Category Archives: Environment

19 March 2024 · 3:15 pm

Tank half-full – Decarbonising India’s personal transport

On 15 March, the government introduced a policy to stimulate electric vehicle (EVs) manufacture in India. Government’s strategy for decarbonising transport leans heavily on its EV ambitions. The plan is by 2030, for 30% of new car, 70% of goods vehicles and 80% of scooters and rickshaws sales, to be EV. In tandem electricity will need to fully decarbonise over the next few decades.

The aspiration is for these vehicles to be domestically produced. Imports of EVs, like other road vehicles, are subject to India’s ferocious import duty regime. New vehicles with an import sticker price of more than $40,000 pay 100% import duty, those less than $40k pay 70% duty. Tesla has sought to negotiate a waiver for imports of its vehicles and promised to invest in a vehicle manufacture pant for local production.

To the government’s credit, it ignored Tesla’s entreaties for special treatment and last week’s announcement allows all foreign car manufacturer to import up to 8000 vehicles a year with a reduced 15% tariff, but in exchange they have to invest more than $500m in an Indian facility inside of 3 years and source half the components by value domestically within five years. In essence, a foreign car manufacturer gets to import 40,000 EVs at low tariffs over five-year netting around half a billion in profits (assuming $12,500 per vehicle) but in exchange has to invest those profits in creating a local EV manufacturing base.

Figure 1 illustrates why this encouragement for local manufacture is needed. There has been massive growth in electric vehicles but little of it is in EV cars.

Figure 1: Annual sales of Indian electric vehicles

*2023-24 sales are till end February. All data from the Vahaan database

Electric versions comprise around 4% of total scooter sales, a staggering 50% of three-wheeler sales but only around 1% of car sales. Three wheelers, a peculiarly Indian vehicle class, provides last-mile commercial deliveries and short hop taxi rides. Its electric-vehicle’s home turf since 3-wheelers small batteries don’t need dedicated charging infrastructure and the higher capital costs are quickly defrayed by lower operating costs compared to the petrol-engine equivalent.

The growth in 2-wheel electric scooter sales, the stalwart of Indian personal mobility, is mind boggling – a twelve-fold growth in just 5 years. The largest manufacturer Ola Electric only came into existence in 2017. Two other large companies, Ather and Okinawa, are also less than 10-year-old. Traditional 2-wheeler manufacturers like Hero and Royal Enfield beloved by bike enthusiasts are stuck in first gear. India’s best-selling 2-wheeler is the Ola S1 Pro. It costs around Rs1.29 lakh (£1,300) and has a feature list that could have been copied from Tesla’s: an Ola app, proximity unlock, decent display with maps, and regenerative braking. It’s 4kWh battery takes 6.5hrs to fully charge using a 750W charger that can plug in any wall socket. Its energy efficiency is 25 Wh/km. The contrast with cars is significant the most efficient electric car retailing in the UK is the Peugot e-308 which manages 127 Wh/km, while the Tesla 3 achieves 150 Wh/km.

E-Scooters have taken off through subsides: namely the Faster Adoption and Manufacture of (hybrid and) Electric-vehicles policy. Its first version FAME-I ran between 2015 and 2019, FAME-II ran between 2019 and 2023. FAME I had a budget of Rs 359 cr (£35m) and subsidised the sale of to 280,000 vehicles. FAME II expanded the programme, with a Rs 10,000 cr budget earmarked to support the purchase of 1.5 million 2- and 3- wheel vehicles, 50,000 cars and 7,000 buses. Subsidies were paid at roughly Rs 10,000 per kWh battery ranging from around Rs 250,000 for EVs like the Tata Nexon to Rs 50,000 for scooters like the Ola Pro. The outturns to date are interesting. Subsidies were paid out to just 19,000 EV cars, 153,000 3-wheelers and 1.3 million e-scooters. The limited take-up for cars is not hard to understand. Who’s interested in buying a car when there is no charging infrastructure? In the February interim-budget, the finance minister hinted at the switch in tack away from consumer subsidies to strengthening the ecosystem by supporting manufacture and charging infrastructure.

This brings us back to where this article starts. But is the finance minister’s instinct for supporting electric car manufacture correct?

