The yr 2035 has been earmarked to be an “vital and magical yr” for Hong Kong’s vitality transition.
That is in keeping with Tse Chin-wan, Hong Kong’s secretary for atmosphere and ecology, in a gap speech on the lately concluded COP29 summit held in Baku, Azerbaijan. Talking on the China Pavilion, he elaborated on town’s plans to attain internet zero by 2050, and highlighted the way it will faucet nuclear to take action.
Hong Kong should enhance the share of atomic energy it imports from neighbouring mainland China by as much as 70 per cent by 2035, if it intends to halve carbon emissions in the identical yr, compared to 2005 ranges, mentioned Tse.
The town will obtain the purpose by way of cross-border electrical energy transmission infrastructure and put an finish to coal-generated vitality within the metropolis by 2035, he pledged.
Whereas the plans are formidable – with town’s largest electrical energy supplier CLP additionally noting that nuclear vitality will energy a lot of Hong Kong’s future – the shortage of regulatory measures to implement local weather objectives and mechanisms to carry the federal government and carbon emitters accountable, coupled with contradictory future growth plans, might throw a spanner into Hong Kong’s internet zero plans.
What town desperately wants, critics say, is a clear and well-thought-out plan that transparently takes inventory of present progress and illustrates how Hong Kong will obtain internet zero – not simply pledges.
“You hear lots from the federal government; generally they speak about renewable vitality, generally they speak about nuclear, generally they speak about hydrogen. However there’s an absence of concrete substance or particulars in the case of planning for the 2050 internet zero transition,” mentioned Karen Ho, head of company and group sustainability at WWF Hong Kong.
‘Purple’ score for governance and accountability
A March 2024 coverage overview of Hong Kong’s inexperienced finance insurance policies revealed by Greenpeace East Asia and CarbonCare InnoLab, a Hong Kong-based non-governmental organisation, pointed to lacking accountability and the shortage of quantifiable targets within the authorities’s inexperienced plans. Each referred to as for elevated accountability from the federal government and for regulators to set extra measurable objectives and timelines.
The report additionally highlighted the necessity for strong mechanisms to forestall greenwashing and higher monetary supervision of local weather dangers, amongst different suggestions.
The town would vastly profit from “clearer path” from the federal government and for all related our bodies to be aligned with the Paris Settlement purpose of limiting international temperature rise to 1.5 levels Celsius to attain internet zero by 2050, famous Tom Ng, local weather challenge chief at Greenpeace, who co-authored the report.
“There’s a lack of a ‘high-level’ imaginative and prescient in Hong Kong proper now. We’d like alignment between authorities our bodies and [relevant] authorities that we’re pushing in the direction of the identical purpose. Proper now, we don’t see that in any respect,” mentioned Ng.
The fragmentation of local weather plans throughout completely different authorities can result in confusion and inefficiency, the report highlighted, calling for an “overarching technique set by high policymakers with clearly outlined timeframes, quantitative objectives, and detailed implementation roadmaps”.
The research, which gave Hong Kong’s governance and accountability a “pink” score to indicate that these “want pressing consideration”, recommends that the monetary secretary launch a high-level paper detailing the roadmap to develop town right into a inexperienced finance hub in Asia.
The report by Greenpeace and CarbonCare InnoLab notes that governance and accountability “requires pressing consideration” in Hong Kong with a pink score. Picture: Greenpeace and CarbonCare InnoLab
The report additionally requires related stakeholders together with Hong Kong Financial Authority (HKMA), Securities and Futures Fee (SFC), and Hong Kong Inventory Alternate to be held accountable. It needs regulators to search professional recommendation, set up committees, and concern monetary system-wide pointers on points reminiscent of disclosure and threat administration to facilitate inexperienced finance development, which the research claims will result in a extra stringent, clear and accountable inexperienced finance system.
The paper additionally drew comparisons to cities reminiscent of Shanghai, Shenzhen, Singapore, and Tokyo, which have “carried out complete inexperienced finance methods with formidable objectives and a few accountability mechanisms to help internet zero emissions targets.”
Singapore’s monetary regulator, the Financial Authority of Singapore, for instance, has carried out pointers for environmental, social and governance (ESG) disclosures that require firms to report on their sustainability practices comprehensively.
Hong Kong, however, nonetheless depends on voluntary participation from firms. For instance, Hong Kong’s Inexperienced Bond Framework, whereas aligned with Inexperienced Bond Rules established by the Worldwide Capital Market Affiliation, doesn’t mandate exterior evaluations.
