LettersHong Kong’s low-carbon future hangs in the balance, as city fails to warm to green finance

Mitigating the effects of climate change is expected to add more than US$26 trillion to the world economy by 2030

China invested US$100 billion in the clean energy sector in 2018, but investor interest in Hong Kong is lagging behind

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Greenpeace activists display a thermometer installation in front of a brown-coal-fired power plant in Bergheim, Germany, on January 22. The Rhenish Brown Coal Field is Europe’s largest carbon dioxide source. Photo: EPA

Published: 3:00pm, 22 Apr 2019Updated: 3:00pm, 22 Apr 2019

Today is Earth Day: so let’s think about the Earth. The world is getting hotter. The atmospheric concentration of carbon dioxide continues to climb, and is expected to surpass 410ppm (parts per million) this year. The Fifth Assessment Report from the International Panel on Climate Change stated that the level of carbon dioxide has to stay under 450-500ppm by 2100 if we are to limit global warming to 2 degrees Celsius above pre-industrial levels – and 430ppm and below for 1.5 degrees Celsius.

Transitioning to a low-carbon society will require rapid, dramatic changes, such as investments in renewable energy, energy efficiency and sustainable infrastructure projects, green bonds, climate risk insurance and more.

Mitigating climate change is estimated to add over US$26 trillion to the world economy by 2030, or enabling US$2.4 trillion of green investments every year. China in 2018 invested US$100 billion in the clean energy sector, financing solar and wind projects.

Around the world, US$8 trillion has been committed by over 1,000 institutions for divestment from fossil fuels. Although the divestment movement is still small, it is expected to grow in momentum with the positive outcomes anticipated from future climate change conferences. The fact that portfolios are not suffering from divestments makes divesting even more attractive than before.

As one of the top three international finance centres, Hong Kong should be benefiting from this movement. And yet, the city ranks poorly compared to its traditional peers and even neighbouring cities on green finance, being placed 31st on the latest Global Green Finance Index. Though the government did try to jump on the bandwagon with the green bond programme announcement last year, investor interest does not seem to have caught up.

In the latest budget consultation, we have made several policy recommendations to facilitate the green finance movement in Hong Kong. For example, having the financial secretary coordinate the city’s green finance policy; adopting a “comply or explain” approach to the Principles of Responsible Ownership; enabling green finance education for the industry and the public, and more.