In reviewing power deals, Hong Kong can seize the chance to cut emissions, limit climate impact

Hong Kong’s upcoming review of the scheme of control agreements with the city’s two power companies presents an excellent opportunity to take drastic action towards a more sustainable future

Kitty Tam

Published: 8:15am, 26 May 2023

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The scheme of control agreements, signed between the government and the city’s two power companies, have been instrumental in Hong Kong’s efforts to stabilise energy prices and improve air quality.

To compare electricity price trends, London has experienced a staggering 103 per cent increase over the past two years, while Singapore has witnessed a 41 per cent rise. In contrast, Hong Kong has maintained relatively stable energy prices.

Since the 1990s, the power sector has also made significant progress in improving air quality by reducing the emission of harmful pollutants by 92 per cent.

The recently released final instalment of the sixth assessment report by the United Nations’ Intergovernmental Panel on Climate Change warned once again that rapid reductions in carbon emissions would be needed to avoid global temperature rises of more than 1.5 degrees Celsius. Exceeding this limit would have irreversible and lethal consequences for both humanity and nature.

The interim review of the scheme of control agreements this year presents an excellent opportunity for Hong Kong to take drastic action to reduce emissions. With electricity generation being the primary source of greenhouse gas emissions in Hong Kong, accounting for 66 per cent of total emissions, regulating this through the agreements is crucial.

The agreements can be further enhanced to achieve the deep carbon reductions required to maintain the 1.5 degree C limit. There are several key steps Hong Kong can take to further accelerate its carbon emissions reduction and transition towards a sustainable future.

First, it is imperative to set a detailed sectorial carbon emissions pathway from now to 2050. As the Hong Kong government has committed to carbon neutrality by that date and aims to halve carbon emissions by 2035, the agreements should reflect this crucial commitment in their primary text.

Collaborating with the power sector and setting five-yearly carbon emissions targets can provide a clear road map to near-term carbon reduction. Such a pathway also provides clarity and certainty for businesses and investors, which is essential for effective decision-making and long-term planning in their decarbonisation action.

According to Energy Foundation China, the Greater Bay Area has high energy demand and is still in the process of building up its capacity of low-carbon resources. In fact, an additional 10GW of coal-fired facilities are expected to be constructed in the region by 2025 to meet increased power demand.

Therefore, directly introducing clean electricity from the Greater Bay Area grid into Hong Kong may not be a responsible approach for the city due to the insufficient surplus of renewable energy available for export from the region.

Hong Kong officials should work towards achieving a coal-free Greater Bay Area by developing a collaboration framework with the other cities, including clear negotiation timelines and incentives for power companies to invest in zero-carbon solutions within the region.

Moreover, transparent and accessible data is essential for establishing a foundation for green finance capacity-building and facilitating energy-efficiency improvements for homeowners. However, the current energy end-use data in Hong Kong is outdated by two years.

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This data, along with the average and standard deviation of the residential and commercial sectors, must be made publicly available to enable informed decision-making on energy policy and efficiency measures. A public consultation should be launched to gather input on the data structure and ensure it meets the needs of various stakeholders.

Finally, transforming the grid infrastructure is crucial to promoting the development of electric vehicle fast-charging. As EVs become increasingly prevalent, a well-developed charging infrastructure is necessary. Hong Kong currently has limited availability of fast-charging stations above 100kW, impeding the widespread adoption of EVs. The scheme of control agreements can play a vital role in encouraging the development of fast-charging infrastructure.

Exceeding the 1.5 degree limit would be akin to willingly stepping off a cliff, with irreversible consequences for humanity and nature. However, by opting for rapid, sustained and deep reductions in carbon emissions, we can mitigate projected losses and damage, while also enjoying various associated benefits such as improved air quality and better health.

Hong Kong must make the right choices and steer clear of the edge of that cliff by incorporating these key measures into the review of the scheme of control agreements. We must act quickly to limit the impacts of the climate crisis, for now and for the future.

Kitty Tam Tsz-ching is programme lead at Civic Exchange think tank

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