Green Technology & Environmental Services Industry in Hong Kong

Overview

• Hong Kong’s environmental industry focuses on six business areas, including (1) water conservation and pollution control, (2) air and oadour pollution control, (3) energy conservation, (4) waste treatment, disposal and recycling, (5) noise control and mitigation, and (6) environmental consulting services.

• The value added of Hong Kong’s environmental industry amounted to HK$9.9 billion in 2019 (or 0.4% of GDP). Employment by the industry reached 44,670 in the same year, accounting for 1.2% of Hong Kong's total.

• Leveraging Hong Kong’s unique strengths in the global technology revolution, green technology is one of the Hong Kong Science Park’s five core technology clusters.

• Phase 3 of the Hong Kong Science Park was completed in April 2016. Meanwhile, O·PARK1, Phase 1 of the organic resources recovery centre, locating at Siu Ho Wan in North Lantau commenced operation in July 2018.

• The government provides funding supports to environmental technology-related R&D projects under the Innovation and Technology Fund (ITF), which has approved 179 projects since its establishment, with total funding exceeding HK$375 million.

• Hong Kong and mainland China have further strengthened cooperation in the environmental industry, after the Agreement on Economic and Technical Cooperation was signed on 28 June 2017.

The environmental industry is widely recognised as a new growth sector. According to the latest available figures, the value added of Hong Kong’s environmental industry grew by 5.8% year on year to HK$9.9 billion in 2018 (or 0.4% of GDP). Employment by the industry reached 44,130, accounting for 1.1% of Hong Kong's total.

The environmental industry in Hong Kong consists of mainly small and medium-sized enterprises, which largely focus on six business areas, including (1) water conservation and pollution control, (2) air and odour pollution control, (3) energy conservation, (4) waste treatment, disposal and recycling, (5) noise control and mitigation, and (6) environmental consulting services. Some companies are also engaged in waste and scrap import/export and wholesale trading.

Mainland China is one of the fastest growing and most important environmental technology and related services markets for Hong Kong companies. According to the World Energy Investment Report 2021 by the International Energy Agency (IEA), mainland China is an important world destination for energy investment. The Chinese government aims to achieve carbon peak by 2030 and carbon neutrality by 2060. In the latest 14th Five-Year Plan (2021-2025), the Chinese government will actively develop green-related industries, such as energy conservation and environmental protection, clean manufacturing, clean energy, ecological environment, green infrastructure, and green services etc. Furthermore, Beijing will also promote the development of wind and solar energy, implement green building policies, and encourage the use of green building materials. These measures are expected to further boost environmental industry development in mainland China, creating opportunities for Hong Kong companies.

Low Carbon and Emission Reduction

Hong Kong has long been active in overcoming the challenges brought by global warming. In June 2021, the government announced the Clean Air Plan for Hong Kong 2035, setting out the vision under the slogan "Healthy Living ‧ Low-carbon Transformation ‧ World Class". The Clean Air Plan covers six major areas of action, namely green transport, liveable environment, comprehensive emissions reduction, clean energy, scientific management and regional collaboration.

With regard to green transport, the government issued the Hong Kong Roadmap on Popularisation of Electric Vehicles in March 2021. The Roadmap introduced a series of measures, such as stopping new registration of fuel-propelled private cars in 2035 or earlier; promoting trials for electric public transport and commercial vehicles including buses, public light buses, taxis and goods vehicles, and striving to legislate a producer responsibility scheme for retired EV batteries in the next few years.

In the clean energy, the government is urging power companies to phase out existing coal-fired units with natural gas progressively from now to 2030. Measures to take forward the adoption of liquefied natural gas in ocean-going vessels will also be examined, including actively exploring the use of the offshore LNG terminal newly constructed by the two power companies as a bunkering facility for ocean-going vessels etc.

Green Building

In recent years, many countries have introduced green building certification systems to provide indicators for building performance and encourage the adoption of low-carbon construction methods for structures that are newly built, undergoing renovation, or already occupied. Common green building certification systems in Hong Kong include the Leadership in Energy and Environmental Design (LEED) by the US Green Building Council and BEAM Plus New Buildings by the Hong Kong Green Building Council.

Hong Kong’s first zero-carbon footprint building, the Zero Carbon Building¹ , opened in Kowloon Bay in 2012, featuring over 80 types of green technology to reduce greenhouse gas emissions. For example, the Building makes use of low carbon materials, such as cool paint to help reducing surface temperature by up to five degrees Celsius. The Building has won recognition and various awards for its innovation environmental performance, including the National Energy Globe Award 2015 by the Energy Globe Foundation.

In 2019, the government introduced Green Schools 2.0 to enhance energy efficiency in schools. Solar Harvest, a Government programme under Green Schools 2.0, installs solar energy generation systems for eligible schools and welfare NGOs for free. In the 2021-2022 Budget, the Government earmarked HK$1 billion to install small-scale renewable energy systems at government buildings and infrastructure, HK$150 million to conduct energy audits and install energy-saving appliances, free of charge, for NGOs subvented by the Social Welfare Department, and inject HK$1 billion into the Recycling Fund.

Development of Green Technology

Leveraging Hong Kong’s unique strengths in the global technology revolution, green technology is one of the Hong Kong Science Park’s five core technology clusters. The Science Park provides a full range of facilities and equipment to support the development of green technology in areas of building energy efficiency, environmental solutions, alternative energy, waste disposal and recycling, electric vehicles, and green electronics for infrastructure projects and carbon audits.

Phase 3 of the Science Park completed construction in April 2016. This project was one of the government’s initiatives to boost the development of green technology in Hong Kong and to attract high‑tech investment by private companies. It can accommodate about 150 green technology companies and create 4,000 green technology research and development positions.

