Hong Kong ‘naturally’ suited to developing carbon trading products, can leverage Guangzhou exchange link, experts say

Name: China launches world’s largest carbon-trading scheme as part of 2060 carbon neutrality goal
Uploaded: 2021-10-11T00:30:24.000Z
Duration: 2 min 38 s
Description: China launches world’s largest carbon-trading scheme as part of 2060 carbon neutrality goal

With proximity to China and access to global investors, city the top choice for a voluntary carbon trading platform regionally and globally, Hong Kong Green Finance Association executive says

Scale of trading in voluntary carbon offsets currently around US$320 million, CME says

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Hong Kong’s Central business district. The local bourse operator and the Guangzhou exchange signed an agreement in August to explore the development of carbon emissions futures products. Photo: Shutterstock

Enoch Yiu

Published: 8:30am, 11 Oct 2021Updated: 4:30pm, 11 Oct 2021

It is not too late for Hong Kong to develop carbon emissions futures products, as the market in mainland China is still in its nascent stages, and exchanges overseas do not cover carbon emissions offsets traded in the world’s second-largest economy, industry watchers said.

The city is also a natural place to host a voluntary carbon trading platform because it is an international finance hub, as well as the largest offshore yuan centre.

“With proximity to mainland China and unique access to global investors, Hong Kong comes naturally as the top choice for a voluntary carbon trading platform regionally and globally,” said Tracy Wong Harris, vice-president and deputy secretary general of the Hong Kong Green Finance Association.

Moreover, Hong Kong could team up with the Guangzhou Futures Exchange to develop carbon emissions futures products and catch up and compete with overseas exchanges.

Hong Kong Exchanges and Clearing (HKEX), the local bourse operator, and the Guangzhou exchange signed an agreement in August to explore the development of such products. And while no launch date had been set, green finance experts were confident that both Hong Kong and mainland China, despite being new to trading in carbon emissions futures, could catch up with the United States and the European Union, where similar financial instruments were already available.

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China launches world’s largest carbon-trading scheme as part of 2060 carbon neutrality goal

“Currently, emissions derivatives products offered by exchanges in the US and EU do not cover carbon emissions allowances traded in China,” said Karen Lam, structured finance and derivatives partner at lawyer firm Linklaters.

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