29 January, 2015
Comment›Insight & Opinion
Should a government department regulate itself? To take a specific example, should the Environmental Protection Department propose an infrastructure project that has an impact on the environment, evaluate the environmental effects of that project, then approve the project as environmentally sound?
This is essentially the question before the Court of Final Appeal in a case concerning the department’s proposal to build the world’s most expensive incinerator off the island of Shek Kwu Chau. Wearing three hats as advocate, assessor and approver, the department’s director, Anissa Wong Sean-yee, has taken the incinerator project through all three processes.
The department has championed the incinerator for 15 years, despite significant local opposition. Its assistant director Elvis Au applied for an environmental permit. Another of its officers, then assistant director Tse Chin-wan, with the help of consultants engaged by the department, managed the environmental impact assessment, resulting in the approval of its report by the department and the issuance of the statutory environmental permit.
The court is now considering whether the department’s director has the power to approve the impact assessment report, prepared and submitted on her behalf, and grant the permit to herself. If the court decides she has this power, the department can proceed with the project. If not, the environmental permit will be invalidated and another impact assessment study will have to be conducted.
The issue goes to the heart of whether it is in the public interest for a government agency to police itself. It raises concerns about the vested interests of bureaucrats versus the rightful interest of citizens in minimising the risks to their health and environment.
The proposed incinerator, opponents say, will use polluting technology, produce toxic ash, disrupt the marine habitat, despoil a pristine island and destroy rather than protect the environment. But how impartial can an environmental protection official be in assessing a project which he has proposed, in which he has invested years of his career?
The self-regulation issue is related to the larger question of how major infrastructure projects in Hong Kong are conceived, analysed, evaluated and approved. In many cases, it appears that insufficient due diligence was done by professionals independent of the government agency proposing the project. Consultants are often hired to produce “the right answer” rather than an objective assessment; those who rely on government contracts will please the client rather than jeopardise future business. Such self-regulation enables government departments to release minimal information on the rationale, impact, financial and operational details of a project.
The Development Bureau’s reclamation plans for the East Lantau Metropolis is an example. The justification for such a colossal development, such as population, housing and transport needs, has neither been established nor quantified. Yet the bureau
intends to request HK$226.9 m
illion to explore building artificial islands in the waters between Hong Kong and Lantau islands.
Tom Yam is a Hong Kong-based management consultant. He holds a doctorate in electrical engineering and an MBA from the Wharton School of the University of Pennsylvania
3 Dec 2014
Can 50km of concrete, steel and tarmac bring greater integration within the Pearl River Delta region, revive Hong Kong’s flagging economy and spur the city on to greater financial heights? That’s the question most people have asked about the Hong Kong-Zhuhai-Macau Bridge, which is scheduled for a grand opening in 2016. After all, advocates for the project have for many years now championed the structure as an economic saviour, a tourism booster and the most effective connection in the Pearl River Delta region.
Earlier this month, the government announced that it is seeking an additional $5billion in funding for an artificial island off eastern Lantau, which would form part of the bridge’s road network. That’s on top of the $83b that Hong Kong is already contributing to the $132.9b project. And, with this news, comes more speculation. Indeed, there’s now a greater need to reflect on whether the benefits of the bridge will ultimately outweigh the costs, especially as the money is coming from public coffers.
There’s also a need to look at whether Hong Kong as a city is set to get the best out of this colossal piece of infrastructure. It’s only fair to examine whether or not the newbridge will fail as a white elephant or herald the start of a beautiful relationship between the three cities that it links together.