My Brompton with a Swytch electric enhancement

Given the lack of road space in cities and bottlenecks in the electricity generating and grid capacity, India should be careful about encouraging a switch to electric cars. Unfortunately, most of the locally manufactured EVs are pitching for the luxury end of the market developing electric versions of their premium ICE model like the Tata Nexon EV. Such cars, especially if the driver is using AC to keep cool don’t save much CO₂. Indian power production emits around 800gCO₂/kWh. Nexon EV claims an efficiency of 86Wh/km. But a real world test achieved a more credible 147 Wh/km, which translates into 117gCO₂/km at India’s grid average carbon intensity. The Nexon petrol variant claims a fuel efficiency that translates into emissions of 133gCO₂/km. The real-life EV using average Indian electricity saves a measly 12% of GHG emissions. Why not just buy a small hybrid? Only the MG has broken ranks and is releasing the tiny MG Comet with a 17.3 kWh battery and claimed efficiency of 74Wh/km. Priced at Rs 8 lakh it is much cheaper than other Indian EVs. India’s top car manufacturer Maruti, India’s largest car manufacturer, is yet to launch an EV car. Its first launch slated for December is going to be an SUV.

Cars are not the answer to personal transport in urban areas. E-Scooters are the best option for many journeys, but another priority should be to make cities walking and cycling. But if you are really interested in optimising performance nothing can beat my Swytch-enhanced Brompton. I bought a 250Wh battery pack during the lockdown and often go to the shops and back just 20% of my charge (though I pedal too). This equates to just 5 Wh/km and spares me climbing 160m from the escarpment where I live to the sea-level and back. A few cities are starting to adopt cycling. Over the last few months, I had the pleasure of biking in Chandigarh for three days, in central Bangalore for a pleasant afternoon, and for a terrifying hour in the cycling death-trap that is New Delhi. (I’ll cover public transport in another blog.)

Chandigarh not Amsterdam

So next budget, expected soon after the election results are announced in June, I hope the finance minister spend more on the less glamourous transport options including infrastructure for pedestrians and cyclists and maintains support for the e-scooters and rickshaws. The big unfinished business is heavy goods vehicles (40 and 50 tonnes) which ply India’s tiny urban roads and highways. These are responsible for 70 percent of vehicle air pollutants. Future blog.

Pavements and road crossings

One unfortunate side-effect of my job is seeing all problems through a climate finance lens. See a problem that need fixing, sort-it with a green loan, possibly credit enhanced and securitised for good measure. But there are a few things in life that money(-markets) can’t buy and government has to dip into its pockets and pay for itself.

Pavements are one such problem. I spent the first week of January in New Delhi scurrying around the diplomatic enclaves and the chic district of Safdarjung in southern New Delhi. The city has seen massive investment in its sleek new(-ish) metro system. If you’re a nerd about these sorts of things its eight lines stretch 327 km and carry 2.5 million passengers a day making Delhi the 10^thmost busy system in the world. Plus, it is as cheap as chips to use (Rs 30 – i.e. 45p – for a typical 10 km journey) making it surely the best thing to hit the city since Lutyens.

But despite glowing reviews by foreigners hardly any of the Indians I met in Delhi used it. One colleague who has lived in Delhi all her life, admitted trying it just twice in its 14 year existence (it’s even got women’s carriages so her reticence can’t be “Eve-teasing” in case you were wondering). It’s not as though she’s congenitally averse to the concept of underground transport, when she’s in London or New York she’s happy to use their grotty systems. So when in Delhi why does she drive or Uber everywhere?

“It’s the last-mile,” she explained. And she’s got a point. The walk from one of the 236 stations – often located on one of India’s arterial roads – to the final destination is often… well take a look at the pictures below.

Indian smashed and see-sawing pavements are the site of Delhi’s charming informal economy, as well as where it stores its vehicles and construction materials. What hope do mere pedestrians have?

