Chapter 1
Introduction
Technology provides the means for modifying the natural environment for human purposes providing basic requirements like shelter, food, warmth, as well as communications, transport and a range of consumer products and services. All of these activities have some impact on the environment. Energy resources are an obvious example of limited resources whose use can have major impacts. Energy use is now central to most human activities and many of the environmental problems could be described in terms of energy-getting and energy-using technologies. The most obvious environmental impacts are the physical impacts of mining for coal and drilling for oil and gas, and distributing the resultant fuels to the point of use. However, increasingly it is the use of these fuels that presents the major problems (2003).Burning these fuels in power stations to generate electricity, or in homes to provide heat, or in car engines to provide transport, generates a range of harmful gases and other wastes, and also, inevitably, generates carbon dioxide, a gas which is thought to play a key role in the greenhouse global warming effect. The pattern of energy production has undergone some significant changes in recent years, particularly in relation to electricity generation in some of the industrialized countries, with gas beginning to replace coal (2003). Electricity like other energy resources has become important resources for man. The production of such resource can have varying effects to the environment. That is why governments devise means to monitor the consumption of electricity and other energy resources. This study will focus on the different methods for forecasting electricity consumption.
Problem Statement
Like other countries, Hong Kong has raised its concern for the consumption of electricity. The concern of Hong Kong leads to the need to know methods to identify the electric consumption. This paper will determine different methods for forecasting electricity consumption in different markets such as commercial, industrial, residential, export, street light and etc. This paper will study different model features for forecasting electricity consumption and then choose some suitable models for implementation of forecasting electricity consumption.
Research Questions
In order to complete the goals of this particular academic activity as well as to set the objectives of the study, the following research questions will be presented and discussed in the entirety of the research paper focusing on the study the different methods to measure electricity consumption. Such information can be acquired through answering the following questions:
Objectives of the study
The research questions referred to the information that the researcher intended to question while the objectives will focus on the problems that should be clarified in order to gather the intended information. The aims and objectives of the study include
Importance of the Study
The study is important to Hong Kong and other nations since they can compare the methods to measure electricity consumption and how they respond to changing electricity consumption in their countries. This study can provide to the government of Hong Kong and other nations, the ability to gauge how useful the methods to measure electricity consumption are. With the establishment of the goals given, this study may also be of importance to the goals that have been set. By fulfilling the aims that were stated in the objectives section, this study will be helpful for other researchers who may be focusing on unique means of measuring electricity consumption. The data that will be gathered will be helpful for researchers in establishing related studies that will help in determining the best method to use The notable significance of this study is the possibility that other researchers may be able to use the findings in this study for future studies that will create a huge impact in society. This study’s findings can be used for other findings that might prove to be helpful in introducing the change the world needs. The research and analysis methods that this study will use need to be credible because it will help researchers in knowing how to look for particular information and then know how to analyze them. It is through this that researchers will then be able to find out how they will be able to focus on their investigation on a particular instance and also know the possible methods that they may choose in the possible time that they may choose to conduct another study. Thus, another significance of this study is to serve as a guide for researches that focus on the analysis of a country’s venture into strategies that will help it maintain its dignity, image and global competitiveness.
Structure of dissertation
There are different chapters for this project. Each chapter has a different focus for a specific course of action that will benefit the study. The different chapters will contribute to the success of the study and it can be used as a starting point for further studies. The first chapter was the introduction part wherein general ideas and goals of the study were discussed. The second chapter will be the literature review part. The second chapter used various resources to gather necessary data. This data have a relation to the goal of the paper which is to study the different means to measure electricity consumption in Hong Kong. The literatures presented will come from books and other sources that are deemed to be helpful in the advancement of awareness concerning the subject. The third chapter will focus on discussing the instruments and methods used for the study to be a success. The fourth chapter will focus on the presentation of demographic data, the ideas of the respondents, and analysis of data. The fifth chapter will demonstrate how the results from the researches link to the literature review results. The last chapter will focus on discussing the Summary of the data acquired, Conclusions and Recommendations.
