Climate change: HSBC grants first green loan in Hong Kong to tech firm Ampd Energy

The lender has provided an US$8 million two-year loan to Ampd Energy, to fund its giant batteries deployed at construction sites
Loan shows how the financial sector can play an active role in unlocking the potential of green technology innovation, HSBC executive says

Business of climate change

Eric Ng

Published: 3:00pm, 1 Mar 2023

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HSBC has granted its first green loan to a climate-mitigation technology firm in Hong Kong, as part of its efforts to fight global warming by financing clients’ emissions reduction projects.

The London-headquartered lender has provided an US$8 million two-year loan to Ampd Energy, to fund its giant batteries deployed at construction sites. The batteries help construction firms and property developers slash their carbon footprints by cutting diesel generator use.

“The loan deal demonstrates how the financial sector can play an active role in unlocking the potential of green tech innovations in the city,” Frank Fang, HSBC’s head of commercial banking for Hong Kong and Macau, said in a statement on Wednesday.

The loan comes after Hong Kong Financial Secretary Paul Chan Mo-po last week announced five initiatives to foster innovation and facilitate fundraising for projects with environmental benefits, as the government looks to transform Hong Kong into an international green technology and finance centre.

The HSBC branch on Pedder Street in Hong Kong. HSBC, like its international peers, has been challenged by climate activists for not doing enough for its loan portfolio to reach net-zero emissions. Photo: Elson Li

These initiatives include financial innovations and the provision of green projects certification to enhance the credibility of carbon-reduction activity, which is key for bankers making financing decisions.

Ampd is among dozens of young Hong Kong companies tapping business opportunities created by the corporate decarbonisation that needs to take place in the next few decades.

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Founded in 2014, formerly a start-up supported by the incubation programme of the Hong Kong Science and Technology Park, it has expanded its business to Singapore, Australia and the United Kingdom. It is now eyeing the United States market.

“We are positioning ourselves as an international company that started life in Hong Kong,” said co-founder and CEO Brandon Ng. “Our vision is to [enable] emissions-free construction … not just in Hong Kong but wherever there is construction.”

Sustainability-focused European venture-capital firm 2150 and Australia’s Taronga Ventures are among its investors. Ampd currently deploys more than 150 battery systems, more than double the 70 it deployed in 2021, despite last year’s economic recession caused by Covid-19 measures, Ng said.

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Even when the carbon emissions of electricity generation are taken into account, the battery systems’ total carbon footprint is at least 85 per cent less than that of diesel generators, Ng said. This translates to a reduction of around 17,500 tonnes of carbon dioxide emissions per year, he added.

Hong Kong’s carbon emissions from energy stood at 64.6 million tonnes in 2021, according to an estimate by international energy firm BP.

Each of Ampd’s systems consists of more than 30,000 lithium-ion battery cells, which power equipment such as cranes, pumps and arc welders. The box-shaped mobile energy storage systems stand 2.6 metres high and weigh nearly 8.5 tonnes.

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HSBC, like its international peers, has been challenged by climate activists for not doing enough for its loan portfolio to reach net-zero emissions. Such banks typically adopt an engagement policy with their clients, by urging them to assess their current carbon footprints and come up with plans to reduce them, including the financing needed to execute these plans.

HSBC chairman Mark Tucker last April said it plans to set targets on a sector-by-sector basis that are consistent with global ambitions to reach net-zero emissions by 2050.

The bank, one of Hong Kong’s three currency-issuing lenders, said in 2020 it would provide between US$750 million and US$1 trillion in financing and investment by 2030 to help clients reach this goal. In 2017, it set a target for sustainable finance to reach US$100 billion.

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As part of the effort, HSBC targeted investing US$100 million in clean-energy technology innovation firms. It pledged to donate the same amount to renewable energy and nature-based climate mitigation projects by 2025.

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