香港地球之友綠色金融顧問 Alexandra Tracy
Greener cities are essential to a low carbon and climate resilient future.
By 2030, more than 550 million people are expected to move to cities in Asia, where they will generate more than 85% of GDP and bring the urban share of the population to roughly 44 percent. Cities are already responsible for around 70 percent of global energy use and energy related greenhouse gas emissions, which will increase as they grow.
For the new and emerging cities in the region, there should still be the possibility to leapfrog historical approaches to urbanisation and to prioritise the development of more resource efficient, climate friendly cities – a whopping 75% of the area expected to be urban by 2050 has not yet been built !
But for a mature city like Hong Kong, it is largely a matter of improving upon what we already have in the ground. In order to meet the goals of the government’s Climate Action Plan 2030+ (including carbon emissions reductions of at least 26%), significant change has to occur in three key sectors: buildings, waste management and transportation.
Over 60% of Hong Kong’s carbon emissions are attributable to generating electricity for buildings. While new buildings are already subject to a green standards regime in Hong Kong, there is substantial potential for energy savings by upgrading and retrofitting aging and inefficient building stock.
The bottleneck in building upgrade is not technology, but financing. Building owners tend to be reluctant to provide capital for improvements that will take several years to pay back. However, very little commercial funding is available, as most banks view energy efficiency projects as disparate, onerous to analyse and too small sized to justify much attention.
- Waste Management
In densely populated Hong Kong, waste is an increasingly challenging issue. The territory generates around 6.4 million tonnes of waste each year but is able to collect and process only a minimal portion of recyclable waste. Approximately two thirds of Hong Kong’s waste goes into landfills, whose existing capacity is expected to be full up this year. Landfill waste is typically highly toxic and can severely damage surrounding ecosystems.
New capital is required to support innovative technologies to tackle waste management, such as composting and recycling, and in particular waste to energy. The Hong Kong government is creating a long term plan for the development of waste to energy facilities, but it not clear how this roll out will be funded.
Carbon emissions from transportation make up about 16% of the total emissions in Hong Kong. While the rail and tram systems are run on electricity, road vehicles are mostly powered by diesel, petrol and LPG. Air quality in Hong Kong, especially roadside pollution, remains a significant challenge.
For several years, the Hong Kong government provided some of the most generous tax incentives in the world for the adoption of electric vehicles, but faced strong criticism for using public money to subsidise the purchase of high end vehicles. The incentive was subsequently withdrawn and electric vehicle purchase rates decreased rapidly.
Filling the Funding Gaps
One of the most effective ways of altering public and business behaviour is by making change affordable. We only need to look around the world at successful case studies from other cities where funding solutions have been put in place to tackle specific urban climate issues.
To take just one example, buildings. In New York, an energy efficiency company called Sealed Inc introduced an innovative programme that would carry out upgrades but also offer home owners an easy way to pay for them. Sealed advances the capital for the bulk of a household’s efficiency upgrades and also takes over as the billing agent for the home owner’s utility bills. The home owner pays Sealed a monthly bill that covers both the household’s energy use and the upgrade investment. This is a much easier solution for the home owner than trying to get financing somewhere else.
Or another example, transportation. In Australia, the government backed Clean Energy Finance Corporation provided financing of A$50 million to encourage vehicle fleet buyers to choose cleaner models. This funding allowed Eclipx Group, one of Australia’s largest independent fleet leasing companies, to offer financing at lower interest rates to customers who invested in passenger and light commercial vehicles satisfying low emissions benchmarks. The loans were later packaged and sold in the capital market.
There are many more case studies and precedents on which Hong Kong could build to fill its own funding gaps. Regulation and education can only go so far. Finance is an essential part of the transition to a greener city.