And then there is the issue of Crossing an Indian Road. When I asked the way to a nearby café on the other side of a busy road, my hotel’s staff begged me to take an auto. “But it’s just a couple of hundred meters” I spluttered. Google maps dispatched me on a 1.5 km detour through one of Delhi metro’s excellent underpasses (another altruistic act of benevolence by this celestial institution). Google’s algorithm clearly took legal advice and completely blanked a near-by and widely used pedestrian crossing. If it directed me to the ‘official’ crossing and the inevitable happened, widow-Vaze would sue its ass for, if not man-slaughter, at least assisted suicide. (Quick tip for President Trump – don’t waste $6 billion building a wall between Mexico and US border. Just ask Delhi city planners to route one of its dual carriage-ways along any border that needs to be hermetically sealed. Even a wily, rapist, drug-laden coyote wouldn’t stand a chance of making it across.) Cars aren’t so much a mode of transport in India as a WMD. India, for once, can happily take the silver medal to China’s gold sending just 230,000 people to an early grave compared to China’s 260,000. But India shouldn’t get too self-righteous China has nine times more road vehicles than India. For the record, UK’s drivers kills just 1,700 a year.

Which brings me back to the main point of this blog. Middle- and upper-class Delhi-ites don’t much use any public transport, except the plane, because so many of them own cars, often with drivers. Like feeble Dalek’s encased in their steel exo-skeletons, they have insulated themselves from the carnage wrought by their vehicles and glibly exterminate all who chance in their way. Things are likely to get worse. The rip-roaring success of Uber and Ola (India’s home-grown ride sharing app) is not an indication of India’s ingenuity, but of her inequality. Most of the Uber fares around Delhi and Mumbai were £1-£2 even for a 40 minute journey through Mumbai’s snarled up traffic. India’s shocking unemployment rates mean too many people are prepared eke out a living as car-slaves so more and more people can turn their backs on walking.

Here is my elevator pitch for Indian metropolitan planners. Forget about widening roads and building more over-passes that will simply yield bigger traffic jams in a few years. Instead suggest to traffic cops instead of collecting bribes they should instead collect fines for crossing red lights and mowing down pedestrians. Second, phase-out the use of petrol and diesel altogether in cities. Visibility in Delhi was down to one kilometer during my stay (though it made for some stunning sunset shots). Convert buses and taxis to electric and put a ceiling on the numbers of cars that are allowed to be owned. Third, introduce parking wardens with tough targets and low EQs. Fourth, revenues from road offences should be ploughed back into effective road crossings on minor roads and underpasses and footbridges on major roads. In Connaught Circus the underpasses are vibrant commercial spaces that collect rent, not homeless.

Perhaps the fines could be used as a revenue stream to pay the yield on a green bond to finance pedestrian facilities. I think I’ve invented a new financial instrument – a Fine Backed Security (FBS). Great idea I should tell my boss.

Four things environmentalists can learn from Hong Kong

So my three and a half years in Hong Kong are up and I’m wending my way back to the UK tomorrow via the Silk Road over the next four weeks. In my work here, I often suggest environmental policies from other countries that Hong Kong might adopt. But knowledge transfer has traditionally wafted the other way, from East to West. So I thought I’d use my last Hong Kong blog to about what Hong Kong can teach policy makers in the West.

1. The MTR (Mass Transit Railway)

Now carrying around 5.79 million passengers a day in Hong Kong and another 6.49 million overseas (yes: it’s managing lines in China, London and Stockholm) almost half of the city’s public transport trips are undertaken on the MTR. It’s so much part of the everyday fabric, it’s hard to believe Hong Kong’s “underground” only commenced operations in 1979. It’s hugely profitable, even disregarding its property income, has a punctuality of 99.9%, clean and is incredibly easy to use.

What makes MTR unusual is the way it’s financed. Unlike other underground systems which struggle to secure capital budgets, MTR is awarded development rights for commercial and residential property around new MTR stations. So instead of the huge windfall rents from proximity to the MTR station being appropriated by those owning plots near the new station, the gains can go into investment into new lines. In the three years we’ve been here we’ve watched two lines being extended, and one entirely new line open up.

idiosyncratic map of the MTR

The contactless payment system devised by the MTR, the Octopus card, is Hong Kong’s de factolocal currency, and used for 14 million payment transactions a day. It’s widely accepted in shops and cafes, and is the only way to pay for parking meters. It’s so ubiquitous that the card’s magnetic strip is used as access control cards in many residential building complexes and schools. Pretty much all our visitors have picked one up at the airport and used it seamlessly for their travel and snack purchases over their stays.

