Warming to change
The Legislative Council's first meeting on climate change is on Monday. Hopefully, legislators will realise that climate change has a number of distinct characteristics that make it different from other forms of pollution. Its causes and consequences are global; its effects will persist; and the related uncertainties and risks will be large. If they realise the magnitude of the problem, perhaps they will help invigorate the government on this matter.
Legislators should note that there are global efforts to negotiate the reduction of greenhouse gas emissions from 2012 - when the UN-backed Kyoto Protocol commitments expire - in order to keep the rise in these emissions to an agreed level, and then cut them.
There is increasing focus on how to 'decarbonise' and for economies to become 'low-carbon' to stay competitive. Greenhouse gas emissions are likely to be priced into economic activities, which is expected to encourage people to stay away from carbon-intensive goods and services because they will be more expensive. Hong Kong could do well by getting ahead of the curve.
For our economy to cut greenhouse gases, there must be a comprehensive effort to improve energy efficiency in many sectors. This involves maximising efficiency gains in power generation, transport and buildings; and using energy policy to create incentives and reward efficiency. To achieve these ends, a management vision in both the public and private sectors is essential. Political and business leaders must focus on making the necessary management changes, and apply technology to alter modes of operation to achieve efficiency gains.
Governments need to look at optimising both command and control methods to reduce emissions, and consider how market mechanisms (such as tax and emissions trading) can help.
Global efforts will continue into finding measures to price greenhouse gases. The international financial sector is becoming more active in using what are called the 'flexible mechanisms' under Kyoto - market means to cut emissions.
As a finance centre, Hong Kong needs to look at developing a trading platform for carbon and other emissions which, thankfully, the Hong Kong Exchanges and Clearing is doing. That may turn out to be the most significant new product area the exchange will get into. The government's position is far from cutting-edge. Hong Kong's Kyoto commitments are tied to that of the mainland and there is no promise to limit or reduce greenhouse gases. Hong Kong's greenhouse gas emissions per capita were 6.4 tonnes in 2004, representing a 7-per-cent cut compared with 1990. This implies that it is ahead of other jurisdictions. The government also points out that electricity consumption per person is relatively low compared with that of other developed economies. In other words, officials feel satisfied.
Government policy is for Hong Kong to be more energy efficient through encouragement, by keeping air conditioning at 25.5 degrees Celsius, mandatory labelling and public education; and scientific research relating to climate change. Hong Kong should adopt a more aggressive climate change position, because it has the capacity to go further. London, for example, is committed to reducing carbon dioxide emissions by 20 per cent, relative to 1990 levels, by 2010. The financial services sector in London is also making major efforts to become a carbon financing centre. The first step is for Hong Kong to create a climate change policy. Perhaps the reshuffle of ministerial portfolios in July, with environment and energy under one roof, will present opportunities for a forward-looking policy.
Hong Kong should take note of national goals to reduce energy costs per unit of gross domestic product by 20 per cent by 2010, and to derive 15 per cent of energy from renewable sources by 2020. Hong Kong can play a leading role in achieving the maximum gains between this year and 2010.
Christine Loh Kung-wai is chief executive of the think-tank Civic Exchange