China Daily: Hong Kong’s two major power suppliers — CLP Power Hong Kong and the Hongkong Electric Co — increased the price of electricity by 6.4 and 5.5 percent respectively this year. The total fuel charge comprises the basic electricity tariff and the fuel cost adjustment, the latter of which fluctuates because of volatile international fuel pricing.
Hong Kong Legislative Council members have urged the administration to promptly establish a cooperation framework with other cities in the Guangdong-Hong Kong-Macao Greater Bay Area to secure a diversified supply of zero-carbon energy for Hong Kong, hoping this will advance the decarbonization initiative while checking the drastic rise in the local electricity tariff level.
“It is true that Hong Kong cannot decarbonize entirely by itself at a reasonable cost and within a reasonable time frame; therefore, it makes sense to cooperate with neighboring regions to import clean energy to decarbonize rapidly,” says Jeffrey Hung Oi-shing, CEO of Friends of the Earth (HK).
Lawrence Iu Chun-yip, executive director at Civic Exchange, a Hong Kong-based think-tank focusing on environmental issues, agrees, saying, “Hong Kong desperately needs regional cooperation to import more zero-carbon energy at the moment.”
Iu said, “The city should think out of the box and be more proactive in crafting some sort of regional energy cooperation mechanisms that contain policy frameworks to guide the two utility companies for making commercial decisions regarding electricity supply.”
Iu stresses that regional energy cooperation between Hong Kong and other Greater Bay Area cities should satisfy four objectives: reliability, security, price affordability, and environmental impact assessment.
The government of the Hong Kong Special Administrative Region says it has initiated discussions with the National Energy Administration on issues relating to regional zero-carbon energy cooperation, including joint investment in and development of zero-carbon energy projects near Hong Kong.
Other stakeholders think a different approach is needed.
“Though it is difficult to develop large-scale renewable energy in Hong Kong due to expansive land cost, the city can still produce a certain level of renewable energy that can cater to local energy consumption needs,” Greenpeace campaigner Tom Ng Hon-lam tells China Daily.
“My concern is that the mainland has a significant decarbonization requirement as well. I do not see that the Greater Bay Area has the potential to generate excessive renewable energy that Hong Kong can import. We will be in competition with them for renewables. We have to be self-sufficient,” argues Davis Bookhart, director at Sustainability/Net-Zero Office and adjunct associate professor of Environment and Sustainability Division at the Hong Kong University of Science and Technology.
Secretary for Environment and Ecology Tse Chin-wan said in March that the government is studying the idea of importing mainland nuclear energy to stabilize electricity prices in Hong Kong. He added that the administration is planning to build a new power-receiving facility in Tseung Kwan O, and it is expected to be completed before 2035.
Even if Hong Kong can import green energy from the Greater Bay Area, this would not necessarily guarantee that electricity bills will be cheaper.
“Heavy capital investment is required to build new infrastructure across the border at the upstream level to facilitate energy import. What we can argue is that if we import clean energy from the Greater Bay Area, it is very likely the utility tariff level can be affordable in the future,” Iu argues.
Stakeholders argue Hong Kong should develop local renewable energy sources now to ensure the stability of local utility prices in the future because renewable energy is completely immune to geopolitics.
Experts do not agree that green hydrogen or waste-to-energy are kinds of renewable energy sources because these two energy forms still require power generation to produce the energy.
The government has pledged to increase the share of renewable energy in the fuel mix for electricity generation to 7.5 to 10 percent by 2035 and to 15 percent gradually thereafter. Renewable energy currently accounts for less than 1 percent of the fuel mix for electricity generation.
Environmental-industry stakeholders agree that beefing up infrastructure, reducing building energy consumption, providing financial subsidies, and reforming the city’s electricity market are recipes for increasing renewable energy as a fuel mix source.
“The government’s passive pace of renewable energy target setting and development is distressing,” Hung warns. “The government must significantly ramp up its climate ambitions and deployment of renewable energy infrastructure if it wants its climate targets to be taken seriously.”
As a coastal city surrounded by the South China Sea and with a tropical climate, Hong Kong has great potential for developing solar and wind renewable energy, according to Ng. He says Hong Kong should progressively increase the ratio of solar and wind power in its mix of energy sources.
The solar farm at Siu Ho Wan Sewage Treatment Works of the Drainage Services Department currently is the government’s largest solar energy generation system (comprising over 4,200 polycrystalline photovoltaic panels) that can generate about 1.1 million kilowatt-hours of electricity annually.
The government launched pilot programs on the installation of floating solar energy generation systems at Shek Pik Reservoir, Plover Cove Reservoir and Tai Lam Chung Reservoir in 2017. It plans to install large-scale floating solar energy generation systems each with a generation capacity of about 5 to 10 megawatts at suitable locations at the three reservoirs.
