre-Euro IV emission standards so as to phase out these vehicles in accordance with their pollution level, thereby meeting the 2015 and 2020 emission reduction targets. The Environmental Protection Department has earlier proposed that the amounts of ex-gratia payments for scrapping and replacing vehicles be standardised and raised, and that the retirement deadlines for Euro I to III DCVs be extended by one year. Under the revised proposal, the Government's financial commitments will be increased to $11.7 billion. In this connection, will the Government inform this Council:
(a) of the respective numbers of light, medium and heavy pre-Euro and Euro I to III DCVs in Hong Kong at present; whether it has a breakdown of the numbers of DCVs by frequency of use (such as occasional or frequent use); if so, of the respective numbers; if not, the reasons for that;
(b) given that quite a number of vehicle owners from grass-roots families have indicated that they are unable to pay for the huge costs involved in replacing their vehicles, whether the Government has assessed the number of vehicle owners or companies concerned that will close down their relevant businesses as a result; if it has, of the numbers; if not, the reasons for that;
(c) given that some owners of medium goods vehicles have relayed to me that they have difficulties in operating their businesses, whether the Government will increase the level of ex-gratia payments as well as further extend the retirement deadlines of DCVs; if so, of the details; if not, the reasons for that;
(d) given that the retirement deadlines of Euro I to III DCVs have been extended by one year to 2017, 2018 and 2020 respectively, while that of pre-Euro DCV models is maintained at 2016, whether the authorities have estimated the number of DCVs of the relevant emission standards that will retire in the next three years; if they have, of the number; if not, the reasons for that; whether they have assessed the number of second-hand Euro IV vehicles available for purchase by owners of retired vehicles in the next three years; if so, of the number; if not, the reasons for that;
(e) whether the Government has taken measures to ensure that the prices of second-hand and new DCVs be maintained at reasonable levels, so as to forestall the situation of demand outstriping supply and prevent vehicle dealers from jacking up the prices; if so, of the details; if not, the reasons for that;
(f) whether it has considered adjusting the amount of ex-gratia payments according to the inflation rate on a regular basis; if so, of the details; if not, the reasons for that;
(g) whether it has considered providing interest-free loans to assist and encourage owners of DCVs to replace their vehicles; if so, of the details; if not, the reasons for that;
(h) given that the transport sector strongly oppose the Government's setting the service life limit of newly registered Euro V DCVs at 15 years, whether the Government will consider renewing the licences of such vehicles which are 15 years old but have passed the vehicle examinations; if so, of the examination standards concerned; if not, the reasons for that; whether it will consider extending the service life limit of such vehicles; if so, of the number of years by which such limit will be extended; if not, the reasons for that;
(i) of the measures put in place to prevent people from obtaining the ex-gratia payments offered by the Government by importing second-hand DCVs at low costs from abroad; and
(j) given that some members of the vehicle repair sector have indicated that with the massive use of electronic parts and components in Euro IV and post-Euro IV DCVs, it is necessary for vehicle mechanics to be equipped with a certain level of computer knowledge and be provided with data support from vehicle manufacturers in order to provide repair service for such vehicles, whether the Government has assessed the number of workshops specialised in repairing DCVs that will close down as a result of having no access to such knowledge or data support; if so, of the number; if not, the reasons for that; and whether dealers of DCVs will be required to make public the relevant technology and information, and to provide relevant training courses for vehicle mechanics?