Do understand MTR’s environmental success you just need to think about what transport and associated emissions would have been without it. The Hong Kong MTR’s electricity consumption was 1600 GWh last year – around 1 MtCO₂, 2 per cent, of the cities total emssions. Unleaded petrol (used by taxis and private cars) in the city was responsible was 1.5 MtCO₂emissions. This is despite only 14.4 percent of households having access to private cars and each private car only being driven 30 km/d on average. That’s right. Only one in six households in Hong Kong have a car. Most people, even well-off people, choose to use public transport and taxis. Think what transport emissions would be if the other five sixths of households without cars bought vehicles of their own.

As well as changing the pay we spend and travel, the MTR has changed where people live, stretching the widely habitated areas suitable for commuters off Hong Kong island, out of Kowloon through the 600-metre mountain ranges into areas of the New Territories like Shatin, Tai Po, Fan Ling, Tseung Kwan O, Yuen Long.

2. High density accommodation

The city makes use of all three spatial dimensions. Hong Kong’s 7.5 million people live in just 42,000 buildings; of these 8000 are high rise. Our current flat is in a 50-storey building; our previous in a 66-storey. Our ‘luxury’ estate comprises 17 towers set in 9 hectares of space and accommodating 20,000 people. The blocks are skirted by lawns, trees, play areas, indoor and outdoor swimming pools, tennis and squash courts, gym, soft play area, halls for hire, snooker facilities, a bowling alley and supermarket. By way of comparison, Highgate Camden in central London has an area of 320 hectares (150 hectares excluding the heath) and a population of 10,000 people.

This extreme high density means that the whole of Hong Kong’s population lives on just 70 km²of space with a density of 100,000 people per square kilometre, with the vast majority of people in the ultra-compact space around the MTR and bus stations. This means that the “last-mile’ journey either end of the MTR is usually not a mile, but a couple of hundred metres easily provisioned by tunnels and above ground walkways. At its extreme is the tangle of thru-building walkways permeating the Hongkong Land’s Central portfolio. Major MTR stations are embedded inside shopping malls and surrounded by residential or offices. The towering IFC and ICC blocks are built over the Hong Kong and Kowloon MTR stations.

Tangle of above ground public walkways weaving through shops, hotels, banks and offices in Central

This extreme concentration of habitation helps the environment not just by improving the economics and logistics of mass-transport systems but by freeing up land for nature.

There is a down side to the parsimonious way land is made available for urban uses. Developers and government conspire in driving up property prices so each flat is tiny and crowded to European sensibilities and inadequate for many Hong Kong people too. Hong Kong people’s homes are 15 square metres per person; half that in Singapore, or Tokyo.

3. Country Parks

Seventy-five percent of Hong Kong’s land territory is non-built up, over half of this, 444 km², consists of country parks and other designated special areas. Unlike national parks in the UK no farming or forestry takes place. The space is slowly reverting back to forests, mangroves, coastlines and bare hill face. These parks and special sites are home to 2100 species of local plant, 50 species of mammal: from deer, porcupine, bats and macaques, 540 species of bird.

The country parks are criss-crossed by the MacLehose, Lantau, Wilson trails creating a wonderful and easily accessed corridor into nature used by 17 million people a year. It is hard to believe but nearly all the country park forests and grass lands are new growth re-established after the second world war. Well before the British came in the 1840s, Hong Kong’s mountains and uplands had been cleared of their trees to make charcoal and timber. Landslides and erosion had washed away the top-soil. Replanting began at the end of the 19^thcentury, but the second world war denuded the landscape of its trees once more. The Country Parks Ordinance was enacted in 1976 to provide open space for recreation and to collect rainwater for the reservoirs. The different trails were laid in the late 1970s to link the country parks to one another.

Views from Lantau North Country Park, Lantau and Lung Fu Shan Country Park, Hong Kong Island

I am not aware of any other city that manages to squeeze so much nature so close to millions of people. But I hope the other mega-cities in the Greater Bay Area and elsewhere in Asia try and emulate. As well as improving local air quality, it provides fantastic recreation right on the door step.