In 2019, the China Everbright Green Technology Innovation Research Institute set up its global R&D headquarters in the Science Park. As one of Asia’s largest waste-to-energy project investors and operators, Everbright International is actively looking for collaborations with other innovators at the Science Park to drive green innovations.

Examples of successful green technology enterprises in Hong Kong include Dunwell Enviro-Tech (Holdings) Ltd at Yuen Long Industrial Estate. Dunwell provides used oil and wastewater treatment, recycling, reuse services and turns waste lubricating oil into cost-effective finished oil using its patented vibrating membrane advanced treatment (VMAT) technology. Besides, the ASB Biodiesel plant, a foreign investment project established in Tseung Kwan O Industrial Estate, uses Austrian technology to process waste oil, such as waste cooking oil and grease trap oil, with the capacity to produce 100,000 tonnes of low-carbon transport fuel per year.

Located at Siu Ho Wan in North Lantau, O·PARK1 commenced operation in July 2018. Using anaerobic digestion technology, O·PARK1 can convert 200 tonnes of food waste into electricity each day. O·PARK2 and O·PARK3 located at Sha Ling of North District and Shek Kong of Yuen Long respectively, are designed to convert 300 tonnes of organic waste per day. Currently under construction, O·PARK2 is scheduled to commence operation by 2023.

The government also provides funding support to environmental technology-related R&D projects under the ITF managed by the Innovation and Technology Commission. As of March 2021, the ITF has approved over 190 environmental technology-related projects, with the total funding exceeding HK$388 million.

Hong Kong-Guangdong Cross-boundary Cooperation

In April 2008, the government launched a Cleaner Production Partnership Programme to encourage Hong Kong-invested enterprises in Guangdong to actively participate in improving the quality of the environment in the region. In light of the environmental benefits and positive feedback from industry, the Programme has been extended until 31 March 2025 according to 2020-2021 Budget. Under the Programme, assistance is given to Hong Kong factories in the Pearl River delta (PRD) to use cleaner production technologies and operation mode so that concerted efforts are made to create a cleaner environment. Efforts include:

• Increase energy efficiency
• Reduce air pollutants emission
• Lower production cost
• Reduce sewage discharge

Through cleaner production, Hong Kong-invested manufacturers can meet national and Guangdong province’s environmental protection standards, enhance their environmental performance, lower cost, increase competitiveness and improve their corporate image. This programme targets eight industries, namely chemical products, food and beverage, furniture, metal and metal products, non-metallic mineral products, paper making and paper products, printing and publishing, and textiles. Currently, more than 180 environmental technology service providers have registered with this programme, including service companies in Hong Kong and the PRD.

In April 2010, Hong Kong and Guangdong signed the Framework Agreement on Hong Kong/Guangdong Co-operation, and agreed to, among other things, cooperate on environmental protection measures, such as:

• Reducing pollutants: jointly exploring the reduction targets and options for total air pollutants emission in the PRD region in 2011-2020.
• Cleaner production: help implement the Cleaner Production Partnership Programme to support Hong Kong-invested enterprises in Guangdong to conduct assessment, develop demonstration projects, provide certification services, etc. in order to improve energy efficiency and to reduce air pollution.
• Electric cars: introducing electric cars to major greater PRD cities such as Hong Kong, Guangzhou and Shenzhen, and jointly fostering research and development, manufacturing, general application and development of the relevant auto-parts industry for electric cars in the greater PRD region.

In November 2018, the Memorandum of Co-operation on Retro-commissioning (RCx) of Buildings in the Guangdong-Hong Kong-Macao Greater Bay Area was signed by relevant institutions and universities in Guangdong, Hong Kong, Macao, Beijing, and Shanghai to promote the development and application of RCx  of buildings in the GBA for enhancing energy saving. Under this framework, there will be regulator symposiums, technical forums and training courses in the GBA for the exchange of experience in capacity building of trade and promoting the application of RCx for developing energy efficient buildings.

At the second meeting of the Hong Kong-Guangdong Joint Working Group on Environmental Protection and Combating Climate Change held in October 2020, Hong Kong and Guangdong agreed to work closely together on the PRD Regional Air Quality Management Plan and a three-year study (2021-2024) on post-2020 regional air pollutant emission reduction targets and concentration levels, with a view to formulating air pollutant emission reduction targets/levels in 2025 and 2030. Hong Kong and Guangdong will also launch a study on the characterisation of photochemical ozone formation, regional and super-regional transportation in the GBA, to identify the causes of ozone formation in the GBA and help alleviate regional ozone pollution.

CEPA Provisions

Since the implementation of the second supplement to the mainland-Hong Kong Closer Economic Partnership Arrangement (CEPA) in January 2006, all products of Hong Kong origin, including those related to environmental protection, can be imported into the mainland at zero tariffs. Detailed information, as well as the origin rules for Hong Kong products, is available here.

Hong Kong service providers can set up wholly owned enterprises on the mainland under CEPA to provide architectural design and engineering services, including in relation to environmental systems. When Hong Kong service providers set up construction engineering design enterprises in China, their track record in Hong Kong and on the mainland can be used by the authorities as the basis for assessing their application for enterprise qualification on the mainland.

Other arrangements between Hong Kong and mainland China relating to the environmental industry under CEPA are as follows:

Details of CEPA can be found here.

¹ A zero-carbon building is a building with zero net energy consumption or zero net carbon emissions on an annual basis.

² Retro-commissioning (RCx) is a systematic process to periodically check existing systems’ energy consumption performance, and to identify potential operational improvements that can save energy costs and improve the indoor environment of a building.