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Hong Kong

Better Fuel Mix:


Option 1 or 2?

Student Name: Luk Tzu Wei, Bryan


Major: Criminology
Word Count: 3028 (excluding references and others)
Research question: Based on the public consultation of March 2014 Planning Ahead
for a Better Fuel Mix, the HKSAR government is proposing two future options for
electricity generation in Hong Kong: 1) purchasing from the Mainland power grid and
2) using more natural gas for local generation. Research the historical legacy of
energy production in Hong Kong and discuss how the new narrative of transitions to a
low carbon economy may influence the choices that Hong Kong may make for a
sustainable energy.

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Main Abbreviations

Greenhouse Gases
Chinese Central Peoples
Government
C40 Cities Climate Leadership
Group
Government of Hong Kong
Special Administrative Region
Public Consultation on Planning
Ahead for a Better Fuel Mix:
Future Fuel Mix for Electricity
Generation in 2014
China Southern Power Grid Co.
Limited
China Light and Power
Renewable energy
Hong Kong Electric Company
Ltd
Hong Kong Basic Law

GHG
CCPG
C40
HKG
2014 Consultation

SCP
CLP
RE
HKE
Basic Law

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1. Introduction:
The Greenhouse Gases (GHG) emissions in Hong Kong has experienced an annual
growth 1 2% in GHG emission which rises from 33.3 in 1990 to 43.1 million tons of
CO2 emission in 2012 as the result of the increase of local cement production
according to the consultation document published by Environment Bureau (2014).
The document addition shows that the main local emission sources are the electricity
generation (68%), local transportation (17%), waste treatment (5%), industrial
processes (4%) and others (0.1%); The coal dominates the fuel mix for electricity
generation in Hong Kong (about 54%), followed by natural gas (about 23%) and
nuclear electricity imported from the Mainland (about 23%). In order to achieve the
objectives, HKG decides to proposal the idea of revamp the fuel mix in Hong Kong in
its first 2010 Consultation [Please refer to Appendix I for the situation of fuel mix in
Hong Kong].
2. The Cause of Consultation:
Under the blessing of the Chinas involvement to the United Nations Framework
Convention for Climate Change and Kyoto Protocol, Hong Kong was obligated to
support the climate policy of the Chinese Central Peoples Government (CCPG) in
accordance with the Article 153 of Hong Kong Basic Law (Basic Law)1 after the
notification by CCPG to the Secretary-General in 2003 (United Nations, 2014). In
2007, Hong Kong becomes the member of C40 Cities Climate Leadership Group
(C40) which is a network of worlds megacities aiming to reduce GHG and to
demonstrate some cities that can significantly reducing gas to provide proven modals
that other cities and national government can adopt (C40 Cities, 2015). In 2009,
CCPG introduced a voluntary national target about the reduction in CO2 emission
which is a 40 - 45% reduction in CO2 emission in 2020; hence it becomes the major
catalyst for the Government of Hong Kong Special Administrative Region (HKG)
to achieve climate agenda. Hong Kong, as a more economically developed and
political liberalized city, would exceed the target to 50 60% reduction in 2020 with
the principles of Safety, Environmental Friendly, Affordability and Reliability
(S.E.A.R.).
HKG subsequently introduced the Public Consultation on Planning Ahead for a
Better Fuel Mix: Future Fuel Mix for Electricity Generation in 2014 (2014

