Restoring Blue Skies:
Review of the Policy Agenda on Air Pollution
Hong Kong General Chamber of Commerce

April 2008

(Full Paper)

Synopsis of ideas and recommendations

One: Global citizenship
Two: Cooperation with the Mainland

12.   Pollution transcends boundaries – this is especially true of air pollution in the Greater Pearl River Delta.  According to the Environmental Protection Department, 80% of Hong Kong ’s air pollution is contributed by emissions from the PRD.  Controlling air pollution in the PRD is a matter of common interest for both jurisdictions.

13.   Thanks to the Regional Air Quality Monitoring Network developed under the Regional Air Quality Management Plan by the HKSAR and Guangdong governments, we now know much more about regional emissions in the PRD, whether they are from energy (power generation), industry and transport, marine or aviation sources.  However, even if the controls on emissions are fully implemented, given that the economic development of the PRD is proceeding at a scale never before seen, we may only be playing a catching-up game, with no assurance that the environmental quality of the PRD would improve.  With the year 2010 rapidly approaching, there is an urgent need to re-assess the long-term environmental strategy collectively of Hong Kong and the PRD, and to develop cross-jurisdictional solutions for the long term sustainability of Greater PRD region post-2010. 

14.   A comprehensive cross-border solution will not be easy.  Critical to this will be the establishment of a transparent regulatory infrastructure and its effective enforcement.  In addition, we would like to make a few suggestions in this paper, as follows.

15.     First, and more immediately, the HKSAR and Guangdong governments should further develop the emission trading scheme.  Emissions trading helps attain any given emission target efficiently, but in itself does not lead to reduced emissions. Hence it is important to implement 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.  We note that the HKSAR government has recently introduced a Bill establishing caps and facilitating emissions trading.  We welcome this introduction of market-based instruments to Hong Kong ’s regulatory “toolkit”. Given that the Mainland has already introduced emission trading in a number of provinces since 2003, we do not see the need for extensive pilot-testing.  The possibility of extending emission trading regime to cover also carbon emissions should be explored, and potential synergies with the Clean Development Mechanism examined.  Having said that, target setting must be based on sound science and cost-benefits analysis, taking account of the region’s capability of emission reduction as well as the need for economic development. (8)

16.     Secondly, and as a matter of priority, emissions controls should be instituted on coal-fired power plants that do not have it already, 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. (9)

17.     Thirdly, the business sectors of Hong Kong and Guangdong must be properly engaged in the pollution abatement.  Already factories in the PRD are feeling the pressure of tightening of emission regulations; some were banished by the Guangdong Government and unfortunately quite a few of these factories are Hong Kong-owned.  The $93 million “cleaner production” programme announced in the Policy Address and to be implemented by the Hong Kong Productivity Council is a welcome scheme that will help factories adopt clean technologies.  The Chamber fully supports this scheme and would be happy to contribute to its management and promotion.  As the environmental and economic objectives of the Hong Kong and Guangdong governments are increasingly aligned, there is an opportunity to develop sustainable solutions to benefit both sides, for instance, by extending the cleaner production programme and projects like the Chamber’s Clean Air Charter more extensively across the border.  The idea of an “environmental compact” for Greater PRD investors can also be explored.  Although it is the private sector which will be signing charters or undertaking clean production programmes, government promotion would be essential if this were to become an effective campaign across the border. (10)

18.     For the private sector, there is also the opportunity to “turn the table” on pollution abatement: to find new opportunities amidst the challenges.  Although the Mainland itself has developed rather advanced technological capabilities in environmental protection, Hong Kong businesses still have a role in bringing foreign capital and technologies to help contribute to sustainable development of the country. (11)

19.     As one foresees more environmental regulations, the compliance regime needs to be strengthened, whether for regulating the emission trading schemes, enforcing new measures on emission reduction, or implementing future policies on closure, relocation or subsidies.  To that end, a data set on stack emission, both in Guangdong and in Hong Kong, should be compiled and shared by both sides, to enable total emission loading and total effects to be understood and hence the appropriate trading and regulatory regime designed. (12)

20.     Finally, riding on the success of CEPA, the Mainland and Hong Kong should consider developing a “CEnPA” – Closer Environmental Partnership Arrangement.  This can be used to facilitate sustainable development and environmental improvement in both jurisdictions.  Under the Arrangement, both sides may put forward “requests” and “offers” on environmental actions such as cleaner fuel, cooperation on trade in waste, development of water resources, aid for industry, and of course, emission reduction.  A CEnPA framework would also be a useful platform to test out innovative policy ideas such as a regional fund to cover pollution abatement in the PRD funded by an energy tax or emission surcharge.  Many possibilities may be considered; the key is to use the unique “One Country, Two Systems” set-up to engender creative policy solutions that benefit both sides. (13)


Three: Energy policy
Four: Demand-side Management
Five: Infrastructure and urban planning
Six: Sustainable transport
Seven: Green procurement
Eight: Pollution tracking
Nine: Transparency and reporting
Ten: Building human capital for sustainability

The Way Forward

(Full Paper)