Chapter 2
Literature Review
Hong Kong
Hong Kong remains wrapped in an enigma. Its intermediaries of capital, who include traders, financiers, and corporate managers, have made Hong Kong the pivot of decision-making about the exchange of capital within Asia and between that region and the rest of the world (2000). Yet, for 150 years, this tiny island and adjacent peninsula could not even lay claim to status as a city-state. When Britain declared sovereignty over Hong Kong in 1841, after taking it from China under the terms of the Treaty of Nanking that settled the Opium War, the government and merchants had to build a town. The British viewed Hong Kong as their emporium of trade in the Far East, but they did not aspire to transform it into a commercial-military power. The impetus for Hong Kong’s return to China rested in the ticking clock of an obscure treaty from 1898 when Britain acquired the New Territories; the lease terminated on July 1, 1997 ( 2000).Hong Kong has survived the challenge of the 1997 Handover from British to Mainland Chinese control and the economic reversal caused by the unrelated events of the Asian financial downturn and the September 11 disaster. Although the latter has had more impact on the lives of everyday people, the Handover was a cause for a certain amount of nervousness about the future with concerns raised about change to civil, administrative and economic freedoms. The passing of colonialism has allowed some examination of Hong Kong cultural identity in government programs and through other venues, but much of the focus has been on maintaining its economic advantage in the region as the economy has slowed in growth (2004).
Moreover, the tourism market appeal of Hong Kong as a brand changed after the Handover, causing some disappointment among economic forecasters and tourism authorities. A number of aggressive new marketing strategies have been adopted, which present an artificial summary of its cultural identity, race relations and attitudes to colonialism (2004). Hong Kong is one of the two special administrative regions belonging to China. Hong Kong over the years has developed into a leading financial theater through the economic changes it made in the region. The defense of Hong Kong’s territory and foreign affairs lies on the Central people’s government but its internal issues and problems is managed by the government it has created. Hong Kong is on the continuous path for improvement. Hong Kong has created changes on some of its landmarks and physical features this contributed to the state becoming a tourist destination. Being a tourist destination means more consumption of electricity.
Hong Kong Economy
On the question of the economic situation there is greater cause for concern, and there is the distinct possibility that here the pessimists are gaining the upper hand, at least in the short term. There can be no question that Hong Kong’s economy has carried hidden structural weaknesses for some time, and that these are now being exposed. Hong Kong has lost virtually its entire manufacturing base to China, and there is little doubt that this pattern will continue into the future given the mainland’s comparative advantage in land and labor factor costs ( 2000). Externally, the position of the pessimists also seems to be gaining ground. The large re-export component of the Hong Kong economy is highly vulnerable to external developments. The improvements in the standard of professionalism of Chinese producers make it less necessary to ship goods initially to Hong Kong, for quality inspection, packaging and overseas transportation, on the way to their final destination. It is reasonable to assume that the lucrative margin earned on consumer goods by Hong Kong middleman will certainly decrease over time (2000).
The likely eventual agreement for direct air and sea links between the mainland and Taiwan thus bypassing Hong Kong will also have a significant negative impact on economic activity in Hong Kong. The effects of continued growth and success of Shanghai, and other mainland coastal areas, should also not be underestimated. By the time of the handover, the Hong Kong economy was very strong. Growth remained around 6 per cent per annum, and unemployment was low. The only significant problem was the property market, which had clearly been bubbling up for the previous few months. All of this suggested that the economy ought to be fairly well protected against speculation (2000). Hong Kong stood out as the only open economy in the region that had not suffered devaluation. Suddenly, its own US billion reserves did not look so impregnable and even though the obstacles for speculators were large, the very challenge encouraged some of them because the HK dollar would have to settle at a much lower level against the US dollar if the peg to the US dollar were broken. The profits for speculators would then be correspondingly greater and it might easily lead to a further round of devaluations in the region, with renewed opportunities for speculative profits. Given all the recent turbulence in the world and especially the region’s financial markets in recent years, it is impossible to guarantee that the peg will survive forever at its current rate (2000).
With regard to the Hong Kong economy, there is a clear commitment from Beijing in the Basic Law to maintain after 1997 the capitalist economic and trade systems practiced in Hong Kong, and to retain Hong Kong’s free port status and free trade policy, which includes the free movement of goods and capital. Further, the Hong Kong (HKSAR) government will be committed to safeguard the free operation of financial business and the free flow of capital within, into and out of Hong Kong. Hong Kong will be allowed to raise its own taxes and control revenue. The Hong Kong dollar will continue to circulate and remain freely convertible to the US dollar and other hard currencies. Within this framework, decisions on economic, trade, monetary and fiscal policies are to be taken by the HKSAR without any necessity for these policies to be adjusted in line with those in operation in the rest of mainland China (2000).Since the return of Hong Kong to mainland China, the issue of Taiwan has received increased attention on both sides of the Taiwan Strait. With Hong Kong being an SAR of mainland China, Hong Kong-Taiwan relations naturally constitute a special component of cross-Strait relations. Hong Kong’s Chief Executive has expressed a strong desire to improve cross-Strait relations and is willing to facilitate mainland China Taiwan exchanges through Hong Kong ( 2000).