Hong Kong Basic Law is a local constitution that was designed in 1990 in light of the
Sino-British Declaration. Please refer to the book of Introduction to Hong Kong Basic Law by
Danny Gittings (2013) for further detail information.
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Consultation) which provides information of the fuel mix revamp. It had proposed
two fuel mixed option for the public, which are:
(1) Option 1: Importing electricity directly from the Mainland China - importing
50% electricity through purchasing from power grids of China Southern
Power Grid Co. Limited (SCP) which has already connected with the grid
of China Light and Power (CLP). The natural gases account for 40% and
coal and Renewable energy (RE) remain in 10%.
(2) Option 2: Importing more natural gas - Importing more natural gas from
offshore gas, piped gas and a liquefied natural gas supplied by the Mainland
China for local electricity generation. It will increase the share of natural gas
to about 60% and keep coal and RE in 20% and continue importing energy
from DBNPS, and it can reduce the carbon intensity by about 50% by 2020.
These two provided options of the transition to a low carbon economy would
bring huge impacts on the socio-political and economic sectors, as they would change
the modus operandi of electricity generation by radically shifting the electricity
generation fuel mix into a new model. For illustration, if HKG decides to adopt the
Option 1, then the electricity supply would become Mainland Hong Kong where
Hong Kong might lost control in the realm of power generation; if adopting the
Option 2, Hong Kong would still remind in local generation but might face the risk of
high cost of importing natural gas which might result rapid increase in local tariff
implication. For the sake of further discussing the topic, it is necessary to understand
the historical background of Hong Kong, so that reader can know better about how
the new narrative of transitions to a low carbon economy may influence the choices
that Hong Kong may make for a sustainable energy.
3. History of Hong Kong Electricity
Period of Pre 1997
After the enforcement of Treaty of Nanking2 between Qing Dynasty and British
Empire in 1842, Hong Kong Island became the colony of British Empire in 1843, and
subsequently extended to Kowloon peninsula in 1898. The Second Convention of
Peking3 further expanded the colony with the 99-year lease of the New Territories.
Hong Kong as a result developed as a trading spot for goods exchange with Qing
Dynasty. The Treaty made Hong Kong to be an isolated area where there were very
limited resources for local electricity generation.

This treaty was created as the result of First Opium War which led to British victories
against China. China agreed the cession of Hong Kong to the United Kingdom.
3

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Thanks to the establishment of Hong Kong Electric Company Ltd (HKE), the
first local coal-fired power stations - Wan Chai Power Station was built in 1890,
which caused Hong Kong becoming one of the first cities in East Asia to have
electricity streetlight (Dan, 1990). By 1916, the south of the Hong Kong Island was
connected to a main grid, thus a number of companies and schools were able to access
the electricity generated by the power station (Moss & Francesch-Huidobro, 2015).
Unlike Hong Kong Island, the electricity history of Kowloon peninsula and the New
Territories started in 1903 where the CLP built the first oil-fired power plant in Hung
Hom. Although the different districts of Hong Kong enjoyed different electricity
histories, they surprisingly have never experienced any energy shortcut and been
self-sufficient in energy generation for electricity. The situation of energy autarky
changed a bit in which CLP took an unprecedented step toward connecting the power
system between Hong Kong and the Mainland China through signing the Daya Bay
Joint Venture cooperating with Guangdong Nuclear Investment Company in 1985.
The Daya Bay nuclear plant starts operating in 1995, and providing 70% of electricity
generated to CLP Power and the remaining to Guangdong (EMSD, 2015).
Period of after the Handover:
In the meeting between Britain and China during 70s, CCPG declared that Chinese
authority would resume its sovereignty to Hong Kong (including Hong Kong Island,
Kowloon and New Territories) with the effect from July 1 1997 during the meeting
with Governor Maclehouse in 1979. British de facto never expected the outcome
would be its departure from Hong Kong due to the legality of the 19th-century treaties
(Gittings, 2013). This shocking news had caused huge public panics in Hong Kong
since the public scared that the Handover would subvert the socio-political and
economic system enjoyed in Hong Kong. For the sake of maintaining the stability of
Hong Kong, British and CCPG subsequently agreed to maintain the status quo of
Hong Kong basing on the principles of One Country, Two Systems in the British
Sino-Joint Declaration in 1975. The drafting of the Basic Law followed in the wake of
the Joint Declaration as to provide legal foundations for the One Country, Two
Systems.
After the Handover, Hong Kong is still able to maintain its status quo with the
blessing of the promulgation of the Basic Law (Article 64, 75 & 116 of Basic Law),
4

