The Hong Kong government has announced the allocation of over HKD 600 million (US$ 77.2 million) to support franchised bus companies and the taxi industry in transitioning to electric vehicles (EVs).

This initiative forms part of the city's strategy to achieve zero vehicular emissions and carbon neutrality by 2050.

Road map for zero emissions

Secretary for Environment and Ecology, Tse Chin-wan, unveiled a road map to phase out diesel buses and taxis, replacing them with EVs. The plan incorporates a subsidy scheme and measures to significantly expand the availability of charging stations.

The road map, initially scheduled for release in the first half of 2023, was delayed due to limited EV options in the market at the time. Tse explained that the delay allowed for the introduction of tailor-made EV models to Hong Kong, ensuring sufficient choices for taxi owners.

He also noted that the rapid decline in EV prices over the past year presented an opportune moment to advance the transition to greener transport.

Subsidy scheme details

The subsidy scheme, set to launch in December, 2024, is aimed at assisting operators in procuring 600 electric buses and 3,000 electric taxis. The allocation includes HKD 470 million for the bus sector and HKD 135 million for the taxi sector. Subsidy invitations will be sent to operators and taxi owners imminently.

At present, only 1.4% of Hong Kong's 6,000 franchised buses and 0.5% of its 18,000 taxis are electrically powered.

Cost and incentive framework

The government has adopted an incentive-driven approach, refraining from mandating the transition to EVs. Tse noted that further subsidies are unlikely, given the declining prices of EVs.

Measures are also being taken to avoid passing additional costs onto passengers wherever possible.

Ron Yang Rong, Acting Deputy Environment Secretary, highlighted the need for subsidies due to the significantly higher cost of electric buses - around 50% more than diesel buses. The subsidy for single-decker buses is capped at HKD 400,000, and for double-decker buses at HKD 800,000, or 25% of the capital cost, whichever is lower.

Taxi owners will receive HKD 45,000 per vehicle, covering 10 to 25% of the market price, with priority given to the city's 3,000 oldest taxis, defined as those over 12 years old.

Battery recycling and charging infrastructure

The government has assured that local recycling of EV batteries will be efficiently managed, with the city's first dedicated recycling plant in Tuen Mun scheduled to commence operations in 2026.

Plans to enhance charging infrastructure include the installation of fast-charging facilities at conventional petrol stations and taxi ranks. Bus depots will also make their charging facilities available to taxis. By 2027, at least 500 additional charging stations are expected to be operational, with a target of 3,000 by 2030.

Franchised bus operators will bear the cost of arranging their charging facilities.

Industry reception and challenges

The Hong Kong Taxi and Public Light Bus Association chairman, Chau Kwok-keung, welcomed the subsidies but criticised the allocation for taxis as disproportionately low compared to the bus sector.

Chau also raised concerns about the high cost of battery replacement, estimated at HKD 60,000 to HKD 100,000 every four to five years, and the challenges in sourcing replacement components.

He further questioned the adequacy of the proposed 500 fast chargers to support the introduction of 3,000 electric taxis, particularly as these facilities will also be used by private vehicles, which are increasing in number.

Commitments from operators

Citybus has announced plans to purchase 200 electric buses under the scheme, with a pledge to achieve a fully zero-emission fleet by 2045. Kowloon Motor Bus (KMB) also welcomed the subsidies and stated it would actively consider purchasing electric buses.

The government's road map represents a significant step towards reducing vehicular emissions in Hong Kong. However, ensuring equitable support across the transport sectors and addressing operational challenges will be crucial for achieving its ambitious goals.