LCQ19: Promoting the development of carbon markets

     Following is a question by the Hon Adrian Ho and a written reply by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, in the Legislative Council today (March 22):

Question:

There are views that the development of carbon markets can facilitate the business sector to contribute to the mitigation of global warming while developing business. The Hong Kong Exchanges and Clearing Limited (HKEX) has launched in July last year the Hong Kong International Carbon Market Council composing of members from various local and overseas corporates and financial institutions, with a view to helping Hong Kong develop an efficient and effective international carbon market. In this connection, will the Government inform this Council:

(1) given that HKEX signed a Memorandum of Understanding with the Guangzhou-based China Emissions Exchange last year to jointly explore the further development of carbon markets in the region and the establishment of a voluntary carbon emission reduction programme which is applicable to the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), of the up-to-date progress in promoting the development of carbon markets in GBA and the establishment of the voluntary carbon emission reduction programme;

(2) of the number of participants in and implementation details of the Pilot Green and Sustainable Finance Capacity Building Support Scheme launched in December last year, and whether it has plans to expand the training scale in light of the demand;

(3) given that "carbon negative technology" (i.e. offsetting carbon emission through the technology of carbon capture, utilisation and storage) topped the list of "Top 10 Technologies in 2023" released by the Hong Kong Productivity Council in December last year, whether the authorities have formulated plans and timetable for actively promoting the development of carbon negative technology in Hong Kong, and encouraging local small and medium enterprises to explore the relevant sustainable business opportunities, so as to enhance their competitiveness; if so, of the details; and

(4) of the plans in place to leverage Hong Kong's advantage of being closely connected to the world to assist the country in promoting the development of carbon markets, carbon negative technology and related industries, thereby facilitating the country to achieve the goal of peaking carbon emission before 2030 and its exchange and co-operation with other advanced countries?

Reply:

President,

Promoting green economy for sustainable development is an important theme globally, and our country is advancing towards the "3060 Dual Carbon Targets". We will actively seize the opportunities brought by our country's dual carbon strategies and leverage our strengths under "one country, two systems" and as an international financial centre to accelerate the development of Hong Kong into an international centre for green technology and finance.

In consultation with the Environment and Ecology Bureau, the Innovation, Technology and Industry Bureau, the Hong Kong Monetary Authority, the Securities and Futures Commission and Hong Kong Exchanges and Clearing Limited (HKEX), my reply to the four parts of the question is as follows:

(1) and (4) Formed by relevant Government Bureaux and financial regulators, the Green and Sustainable Finance Cross-Agency Steering Group published in March 2022 a preliminary feasibility assessment for Hong Kong to pursue carbon market opportunities and recommends, among others, developing Hong Kong into a global, high-quality voluntary carbon market, and enhancing co-operation on carbon market development in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA).

HKEX signed a Memorandum of Understanding with the Guangzhou-based China Emissions Exchange in March 2022 to explore co-operation opportunities in carbon finance, established the Hong Kong International Carbon Market Council in July 2022 with members comprising corporates and financial institutions from the Mainland, Hong Kong and overseas, and subsequently launched a new international carbon marketplace Core Climate in October 2022, which is currently the only carbon marketplace that offers HKD and RMB settlement for the trading of international voluntary carbon credits.

We and HKEX will continue to work with stakeholders to explore climate-related opportunities and support the development of the carbon ecosystem, including expanding Hong Kong's products and services suite and enhancing the trading mechanism and infrastructure as well as exploring standards development, with a view to building Hong Kong into a leading carbon trading hub. We will also continue to exchange views with market participants in Hong Kong and other jurisdictions on carbon market development.

The Financial Secretary announced in the 2023-24 Budget the establishment of a Green Technology and Finance Development Committee, inviting industry representatives from green technology, green finance and green standard certification, etc, to assist in the formulation of an action agenda for enhancing the exchange and co-operation with the GBA and international markets and promoting the development of Hong Kong into an international green technology and finance centre.

We will continue to leverage Hong Kong's status as a champion of international standards, a facilitator to channel global capital into the Mainland, and an international financial centre with a stable and mature regulatory system to proactively integrate into the national development of our country and assist in the comprehensive green transformation of the GBA.

(2) We launched in December 2022 a three-year Pilot Green and Sustainable Finance Capacity Building Support Scheme with a total provision of $200 million for application by market practitioners and related professionals as well as students and graduates of relevant disciplines. After completing eligible programmes or accomplishing relevant qualifications, applicants can apply for a subsidy of up to $10,000.

The Pilot Scheme has since its launch received many enquiries and positive feedback on the coverage of the programmes and qualifications. Currently, there are 24 eligible programmes and qualifications as provided by the professional and continuing education schools of local universities, professional institutions, international training providers, etc, and the list will continue to be updated.

The Pilot Scheme is still at its early implementation stage. Participants can make subsidy applications upon successful completion of the programmes or accomplishing the qualifications. We will closely monitor the implementation and continue to collect feedback from the industry, programme providers and participants.

Talent nurturing is crucial to further promoting green and sustainable finance. We will continue to examine the measures on training relevant talents and listen to industry views in formulating suitable strategies.

(3) The Government attaches great importance to promoting local development of decarbonisation technologies, and has set up the "Green Tech Fund" (GTF) in 2020 to provide better and more focused funding support for research and development (R&D) projects which can help Hong Kong decarbonise and enhance environmental protection. The Government has injected $400 million into the GTF to support R&D projects in the priority areas including net-zero electricity generation, energy saving and green buildings, green transport and waste reduction. The GTF can help Hong Kong achieve carbon neutrality and create green job opportunities for the innovation and technology industry.

Internationally, many technologies that can help achieve carbon neutrality, including carbon capture, utilisation and storage, are still at the development stage. Carbon capture involves capturing carbon dioxide at emission sources, and transporting and storing it deep underground. We note that there are successful examples of capturing and storing carbon dioxide in deep sea or underground, such as the world's largest system for carbon capture and storage plant in Iceland that has been operating since September 2021. It is expected to capture about 4 000 tonnes of carbon dioxide per year. However, the application of such technology is energy-intensive and takes up a lot of land and underground space. Given the extremely limited supply of renewable energy and land resources in Hong Kong, this technology is not ready for wide application at this stage.

Nevertheless, the Government will closely monitor technological developments in relevant areas, so that we can adopt reliable and cost-effective solutions in a timely manner for the purpose of achieving carbon neutrality before 2050. The Hong Kong Productivity Council (HKPC) proactively co-operates with the local commercial and industrial sectors as well as research institutions to develop applied technology solutions in different categories, including technologies that are conducive to improving Hong Kong's environment and achieving carbon neutrality. Currently, the HKPC does not provide negative carbon technologies or services and would be pleased to discuss and co-operate with other organisations to develop technologies in this area.

We will continue to listen to the views of the industry and formulate suitable strategies for promoting green economy in realising sustainable development.