Article 6: The Hong Kong Special Administrative Region shall protect the right of private
ownership of property in accordance with law.
5
Article 7: The land and natural resources within the Hong Kong Special Administrative
Region shall be State property. The Government of the Hong Kong Special Administrative
Region shall be responsible for their management, use and development and for their lease or
grant to individuals, legal persons or organizations for use or development. The revenues
derived therefrom shall be exclusively at the disposal of the government of the Region.
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and currently is the Special Administrative Region of CCPG in accordance with the
Article 31 of 1982 Constitution of China. Therefore, the return of Hong Kong to
CCPG did not cause any negative impacts against the local electricity stability or take
any process of physical and institutional integration of two distinct energy systems
where Hong Kong electricity system in fact still reminds separate away from Chinese
electricity (Moss & Francesch-Huidobro, 2015). HKE and CLP continue enjoying
their kingdom in Hong Kong in which CLP is the largest supplier with total installed
capacity of 8,888 MW, and HKE has 3757 MW in total (Environment Bureau, 2014).
Hence the energy production is still mainly dominated by coal (54%), following with
natural gas (23%) and nuclear power imported from the Mainland (23%) in 2009.
Dispute Hong Kong suffered from the scarcity in resources and unique political
changes, it is still enjoying a high stability and quality electricity services over
centuries. Until the Daya Bay Nuclear Plant starts operating in 1995 and provides
electricity to Hong Kong through the grid of CLP, Hong Kong was indeed
self-sufficient in the electricity supply and currently enjoys a highly reliable
electricity supply rate of exceeding 99.999%, which surpasses many other major
metropolitan cities in the world including those in the Mainland (HKCEE, 2014).
Indeed, Hong Kong can experience glorious economic growth, social development
and the enhancement of living standard is because of the high stability and quality
electricity in which the stability of electricity supply and increasing electricity
consumption in effect can improve social development and contribute to faster
economy growth (Leung & Meisen, 2005). In that sense, the public of Hong Kong
should see the stability of electricity supply as the major concern for any future
development related to electricity.
Focusing back to the question of how the new narrative of transitions to a low
carbon economy may influence the choices that Hong Kong may make for a
sustainable energy, this essay would cite the principles of S.E.A.R as the guideline for
further discussion of the proposed two options.
4. Analysis of the Option 1 & 2
In regard of Safety, the 2014 Consultation describes the safety aspect as This option
poses no specific safety risks to Hong Kong. On the contrary, the major issues are the

Article 11: In accordance with Article 31 of the Constitution of the People's Republic of
China, the systems and policies practiced in the Hong Kong Special Administrative Region,
including the social and economic systems, the system for safeguarding the fundamental
rights and freedoms of its residents, the executive, legislative and judicial systems, and the
relevant policies, shall be based on the provisions of this Law. No law enacted by the
legislature of the Hong Kong Special Administrative Region shall contravene this Law.
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risk of loss of electricity or environmental affection due to men-made disasters if


