Policy Statement & Submission

Dr Victor Fung
Chairman
The Greater Pearl River Delta Business Council


Dear Victor,

Re: Joint Hong Kong/Guangdong Air Quality Strategy

As you know, the HKGCC has been at the forefront in pushing the environment agenda both within Hong Kong and in the context of Hong Kong/Pearl River Delta cooperation. Last year, the Chamber forwarded 43 recommendations to the HKSAR Government on how to go forward to improve Hong Kong's clean air and climate change initiatives. One in five of these recommendations touch on HK/PRD cooperation.

In response to your appeal for ideas to develop "green economy initiatives" in the context of the GPRDBC discussions, some preliminary ideas have been developed by the HKGCC and they have asked me to forward them to you for the consideration of the Council:

I. Air Pollution and Climate Change Initiatives

As pollution transcends boundaries – this is especially true of air pollution in the Greater Pearl River Delta (PRD), it is essential to develop cross-jurisdictional solutions to maintain the sustainable development of the region. In response to the requests of the Greater Pearl River Delta Business Council (GPRDBC) for inputs from members on how to contribute to the PRD framework, the Chamber would like to suggest the following recommendations that could help advance a closer cooperation between Hong Kong and Guangdong and develop a long term air quality/climate change strategy collectively. We believe that implementation of our recommendations relating to clean air and climate change would lead to business opportunities for both sides of the economy.

(a) Air Quality Objectives

Following the 18-month study, the HKSAR Government will be launching a public consultation to review and develop the new Air Quality Objectives (AQO). Given the fact that our air pollution is largely contributed by regional sources, we suggest that HKSAR Government should seek to align our new AQO with those to be adopted by the Chinese side, engaging Guangdong Government in the consultation process, so as to jointly implement relevant management measures to tackle pollution on a comprehensive regional basis.

(b) Pollution Mapping

With strengthened Regional Air Quality Monitoring Network developed under the Regional Air Quality Management Plan by the HKSAR and Guangdong Governments, we should have a more comprehensive understanding of the network of regional emissions in the PRD. As the Guangdong Province has launched a comprehensive study to identify the main sources of pollution in the PRD, refinements could be incorporated over time to yield higher-quality data and to mirror changing circumstances. The HKSAR and Guangdong Governments should jointly compile a database of pollution sources, on the basis of which more comprehensive geographical contour can be developed, providing a basis for setting more specific emission reduction targets over time. Such data bases should be made available to the public for research and policy discussion purposes.

(c) Emission Trading

Although China is a major supplier of CDM projects under the Kyoto Protocol, the Mainland's Certified Emissions Reductions (CER) trading is restricted to the primary market only. Given the growing interest in trading emissions related products, the HKEx has begun discussion with market players to establish a trading platform for environmental and greenhouse gas markets. The GPRDBC could play a role to facilitate the development of a secondary CER trading market in Hong Kong for the Mainland.

The HKSAR and Guangdong Governments should further develop and enhance on emission trading mechanism by implementing emissions trading as part of under a "cap and trade" regime, in which the "caps" (i.e. the allowable total amount of emission) are periodically lowered and then trading takes place to allocate the reduced total among those in the trading scheme. The possibility of extending emission trading regime to cover also carbon emissions should also be explored, and potential synergies with the Clean Development Mechanism examined.

(d) Coal-Fired Factories

On the regulatory side, emissions controls should be instituted on coal-fired power plants throughout the whole region. More directly, the governments of both sides could work together to find a mutually acceptable way to establish a moratorium on building any new coal-fired factories in the PRD, noting that this has been in place in Hong Kong since 1997. Critical to this will be the establishment of a transparent regulatory infrastructure and its effective enforcement.

(e) Developing Code of Practices to foster the Development of Green Economy

The business sectors of Hong Kong and Guangdong should be properly engaged in the pollution abatement through the Greater PRD Business Council. A voluntary self-regulatory approach, e.g. a "code of environmental practices in the Mainland" could be established, providing guidelines on disclosure of emissions and regulatory compliance. The idea of an "Environmental Compact" with reporting mechanism for Greater PRD investors can also be explored. Apart from encouraging Hong Kong companies to be responsible global citizens, these may also have an effect on their Guangdong counterparts along their supply chains. Although it is the private sector which will be making commitments of business competence or undertaking cleaner production programmes, government promotion would be essential if these were to become an effective campaign across the border.

II. Development of Circular Economy

In the just completed high-level visit of HKGCC to Beijing, the Chamber has learnt from the central government that they are rolling out a series of policies to stimulate the development of a "circular economy" encouraging citizens to replace their aging home appliance and automobiles, which is one important step for the county to implement circular economy. Guangdong province, among other nine domestic cities, was identified as one of the pilot cities to carry out this "exchange the old for new home appliance" scheme. Recycling industry is highly environmental sensitive, especially during the handling process of the emissions and the burning of waste, and if handled improperly, it will cause serious secondary pollution, to the air, groundwater and soil. However, the current domestic recycling industry in Mainland, including Pearl River Delta region, is still in its infancy, and lack of the sophisticated processing technologies and management. The HKSAR Government has developed the EcoPark in Tuen Mun. However, this is still very much at an infant stage of its development; there is tremendous scope for Hong Kong to work with Guangdong to develop a more comprehensive and strategic cooperation on development of industries relating to the circular economy on a regional basis. In view of this, we suggest that the Hong Kong and Guangdong Governments could work together to establish a working group to look into how such a cooperation mechanism can be developed with inputs from the GPRDBC. The Chamber will be happy to participate actively to contribute to the development of such a mechanism.

III. Green Supply Chain

In the context of the 12th Five-Year Plan, the Chamber believes that there will be a need to consider how the infrastructural support for Hong Kong's supply chain can be better dovetailed to the infrastructural development initiatives in the Mainland, especially in the PRD region. We would need to consider how products are transported not only in an efficient and effective manner, but in a "safe" and "green" manner. The CSI of the Chamber will be developing new initiatives in this area in the coming months.

We hope that these thoughts could be useful to the Council. Should have you any questions, please feel free to contact Alex Fong, CEO of the HKGCC.

Thank you.

Yours sincerely



Anthony Nightingale
Member, Sustainable Development Subgroup
Greater Pearl River Delta Business Council

c.c. Mr Andrew Brandler, Chairman, HKGCC
Mr Alex Fong, CEO, HKGCC
Mr David Dodwell, Chairman, HKCSI, HKGCC