4. Banning of trawling

Go to any wet market and you can see Hong Kong people love eating fish: croakers, groupers, bream.

Volume and value of the Hong Kong fishing fleet 1965-2008, LegCo

It’s hard to believe but until the 1970s fishing was still carried out off sailing junks using traditional lines. But Government programmes encouraging investment and better integration if the Hakka fishers, saw the fleets ‘modernisation’ replacing wind-power with diesel; lines with trawlers. The predictable result echoed that seen in fisheries world over. The diagram above shows the swift boom and bust cycle of rapid expansion in catch until 1989, followed by an equally rapid decline. In the battle between nature and technological mining of nature there is only ever one winner. The cod and haddock fisheries in the North Sea and the Grand Banks of USA/Canada similarly collapsed.

But then Hong Kong did something different, the government courageously banned trawling at the start of 2013. Trawling, the raking of the seabed to indiscriminately snare everything on the sea bed regardless of whether it’s edible, used to account for 80 percent of fishers’ incomes when the ban came in. By the end of 2015, government paid 1250 vessel owners almost $1 billion in one-off buy outs. Money has been loaned to retrain fishers, or to finance the switch to aquaculture/mariculture and fisheries related eco-tourism. There is also extensive co-operation between Hong Kong and the Guangdong Fisheries Administration General Brigade to ensure illegal .

The first-year results are encouraging with a 50 percent increase in the catch of bottom dwelling species, and a doubling in the waters where trawling used to be most intense. But it’ll take years for the communities on the sea-bed to recover and other measures like proper stock assessments over the South China Sea and the establishment of marine nature reserves are needed to make a real in-road.

There were other things that could have been included on the list but didn’t quite make the cut. The mandatory switching to low-sulphur fuel while vessels are berthed was an excellent bit of legislation to improve air quality, but is rapidly being superseded by more stringent regulations from Beijing covering all Chinese waters. I was tempted to write about the excellent network of cycle lanes spreading through the New territories and the dockless bike hire companies like Hong Kong’s Gobee (which sadly is closing due to competition from superior, and better financed, Chinese competitors like Ofo). With cycling Hong Kong is playing catch-up with Guangdong.

Another initiative that didn’t quite make the mark was the recent push by the government to position HK as a green finance hub including support for issuing green bonds in Hong Kong and using the HK Quality Assurance Agency to certify green bonds.

Perhaps these three near successes are part of the bigger story. The real hub of environmental leadership is taking place north of the Shenzhen River in mainland China.

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Filed under Environment, Politics, Technology, Travel

2 July 2018 · 2:53 pm

Why are Hong’s two power utilities CLP and HKE building an off-shore LNG regasification plant?

Two weeks ago I experienced the usual level of cognitive dissonance most environmentalists working in Hong Kong get from time-to-time. I spent Thursday at an uplifting conference on green finance organised by the Hong Kong Monetary Authority and the International Capital Market’s Association. Star billing went to the green bonds market, which is starting to really take off with around US$180 billions of issuance, which is around 2% of the value of all bonds issued last year. Hong Kong wants a piece of this – especially the lucrative deals from mainland Chinese banks wanting to raise finance for renewable energy, public transport and green buildings in China and the belt-and-road countries.

Paul Chan the finance secretary and his deputy Joseph Chan both talked about the sweeteners cash-rich Hong Kong government is offering project sponsors. They’re generous, the Government is subsidising the costs of certifying green bonds, as well as issuing up to HK$100 billions of green bonds itself. Other speakers, including the Ma Jun, former chief economist at the Peoples Bank of China, wove together a tale of how Chinese banks were experimenting with techniques to analyse whether the infrastructure they financed was consistent with decarbonising the economy and resilient to climate change.

Sounds like Hong Kong is itching to develop and fund green infrastructure. Well that’s how it seemed till the next day.

