A Cost for Cleaner Air: Hong Kong's LPG Vehicle Scheme

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Case

Reference no. 206-055-1

Subject category: Economics, Politics and Business Environment

Authors: Chester Chan; Ka-Fu Wong; Mark Grant Stimson

Published by: Asia Case Research Centre, The University of Hong Kong

Published in: 2005

Length: 16 pages

Data source: Generalised experience

Topics: Price control; Subsidy; Oil and gas; Liquefied petroleum gas (LPG); Alternative fuel; Filling station; Economic regulation; Price controls and subsidies

Share a link: https://casecent.re/p/70466

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Abstract

This case studies a Hong Kong government environmental mandate to replace the territory''s diesel-powered taxicab fleet with liquefied petroleum gas (LPG) powered vehicles. In order to encourage the transition, taxi owners were given cash grants to purchase new LPG vehicles and drivers were promised ''cheap'' fuel. In exchange for selling at or below capped prices, certain companies received ''free'' land to develop dedicated LPG filling stations. Other local filling stations sold LPG fuel alongside gasoline and diesel, though at market prices. All stations in the territory were supplied by fuel imported from abroad.

Location:

Hong Kong, China

Industry:

Energy, public policy strategy, transportation

Other setting(s):

2006