Friends of the Earth (HK) comment on the Preliminary Feasibility Assessment of Carbon Market Opportunities for Hong Kong
The Green and Sustainable Finance Cross-Agency Steering Group (Steering Group) today published its preliminary feasibility assessment of carbon market opportunities for Hong Kong. Friends of the Earth (HK) supports the Steering Group’s recommendations to develop Hong Kong into a regional carbon trading centre. Friends of the Earth (HK) believes the unique position of Hong Kong can be of great advantage to collaborate with the Guangzhou Futures Exchange on carbon market development and act as the Mainland's offshore risk management centre. In particular, the potential establishment of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) Unified Carbon Market could encourage more listed companies and international companies to freely purchase high-quality voluntary emission reduction credits through the carbon trading platform in Hong Kong to offset their carbon emissions.
Friends of the Earth (HK) advise the government to adopt the following recommendations:
- It is essential to have a world vision and adopt clear standards and methodologies in establishing a
global carbon trading mechanism. A global carbon emission reduction standard requires a more
stable project governance framework, a wider range of project types, and standards which do not
require the endorsement of specific governmental authorities.
- It is useful to establish effective market participation rules and formulate market pricing for carbon
offset commodities involved in the transactions. This strategy encourages more public or private
companies to freely purchase high-quality voluntary emission reduction quota through the carbon
trading platform in Hong Kong.
- The Carbon Trading Centre should focus on the voluntary carbon trading market and construct a
diversified, high-quality and multi-level trading system. As energy consumption and conservation
practices in many markets is decentralized in nature, the characteristics of blockchain such as
decentralized nature, transparent, immutable, and collectively maintained are useful for this very
purpose. These characteristics enable the authentication of carbon credits, transactions to be
traceable and certification records to be stored. It can also serve the purpose of validation, assist
stakeholders and regulatory bodies for easier supervision and minimize defaults.
- Blockchain and Internet of Things technologies can be considered as a potential revenue to trade and
transfer credible carbon credits. Decentralized carbon trading ecosystem can also incentivize smaller
players such as for local start-ups to participate in low carbon economy and green finance. Hong Kong
and the Greater Bay Area are well positioned to become the incubation center for enterprises with