It is expected that the interaction of the mainland, Taiwan, and Hong Kong will create better understanding, promote mutual benefits, and reduce misconceptions, thus reducing the scope for conflict. Hong Kong’s return to mainland China in July 1997 can be seen as an opportunity for both Taiwan and China to develop their ways of interacting, with Hong Kong as intermediary. Pending establishment of the three direct links across the Strait, or the final unification of Taiwan and mainland China, it may be expected that Hong Kong’s role will continue well into the future (2000). Hong Kong’s economy is one of most improved in the world. It survived different threats and problems to its economy. It was able to withstand the different changes and challenges that its government has undergone.
Emerging economy
From an economic point of view, the most significant developing countries are those whose economies are ‘emerging’ both in terms of market opportunity and in the sense that they are coming out from the constraints of state administration and restrictions on foreign trade. These economies are now seeking to modernize rapidly with the assistance of foreign governments and companies (1998). The faster rate of growth in emerging countries starts from a less-developed economic base, which means that they manifest a high level of demand for both consumer and industrial products and services. Their economies therefore offer the most significant opportunities for companies from the developed countries to expand their markets ( 1998).
While acquisitions are generally the favored mode of expansion into developed-country markets, cooperative forms such as joint ventures tend to be the most prevalent in emerging economies. This is partly a result of host government preferences for local firms to share in the ownership of foreign funded ventures in the expectation that such participation will increase their opportunities to acquire new technology, management skills, and other expertise. It also reflects a frequently found preference among foreign investing companies, at least in the early years, to reduce their exposure to risk, and to co-opt the assistance of a local partner in navigating through an unfamiliar environment. The cultural and institutional features of the emerging economy are normally quite different from those of the foreign partner’s home country and this creates additional complexity for that partner (1998). Secondly, the nature of partner objectives and the achievement of complementarily between them differ from those applying to most alliances between partners from developed countries. Thirdly, the differences between emerging and developed countries in culture and environment, together with the fact that in some cases the emerging economy has a colonial legacy with the sensitivities attaching to this, can give rise to special difficulties in the process of managing alliances ( 1998).
When one country is said to be an emerging economy it means that it has passed the different economic challenges that they have encountered. The emerging economies have come back from problems in their economies and they find ways to conquer such problem. Major emergent economies are on the fast track to economic growth but yet beset by critical challenges to the sustainability of their business environment. Hong Kong is an emerging economy it has faced different kinds of economic problems over the years. It is still facing some of the economic problems and they are finding solutions for it. The blockages for the continuous growth of the countries ‘economy is the corruption happening in the country, its lack of drive to live up to the things expected of them and the different debts they have incurred over the years. The different blockages should not be a problem for the country; it is supposed to be a challenge to them so that in the future the country will be economically mature.
Competitive economy
Even in advanced countries technological developments, where they tend to increase the degree of complementarily between different investment decisions, may have a profound effect on market structure. There exist between the firms in a modern competitive economy complex interrelationships of ownership and control, which are abstracted from in much of our more formal analysis; their justification derives, in part, from the need to co-ordinate complementarily activities. And the optimum size of the firm may be determined, not so much by the scale economies associated with any particular operation, but by the number of operations which require planned co-ordination ( 1997). Nevertheless, as we have seen, all the forces do not work in the direction of integration. The inevitable imperfection of the entrepreneur’s knowledge, both about technical conditions and about the prospects of other firms, checks his willingness both to make long-term binding commitments and to throw in his lot with that of others. The counterpart of entrepreneurial reluctance to make binding commitments will be a policy of deliberately limiting the degree of integration provided for in the plan ( 1997).
Close complementarily between several investments is equivalent to a conductor of error; some degree of independence acts as insulation. The greater the extent to which the profitability or propriety of any one investment depends on others being implemented exactly according to plan, the wider will be the area over which the consequences of any particular failure will be felt. The absence of a sufficiently wide consensus about the profitability of simultaneous investment in related directions is also a check to concerted activity in both kinds of economy; in a planned system the combined investment can still proceed, provided the controlling authority issues the appropriate fiat. Whether this is a desirable outcome, however, depends of course on whether its assessment of the situation is correct ( 1997). Opinions about the best allocation of resources are weighted in a competitive economy by the wealth and the credit which those holding them can command; in a planned system, by the position of those holding them in the hierarchical structure. In a competitive economy, the command over resources exercised by any particular entrepreneur, and therefore the weight to be given to his estimates depends on the extent of his capital and of his credit (1997).