Reply:
President,
The Chief Executive proposed in the 2013 Policy Address to phase out some 80,000 pre-Euro IV diesel commercial vehicles through an incentive-cum-regulatory approach. The Environment Bureau and the Environmental Protection Department (EPD) actively discussed the details of the proposal with the transport trades thereafter, and revised the proposal in light of the views of the trades. When compared with the proposal put forth early this year, the revised proposal has increased the ex-gratia payment levels ranging from previously 10% to 30% to 27% to 33% of average taxable values of new vehicles, and reduced the number of age bands from five to three, such that owners of diesel commercial vehicles, in particular the pre-Euro and Euro I ones, may receive higher payment. The ex-gratia payment level will only be linked with the age of the phased-out vehicles but not whether vehicle owners procure new vehicles so as to give greater flexibility to vehicle owners to choose whether and when to buy a replacement vehicle. Besides, the revised proposal has also deferred the retirement deadlines for Euro I, Euro II and Euro III diesel commercial vehicles by one year respectively. The retirement deadline for pre-Euro diesel commercial vehicles will thus be January 1, 2016, while that for Euro I is January 1, 2017, Euro II is January 1, 2018 and Euro III is January 1, 2020. For newly registered vehicles, they are subject to a service life limit of 15 years.
Based on the consensus reached with the transport trades, we tabled the Air Pollution Control (Air Pollutant Emission) (Controlled Vehicles) Regulation (the Regulation) at the Legislative Council on October 30 this year after obtaining the support of the LegCo Panel on the Environmental Affairs to the revised proposal on October 2. The LegCo has formed a subcommittee to scrutinise the Regulation. We plan to seek the funding approval from the LegCo Finance Committee for implementing the ex-gratia payment scheme in the first quarter of 2014. The subcommittee that scrutinises the Regulation held a public hearing on November 26, 2013 on the Regulation. Most of the transport trades who spoke in the hearing supported the revised proposal and looked forward to its early implementation.
Regarding the questions raised by Dr Hon Lam Tai-fai, our responses are as follows.
(a) As of end October 2013, there were some 82,000 registered pre-Euro IV diesel commercial vehicles. A profile of these vehicles is at Annex A. Since the frequency of use of vehicles is subject to changes due to the different operational modes of individual trade and vehicle owners, as well as the overall economic cycle, we do not have the information of the frequency of use of these vehicles.
(b) Having regard to the views of the trades, our revised proposal only correlates the ex-gratia payment level with the age of the phased-out vehicles but not whether the vehicle owners procure replacement vehicles, such that vehicle owners can choose whether and when to buy a replacement vehicle (new or second-hand) taking into account their personal circumstances. In addition, the Government has also increased the level of ex-gratia payment. The original and revised proposals of ex-gratia payment are at Annex B. Based on these revised proposals, the mainstream view of the transport trades (including some representatives of "single vehicle owners" or operators of smaller business scale) was that the proposal was acceptable. Besides, we also contacted the banking industry and understood that there were different plans of car loan in the market for application by vehicle owners. The loan amount can be up to 90% of the vehicle price and the current interest rate is in general lower than the prime rate. Whether procuring a replacement vehicle and the future operational mode of business are commercial decisions of the vehicle owners. In addition, we do not have information that can reflect the financial statues of the vehicle owners or companies concerned. We therefore cannot evaluate the impact of the proposal on the number of vehicle owners or companies concerned in future.
(c) Our revised proposal has already been optimised in the light of the transport trades' views, and was acceptable to the transport trades in general. The revised ex-gratia payment package would amount to around $11.7 billion, representing an increase of around $3 billion from the estimated funding of $8.7 billion required under the original offer made in January 2013. Further increasing the ex-gratia payment level will go against the principles of prudent use of public funds and the polluter pays. In addition, the revised proposal has already deferred the retirement deadlines for Euro I, Euro II and Euro III diesel commercial vehicles by one year respectively. Further extension of the proposed retirement deadlines would fail to improve roadside air pollution problems as soon as possible, and also compromise the attainment of the new Air Quality Objectives by 2020 and the compliance of the 2015 and 2020 emission reduction targets jointly set by the Government and the Guangdong Provincial Government.
