Hong Kong has set itself an ambitious decarbonisation agenda for the coming decades, with a target to achieve climate neutrality by the year 2050. The correspondingly named Climate Action Plan 2050 emphasises four key decarbonisation strategies in the areas of net-zero electricity generation, energy efficiency in the building sector, green transport, and waste reduction.
Net-Zero Electricity Generation
Hong Kong relies heavily on fossil fuels for electricity generation. In 2020, the city’s fuel mix was made up of 48% natural gas, 24% coal, and 28% nuclear and renewable energy sources. In order to achieve net-zero carbon emissions by 2050, the Hong Kong Government plans to significantly increase the share of renewables in the coming years and has implemented various measures, such as the Renewable Energy Certificates Scheme to encourage the development of renewable energy in Hong Kong, as well as initiatives for the development of solar and wind energy.
In 2006, Lamma Winds commenced operations as the Hong Kong’s first – and so far only – commercial wind power station, generating electricity for up to 250 households. In recent years, studies have been conducted to identify potential locations for the development of offshore wind farms in Hong Kong. For instance, a new offshore wind park is slated for development to the southwest of Lamma Island, some four kilometres away from Lamma Power Station. Developer HK Electric plans to implement the project from 2024 onwards for a commissioning in 2027. Upon completion, the new wind park is set to provide electricity for up to 120,000 households in Hong Kong.
In addition, Hong Kong has recognised the potential of hydrogen as a key part of its decarbonisation strategy. An inter-departmental “Carbon Neutrality Task Force” was set up in 2021 to explore the application potentials of hydrogen technology in Hong Kong. However, there are currently still numerous challenges in this regard, including the lack of a clear regulatory framework, safety concerns with regards to storage and transportation, high costs of production and distribution, as well as limited availability of hydrogen from renewable sources.
Energy Efficiency in the Building Sector
Buildings are one of the biggest sources of carbon emissions in Hong Kong, one of the most densely built-up cities in the world. Hong Kong’s well over 40,000 buildings account for 90% of the city’s total electricity consumption and around 60% of its total carbon emissions. In 2012, the Building Energy Code was introduced to set minimum energy efficiency standards for new buildings and major renovation measures. The BEC covers all aspects from building design and operation to lighting, air conditioning, insulation, and other end-uses. The BEC has been updated every three years since, with the latest 2021 version setting energy efficiency requirements about 10% higher than the previous version.
Compliance with the BEC is a statutory requirement under the Buildings Energy Efficiency Ordinance. Developers of new buildings are required to implement four main types of building service installations in compliance with BEC standards: air-conditioning, lighting, electrical, as well as lifts and escalators. Likewise, owners or occupants of existing buildings should ensure that any retrofitting measures are BEC-compliant.
Meanwhile, the Energy Auditing Scheme was launched to encourage building owners and operators to identify and address energy inefficiencies in their buildings. Under the scheme, registered energy auditors will audit buildings and make concrete recommendations for energy-saving measures. The government may then partially subsidise the audit and the implementation of the recommended measures. The BEE Ordinance stipulates that central service installations in commercial buildings, such as shopping malls, must be audited under the EAC every ten years.
Green Transport
Green mobility initiatives also play a central role in Hong Kong’s carbon reduction strategy: Transport sector accounts for an estimated 16% of the city’s total emissions. As of the end of April 2023, some 55,000 e-vehicles were registered in the SAR, accounting for only 6% of the total number of vehicles on the streets of Hong Kong.
As part of the Roadmap on Popularisation of Electric Vehicles, published in 2021, the government has set a target of phasing out internal combustion engine and hybrid vehicles by 2035 and has introduced various policies to encourage the adoption of EVs. These policies include tax exemptions and subsidies, including a 100% profits tax reduction on procurement expenditures for electric company vehicles, and the expansion of the public and private EV charging infrastructure across the city: By 2025, Hong Kong aims to reach 150,000 private charging stations.
Meanwhile, Hong Kong has one of the most extensive and efficient public transportation systems in the world – including the MTR system, buses, trams, and ferries – that covers virtually the entire city and accounts for around 90% of all passenger movements each day. The government has made continuous efforts in recent years to further improve the public transportation system, including the exploration of hydrogen-powered buses as well as the continuous expansion of the MTR network. In addition, the Smart City Blueprint 2.0 includes multiple initiatives to develop an intelligent transport and traffic management system by leveraging real-time data on traffic and passenger flows.
Waste Reduction
Last, but not least, improving local waste management and recycling infrastructure remains high on the agenda for Hong Kong. The city has one of the highest per capita rates of waste generation in the world: In 2021, more than 15,000 tonnes of waste were generated per day, adding up to an annual total of 5.67 million tonnes, or more than 1.5 kg per capita. An estimated 5 million plastic bottles are thrown away in Hong Kong every day.
The Waste Blueprint 2035 sets a medium-term target of reducing per-capita waste generation by 40 to 45% while increasing the recovery rate to 55%. In doing so, Hong Kong hopes to reach the long-term goal of “zero landfill”. The expansion of Hong Kong’s local waste sorting and recycling capacities will be key to the achievement of this goal. An important step in this direction was made in late 2022 with the opening of the city’s first plastic bottle recycling facility. Jointly operated by ALBA Group Asia, Baguio Green Group, and Swire Coca-Cola, the facility has a planned recycling capacity of 900 tonnes per month.
Meanwhile, a charging scheme for Municipal Solid Waste, which has been in the works for several years, is expected to finally be rolled out within 2023. The scheme will introduce a requirement to use pre-paid designated garbage bags of different sizes with a per-litre charge of 11 cents.
In summary
Hong Kong is pursuing a multi-layered approach towards decarbonisation, which will require a concerted long-term effort by the government, the business sector, and the public to materialise. Moreover, Hong Kong will rely heavily on the import of sustainable technology solutions from abroad to implement in the abovementioned sectors and effectively reduce carbon emissions across the board. Hence, specialised German suppliers of green technology and service solutions, particularly in the building sector, could benefit from emerging market opportunities in Hong Kong in the years to come.
GIC Hong Kong has been engaging with various local partners in recent weeks and months, including property developers and government agencies, to analyse market potentials for German companies in this field and explore possibilities for a business delegation to Hong Kong later this year. More updates will be provided in due course.
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