Hong Kong expects to have its first offshore wind farm by 2027; Hongkong Electric Co has proposed to build one southwest of Lamma Island and will commence tendering next year for scheduled commissioning in 2027. The proposed wind farm will produce 400 million units of zero-carbon electricity a year, which is around 4 percent of HK Electric’s total electricity output — enough to generate electricity for about 120,000 households, and preventing the release of around 284,000 metric tons of carbon dioxide emissions per year.
CLP Group is currently working on the feasibility and pre-engineering work studies of the offshore wind farms east of Clear Water Bay that are incorporated in the listed utility conglomerate’s 2024-28 development plan.
Iu urges the administration to hasten the process of making environmental assessments and to streamline the planning procedure involved in building renewable energy infrastructures. “The current procedure involves the approval of various government departments, which inevitably lengthens the process.”
Reducing building’s consumption
Besides ramping up renewable energy infrastructure, experts concur that the government should drastically slash the energy consumption of buildings in Hong Kong to push the decarbonization drive and rein in price increases on local utility bills.
Buildings account for about 90 percent of Hong Kong’s electricity consumption, and over 60 percent of the city’s carbon emissions are attributable to generating electricity for buildings. The administration strives to enhance the overall energy performance of government buildings and infrastructure by more than 6 percent by 2024-25, using 2018-19 as the baseline.
“The target of reducing energy consumption for government buildings and infrastructure is too conservative. It should promulgate a more aggressive target rather than a conservative target that can be achieved easily,” Ng says.
In addition, Ng recommends the administration consider giving financial subsidies to current owners of residential and commercial buildings to promote energy efficiency. It can also do more carbon audits on government buildings to set up a role model for residential and commercial building owners to follow.
Bookhart agrees, saying: “Hong Kong has some of the weakest energy building codes in the world. The government should aggressively raise the standard of the building energy code to match international green building standards.”
The government has pledged to reduce the electricity consumption of commercial buildings by 30 to 40 percent, and that of residential buildings by 20 to 30 percent, from 2015 levels, by 2050, and to reach the halfway point in meeting these targets by 2035.
“The government should make the reduction target more transparent to all stakeholders as the benchmark for building owners to follow,” Iu says.
The third suggestion is to provide financial assistance to encourage more renewable energy generation. Bookhart makes particular reference to the government’s Feed-in Tariff Scheme.
The government in 2018 introduced the FiT program to facilitate the private sector in its efforts to sell renewable energy it has generated to the power companies at a rate higher than the normal electricity tariff rate. By shortening the payback period to 10 years, the FiT rate was intended to incentivize the private sector to invest in renewable energy.
However, the government lowered the FiT rates in April 2022, which means renewable energy investors may not be able to recover their costs before the program expires at the end of 2033.
“If the government would change the FiT Scheme — for example, with a 15-year per project from whenever you start — then everyone would always have the same incentive because you are guaranteed 15 years of returns instead of having a hard deadline in 2033,” Bookhart says.
The HKUST professor also suggests the FiT Scheme should be extended to other renewable energy sources such as biodiesel. “The FiT should not be dictating on the technology but focus on the outcome — electricity without carbon.”
Bookhart also says, “Incorporating a cost of carbon would make the fossil fuels more expansive, and it would make renewable energy more attractive.”
Industry players would be charged a carbon tax, and the fee would be a disincentive to do things that generate a lot of carbon. By taking those carbon fees it could immediately subsidize the kinds of technologies that we really want, Bookhart says.
Reform of electricity market
Last but not least, the long-term reform of Hong Kong’s electricity market is also warranted.
“If we become a little bit more market-orientated, we can consider decoupling the electricity generation away from the utilities and become an open competitive market,” argues Bookhart. “It is conceivable that we could have hundreds of smaller plants that are very nimble and efficient and serve a small area, with innovative people creating new renewable energy sources.”
Hung agrees. “Market liberalization empowers alternative energy suppliers to enter the market allowing for more decentralized energy generation and sustainable renewable energy to thrive. The government should liberalize the market.”
When reviewing the Scheme of Control Agreements with the city’s two utilities companies, the government can incentivize them by having a fast-track approval process to help accelerate the deployment of new renewable energy infrastructure, Hung says.
Ng cites the United Kingdom as an example, saying that the ratio of renewable energy adoption in the country increased after market deregulation because it attracted some companies to provide renewable energy for the market.
Hong Kong’s overall decarbonization strategy is to achieve carbon neutrality before 2050, and to reduce its total carbon emissions from 2005 levels by half before 2035. To achieve this goal, the government plans to spend about HK$240 billion ($30.6 billion) in the next 15 to 20 years on various initiatives for combating climate change.
Originally published on China Daily on 21 Apr 2023. Written by Oswald Chan.