PRIORITIES OF HONG KONG'S NEW ENVIRONMENT BUREAU:

UNCLAS SECTION 01 OF 02 HONG KONG 002022 SIPDIS SENSITIVE SIPDIS STATE FOR EAP/CM AND OES/E STATE PASS EPA STATE PASS ENERGY E.O. 12958: N/A TAGS: CH ENRG HK SENV PGOV SUBJECT: PRIORITIES OF HONG KONG'S NEW ENVIRONMENT BUREAU: EMISSIONS, PUBLIC AWARENESS AND SUSTAINABLE GROWTH SUMMARY -------------- ¶1. (SBU) During a July 19 meeting with local legislators, Hong Kong's new Secretary for the Environment Edward Yau detailed the environmental agenda for Chief Executive Donald Tsang's second administration. Yau said that Hong Kong SIPDIS Government (HKG) will strive to better regulate emissions standards, promote more efficient energy usage and enhance regional cooperation with Guangdong. Yau said he will encourage greater community involvement and awareness in environmental protection initiatives. He indicated that actively involving electricity suppliers in improving air quality, reducing emissions, and promoting renewable energy will be one of his initial priorities. Yau reiterated that the HKG will tie emissions reduction to the upcoming negotiations over the Scheme of Control. He said his Bureau has oversight over the Council for Sustainable Development, which gives it a greater say in promoting sustainable economic growth and development in Hong Kong. End Summary. BACKGROUND -------------- 2, (SBU) On July 1 Secretary Yau, a former Hong Kong civil servant, replaced Sarah Liao as Hong Kong's chief environmental policy maker. At the same time, as part of a broader restructuring of the HKG, the responsibilities of the former Bureau of Environment, Transportation and Works were split between three new bureaus: Environment, Transportation and Housing, and Development. The new Environment Bureau has three branches: the Environmental Protection Department (EPD),the Energy Policy Unit, and the Council for Sustainable Development. The Departments of Highways, Transportation, Drainage Services, Water Supplies, and Civil Engineering and Development -- all formerly in Liao's purview -- were de-linked from environmental policy issues. According to several commentators, Yau's narrower portfolio should allow him to focus more on environmental issues. POWER GENERATION AND PUBLIC AWARENESS -------------- ¶3. (U) Testifying before the Hong Kong Legislative Council, Secretary Yau said his bureau will work to implement the SIPDIS "policy initiatives that Chief Executive Tsang pledged during the spring 2007 campaign," specifically to reduce pollution, regulate emissions, work with energy suppliers and users to promote greater energy efficiency, and enhance cross-border cooperation with Guangdong. Yau said one of his priorities would be to encourage greater involvement of civil society in environmental protection, noting the important role that NGO's and others can play in improving the quality of life of Hong Kong residents. Educational awareness campaigns on a variety of environmental issues -- from energy conservation to reducing the use of plastic bags -- are all part of the new bureau's campaign to get the public more involved in protecting and securing Hong Kong's natural resources. Yau did not rule out imposing levies on wasteful misuse of resources. ¶4. (SBU) Yau said power generation in Hong Kong remains a high priority for the new bureau, noting that 90 percent of Hong Kong's sulfur dioxide (SO2) emissions and 50 percent of its nitrogen oxide (NOx) come from the energy sector. To address energy sector emissions and ensure a stable energy supply, he proposed introducing more energy efficiency technologies and renewable energy sources into existing and future electricity production plants. He also claimed the Bureau will step up regulation of power plants. Yau noted that the HKG had begun negotiations over the "Scheme of Control" agreement, which sets electricity tariffs and the permitted rates of return for the power companies. In its ongoing negotiations with Hong Kong Electric Company (HKEC) and Exxon Mobil's China Light and Power (CLP),the two main electricity companies, the HKG recently indicated a willingness to tie each company's permitted rate of return to its ability to reduce emissions. Yau also indicated that the government will consider opening up the electricity market in the next decade in an attempt to spur technological innovation; while at least one company already has expressed interest in entering the market, full liberalization would not occur until 2018. LNG TERMINAL AT SOUTH SOKO ISLAND -------------- HONG KONG 00002022 002 OF 002 ¶5. (SBU) Yau reiterated the HKG's support for CLP's construction of an LNG receiving terminal on South Soko Island, a uninhabited island west of Hong Kong Island. The HKG has approved CLP's environmental impact assessment and EPD has issued a construction permit, with stipulations that CLP take specific measures to safeguard fish habitats and conduct other environmental preservation measures on and near South Soko. CLP is awaiting approval of its financing plan for the project. The South Soko project has been controversial, even among environmental activists; the World Wildlife Fund argued that the project would disturb a major habitat for endangered pink dolphins and should be constructed elsewhere in Hong Kong or on the mainland. Environmentalists who focus on air quality, however, such as former Legco member Christine Loh, have publicly supported the LNG terminal (with strict environmental safeguards) as it would help bring faster reductions in emission levels and improve air quality. Loh also argues that placing CLP's terminal in Guangdong would effectively continue the trend of "dumping" Hong Kong's industrial projects onto the mainland, where environmental oversight is not as strong. CLP, HKG officials, and Loh all note that building the LNG terminal in Hong Kong only involves approval of one jurisdiction, making completion of the project faster and less likely to encounter problems with mainland Chinese bureaucracy and/or corruption. An LNG terminal in Hong Kong would allow CLP to source from global supplies, making the company less reliant on Sinopec and other mainland suppliers. South Soko's remote location also would allow LNG tankers to avoid densely populated urban centers when delivering fuel to Hong Kong. SUSTAINABLE DEVELOPMENT AND RENEWABLE ENERGY -------------- ¶6. (SBU) Officials from the Council for Sustainable Development -- now part of the Environment Bureau -- also recommend Hong Kong produce two percent of its electricity from renewable sources by 2012, although environmental groups generally prefer at least five percent. As a result of this push, HKEC and CLP are researching the feasibility of offshore wind farms. Despite these pledges to promote renewable energy, however, a local wind energy specialist believes Hong Kong's geography inhibits construction of large scale wind projects; the Pearl River estuaries would be more suitable. That specialist still hopes that discussion of these plans will raise the profile of renewable technologies among the general public and the business community in Hong Kong and throughout the region. Josie Close of Hong Kong University's Centre of Renewable Energy believes solar power could better help Hong Kong meet its renewable energy goals, but criticizes policy makers for not providing economic incentives for architects, construction companies, and building operators to incorporate these technologies into their plans. Despite their public statements to the contrary, Close believes the HKG and local business leaders lack the political will to invest in next-generation technologies for renewable energy. Marut