Why no restrictions on fossil gasoline financing?
Hong Kong has positioned a lot deal with ramping up its sustainable finance initiatives in recent times, with the goal of being seen as a local weather capital funding hub inside the area.
This contains, however isn’t restricted to, the Authorities Sustainable Bond Programme, the Inexperienced and Sustainable Finance Grant Scheme, the Inexperienced Tech Fund, and the Pilot Inexperienced and Sustainable Finance Capability Constructing Assist Scheme – all of that are geared in the direction of selling inexperienced finance within the metropolis and funding sustainability tasks.
As well as are concessionary measures to advertise inexperienced delivery and electrical automobiles, for instance, which have been introduced within the metropolis’s 2024-2025 Funds in March this yr and reiterated in October’s coverage deal with.
The town now accounts for greater than a 3rd of Asia’s whole inexperienced and sustainable bond issuances. Over 200 ESG funds with property underneath administration of just about US$170 billion have been authorised with SFC as of 31 December 2023, in keeping with SFC figures.
Nevertheless, there are nonetheless no restrictions on fossil gasoline financing in Hong Kong, which Singapore has progressively diminished its publicity to in recent times.
This presents dangers, Ng famous, making it potential for big firms and monetary establishments alike to finance or depend on coal all whereas selling inexperienced initiatives – a type of greenwashing. It could add one other impediment to town’s journey to internet zero, he mentioned.
“We don’t see any authorities legal guidelines relating to greenwashing, which offer loopholes for firms. [If the city] has clear pointers that may lead the market in the direction of Paris Settlement objectives, [this would allow] completely different banks or completely different asset managers to observe a decarbonisation framework, which we’re lacking,” Ng mentioned.
So whereas a lot inexperienced finance has gone in the direction of varied tasks in Hong Kong – reminiscent of these in renewables, vitality effectivity, and waste administration, as outlined in a lately issued report by town on its Authorities Sustainable Bond Programme – till extra stringent rules on greenwashing are enforced, questions surrounding the credibility and precise impression of inexperienced finance efforts will stay.
A more in-depth have a look at the Hong Kong Taxonomy
Two months after the Greenpeace and CarbonCare InnoLab report was revealed, the HKMA launched a Hong Kong Taxonomy for Sustainable Finance (Hong Kong Taxonomy), offering a standardised framework for classifying and labelling monetary merchandise based mostly on their environmental sustainability for traders’ reference. The taxonomy encompasses 12 financial actions based mostly on 4 key sectors: energy technology; transportation; building; in addition to water and waste administration.
The HKMA then issued a Sustainable Finance Motion Agenda in October, which the regulator says will deal with some gaps within the metropolis’s internet zero method. The agenda mandates internet zero objectives for all banks, and requires enhanced climate-related transparency and sustainable investments, in addition to innovation and inclusivity.
An HKMA spokesperson advised Eco-Enterprise that the Hong Kong Taxonomy is “designed not solely to cater for financial actions in Hong Kong, however slightly to boost cross-border financing raised by way of Hong Kong, whereas incorporating parts to handle the native context in Hong Kong”.
The Hong Kong Taxonomy will are available in two phases, with the present first section offering definitions and technical screening standards for renewable vitality, together with photo voltaic and wind energy, to drive capital flows in the direction of related investments and property.
The upcoming second section will see the Hong Kong Taxonomy expanded to cowl extra sectors and financial actions “with a view to supporting not solely Hong Kong’s decarbonisation but additionally the transition of the area”, the HKMA spokesperson famous. “The expanded taxonomy may also cowl new environmental goals, specifically local weather change adaptation, in addition to new elements like ‘Do No Vital Hurt’ (DNSH).”
The first goal of any DNSH standards in a taxonomy is to make sure that an exercise, regardless of making a considerable contribution, doesn’t have adversarial results on different environmental goals.
Whereas each the taxonomy and motion agenda are commendable, they continue to be voluntary and are unlikely to carry firms answerable for any violations for now, famous Ivy Leung, government director of CarbonCare InnoLab. The non-profit carefully tracks local weather motion and sustainable practices in Hong Kong.
“The classification system nonetheless doesn’t require firms to report on their impression and it isn’t legally binding. Due to this, [companies] can’t be audited,” she mentioned.
