HONG KONG: Addressing the increasingly important issues of environmental protection, Financial Secretary John Tsang has announced that the government will spend more than HK$800 million to tackle roadside pollution sources.

In his budget delivered yesterday at the Legislative Council, Tsang set aside HK$300 million for a three-year pilot green transport fund, initially only for public transport operators to apply for, to encourage the transport sector to switch to greener fuels and technology.

The government will also introduce a three-year subsidy scheme to replace Euro II-standard engine models, which are more polluting than more recent designs, in commercial vehicles, through spending from a HK$540 million fund. Its previous HK$3.2 billion subsidy scheme for pre-Euro and Euro I models will expire next month.

The first scheme covering Euro I engines and older models managed to take some 28,000 vehicles among 60,000 off roads during its three-year run, according to the Environmental Protection Department.

To accelerate tax deductions for spending on environmentally friendly cars, a 100 percent profits tax refund will be given to enterprises in the first year of the proposal.

"The use of low-emission and energy saving transport will not only help improve roadside air quality, but also reduce carbon emissions and promote a low-carbon economy," Tsang said.

Chief executive officer of Clean Air Network, Joanne Ooi, lauded the tax deductions for cleaner cars saying the tax deduction would provide a significant incentive for companies to take up cleaner cars, but pointed out the government's second subsidy scheme to replace older polluting models did not go far enough, remarking that the size of the subsidy is unenticing and substantially less than the preceding subsidy.

"The payoff for individuals is so small that truck owners won't want to prematurely retire their vehicles, because they won't get any special rebates or deductions," she said, adding that initiatives in California to get drivers to swap their dirty vehicles offered rebates of HK$80,000 to HK$360,000.

She said the subsidy should have been a blanket measure covering all vehicles powered by engines deployed before the Euro IV standard, adding the first phase of the government's own clean air objectives called for the phasing out of Euro III and earlier models.

The average grant offered in the government's Euro I and pre-Euro subsidy scheme works out to about HK$43,000, compared to the HK$650,000 to HK$800,000 for a Euro IV truck, according to chairman of the Medium and Heavy Truck Concern Group, Lai Kim-tak.

Director of Friends of the Earth Edwin Lee Che-feng welcomed the measures as an acknowledgement by the government of the city's roadside pollution problem, but said the budget proposal was not comprehensive enough because it lacked disincentives for drivers to keep their older, more polluting vehicles.

"If the stick is not there, there should be stronger financial inducement; otherwise the measure will go nowhere," he said, suggesting the government also raise annual registration licensing fees if vehicle owners do not accept the incentive or require them to be inspected twice a year instead of once a year.

A spokeswoman for Kowloon Motor Bus said the company was studying the proposal. Another spokeswoman for New World First Bus and Citybus said the companies will continue to closely monitor the latest green technologies available in the market, and will seek more details about the green fund from the government.

"In addition, we are open to the idea of hybrid buses, provided they can match the road conditions of Hong Kong and the operational needs of bus companies. However, in the bus market, there is still no hybrid double-decker suitable for operating in Hong Kong," she said.

(HK Edition 02/25/2010 page2)