Option 1 is taken. It is because China had suffered from a huge number of scandals
and negative news about the poor constructions and standard facilities due to the
political crimes and corruption which has seriously affected the effectiveness of law
enforcements against privates and publics misconducts (He, 2000; Mayer, 2011). For
example: the Tianjun explosion incident 7 is a good illustrator of showing the
evilness of political corruption8 and white collar crimes9 in China where the two
major shareholders in Ruihai International Logistics10 de facto admitted to using their
political connections to gain government approvals for the site, even though they had
obviously violated the local rules of the prohibition the storage of hazardous
chemicals within 3,200 feet of residential areas (Levin, 2015). Therefore, if similar
incidents occur in the power stations of SCP, it might affect the electricity stability to
Hong Kong and the environment of Hong Kong in certain extend. However, the risk
still reminds uncertain due to the missing information about the source of energy
supplies.
In terms of the environment performances in the GHG emission, the option 1 in
practice would not be able to provide better environment performances. As mentioned
in 2014 Consultation, the grid-to-grid electricity purchase would be cooperated with
the SCP, which is same as the current operation in Macau. 11 If concerning the
operation of SCP, its main electricity supply is from Guangdong province - an area
that is heavily based on the fossil fuel sources of total 81% (coal (48%), petroleum
(29%) and natural gas (4%)) for electricity generation (Yang &Yuan, 2013). Basing
on the assumption that the electricity purchased from China through the SCPs grids is
from Guangdong as well, it might indirectly encourage the power plants in
Guangdong to increase the amount of coal consumption for tackling the increasing
demand of electricity. In fact, the recent report of 2014 consultation published in
November 2015 shows that the political parties, green groups & NGOs, Professional
bodies & think tanks and HKE also share the same opinion that the option 1 would
bring the effect of displacement of pollutants as they believe that the electricity
7

It occurred in August 2015 which caused 114 deaths in the blasts with more than 672
injuries
8
Political Corruption: It is the abuse of public power, office, or resources by government
officials for personal gain through sub rosa unlawful means such as extortion, soliciting or
offering bribes.
9
White-collar crime: Firstly defined by sociologist Edwin Sutherland in 1939 as a crime
committed by a person of respectability and high social status in the course of his occupation.
It currently refers to financially motivated non-violent crimes that is committed by business
professionals and government officials. (FBI, 2015)
10
The Company who owns the involved container storage station at the Port of Tianjin.
11
The electricity import from Guangdong province through the grids of SCP accounts to
around 92.8% and with only 7.2% from local generation (CEM, 2015)
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imported from China is likely generated by coals which might worsen the pollution
issue in the area of Pearl River Delta. In that sense, as option 1 could not bring a
guarantee reduction of GHG, but the option 2 in contrast can result an absolute
reduction of carbon emission by 19 33% or from 42 million tons in 2005 to 28 34
tons in 2020, it thus would likely be adopted for the sake of GHG reduction.
Regarding to the affordability of both options, the option 2 would result a higher
cost to the general public. Since natural gas would be imported via the pipelines from
China in which its long-distance transmission and transportation would require very
high operation and infrastructure cost. Apart from that, Hong Kong would become
fragile against the external factors affecting the price of natural gas due to the heavy
reliance, and the lower class in Hong Kong likely suffers the most (Greenpeace, 2012).
However, it is noteworthy that the 2014 Consultation did not provide any further
information about the new cross-boundary facilities for the grid-to-grid purchase, so
the price comparison between option 1 and 2 is not applicable.
Concerning the reliability, option 1 is an unprecedented approach to Hong Kong
electricity market, as Hong Kong historically is relied on local generation that has
successfully maintained a high-energy reliability and stability. If option 1 is adopted,
50% of total local electricity would be imported from China, hence Hong Kong would
be no longer an autarky to maintain its energy supply. Although the 2014 consultation
has cited examples of North America, the European Union, and the Macao SAR about
the practice of importing electricity, those examples are indeed not comparable to
Hong Kong - a city with a significant concentration of high-rise domestic and
commercial buildings, and a densely populated environment with complicated
transportation networks (HKGCC, 2014). Furthermore, Guangdong had experienced
the most serious electricity shortage in 2012 in the past decade due to the climate
changes which has severely reduced the electricity supply from Hydro power (OPE,
2014) and the rapid increasing demand caused by the urban development (Fu & Wu,
2005). In that sense, there is no guarantee for the energy stability from option 1.
The option 2 in contrast can still maintain high stability and reliability since it
only changes the type of fuels used for energy generation in lieu of changing the
modus operandi. In fact, it is the major concern in which majority respondents are
doubtful about the stability of electricity supply from Mainland.
5. Analysis of the Feasibility of Sustainable Energy
Currently, the development of sustainable energy is the hot topic among public,
private and governments. In Hong Kong, many people believe that urban cities are
difficult to utilize sustainable energy due to the land and resources limitation (Hui,