In the competitive economy, the ultimate tribunal is composed of particular owners of wealth who feel able to form an opinion on the matter (1997). To have a competitive economy means that the country can match with the kind of economy other emerging economies are having. It shows how well the country has performed and maintained its status. It shows how effective a country’s economic policies and procedures are. Hong Kong is attempting to be a competitive economy that can conquer any attempts to destabilize its economy and prevent it from gaining economic growth. The country can attain economic competitiveness through making sure that the tourist in the country remains high at the same time the country takes care of its environment.
Hong Kong and its management of the environment
Most governments now have environmental ministries and some kind of requirement for assessment of the environmental impact of activities prior to their being approved. In some instances, such initiatives have occurred only very recently and environmentalists wonder if they are adequate for the task. Hong Kong established an , and has taken some steps to lessen air, noise, and water pollution ( 1993). Thus, noise controls were put in place, the use of high-sulfur fuels in factories was banned, and a clean-up plan was launched. Despite these efforts Hong Kong still looks, smells and sounds like a highly polluted city and will continue to do so for many years. Although widely recognized as a serious problem for decades, governments have provided only limited resources for dealing with the problem. This situation has improved slightly in recent years. The evaluation of energy policy needs to be conducted within a context that is more conscious of environmental issues. Governments must realize that environmental considerations, and their effect of energy, are just as much a limit to growth as transportation infrastructure or energy shortage itself ( 1993).
Portions of academia and the political elite recognize that economic development is not threatened by environmentalism; rather, long-term economic and political stability are threatened by a lack of attention to the environment. Only by grasping this dialectical relationship and carefully managing the environment can help modernization to succeed. Failure to do so will result in flood, drought, and blight: the familiar signs that the rulers have lost the Mandate of Heaven. Responsible businesses or countries have always sought to comply with the law and failure to do so can have disastrous consequences for the balance sheet ( 1993). Even minor breaches can damage profits beyond the cost of fines imposed. If the company is liable to pay compensation for damage caused it may be able to meet the costs of reparation from insurance. In terms of policy formulation, environmental issues have, in fact, been incorporated into government planning. Development plans have included a few clauses concerning forestry protection and conservation of natural resources, with a corresponding budget allocation. Policy is one thing, implementation is another. The distance from words to practices has been especially great (1993).
Failure in the implementation of environmental policies can be seen as resulting from the insincerity of the country’s decision makers, the inefficiency of government agencies, and widespread corruption. While some agencies have no direct administrative authority for managing the environment, the agencies with such authority are numerous and their actions are largely uncoordinated, with each perceiving environmental problems as only part of their other wider responsibilities. Moreover, these agencies have no authority to take legal action against violators. The common practice used in response to these problems is to set up additional agencies or committees and to draft additional ineffective regulations ( 2004). Countries like Hong Kong have been more responsive for calls to manage the environment.
The need to manage the environment
Life on earth has shown a surprising resilience in withstanding changes in the environment, and humanity in particular has adapted well to changing climate after the last glaciations some 10,000 years ago when most of the northern hemisphere was covered by ice and snow. However, all the natural changes in the environment, except natural disasters, occurred slowly over long periods of time, typically centuries. After the industrial revolution at the end of the eighteenth century, and particularly in the twentieth century, anthropogenic aggression to the environment has become more important due to population growth in developing countries and the enormous increase in personal consumption, mainly in the industrialized countries ( 2000). What characterizes these environmental changes caused by man is that they took place in a short period of time, typically decades. Broadly speaking all these problems have a multitude of causes, such as population increase, and the growth and changing patterns of industry, transportation, agriculture, and even tourism. The way energy is produced and used, however, is at the root of many of these causes ( 2000).
Energy sources are distributed around the globe in a fashion that is frequently not matched to the location of the consumption centers. Access and distribution to most of them creates numerous problems such as global insecurity, of which the volatile political situation of the Middle East is an example. Other global problems are those originating in the use of nuclear energy for electricity generation, which creates the risk of nuclear weapons’ proliferation. Conventional wisdom says that economic growth is roughly proportional to the growth in consumption of raw materials and energy, and the resulting pollution ( 2004). The empirical evidence for such correlation is in general based on studies over limited intervals of time. If such proportionality was to last for many decades the consequences would be disastrous, because the economies of a number of very populous developing countries are growing, as well as GDP per capita, and will soon approach the level of the developed countries. This would result in great strains in the access to raw materials and energy, as well as an increase in environmental degradation ( 2004).
