To provide an incentive for fuel suppliers to advance the availability of Euro V diesel in Hong Kong and for drivers to use this more environmentally friendly fuel, a concessionary duty rate of HK$0.56 per liter for Euro V diesel went into effect on December 1.
The rate will last for two years and the Euro V diesel is reportedly suitable for all existing diesel vehicles. As compared with ultra-low sulphur diesel , which is the current statutory minimum requirement for motor vehicle diesel, fuelling existing diesel vehicles with Euro V diesel can reduce their sulphur dioxide and particulates emissions by 80% and 5%, respectively, according to the Environmental Protection Department in Hong Kong.
In the first eight months of this year, about 40% of the motor vehicle diesel imported to Hong Kong met the specifications of Euro V diesel. Based on the import diesel prices for the period, Euro V diesel was more costly than ULSD by up to about $0.1 per liter.
"The concessionary duty rate of $0.56 per liter for Euro V diesel, which is about half the concessionary duty rate for ULSD, will make it more price-competitive than ULSD. While the future price differential between the two types of fuel will be subject to market factors such as supply and demand, all the major fuel suppliers have undertaken to duly reflect the duty concession when pricing Euro V diesel," said a spokesman from the Environmental Protection Department.
Hong Kong plans to make Euro V diesel the statutory requirement for motor vehicle diesel from January 1, 2009, in tandem with the European Union. Before doing so, the concessionary duty rate arrangement will be reviewed. The concessionary duty rate of $1.11 per liter for ULSD will continue until December 31, 2008, and the rate will be restored to $2.89 per litre from January 1, 2009.
