VZCZCXRO9914
PP RUEHCN RUEHGH RUEHVC
DE RUEHHK #2022/01 2150047
ZNR UUUUU ZZH
P 030047Z AUG 07
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC PRIORITY 2478
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY

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