The environmental consequences of industrial development and associated energy consumption in developing countries are beginning to reach such proportions that they not only threaten the local population but represent a sizeable contribution to global climate change, mainly due to increased fossil fuel consumption ( 2004).The world today has a rich North and a poor South with pockets of poverty in the former and some very affluent people in the latter. Most of the world’s population aspires to the material lifestyles and consumption patterns apparent in richer nations. Others may be less secular and look forward to non-material development in the shape of an increase in contentment, more sense of security, religious or cultural enrichment ( 2005). The former, material, outlook is dominant and with growing populations the question is, will the Earth’s environment support these hopes? The environmental manager is concerned with exploring what can be done to improve people’s lifestyles, given the structure and function of the environment, and then implementing it. Some countries have achieved what they and others see as development, thanks to one or more of the following: agriculture, science, industrial expansion, natural resource exploitation, colonial expansion, trade and intellectual skills. Development is thus widely seen as a goal and an ongoing process, but there is less certainty over its exact meaning or how it functions, or the strategy that is best adopted to pursue it ( 2005).
Environmental management is no longer just concerned with physical and largely quantitative data it now deals with historical data, policy formulation, social capital and institutional issues, qualitative information from focus groups and questionnaires, advice from political ecologists, the findings of cultural ecology, anthropology, and much more. On the whole, it has become more co-ordinatorial and participatory and much more integrative. Modern environmental management also tends toward less compartmentalization, more encouragement and support than enforcement, and often a bottom-up approach. There is also a shift toward continuous improvement and environmental stewardship, rather than command and control and solution of problems after they occur (Barrow 2005). There is an imminent need to manage the environment due to global issues that have risen in the past few years. The need for managing the environment results to countries like Hong Kong to understand the best means to measure and monitor electricity consumption.
Electricity Consumption
Energy use is characterized by very high dependence on coal and coal-fired electricity production, massive investments in producing oil from coal and gas, intensive use of energy in the industrial development sector, and energy scarcity among low income households. Domestic consumption of electricity varies greatly across the socioeconomic spectrum. Wealthier households are heavy consumers, whereas poorer homes use mainly paraffin, candles, and rechargeable batteries. There is also local fuel wood collection. People that live in dwellings without electricity are exposed to health risks associated with the fuels they use. Domestic health risks have the greatest direct impact on women and children, who are confined for the longest periods to indoor domestic environments ( 2001). The factors that affect electricity consumption are associated with a person’s conditions of life, whereas his or her orientation of life including values and thinking on environmental issues has only limited effect. Also, the existence of codes of eco friendly conduct within a person’s social network has no significant effect on electricity consumption ( 2001)
This contrasts with the relationships found between way of life and ecologically aware consumption in general. The consumption of eco friendly products is governed primarily by the codes of conduct, and the attention paid to environmental issues, within the social network. In addition, those people who do not know the size of their electricity bill have relatively larger electricity consumption, but also a relatively larger consumption of green products. This indicates a discrepancy in pattern of behavior between electricity consumption and consumption of green products. An explanation for this could be that electricity consumption is basically invisible and tends to be forgotten by the consumers ( 2001). Moreover, serious reductions in consumption of electricity would likely interfere with the routine of daily life. Standard rate-making practice has been to establish revenue requirements and set overall electricity prices to cover average historic accounting costs. These may bear little relationship to current marginal, or opportunity costs of electricity, which reflect forward-looking conditions (1994). Market imperfections are often cited as a major reason that customers do not adopt higher levels of energy efficiency. Non market costs of externalities resulting from production of electricity are generally not taken into account explicitly in setting electricity prices. Thus, the price seen by consumers and utilities does not reflect all societal costs of producing electricity, possibly resulting in a greater than socially optimal level of consumption of electricity. Electricity provides the means for consumers to enjoy the benefits of myriad energy services, including light, comfort, refrigeration, and motive power. The marginal, or incremental, value of electricity is reflected in its price; that is, consumers are willing to consume electricity up to the point where its incremental value just equals its price, which represents the incremental cost seen by the consumer (1996). Electricity consumption is one of the things monitored by governments and consumers. Various instruments are used to measure the consumption of electricity.
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