The law covers energy planning, development and utilization, energy market systems, energy reserves and emergency measures, energy technology innovation, supervision and management, legal responsibilities, and supplementary provisions, among others.
Experts in this area note that as the world’s largest energy producer and consumer, China has long lacked a fundamental and overarching energy law. The introduction of the energy law will fill this legislative gap, significantly strengthening the legal foundation in the energy sector, ensuring national energy security and promoting green and low-carbon transformation.
The timing could not be better, since the 29th Conference of the Parties to the UN Framework Convention on Climate Change (COP29) is taking place in Baku, Azerbaijan, through Friday.
Related to this, the EU climate monitor Copernicus said last week that 2024 is “virtually certain” to be the hottest in recorded history with warming of more than 1.5 C above the pre-industrial average. Under the Paris climate accord, countries must aim to keep global warming well below pre-industrial levels and shoot for 1.5 C if possible.
Last year’s COP28 in Dubai delivered a historic moment in the fight against climate change by adopting a document unanimously approved by 198 nations, which called on all countries to move away from the use of fossil fuels, though not to phase them out.
Countries will “contribute to transitioning away from fossil fuels in energy systems in a just, orderly and equitable manner”, the document stated. This was the first time there was a clear reference to the future of all fossil fuels (coal, oil and gas) in a COP text.
The agreement also proposed accelerating a phasedown of unabated coal power, while recognizing the need for deep, rapid and sustained reductions if humanity is to limit temperature increases to 1.5 C. Furthermore, there was recognition that global emissions will likely peak before 2025, and that for developing nations, this may be later.
China is already reducing its dependence on coal: China’s goal is that of reaching its carbon emissions peak before 2030 and becoming carbon neutral before 2060, as listed in the 14th Five-Year Plan (2021-25).
Both of China’s objectives are crucial for achieving green development. By way of comparison, the United States and the European Union aim to achieve carbon neutrality by 2050. If they meet their targets, it will have taken the US around 45 years and the EU around 60 years to move from their carbon emissions peak to achieve neutrality, but China plans to do it in just 30 years, which is a very ambitious yet reachable, goal.
Experts believe China is winning the clean-energy race. China has spent 10 times more on clean energy than either the US or Europe over the past five years. It dominates the rapidly growing renewables manufacturing market, producing 90 percent of all solar panels, over 70 percent of all lithium batteries, and 65 percent of all wind turbines.
When it comes to Hong Kong, the UN’s resident coordinator in China, Siddharth Chatterjee, while speaking last year at the Hong Kong Financial Forum 2023, said that Hong Kong has a unique role to play as China’s offshore capital hub for green finance, as the country needs to accelerate environmentally friendly projects if it is to transition to a low-carbon economy.
To signify Hong Kong’s commitment to the Chinese mainland’s goals, the Hong Kong Special Administrative Region government strives to achieve carbon neutrality before 2050, and the interim decarbonization target is to reduce Hong Kong’s carbon emissions by 50 percent before 2035 as compared to the 2005 level. In October 2021, the government promulgated Hong Kong’s Climate Action Plan 2050, which outlined four major decarbonization strategies; namely, net-zero electricity generation, energy saving and green buildings, green transport and waste reduction, as well as interim targets that will contribute to the achievement of carbon neutrality for Hong Kong before 2050.
Hong Kong’s interest in strengthening its position as a green tech and green finance hub is not new. By embracing green finance even more, the SAR is acting in a way that is consistent with China’s carbon goals. And Hong Kong tapping into green and sustainable finance is not only beneficial to the special administrative region, but is also consistent with China’s objective of paying enormous attention to sustainability and climate change.
Green bond markets have been increasing in size and value for more than a decade. Since the first green bond market opened in 2007, more than $1 trillion worth of green bonds have been issued globally as investors have identified a sustainable and profitable investment option. As a matter of fact, oversubscription has become the norm for green bond issuances.
Hong Kong is, thus far, quite advanced when it comes to embracing the opportunities offered by green finance and green bonds. In this sense, both Hong Kong and the GBA will benefit from contributing to the achievement of the COP28 targets by promoting green tech and green finance to serve the needs of the country’s low-carbon economy.
To sum up, China has the potential to be a key player in a possible fossil fuel phaseout. While its carbon emissions peak has not yet been reached, China is committed, as established in the 14th Five-Year Plan, to become carbon neutral by 2060. The energy law can be a very beneficial tool for China to meet its goals.
As for Hong Kong, while it will remain one of the most important financial centers in the world, now seems to be the perfect time for the city to promote its role as a green tech and green finance hub. As Financial Secretary Paul Chan Mo-po said, as there is a huge demand for green financing in the region, I am sure the investment will pay off, given Hong Kong’s unique role within China and the Greater Bay Area.
The future needs to be greener and more sustainable, and both the mainland’s and Hong Kong’s actions seem to be very adequate and relevant steps toward that goal. All this without leaving aside the many economic opportunities offered by green finance as well as by newer areas like blue finance.
The author is a fintech adviser, a researcher and a former business analyst for a Hong Kong publicly listed company.
The views do not necessarily reflect those of China Daily.
