15 Jan 2019
A Greener Greater Bay Area
By Maya de Souza, Assistant Director for Policy Research, Business Environment Council
How can Hong Kong businesses leverage the Greater Bay Area (GBA) initiative to protect our environment and strengthen our economy? The Business Environment Council has explored this question, including at its EnviroSeries Conference on 23 May.
Will the GBA be greener?
In becoming “the factory of the world”, it is widely acknowledged that many of the regions that make up the GBA paid a price in terms of water, air quality and landscapes. But clear commitments and action by national and regional governments suggest the damage will now be reversed – shifting instead towards environmental enhancement and a low carbon economy, a transformation that creates a multitude of opportunities.
Is there a sound basis for this optimism? At a national level, commitment to an “ecological civilization” is enshrined in the 13th Five Year Plan. The commitment seems firm, as risks to social stability from polluted air, water and soil as well as climate impacts like drought and flooding underlie the commitment.
At a regional level, the “State Council Guiding Opinion on Deepening Pan-Pearl River Delta Regional Cooperation” released in 2016 committed to make the GBA a pilot ecological civilization zone, accelerating industrial upgrading, green development and a low-carbon lifestyle.
It is not only words but also action. Beijing has stood firm by its Paris Agreement climate change targets, announcing an Emissions Trading Scheme as promised at the end of 2017. Also, the evidence suggests that the Environment Protection Law, introduced in 2014, with provinces developing, reporting on, and enforcing environmental protection plans, is being enforced rigorously. An Environmental Protection Tax was also introduced this year on air, soil and water pollution.
China’s Alliance of Pioneer Peaking Cities – with commitments for early peaking of CO2 with programmes including low carbon technology, green buildings and transport – reinforces this at city level. Two of the 11 cities in the alliance are also in the GBA: Guangzhou and Shenzhen.
However, the evidence suggests that under economic pressure, progress may falter. A strong compact between cities not to undercut in terms of standards is vital to make this work.
What are the business opportunities?
The Business Environment Council conducted a survey that drew out five needs for greening the GBA: sustainable waste management, reducing emissions from transport and logistics, clean energy, reducing industrial pollution, and green buildings. Contributors also identified Hong Kong’s top five competitive strengths: environmental services, construction, finance, energy management and utilities. This shows a decent match.
The opportunities include clean infrastructure, green finance and professional skills associated with a knowledge economy.
Hong Kong has had successes in managing heat islands and wind movement. It has an array of energy management start-ups, excellent engineering faculties and institutions like the Science Park. We can be experts in sub-tropical energy efficient buildings, smart energy management and even developing new insulating materials. Mainland China’s 2015 statistics show plans to construct 5 trillion renminbi (HK$6 trillion) of real estate in the Guangdong region. This is big business.
Another infrastructure opportunity is waste water treatment facilities that minimize effluent and recycle water. They offer win-win solutions and we have strong expertise in this field in Hong Kong. Multi-objective integrated facilities will also be increasingly in demand, ranging from organic waste to energy plants to combined heat and power (CHP) facilities which produce power as well as heat. Hong Kong has some integrated facilities such as T-Park and CHP cogeneration plants in hospitals.
With around 300 million tonnes per annum of shipping in Shenzhen and in Hong Kong, and 2.5 billion tonnes of road freight in Guangdong province (higher than all other parts of China), clean low emission transport and logistics is a third aspect of clean infrastructure. Action is important: air pollution still exceeds WHO levels and CO2 emissions are high. Hong Kong’s strengths go beyond our world-renowned rail-based transportation system and transit-oriented development approach. We have experience in energy efficient ports and lower emission shipping as well as last mile travel like escalators and cycle lanes. As for innovation, the Government has supported pilots of low emission ferries and boats.
Our finance sector is huge, second in China only to Shanghai. New opportunities include issuing Green Bonds as well as Green Loans for greening infrastructure. But the field of “ESG investing” – environmental, social and governance – is another substantial area. At the heart of this is screening investments to ensure financial resilience to climate change and other social and environmental risks. Extensive professional and analytical opportunities will arise. Hong Kong’s healthy international ecosystem of financial services makes it well-placed for this field.
Examples of these services include environmental assessments, audit and urban planning. Detailed consideration of options, for example, to minimise the impact of high speed rail routes and roads to protect nature and landscapes, enhance social well-being and minimise carbon emissions will be critical. High speed rail alone is expected to double in the GBA between 2015 and 2020. Trust and reputation is vital, and Hong Kong has the reputation in these sectors. The next generation of professional services is related to smart city development, including data analysis which supports services like energy management.
How can Hong Kong grasp these opportunities?
A concerted effort by the public and private sector will help, drawing on strategies developed by other countries. The U.K.’s outward-looking industrial strategy is one model. Smaller territories on the edge of bigger markets – such as Scotland and Denmark – have also put in place strategies focused on developing expertise and competitive advantage linked to environmental excellence.
Part of being strategic is identifying areas that Hong Kong can focus on, be it construction standards or sustainable sourcing. By taking the lead in one or more such fields, we can boost Hong Kong’s standing in China and the wider region. This role is not new – Hong Kong led on marine emissions with the Fair Winds Charter.
Another is the potential to leverage new developments with the new Lok Ma Chau Loop, which offers an opportunity to trial and pilot in order to develop excellence. Mainland China is not afraid to try out new things and is learning fast. Singapore has done the same, developing new skills, and as a result it has been able to partner with the Guangdong Government to develop a new green city. Likewise, Hong Kong can do the same by making the most of opportunities like the Lok Ma Chau Loop.
And finally, business-research partnerships and clusters like the Hong Kong Science and Technology Park are vital. Exciting developments are under way. HKRITA is working on climate resilient textile production. Universities are developing solar photovoltaics and battery technology. But to ensure commercialisation, strengthening the partnerships of our excellent universities and applied research institutions with business is critical.
Green GBA is a shared goal
The trend towards a greener Greater Bay Area is now evident. There is a wealth of opportunity for Hong Kong’s businesses from green finance to certifying and auditing which can be used to support a range of sectors. Perhaps most significantly, discussions at our event illuminated the gain to Hong Kong from stepping up to the table and become a trusted partner in this hugely worthwhile mission towards a greener GBA – a shared goal for all in the region.
This article was first published in the magazine The Bulletin. Please click to read the full article.