On 15th June, Hong Kong’s two power companies China Light & Power (CLP) and HK Electric (HKE) issued an environmental impact assessment (EIA) promoting a floating liquidfied natural gas (LNG) terminal to receive and re-gasify liquid gas from tankers, and pipe it to the utilities’ power stations. What could be wrong with this? Hong Kong’s energy policy is to increase the share of electricity generated from natural gas and reduce our reliance on coal. The trouble is, while gas is cleaner than coal, it is not clean enough to meet the Paris Agreement. So the bigger question is whether Hong Kong needs to invest in long-lived gas assets like the new LNG terminal, or whether we can use existing facilities in the transition years.

The EIA rationalises the floating terminal: “The Project will increase CLP and HK Electric’s options regarding the sourcing of future gas supplies for Hong Kong, and provide the flexibility to directly access competitively priced gas from the global LNG market, including its associated spot market, therefore improving the Hong Kong LNG buyers’ future negotiating position, and diversity of gas supply sources.”

The argument being made isn’t that existing facilities to import gas are insufficient for the projected demand, instead the argument is that the new terminal will increase security of supply and help the power companies’ negotiating hand.

Let’s look at these. At the moment CLP receives gas from the massive Second West-East Gas Pipeline (WEPII) from Central Asia, and also a pipeline connecting Hong Kong to smaller gas fields, like the 20-year old Yacheng field in the South China Sea. CLP draws attention to the fact Yacheng is fast depleting. What it doesn’t mention is that only two years ago it contracted to receive gas from another South China gas field, Wenchang, and which necessitated no new investment on CLP’s part, to help balance Yacheng’s fall in output.

The other electricity utility, HKE, receives gas from a land-based LNG terminal in Dapeng Shenzhen. This is just 20 kilometres away from CLP’s service area. Dapeng, as well as already supplying HKE with gas from world markets, also supplies HK’s third energy utility, Towngas, with its natural gas imports through a pipeline to Tai Po, which lies inside CLP’s service area. If Towngas is happy to rely on the Dapeng terminal to supply its raw gas, why doesn’t CLP follow suit? Using an already existing LNG terminal to access world gas markets would surely save a bundle, and also provide the security of supply to ward off any disruption to the WEPII like the Shenzhen landslide.

The second argument being made is that untrustworthy Chinese energy companies are screwing Hong Kong on gas price, and Hong Kong needs its own independent facility. This might play well to some parts of Hong Kong society, the trouble is, only six years earlier, when CLP first connected to the WEPII, it gave a presentation to legislators saying almost the exact opposite. In the slide deck CLP claimed it had agreed a pricing formula for gas covering the next twenty years for gas supplied by WEPII. Price would be linked to commodity costs of gas, plus fees for transit costs and taxes. Government would scrutinise the agreement’s application to ensure fair-play. In the presentation it forecasted WEPII prices to be the same as LNG prices landed in Dapeng. If CLP thought WEPII was a good deal then what’s changed?

Perhaps the reason that CLP and HKE want to build the floating LNG terminal is not for the reasons being given, but because they make a great deal of risk-free money from building their own gas terminal, but no money at all if they use someone else’s. One of the peculiarities of the Scheme of Control (SoC), the gentleman’s agreement between the government and the two power companies, is that profits are earned only from investment. Figuring out what a customer wants and providing it as cheaply as possible to gain market share, the normal route to power utilities making money, goes unrewarded. The new SoC promises utilities an 8 percent rate of return on their $5-6 billion investment in the floating LPG terminal it. This means that customers will have to foot the $400 million per year bill for the just-in-case asset for up to 30 years regardless of whether the companies use it. CLP are currently asking for bids to supply 1.4 million tonnes of LNG through the proposed terminal, just a quarter of the gas CLP will need to supply half its power.

And if the government decides to transition away from gas to a genuinely clean fuel over the next 30 years, guess what, the SoC promises that the utilities have to be compensated for the LNG terminal being stranded. In my last few days at WWF, I spoke to government and CLP officials and asked whether the terminal would be funded within the SoC or outside its terms and got the same answer over-and-over: “not decided yet”.

So what’s all this got to do with the green finance conference earlier in the week? One of the big themes of the talk was that investors need to wake-up to the fact that some of their investments are going to impaired by policies to mitigate climate change, as well as the impact of climate change itself. The world’s central bankers asked the Task force on Climate-related Financial Disclosures (TCFD) to figure out how information could better align financial markets to deal with climate change.

