Hong Kong, a prominent financial hub in Asia, plays a pivotal role in the green transition within the Asia-Pacific region. This shift towards sustainable practices addresses climate change, economic resilience, and environmental health. Hong Kong's initiatives, financial policies, and collaborations are instrumental in this regional transition. This blog provides a detailed overview of Hong Kong's role, supported by data and facts.

Hong Kong's Strategic Green Initiatives

Climate Action Plan 2050

‍Hong Kong aims to achieve carbon neutrality by 2050 through the Climate Action Plan 2050. Key components include:

• Energy Transition: Moving from coal-fired power to natural gas and renewable energy sources. In 2020, coal accounted for 48% of Hong Kong's electricity generation, natural gas 27%, and nuclear 25%. The goal is to phase out coal by 2030.
• Green Buildings: Implementing energy efficiency standards for new buildings and retrofitting existing ones. New government buildings must achieve at least BEAM Plus Gold rating. Retrofitting existing buildings with energy-efficient systems is expected to save up to 15% of energy consumption by 2030.
• Electric Vehicles: Expanding infrastructure for electric vehicles (EVs) and providing incentives for EV adoption. By the end of 2020, there were over 16,000 EVs registered in Hong Kong, up from just over 1,000 in 2010. The target is to have at least 30% of the private car fleet as EVs by 2030.

Renewable Energy Development

‍Hong Kong is investing in renewable energy projects to diversify its energy mix. Solar, wind, and waste-to-energy projects are being developed. The goal is for renewable energy to account for 7.5% to 10% of total electricity supply by 2035 and 15% thereafter. As of 2020, the total installed capacity of renewable energy was approximately 172 MW, including solar photovoltaic (PV) systems and wind turbines. The largest solar energy generation system, installed at Hong Kong Disneyland Resort, has a capacity of 3,050 kW and generates over 3,300,000 kWh annually.

Hong Kong also plans to explore the use of hydrogen for power generation. The city aims to boost the share of renewable energy sources, including wind (3.5% to 4%), waste-to-energy (3% to 4%), and solar power (1% to 2%) by 2035.

Financial Policies and Green Finance

Green Bond Market

‍Hong Kong has become a leader in green finance. The Hong Kong Monetary Authority (HKMA) launched the Green Bond Grant Scheme in 2018 to support green bond issuance. By 2023, Hong Kong had issued over USD 15 billion in green bonds. The Hong Kong government issued its inaugural USD 1 billion green bond in 2019, which was oversubscribed by over four times, showing strong investor demand.

Green and Sustainable Finance Cross-Agency Steering Group

‍Formed in 2020, this group coordinates efforts among financial regulators to promote green finance. Initiatives include:

• Capacity Building: Enhancing the knowledge and skills of financial professionals in green finance. The HKMA and the Securities and Futures Commission (SFC) have organized workshops and training programs.
• Disclosure and Reporting: Improving the transparency and quality of environmental, social, and governance (ESG) disclosures. The SFC has mandated that all listed companies in Hong Kong disclose ESG information in their annual reports starting from 2021.

Green Finance Initiatives

‍Hong Kong's government has introduced a new round of green bonds worth HKD 175.5 billion (USD 22.5 billion) for a five-year period. This is part of a broader strategy to encourage sustainable development projects through green finance.

Collaborative Efforts and Regional Leadership

Greater Bay Area Green Development

‍Hong Kong collaborates with Guangdong and Macau under the Greater Bay Area (GBA) initiative to promote green development. This collaboration focuses on:

• Cross-Border Green Finance: Facilitating the flow of green capital across borders within the GBA. In 2021, the GBA Green Finance Alliance was launched to enhance cross-border green finance cooperation.
• Technology Transfer: Sharing green technologies and best practices to enhance regional sustainability. Joint research and development projects are underway to explore solutions for energy efficiency and pollution control.

Participation in International Forums

‍Hong Kong participates in international forums such as the United Nations Framework Convention on Climate Change (UNFCCC) and the International Platform on Sustainable Finance (IPSF). These engagements allow Hong Kong to contribute to global green finance standards and climate action policies. In 2020, Hong Kong joined the Network for Greening the Financial System (NGFS), a global coalition of central banks and supervisors committed to climate risk management.

Regulatory Framework

Hong Kong's regulatory framework supports its green transition efforts through various policies and regulations:

• Buildings Energy Efficiency Ordinance: This ordinance regulates the energy efficiency of buildings, including requirements for energy audits and energy-saving measures for new buildings and major retrofits.
• Energy Saving Charter: Launched in 2012, this charter encourages business and community organizations to commit to energy-saving measures. Over 3,000 premises signed up to the Energy Saving Charter 2022.
• Renewable Energy Certificates: These certificates, issued by the two power companies, CLP Power and HK Electric, allow consumers to purchase renewable energy generated in Hong Kong, promoting the use of clean energy.

Impact and Future Prospects

Economic Benefits

‍Hong Kong's green transition efforts are expected to yield economic benefits, including:

• Job Creation: Green industries, such as renewable energy and green finance, are projected to create thousands of jobs. According to a report by the Hong Kong Trade Development Council (HKTDC), the green economy could generate up to 40,000 new jobs by 2030.
• Investment Opportunities: Sustainable projects attract global investors, enhancing Hong Kong's position as a leading financial center. The growing green bond market and increasing demand for ESG investments present opportunities for investors.

Environmental Impact

‍By 2050, Hong Kong's green initiatives are projected to:

• Reduce Carbon Emissions: By 65-70% compared to 2005 levels. This reduction equates to approximately 30 million tons of CO2 equivalent (CO2e) emissions annually.
• Improve Air Quality: Reductions in air pollutants contribute to better public health. The Environmental Protection Department (EPD) aims to reduce concentrations of key air pollutants, including PM2.5 and NOx, by 50% from 2020 levels by 2030.

Conclusion

Hong Kong's initiatives, financial policies, and collaborations position it as a key player in the Asia-Pacific green transition. The city's commitment to sustainability addresses environmental challenges and drives economic growth and regional cooperation. As Hong Kong continues its efforts, its role in the green transition will influence the broader Asia-Pacific region, promoting a more sustainable future.