Supporters of the project cite the economic benefits alongside the expected increase in tourists and the revitalisation of the city’s property market as positive reasons for the bridge’s existence. Anti-bridge proponents focus more on the potential environmental damage, saying that it’s simply a vanity project. While both sides rant on, though, it’s ultimately the rising cost of the whole project that has provoked fresh debate in the past few weeks. “There’s certainly no economic justification in building a bridge,” says Bob McKercher, professor of tourism management at Hong Kong Polytechnic University. “When you look at the numbers, it’s a complete white elephant. It will never pay for itself. And, right now, the traffic flow will only ever go one way – and that’s from Hong Kong to Zhuhai and Macau. There just isn’t enough of a population to have traffic flowing the other way. And the only real beneficiaries of the bridge will perhaps be Disney, the airport and Ngong Ping. I can’t see anybody else in Hong Kong benefitting from it.”
In response to claims that the bridge will boost Hong Kong’s tourism industry, McKercher explains: “People in Zhuhai are not going to come to Hong Kong because they can get everything they need from Macau. The studies that I’ve looked at indicate that there was a huge demand initially, but other studies have indicated that the bridge would never pay for itself. To me, this is just another unnecessary piece of infrastructure that has been justified by the god of tourism, by people who just don’t understand tourism.”
Critics have also pointed out the bridge’s contribution to air pollution and destruction of marine habitats, particularly in relation to the endangered pink dolphins living within the vicinity of the construction site. “The Environmental Impact Assessment only took into account the issue of piledriving for underwater noise reports,” says Gary Stokes, director of non-profit organisation Sea Shepherd Asia. “What they didn’t do is to consider the terrible everyday ongoing construction noise. Dolphins communicate and navigate through sound, so in human terms it’d be like being constantly blinded by a big, strong light. They wouldn’t be able to find their way around.”
It’s not all doom and gloom, though. Many pro-bridgers have a brighter perspective. Stephen Townsend, director of urban design at architectural firm Gensler Asia, proposes a more holistic view when it comes to the bridge’s pros and cons beyond Hong Kong. “I think that real estate prices are going to skyrocket in Zhuhai because of the bridge, like in Shenzhen 20 years ago,” he says. “It brings services and spontaneous informal access directly from Hong Kong that we didn’t have before. Now I can have a house in Zhuhai at a third of the price and three times the space, and actually work in Hong Kong.”
Townsend continues: “I think the developers who own shopping centres in Hong Kong are going to be very happy once that bridge opens. And if you own property on Lantau Island, I think you’re also going to be happy that there’s now a marketplace that has direct access to the property market. I think the emphasis for growth in Hong Kong, considering the population will grow another two million in the next 15 years, will be around the Lantau, Tuen Mun and Sheung Wan areas. And a lot of that will depend on that connection to provide a balance of services, people and industry going back
“The bridge is beneficial in terms of trade, logistics and tourism by facilitating people and goods movements in the region,” says Allen Ha, chairman of the Lantau Development Alliance. “It will also be beneficial for our airport in terms of connectivity with the rest of the world. But, right now, if we just build the bridge, the tourists may still just go and stay at the traditional places [like Tsim Sha Tsui]. Our proposal then is to increase our receiving capacity in Lantau by building new hotels, which can help alleviate some of the tourist overflow in Hong Kong. Ultimately, we’re looking at a bigger area than Macau, Zhuhai and Hong Kong. We’re talking about the population in the whole Pearl River Delta, and allowing people to travel to a new place within an hour.” The Highways Department has also informed Time Out that ‘the journey time between Hong Kong International Airport and Zhuhai will be reduced from its current four hours or so to about 45 minutes’.
Despite all the conflicting viewpoints, the failure to integrate a rail link option as a form of public transportation is being viewed by both pro and anti-bridgers as a major oversight. “While [a rail link] would have probably raised the cost of the bridge considerably, it would have been fortuitous to have one, even if it just went to the immigration island between Zhuhai and Macau,” says Townsend. McKercher goes even further on the subject: “In light of concerns over air pollution, why the hell
are they building a bridge to put in more vehicular traffic? Why didn’t they also include a rail link to move people efficiently from border to border?”
