jeudi 18 décembre 2014

Schizophrenia at HKSAR Environment Bureau

On December 16th, KS Wong who is the Secretary for the Environment in HK made an announcement following the news that tariffs for CLP Power[1] customers will rise by 3.1% next year: "Using clean energy[2] to reduce carbon emissions and improve air quality will inevitably increase pressure on power companies to raise electricity tariffs […]. The two power companies, together with the Government, have tried to have various means to stabilize the price. At the same time, we have to consider various means, including the stabilization fund so we can have a certain reserve of a reasonable percentage, and we can then have a more stabilized situation over the time." . This is a quite surprising announcement[3], coming from HK Secretary for the ENVIRONMENT !

Enquiring further allows for more comments. In fact, there are three “departments” in the Environment Bureau (see environmental protection, energy, and sustainable development. And looking at the energy policy objectives, the first one is price, then come safety and reliability and then…environmental concerns. How can it be? First it seems that until quite recently, with cheap energy imported from Mainland China there was no real need for an energy policy so it has been put under the responsibility of the Environment Bureau because it had to be put somewhere. Second it so Hong Kong style to have price concerns before anything and it is quite revealing that it is even the case at the Environmental Bureau.

However, there is a more optimistic view on KS Wong statement. Energy price is a big concern for HK business and HK population. Everybody knows that a cleaner energy will be more costly and this rises an important issue of policy acceptance. What if, to deal with that issue, KS Wong was manipulating expectations by paving the way for further electricity price increase due to cleaner energy? He would be using his “energy policy hat” to deal with environmental policy acceptance? Maybe not such a bad idea: fuzzy information has proven efficient for monetary policy, why not using it for the environmental policy? There is room for economic analysis, here.


[1] On of the two companies providing electricity for HK.
[2] HK is turning for more gas and less coal for electricity generation.
[3] See also previous post on how the fall in oil prices is a bad news for climate change.

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