Orange News: Today, as we stand at a pivotal moment in economic transformation, it is crucial to seize transition opportunities. This highlights both the socio-environmental and economic opportunity for a green transition that will benefit all Hong Kong citizens and the risk of failing to achieve it. As we look to the future, we should intensify our efforts to be a super-connector of China and the World, accelerate decarbonisation and adaptation efforts, and ensure alignment with the government’s Climate Action Plan 2050 (CAP2050) and as a National green and sustainable finance centre.
Hong Kong has long been a major financial and commercial hub in Asia, with its economy deeply interconnected with global markets. The global climate action and the need for biodiversity preservation offer the city significant opportunities for growth and innovation. Sustainability is reshaping financial markets and regulatory landscapes, presenting Hong Kong with an opportunity to strengthen its leadership in climate action and green finance. By addressing climate change and supporting biodiversity, the city can unlock new economic prospects while contributing to global environmental goals.
To position Hong Kong as a leading city that fulfils President Xi’s vision and showcases China’s ecological strength, the city must embrace comprehensive environmental policies and accelerate its transition towards a sustainable green hub. The Hong Kong SAR Government is currently consulting the public on the 2024 Policy Address. It presents a timely opportunity for the Government to lay out a bold vision that aligns with global trends and positions Hong Kong as a resilient, sustainable and innovative economy in the face of an uncertain future. There are six key areas that the Government can focus on.
First, the Government can establish a climate governance framework which effectively prioritises action and resources to meet climate challenges, providing clear governance and transparent annual progress reporting on emissions reduction. CAP2050 sets targets to halve emissions by 2035 and achieve carbon neutrality by 2050, and the next step will be to set a detailed action plan and mechanism for tracking progress. To strengthen its climate governance, Hong Kong could adopt a climate framework law, involving an enhanced role for the HKSAR Government Steering Committee on Climate Change and the establishment of a Technical Climate Change Council to guide research and policy. Moreover, implementing incentive mechanisms and promoting a whole-of-society transition to a lower-carbon lifestyle through would support these goals.
Second, Hong Kong can promote the growth of low-carbon industries and advance a circular economy by reshaping its economic model to prioritise waste reduction and resource efficiency. As waste accounted for approximately 8% of Hong Kong’s total carbon emissions in 2022, the “Buy Less, Buy Better” concept offers a pathway to harmonise economic development with the objective of carbon neutrality. To achieve this, the Government should implement Producer Responsibility (PRS) Schemes, pilot Municipal Solid Waste Charging in government buildings, and expand Green@Community initiatives by 2025.
Third, the Government can continue to adopt a policy framework that strengthens Hong Kong’s position as a sustainable finance hub. The framework can focus on implementing ISSB standards, providing sector-specific guidance and ensuring compliance with HK Exchange’s new sustainability listing rules. It can also upload a high standard for credible net-zero transitions by clearly defining contributions to climate change mitigation and integrating additional environmental objectives into the taxonomy. Assurance and certification schemes can be established to enhance the credibility of environmental professionals. Furthermore, we recommend that financial institutions disclose financed emissions and conduct scenario analysis, while academic institutions emphasise sustainability in financial literacy education.
Fourth, to strengthen Hong Kong’s role as a regional finance centre, the city should actively participate in Just Energy Transition Partnerships (JETP), a financing mechanism that supports countries’ self-defined pathways for transitioning from coal to low-carbon electricity generation. The Hong Kong Monetary Authority (HKMA) can lead this effort by issuing a ‘JETP Bond’ and securing favourable conditions for Hong Kong-based financial institutions and professionals to contribute to JETPs.
Fifth, the Government can use nature-based solutions (NbS) for climate mitigation and adaptation. NbS involve conserving, restoring and managing ecosystems to reduce carbon emissions and enhance climate resilience, benefitting both biodiversity and urban quality of life. They are essential to Hong Kong’s alignment with the Kunming-Montreal Global Biodiversity Framework (KMGBF) in its upcoming Biodiversity Strategy and Action Plan (BSAP). Integrating NbS into the BSAP will help Hong Kong meet international biodiversity commitments while also reinforcing its role as a green finance hub. This alignment will attract more sustainable investments, as companies increasingly adopt frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD).
Sixth, Hong Kong should develop ambitious pathways to establish itself as a leading domestic and regional green transport hub through ‘avoiding’, ‘shifting’ and ‘improving’ journeys. As transport is the second-largest source of greenhouse gas emissions in Hong Kong, decarbonising this sector is essential, especially as the power grid continues to decarbonise. While battery-electric and hydrogen vehicles offer promising solutions, challenges such as infrastructure, regulatory gaps and public awareness remain. To address this, the Government can focus on reducing travel demand by incentivising people to live closer to work, expanding the Roadmap on Popularisation of Electric Vehicles to all vehicle types, and enhancing intermodal transport to reduce private car usage. Additionally, journeys can be improved by implementing cross-boundary collaboration with Mainland China on logistics decarbonisation and promoting bunkering of green fuel and Sustainable Aviation Fuel (SAF). These actions will help maintain Hong Kong’s position as a global leader in green transport while supporting broader climate goals.
This June marks the 12th consecutive month of global temperature reaching 1.5°C above pre-industrial levels. This alarming trajectory underscores the need for immediate action. The estimated cost of inaction could exceed USD 1,266 trillion globally, while a rapid transition to net zero could generate global economic gains of USD 43 trillion over the next five decades, boosting global GDP by 3.8% by 2070. At this pivotal moment, Hong Kong must make a decisive choice: to embrace bold, sustainable policies, or risk enduring the ramifications of climate change.
Originally published on Orange News on 23 Aug 2024. Written by Lawrence Iu.