One of the TCFD’s key recommendations was that companies assess the impact of and disclose their exposure to risks from climate change policies like carbon pricing or emissions trading. This sensitises the finance community to their fossil fuel investments being stranded once the world transitions away from them. However, the current SoC uses customer bills to 100 percent insulate the two power companies from their long-term greenhouse gas incontinent investments. So I beg the Hong Kong government to say no to any attempt to fund the LNG gas terminal through the SCA. Doing so makes a mockery of the the green finance principles being espoused elsewhere in government. If the utilities want to gamble on future demand for gas let them use shareholder money, not customer bills to make the wager.

I have spoken to the two power companies’ staff enough times to know that some of them get the threat of climate change and the special responsibilities power companies have to address it. Both companies have set themselves ambitious 2050 goals to decarbonise. But now they need to implement these high-minded strategies in concrete infrastructure investment plans.

It’s time to dust off their off-shore wind proposals first developed a decade ago, and propose these once more. In my opinion the new SoC is a good mechanism to finance off-shore wind, the rate of return has been reduced from 11 per cent to 8 percent and the capital costs should be much cheaper than ten years earlier. Taiwan has contracted to buy output from 5 GW of off-shore wind this year for prices around US$73/MWh or HKD0.57/kWh. This could well be less than the price of LNG fuelled gas power!

The world has moved on and the Hong Kong people and finance community are hungry for green investments, not white elephants.

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Filed under Economics, Environment, Technology

20 February 2018 · 6:39 am

Train trips in India and China

Christmas and New Year was spent in India attending a cousin’s wedding and a nephew’s thread ceremony. It’s always fun going back to the country of my birth. I love the food, the music, the great value for money and energy of the place. But It’s also depressing seeing how slowly it changes. India’s stagnation was made even more evident, when six weeks later, I visited the beautiful town of Guilin in Guangxi.

Arrivals at Mumbai Airport set the tone. The automated fingerprint check, designed to streamline entry into the country, bureaucratically first demanded two thumbs, then four right fingers, and finally four left fingers; in Hong Kong a thumb imprint is sufficient to gain entry. More ominously, my fingertips were too dry, and like so many Indian transactions a bit of grease was needed to lubricate the process.

It was as recently as 1985 that India’s and China’s GDP, on a PPP basis, were the same. Now China’s is more than double India’s. And the gap feels widest in infrastructure.

The six hundred kilometre journey from Shenzhen North to Guilin, on China’s marvellous new high-speed train, takes just over three hours. It’s as good as the Eurostar, or the Japanese Shinkansen except cleaner and cheaper. The round trip cost just US$100 (plus US$20 booking fee to approved reseller China DIY travel – which provided useful videos of the station layout and a reassuring customer service function). The tickets are fairly easy to buy online. Unbelievably, China’s first 70 miles of high speed line was built just ten years ago – in time for the Olympic Games; now there are over 16,000 miles of track crisscrossing the country. China has two thirds of the world’s entire length of high-speed track. By way of comparison the USA (roughly the same size as China) rail company Amtrak operates 21,000 miles of rail, none high speed – built over 150 years!

Chinese High Speed CRH2C clone of the E2-1000 Shinkansen – my inner trainspotter is freed

I travelled from Mumbai to Pune by train for New Year, much to the amusement of my relatives. Most of them were familiar with the concept of railways…some had even used them in their youth before planes took off…so to speak. Usually they go by road. Mumbai-Pune is a distance of 150 km and takes just a couple of hours on the new Expressway. Taxis are affordable and there are many different classes of coach. I made the train journey around twenty years ago. The only discernible change was nomenclatural: Mumbai’s stunning Indo-gothic railway station is now Chhatrapatti Shivaji Terminus (CST), not Victoria Terminus (VT). Not before time – fifty years late which is par for the course for Indian Railways.

