While the Hong Kong people celebrate another electricity subsidy as part of the budget handouts, they might not notice that the real winners are the two big power companies. This so-called "one-off" subsidy has been given out four times since 2008 and amounts to more than HK$18 billion of taxpayers' money.
It has done nothing to help make Hong Kong more energy efficient; rather, it has simply been converted into profits for the two power giants. The government could have spent that HK$18 billion more wisely on green-building development.
This subsidy gives the power giants a perfect excuse to raise tariffs yet again. We can see from 2008 figures that the subsidy helped boost electricity demand by 700 GWh in one year. This subsidy encourages people to consume more electricity, thus giving the power companies grounds to invest more assets.
Under the existing scheme of control agreements, the two power firms can adjust their rates in relation to the balance of their fixed assets. CLP Power has already warned the public that its tariffs may go up by 40 per cent in the next few years. It is clear that Hong Kong will be caught in a vicious cycle of rising tariffs and government subsidies. Do we really want our power bills to spiral upwards?
What if the government had spent that HK$18 billion on promoting green buildings instead? Between 2009 and 2012, the government ran a HK$450 million Buildings Energy Efficiency Funding scheme to help owners upgrade their buildings. It was estimated to have saved an impressive 150 million kWh of electricity per year.
However, the scheme was allowed to expire last year. If the government had used HK$18 billion to subsidise improving the energy efficiency of buildings, it could have saved approximately 6,000 GWh of electricity every year. This equates to a reduction of HK$6.6 billion in gas costs and a reduction of 4.2 million tonnes of carbon dioxide every year.
Singapore, for one, beats us in green-building development. All of its new buildings are required to achieve a Green Mark rating (similar to the Beam Plus rating in Hong Kong). It also has a goal to make 80 per cent of all buildings meet these green ratings by 2030. It is providing incentives and offering grants to owners.
The chief executive's policy address in January mentioned a plan to establish an inter-departmental committee to map out strategies on green buildings and to promote energy saving. Now's the time for a green-building policy.
Our environment cannot afford such shortsighted "one-off" subsidies any more. Hong Kong people should stand up and demand electricity market reform and their chance at securing a green future.
Image © TBC / Greenpeace