In a bid to forestall banks from greenwashing, the HKMA advised Eco-Enterprise that it issued a round in November 2023 setting out anticipated requirements and the sharing of fine practices noticed, following a overview of banks’ promoting of inexperienced and sustainable funding merchandise.
“The round covers areas reminiscent of product due diligence, disclosure, governance and controls, workers coaching and book-building actions, with a view to mitigating potential greenwashing threat and strengthening investor’s confidence,” the HKMA spokesperson famous, whereas additionally recommending these engaged in inexperienced bonds to hunt third social gathering assurance.
“HKMA encourages market members, together with banks, traders, and issuers and debtors of inexperienced bonds and loans, to hunt alignment with the Hong Kong Taxonomy and suitably have interaction exterior reviewers to confirm the alignment as an illustration of the dedication to transparency and accountability,” defined the spokesperson.
Whereas HKMA’s sustainable finance taxonomy and motion agenda might assist to discourage firms from deceptive the general public about their sustainability, the shortage of public consciousness of greenwashing and regulation from the highest presents obstacles, added Leung.
“A lot of the general public nonetheless depends on the Hong Kong Customs and Excise Division’s Commerce Description Ordinance,” Leung mentioned, referring to a legislative framework enacted again in 2013 and was designed to guard customers from unfair commerce practices and deceptive omissions by banning false commerce descriptions for items and providers.
“Mixed with the shortage of regulation and penalties, firms can nonetheless get away with greenwashing, even when they aren’t conscious they’re committing it,” Leung added.
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“Web zero by 2050 is a city-wide initiative; it includes motion from each stakeholder, reminiscent of these within the personal sector, public sector, and philanthropy. Everybody should do their half. Because of this we have to see extra accountability, transparency, common updates, and high-level motion from the federal government.”
Ivy Leung, government director, CarbonCare InnoLab
Renewed causes for renewables
Past nuclear energy, Hong Kong must make measurable and policy-driven progress in renewable vitality technology, which critics say is vital to lowering emissions within the pure gas-reliant metropolis.
For now, Hong Kong’s vitality combine stays predominantly led by fossil fuels reminiscent of pure gasoline, which has a share of 48 per cent, and coal, which generates 24 per cent of town’s vitality wants. This implies roughly two-thirds of Hong Kong’s vitality provide comes from high-emission sources. The opposite third comes from nuclear energy, which is imported from Daya Bay in neighbouring Guangdong province.
A mere one per cent is renewable vitality, which comes from photo voltaic photovoltaic methods discovered on some rooftops and reservoirs, and wind vitality from a lone wind turbine on town’s Lamma Island.
Hong Kong’s solely wind turbine, positioned on Lamma Island. The turbine overlooks Lamma Energy Station – Hong Kong’s second-largest coal-fired energy plant – which provides vitality to Hong Kong Island and Lamma Island. Picture: nhigh / Flickr
“Renewable vitality in Hong Kong nonetheless has some potential… however we see that there isn’t a overarching coverage or no built-in coverage concept over tips on how to enhance renewable vitality capability,” mentioned WWF’s Ho.
That is regardless of extra formidable targets pledged in its newest Local weather Motion Plan 2050, noting plans to attain a 50 per cent discount in whole carbon emissions earlier than 2035 and to attain internet zero by 2050. The proposal additionally pledges to extend the share of renewable vitality within the gasoline combine for electrical energy technology to 7.5 per cent to 10 per cent by 2035 and subsequently to fifteen per cent by 2050.
The town introduced its first local weather commitments in 2017 with its Local weather Motion Plan 2030+, which outlined a discount in carbon depth of 65 to 70 per cent by 2030, in comparison with 2005 ranges.
It may be argued, nevertheless, that the unique plan’s emphasis on carbon depth allowed for some flexibility relying on financial development and vitality consumption patterns, whereas town’s newest plan units a clearer goal for absolute emissions.
Ho additionally mentioned that Hong Kong ought to look into lowering constructing emissions, which might deal with some 90 per cent of all electrical energy use within the metropolis. Whereas there are initiatives to put in photo voltaic panels on constructing rooftops such because the Feed-in Tariff (FiT) Scheme, having to acquire security certificates and approvals from related authorities, coupled with the protection issues and potential infrastructural harm that typhoons incur annually, deter some property house owners from taking the subsequent step.