Whether or not the Hong Kong-Zhuhai-Macau Bridge brings any or all of its predicted benefits remains to be seen. And whether it affects the environment as much as some expect it to also hangs in the balance. But either way, the city is paying for it right now in hard cash. Like a car on the hard shoulder of the bridge, there’s no turning back. “It’s too late – we’re already building it,” says Townsend. “We can’t fight it. As a community, of course we can complain about it all we can. But I think we now need to figure out how we can make it work and how we can protect the areas of Hong Kong that we love from overspeculation and overexploitation.”
Environmental Resources Management (ERM Group), the consultancy selected by TransCanada to conduct the environmental review for Keystone XL‘s northern leg on behalf of the U.S. State Department, is no stranger to scandal.
Accepting the bribe landed Yan Shunjun, former deputy head of the Shanghai Municipal Environmental Protection Bureau, an 11-year prison sentence.
Yan “allegedly took bribes of 864,000 yuan (126,501 U.S. dollars), 20,000 U.S. dollars and 4,000 euros from seven contractors,” explained Xiuhuanet. “Yan was also accused of illegally setting up a channel to speed up environmental impact assessment processes, which are essential for companies wanting to build factories.”
BP, one of the companies standing to gain if Keystone XL North receives a presidential permit from the Obama administration as a major Alberta tar sands producer, was also mired in the Chinese ERM Group scandal.
“Two firms on ERM’s bluechip client list, BP and Sinopec, are big investors in a petrochemical complex on the site, but the Chinese authorities apparently saw no conflict of interest in awarding the environmental evaluation to ERM,” explained London’s Sunday Times.
In a sense, history has repeated itself.
Hopenhagen to Paris
Back in 2009 when news arose of ERM’s bribery and corruption, Chinese environmental campaigners worried the incident could portend a lack of commitment to tackling climate change in the months leading up to the United Nations climate summit in Copenhagen, Denmark.
But Keystone XL will soon be front and center once again in early 2015 in the halls of Congress and the White House.
Environmentalists fear that opening another route between Alberta and the U.S. Gulf Coast for tar sands crude would ensure the deal struck between the two carbon-emitting giants becomes a moot point, or worse.
Bribery as “Investment”
A commenter on People’s Daily, the state-owned newspaper in China, wrote that bribery was merely the cost of doing business and an “investment” of sorts.
“Foreign firms have quickly learnt the philosophy of guangxi [connections],” wrote the commenter. “Their rule has become, ‘When in Rome, do as the Romans do.’”
ERM, in turn, denied any wrongdoing on its end, even though it had doled out the payments landing Yan in jail to begin with.
“ERM Group had no advance warning of any of the alleged payments to the former deputy director of the Shanghai Environmental Protection Bureau,” ERM declared to the Sunday Times.
“To suggest otherwise is damagingly inaccurate. We are committed to: conducting our business with integrity, applying ethical principles to our relationships with clients.”
KXL, ERM: Institutionalized Corruption
In the U.S. context as it pertains to Keystone XL, ERM’s conduct has been far less ham-handed than it was in China.
By procedure and by law, the company applying for the permit gets to pick and pay for the contractor conducting the environmental review on behalf of the State Department. In this case, it meant TransCanada selected ERM Group to give it a rubber stamp of approval for KXL.
In other words, the State Department has legalized a de facto form of “institutionalized corruption” for handling environmental reviews for cross-border pipelines like Keystone XL’s northern leg. Sierra Club attorney Doug Hayes described it as a “built-in conflict of interest” in a 2013 Bloomberg Businessweek article.
ERM Group, with a track-record of rubber-stamping ecologically hazardous projects in places ranging from central Asia to Peru to Alaska to Delaware and China, has proven itself once again a key tentacle of the “carbon web” for Keystone XL.
The question remains, though: will the sordid episode in the city near Shanghai serve as a teachable moment as applied to the tar sands pipeline described as a “fuse to the biggest carbon bomb on the planet”?
We’ll find out, and likely soon.