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2003), however most citizens with 83.1% are willing to combat against climate
changes through producing renewable energy at home (WWF, 2015). There are total 7
types of sustainable energy, which are solar, wind, hydrogen, geothermal, nuclear,
biofuels and biomass. The nuclear development is controversial due to the Fukushima
incident in 2011; hence geothermal is not applicable to Hong Kong due to the
geographic factor. In that case, only solar, wind and biomass would be discussed.
Wind energy has been a controversial discussion in Hong Kong. In fact, CLP has
proposed the wind farm project which produces 67 wind turbines in Sai Kung as those
turbines would be able to reduce 343,000 383,000 tons GHG emissions in 2010
(CLP, 2010). However, this project has triggered a strong opposition from the public
as it would (1) threaten the biodiversity of the local area, especially resulting a rapid
increase in bird death and disrupting birds migration routes (Pearce-Higgins et al.,
2012; Dellingpole, 2013); (2) requires 10 billion HKD for construction but with very
limited electricity generation (amount to only 1%) with very high maintenance cost
and (3) provide inconsistent energy supply since it heavily relies on velocity and
density of wind.
Solar energy in theory is a big alternative for Hong Kong to generate electricity
due to the long summer climate of Hong Kong. For instances, Hui (2003) points out
that facilities for solar energy has definite possibilities in Hong Kong, which are
respectively solar air-conditioning and refrigeration, photovoltaics (PV) and solar
thermal. However, the cost of installation of solar panel or other relevant facilities is
very high, and results a situation that the current market is not friendly to the
development of it as Hong Kong is a small city with well-established electricity
transmission system with a relatively low cost electricity fee.
The biodiesel should be the most suitable renewable energy for Hong Kong due
to its benefits and reliability (Tam, 2012). Hong Kong in fact is experiencing a huge
amount of waste produced every year where the existing landfills West New
Territories Landfill, South East New Territories Landfill and North East New
Territories Landfill will be saturated in 2019. Domestic waste (including food waste)
accounts 43% of total wastes produced by Hong Kong people with 6,135 tons per day
(Environmental Protection Department, 2014). In that case, Hong Kong is rich in
biomass resources, and huge amount of food wastes practically can be transformed as
the biodiesel for local electricity generation. In the nutshell, the development of
biodiesel can indeed bring the effect of one stone, three birds which are the
mitigation of the pressure against the landfill, reduction on the GHG emission,
minimizing the dependence on the expensive natural gas if the development of
biodiesel is supplemented with the proper government policies and public supports.
In that case, it is profound that the wind and solar energy does not amount to the

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S.E.A.R principles, but there is a strong potential for biomass development because of
the huge resources of biofuel hence it can also provide local electricity generation
with other environmental and economy benefits.
6. Conclusion
To conclude the prima facie points, the history of electricity generation in Hong Kong
shows the importance of reliability as it is deemed as the foundation of the
socio-economic growth in Hong Kong. The part 4 & 5 cites the principles of S.E.A.R
to do further analysis. In regard of the proposed options by HKG, the option 2 would
be relatively more suitable for the sustainable development of socio-economic sector
of Hong Kong. Option 1 is unlikely able to meet the principles of Safety, Environment
performances and Reliability, hence there is no sufficient information to analyze
affordability. In contrast, Option 2 shall be able to meet those principles as it only
changes the fuel types for electricity generation instead of moving away from local
generation importing electricity. But, the importing and using natural gas would
definitely result a higher tariff cost which would bring negative effect to local people.
The essay also briefly reviews the feasibility of sustainable energy. The general found
out is that solar and wind energy have a huge drawback for HKG to develop basing on
the reason of affordability, environment performances and reliability, however Hong
Kong can indeed focus on the development of biomass due to its high feasibility.

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