Launched in 2018, the FiT scheme permits people and companies to put in renewable vitality technology methods and promote the electrical energy they generate again to the native energy firms at charges greater than the usual electrical energy tariff.
Till Hong Kong finds methods to develop renewable vitality capability, Ho says town can have no selection however to extend its imports of fresh vitality reminiscent of nuclear energy from mainland China, significantly the Larger Bay Space (GBA).
The GBA is a growth plan that seeks to have 9 cities inside Guangdong Province – Guangzhou, Shenzhen, Zhuhai, Foshan, Dongguan, Zhongshan, Jiangmen, Huizhou, and Zhaoqing – together with Hong Kong and Macau, act as one financial powerhouse.
A nuclear energy plant in Guangdong province. A 3rd of Hong Kong’s vitality is the results of nuclear energy from mainland China. Picture: IAEA Imagebank / Flickr
Unfulfilled infrastructure plans
Different developments that contradict Hong Kong’s internet zero ambitions are town’s plan to develop synthetic islands off its coast to create extra area for residents and property.
The event, dubbed the Kau Yi Chau Synthetic Islands Venture, will see the federal government create roughly 1,000 hectares of latest land by way of land reclamation close to Lantau Island, which is town’s largest island, and residential to pure habitats, wetland areas, in addition to wealthy marine biodiversity.
An artist’s impression of the Kau Yi Chau synthetic islands in Hong Kong. Picture: centralwaters.hk
Reclamation work for the three-island challenge – which non-profits say will threaten marine animals, coral, and fish populations and additional enhance town’s emissions output – will start as quickly as the federal government completes statutory environmental impression assessments in 2025.
The islands will goal to accommodate a inhabitants of 400,000 to 700,000 folks and see the primary batch of residents transfer in by 2033. There may be additionally hope that the islands would be the metropolis’s “third” central enterprise district.
Some already foresee the challenge ending up as a “white elephant” much like different uncompleted developments such because the West Kowloon Cultural District, which was envisioned to be an arts and cultural hub and was presupposed to be accomplished in its entirety in 2015. The town’s Kai Tak Cruise Terminal, which was initially destined to be a serious cruise hub, stays underutilised because of insufficient transport hyperlinks to the terminal and underused retail areas, regardless of being totally constructed.
One other ongoing challenge that claims to resolve town’s housing disaster is the Northern Metropolis plan, which is able to see the federal government remodel elements of Hong Kong’s northern New Territories – close to China’s border – into an “built-in dwelling and financial” hub.
The shortage of the substitute islands challenge’s point out in any of town’s newest internet zero blueprints ought to have raised some eyebrows, Ho famous, mentioning that the islands contradict different current plans.
“The town didn’t take into account the carbon sequestration or the carbon sink capability of those two challenge websites into their long-term internet zero plan,” Ho mentioned, pointing to the impression on the biodiversity that may outcome from land reclamation work. “Why are we destroying our carbon sequestration potential to construct buildings?”
The town’s emphasis on rising connectivity inside the GBA in recent times ought to, theoretically, have already solved the housing concern due to the massive quantity of area and inexpensive housing throughout the border. However the metropolis has performed the other, Ho famous.
“On one hand, the federal government is encouraging integration inside the GBA. However however, they’re spending their property to construct infrastructure in Hong Kong. It’s exhausting to see the purpose,” added Ho.
A distant dream?
Till Hong Kong publicizes an in depth plan, full with interim decarbonisation targets and credibly explains how town will obtain these objectives within the close to time period, town’s internet zero ambitions might merely stay ambitions.
The town must set interim targets and concern common progress studies, Leung famous, including that this may permit the federal government to take inventory of progress to this point, assess what else must be performed within the subsequent few years, and most significantly, maintain town on monitor to internet zero.
“A progress report should additionally transparently convey progress. Web zero by 2050 is a city-wide initiative; it includes motion from each stakeholder, reminiscent of these within the personal sector, public sector, and philanthropy. Everybody should do their half,” she added. “Because of this we have to see extra accountability, transparency, common updates, and high-level motion from the federal government.”
“In any other case, we’ll attain a state of affairs the place we haven’t achieved our objectives – and realise that we don’t have sufficient time to attain them.”
Themed “Mobilising capital for the inexperienced revolution”, the Hong Kong version of Eco-Enterprise’ flagship discussion board Unlocking capital for sustainability finance will probably be held on 28 February 2025. Discover out extra particulars right here.
