Introduction of Competition and Environmental Regulation in the Electricity Sector in Hong Kong

Abstract

This article explores both the competition and the environmental aspects of the electricity sector in Hong Kong, and a possible linkage between them. There has been considerable public pressure to liberalize the electricity sector in Hong Kong due to longstanding discontent with the persistently high profit of the sector and a regulatory structure that is widely perceived to be ineffective. In light of the government’s seeming reluctance to pursue liberalization, this article examines an alternative approach – litigation under the recently adopted Competition Ordinance. It assesses the likelihood of success of the strategy and its potential shortfalls. The article proceeds to analyse whether competition can be used as a tool to improve the environmental performance of the sector. It concludes that the effect of the introduction of competition is ambiguous if not adverse and therefore proactive regulatory intervention will be needed to ensure that environmental performance does not deteriorate following the introduction of competition. Competition will not be an effective tool to improve the environmental performance of the sector.