Guangdong, Hong Kong Mull Emissions Trading Scheme
Date: 03-Aug-06
Country: CHINA
Author: Wendy Lim and Emma Graham-Harrison
Hong Kong Chief Executive Donald Tsang said earlier that emissions from the city's power companies were the main cause of its air quality problems, and the trading project could help them cut back pollutants at minimal cost.
"I will launch the pilot emissions trading scheme within this year, so that power companies can identify trading partners and draw up emissions trading agreements," Tsang told reporters in the provincial capital Guangzhou.
The city's power comes from CLP Holdings Ltd. and Hongkong Electric Holdings Ltd..
Final details of the pioneering scheme have yet to be worked out but it will not initially include greenhouse gas carbon dioxide, Sarah Liao, Hong Kong's Secretary for Environment, Transport and Works told Reuters.
"This is under the State Environmental Protection Administration, which has set up seven points within China and then two more points with Hong Kong and Macau to allow emissions trading as a pilot case study," she said after a joint Hong Kong-Guangdong panel on air pollution.
"It's very important that we establish this to pave the way for future emissions trading, including the very controversial carbon (dioxide) trading, which is not yet approved."
Guangzhou and Hong Kong are often cloaked in smog, and while Chinese citizens have grown used to accepting poor air quality as the price of economic growth, residents of the former British colony say the pollution is starting to hurt the city's image.
Power generation is responsible for 92 percent of the sulphur dioxide and half the nitrogen oxides dirtying the city's air, authorities have said, and they are keen to clean it up.
Guangdong and Hong Kong have pledged that by 2010 they will cut regional emissions of the two pollutants by 40 percent and 20 percent respectively, using 1997 as a base year.
YEAR END LAUNCH?
The two governments see trading as a potential tool to encourage power plants to make the cuts, by allowing firms that reduce emissions below a certain quota to profit from selling spare emissions rights to companies that exceed their limit.
Liao said there were still complex details to work out, but they hoped to have a plan ready by the end of the third quarter.
"We have been working on the details of how to trade -- how do you monitor the two sides, on what basis can you trade, and how do you calculate the effectiveness? It's not easy because we are under two different jurisdictions," she said.
The neighbouring administrations in China's southeastern economic heartland are well suited to cooperate on the project.
Although much of the pollution Hong Kong needs to clean up drifts across from China, many of the factories producing it are owned by the city's executives, while power plants across the border help keep Hong Kong's lights on and air-conditioning running, giving the city extra leverage.
If China, the world's number two emitter of greenhouse gases, did eventually include carbon dioxide in the scheme, it would be a pioneering move for the country, which has no emissions targets under the UN's Kyoto Protocol.
Beijing usually argues that rich industrial states, having fuelled their economies with oil, gas and coal since the industrial revolution, should take the lead in cutting emissions.
(Additional reporting by John Ruwitch in Guangzhou)
