Climate Transition Finance for Hong Kong
A new "climate transition finance" label is emerging to encompass sectors and activities that may not be able to become entirely green today but will need to improve significantly to contribute to achieving a net-zero world.
The 2015 Paris Agreement aims to elicit an international response to keep global temperature rise well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C.
While current green and climate finance tools are crucial in allocating capital towards the transformation, it is likely that new tools will be necessary in the future. Industries that have historically been high-emitting or face constraints in decarbonizing may not have access to green or climate finance to accelerate their transition.
In Hong Kong, although the government has set targets only until 2030, a public consultation has raised the ambition to develop a concrete plan to transform the city into a net-zero emissions economy by 2050.
The HK2050isNow climate report, published in June 2020, outlined various pathways, actions, and policy options for Hong Kong's power, building, and mobility sectors to align with the Paris Agreement.
These three sectors present opportunities for Hong Kong to strengthen its pathway towards achieving net-zero emissions according to the report:
Power decarbonization: By developing local renewable energy sources, sourcing more nuclear and renewable energy from neighboring regions, replacing coal with gas and coupled carbon capture and storage (CCS), as well as replacing distributed gas with net-zero emission energy, it is estimated that 27 MtCO2 emissions can be abated.
Building energy efficiency: Enhancing energy efficiency in buildings can contribute to abating 10.6 MtCO2 emissions. Buildings and infrastructure constructed between 2020 and 2030 should comply with much stricter energy efficiency standards, and retrofits and improved operational management are necessary.
Mobility: By implementing better town planning to avoid unnecessary journeys, shifting away from inefficient transport modes for frequent journeys, and improving transport management, it is estimated that 6.7 MtCO2 emissions can be abated. Formulating and pursuing an electric vehicle transition roadmap is also important.
While Hong Kong does not have substantial agriculture or heavy industry, it has a high potential to achieve net-zero emissions. However, the city needs to begin planning and taking accelerated action now. It should adopt a significantly more aggressive decarbonization target, with annual reductions of 6.6% starting immediately and continuing through 2050.
A net-zero emissions economy would provide Hong Kong with a cleaner, greener, and healthier environment, as well as substantial economic and social benefits. The private sector has a critical role to play in shifting capital at scale towards net-zero-aligned and climate transition projects that are not currently being financed.
Research, innovation, and development of new low-carbon technologies, methods, practices, and alternatives for high-footprint sectors are paramount. Our ability to transition the hard-to-mitigate sectors relies heavily on the availability of viable solutions that can be adopted on a commercial scale.
Hong Kong is ideally positioned to lead the charge toward a net-zero future.
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