(d) and (e) If the Regulation is passed by the LegCo, some 32,000 pre-Euro and Euro I diesel commercial vehicles will be phased out by the end of 2016. As for the some 50,000 Euro II and III diesel commercial vehicles, they could be used until December 31, 2017 and December 31, 2019 respectively. Generally speaking, vehicle owners will take into consideration such factors as the conditions of their vehicles, their financial situations and personal considerations in deciding when to scrap these vehicles. Therefore, we cannot estimate the specific number of vehicles to be retired each year.
The local market for commercial vehicles is open. We welcome vehicle manufacturers from different regions to introduce to the local market vehicles that comply with the statutory requirements on vehicle emissions standards and road safety, both of which are formulated with reference to international standards. All major vehicle manufacturers from Europe and Japan have already introduced their vehicles into the local market. The production capacity of these vehicle manufacturers is sufficient to cope with the increased vehicle demand brought about by the implementation of the proposal. As there is sufficient competition in the local market, we trust that vehicle prices would be maintained at reasonable levels.
The supply of local second-hand vehicles is primarily affected by the existing vehicle owners. They will decide whether and when to sell their vehicles taking into account such factors as the conditions of their vehicles, their financial situations and personal considerations. Since the reliability of too old vehicles is relatively lower, these vehicles may not be able to cope with the needs of commercial operations. Transactions of second-hand vehicles therefore often involve newer vehicle models, such as Euro III or subsequent vehicles. Currently there are some 30,000 Euro III diesel commercial vehicles. These vehicles can be used until December 31, 2019. There are also some 52,000 Euro IV or V diesel commercial vehicles that were registered before the commencement of the Regulation as of end-October 2013. We therefore do not anticipate any shortage of supply of second-hand vehicles.
(f) Once the ex-gratia payment level is fixed, it will remain the same throughout the whole period of the scheme so as to give extra impetus to encourage vehicle owners to phase out old vehicles earlier.
(g) We have consulted the banking industry on the loan arrangements for vehicle procurement. The trade in general expects that banks would offer competitive plans of car loan to vehicle owners. The prevailing loan amount can be up to 90 per cent of the vehicle price and the interest rate is in general lower than the prime rate. Therefore, the Government has no plan to introduce loan arrangements in the ex-gratia payment scheme. Small and medium enterprises that intend to purchase replacement vehicles may also consider applying for the Small and Medium Enterprise Loan Guarantee Scheme administered by the Trade and Industry Department.
(h) The current air quality in Hong Kong is still far from meeting the ultimate goals of the World Health Organization's Air Quality Guidelines. We need to improve air quality continuously, including timely replacing in-use diesel commercial vehicles with more environmental friendly ones. We therefore propose setting the service life limit of 15 years for newly registered diesel commercial vehicles in future. Under the Regulation, newly registered diesel commercial vehicles, on each licence application from its 15th anniversary date of first registration, are required to comply with the emission standards applicable to new vehicles at that time. We could hardly make use of the latest vehicle emission reduction technologies to achieve the objective of improving air quality as soon as possible if the service life limit for diesel commercial vehicles is further extended.
(i) All new vehicles and second-hand vehicles are required to comply with the prevailing statutory emission standards when they are first registered in Hong Kong. The current statutory emission standards are Euro V. This requirement can prevent people from obtaining the ex-gratia payment offered by the Government by importing second-hand aged diesel commercial vehicles from abroad.
(j) We have been requesting vehicle suppliers to make public technical information on vehicle maintenance such that the vehicle maintenance trade can repair vehicles properly. Currently, vehicle suppliers will provide information about vehicle maintenance to customers upon request. Some vehicle suppliers also arrange workshops on vehicle maintenance skills for vehicle maintenance mechanics. On the other hand, the Vocational Training Council is going to set up a database on vehicle maintenance, and provide technical support to the vehicle maintenance trade. We are exploring with the Vocational Training Council and vehicle manufacturers the feasibility of arranging vehicle maintenance courses.
Ends/Wednesday, December 4, 2013
Issued at HKT 14:21
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