I’d left it too late to book online so I had to go to Dadar station to buy my return ticket. Indian Railways has 1.5 million employees, the role of most of whom was seemingly to frustrate my journey. I speak pretty good Marathi, but even so I found myself sent from one room to another, one queue to the next, struggling to make sense of their Byzantine system of reservations and quotas necessary to sit on an inter-city train. I finally secured a Tatkal ticket, a special quota released just the day before travel, for the journey to Pune. The clerk told me the best she could get me for the return leg was a weight-listed ticket which meant there was no guarantee of a seat. She recommended I book online next time. The process took over two hours. Somewhat uncharitably, I told her there was a place in Hell reserved for staff working in IR. The price of the train ticket even, with the Tarkal surcharge, was around Rs700. Barely £7.80 one way. And therein lies the problem.

Railways need investment. But, poor Indians need cheap fares. How to bridge this political junction? In China the high-speed service doesn’t displace the cheap, slow service; it augments it. The trains run above the standard lines, elevated sometimes two storeys above ground – transport’s nod to the old TV show Upstairs, Downstairs.

The chasm in development between India and China isn’t a private sector, versus public sector issue. Both countries’ railways are state owned. Nor is a story about Indian bureaucracy, China Railway employs 2 million people, many of whom occupy make-work jobs like scanning luggage, or standing outside stations officiously demanding to see passports. India and China governments well understand Idle hands are the devil’s workshop and use their state owned enterprises to remedy this.

In my novel The Rising Tide, the UK government mandates “designated jobs” which are reserved for humans, and which businesses are not allowed to mechanise or computerise. Though the novel is sci-fi, this detail isn’t made up; it is simply telling is as it is in Asia.

China differs from India because its leadership have a plan about how to modernise and are ruthlessly implementing it. In Yangshuo, we met a European businessman who’d settled in Guilin and owned a DNA testing company. Originally he hired other westerners, but slowly visas of less skilled staff were being rescinded and the workforce sinified. As with China’s nuclear power stations and high-speed trains, Western of Japanese designs are studied and then copied. Just because Trump’s a jerk, it doesn’t mean he’s wrong on everything. China allows favoured state owned companies to borrow on a massive scale so they can modernise. Maybe the Chinese economy will go belly up when the debt goes sour, but the infrastructure being built is real.

Indian government agencies seem to be in thrall to their political masters to such an extent they have lost sight of why they exist. A couple of stories illustrate the contrast. One friend who recently returned to India from Hong Kong told us about Mumbai’s new monorail which ran past her window. It was decades in the making, and the design so badly conceived the twists and turns in the track mean it can only operate with four coaches, too few for the volumes of people Indian public transport is obliged to carry. The advert below was the front page of a major Indian newspaper. Why should a power company operating in a south Indian state decide to give away electricity for free to farmers? And why pay top dollar to advertise its political scheming in a Mumbai paper?

While we were in India, there was a tragic fire in a swanky nightclub and 14 young people died. The rooftop restaurant had been warned many times it breached fire safety regulations, but no enforcement action was taken; the municipal authorities staff either bought off, or too lazy to do their jobs. (Curiously Maya and I were in the mills complex earlier that evening, but weren’t cool enough to get in.)

The Indian private sector is thriving. On the trip back I used a mixture of Uber-Pool, local railway, private bus and Mumbai local train. The Uber-Pool and private coach were realistically priced, punctual and offered excellent service. The coach company located its station next to the Expressway junction, from a restaurant it owned, avoiding the terrible traffic jams afflicting Indian cities, and ensuring a second stream of income.

The Indian malaise is wonderfully exposed in my friend Victor Mallet’s new book River of Life, River of Death that puts paid to any notion that a stalled economy at least provides the natural environment some respite. Instead, decades of incompetence and population growth have poisoned, over-abstracted and defiled India’s holiest river.

Will I go by train again in India? Almost certainly. The view all along the route is breath-taking. It traverses Navi-Mumbai, climbs 600m up the Western Ghats to the tourist town Lonavla before entering the Deccan plateau. The journey is slow, 3.5 hours to travel the 150 km, but fun. I love the samosas and cutlets, and conversations. Indian travellers are anyway curious, doubly so hearing my so-so Marathi. In three hours you can become curiously intimate with these strangers you’ve never met, and will never meet again. And as Victor’s book points out, during the 2013 Kumbha Mela, Indian civic authorities displayed their quixotic genius, organising a clean and safe celebration enjoyed by millions of people in the largest human gathering ever. There is still hope for India.