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Green Development

The festive joy of the Chinese New Year and the exchange of greetings and wishes between family and friends, coupled with a number of large-scale events and district celebration activities, have added to the lively and blissful atmosphere in the first week of the Year of the Dragon. When it comes to new year blessings, the most popular ones may be wishing others good health and success, and of course, great wealth and prosperity. Indeed, economic prosperity, social stability and higher incomes are the common aspirations of people across the globe. They are also the essential path to improving people's livelihood.

However, economic progress based on industrialisation over the past two centuries have brought along high pollution, high energy consumption and high levels of emissions. It has resulted in a development mode without due regard to social costs. To achieve more sustainable economic development and harmony between humanity and nature, green transformation has become an international consensus. From the Paris Agreement in 2015 to the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28) last year, major economies have been attaching greater importance to climate change and seeking to expedite response. It is not hard to understand why major global markets are placing a high priority on green economic transformation, and why relevant sectors have attracted significant investments and are rapidly growing. Further increasing the share of clean energy use is one main direction on which countries have embarked.

According to data from the International Energy Agency, the world's newly installed capacity of renewable energy recorded a year-on-year increase of 50% last year, mainly concentrated in solar energy projects. China is already the world's largest manufacturer of solar energy generation modules. In addition, a research organisation has pointed out that even in the face of looming geopolitical uncertainty, high interest rates and high inflation environment, global investments in clean energy transition still reached a record high of US$1.77 trillion last year, representing a year-on-year increase of 17%. It is anticipated that vast investments will be needed in the future to achieve the goals of the Paris Agreement. It is expected that investments in such areas as green transformation and the wider application of renewable energy will continue to rise.

Advancements in green tech have been providing more viable and practical solutions for global green transformation. With the introduction of new services, equipment and products, the development of the green tech industry has brought about enormous opportunities and become an important contributor to economic growth. Hong Kong has gathered a good number of green tech enterprises and talents, as well as vast green capital and many related financial products. We are well-positioned to develop into an international centre for green tech and finance.

On green tech, we are supporting relevant research and development (R&D) through various initiatives, including the Innovation and Technology Fund, Green Tech Fund, New Energy Transport Fund, etc. Over HK$800 million has been approved from these funds for a few hundred R&D and pilot projects in net-zero electricity generation, energy-saving, green buildings, green transport, and more. In Hong Kong, there are more than 200 green tech companies, some of which have proven themselves competitive in the global arena and successfully expanded to the Mainland and overseas markets.

On green finance, with the various initiatives of the Government to support the development of green and sustainable finance, the green finance market has registered significant growth. In 2022, the total green and sustainable debt issued or arranged in Hong Kong exceeded US$80 billion, among which relevant bonds accounted for 35% of the Asian market. In recent years, both the Shenzhen Municipal People's Government and the People's Government of Hainan Province had successfully issued green and sustainable bonds denominated in Renminbi in Hong Kong. Meanwhile, taking the Common Ground Taxonomy as the basis, we are actively exploring the establishment of a green classification framework suitable for Hong Kong while in alignment with the Mainland and international standards. Hong Kong's highly efficient financing platform and technological strengths are becoming the driving forces of green transformation for the city, the country and the Asian region. Apart from accelerating the overall transformation process, they have also opened up new opportunities of development.

To better promote the cross-sectoral interaction and collaboration between green tech and green finance, and to better leverage Hong Kong's role as an international platform, we will organise the inaugural Hong Kong Green Week at the end of this month. On green tech, the Hong Kong GreenTech Summit 2024 will be held, comprising a series of roundtable forums. Dozens of start-ups engaging in frontier green tech research will also showcase their technologies and products. On green finance, the Hong Kong Monetary Authority and the International Finance Corporation, a member of the World Bank Group, will co-host the Climate Business Forum: Asia Pacific. The forum will bring together political and business leaders as well as industry representatives from the Asia-Pacific region, and cover important financial issues related to green transformation.

Be it green tech, green finance or innovation and technology as a whole, there are vast opportunities as Hong Kong and its sister cities in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) work with and render support to each other. This is precisely where the strengths and potential of the GBA lie. Today (18 February) marks the 5th anniversary of the promulgation of the Outline Development Plan for the GBA. During these years, collaboration in the GBA has seen remarkable development. Take financial co-operation as an example. The Qianhai Overall Development Plan promulgated in December last year expressly supports the deepening of integrated development of financial services in Hong Kong and Shenzhen. That includes encouraging more Hong Kong private banks, asset and wealth management institutions, etc. to establish their presence in Qianhai; supporting qualified financial institutions in conducting cross-boundary securities investment business; and commencing cross-boundary e-CNY pilots. In addition, the Cross-boundary Wealth Management Connect Scheme 2.0 will be officially launched next Monday (26 February). Apart from increasing the individual investor quota and expanding the scope of eligible products, it would also provide more policy room for cross-boundary distribution and promotion of products, thereby facilitating more diversified cross-boundary asset allocation by residents in the GBA. Collaboration and development on this front will create more opportunities for the relevant sectors in Hong Kong and benefit GBA residents better.

February 18, 2024