Governments
around the world are putting policies in place to curb carbon emissions. Hong
Kong is no different. It continues to make strides to protect its world-class
status through its sustainable development.
In early
2017, the Hong Kong government released its Climate Action Plan 2030+ report,
which set out Hong Kong’s carbon emissions reduction target for 2030. As
buildings account for about 90% of electricity consumption in Hong Kong, there
is great potential to achieve the government’s ambitions through direct
measures in the built environment, such as energy efficiency improvements and
the use of renewable energy.
As
part of the Climate Action Plan, Hong Kong launched its feed-in tariff (FiT)
scheme late last year, an incentive program encouraging the use of renewable energy
resources. Under the scheme, any non-governmental bodies or individuals who install
solar and wind energy systems will not only make a positive impact on the
environment, they can also make a profit.
Through
the FiT scheme, buildings with grid-connected renewable energy systems can sell
Renewable Energy Certificates, similar to carbon credits, to Hong Kong’s power
companies. HK Electric and China Light and Power (CLP) will then buy renewable
energy and sell it to individuals and businesses wanting to lower their carbon
emissions. Tenants can benefit from the cost-efficient energy source while
demonstrating their commitment to corporate social responsibility.
While
it is too early to evaluate the scheme now, there are some initial figures to
show the response has been positive. Two
months after implementation, CLP announced that it had received 1,400
applications from the launch of the scheme in October to the end of 2018. More
is expected as HK Electric just launched the scheme in January this year.
For businesses
that report their Environmental, Social and Governance (ESG)
performance, taking part in the scheme is extremely attractive. ESG performances
express the environmental and social impact of an organization. Today, most
stock exchanges in the world, such as Hong Kong’s stock exchange, make ESG
reporting a specific requirement for listed companies.
In the
real estate sector, ESG performance is assessed by GRESB (previously known as the
Global Real Estate Sustainability Benchmarking). A high GRESB score equates to
greater access to institutional capital seeking responsible and sustainable
investments and stronger demand from tenants seeking sustainable and greener
buildings.
How
does Hong Kong compare with the sustainability initiatives of other Asia-Pacific
markets? A recent CBRE Research study of office buildings in six major gateway
cities in Asia Pacific – Shanghai, Hong Kong, Beijing, Sydney, Singapore
and Tokyo – found that 23% have achieved some form of green
certification, compared to a ratio of 41% in the U.S.* Shanghai possesses the
largest volume of green office space with more than 20 million sq. ft.
certified as of 2018.
Singapore
and Sydney both have a green certification rate of more than 80% for new office
buildings less than five years old, followed by Shanghai and Beijing. Hong
Kong, with a rate of around 61%, still has a long way to go.
Hong Kong is a new joiner compared to other markets, but the FiT scheme is a great starting point. It has created an attractive economic incentive on a material topic where the built environment needs to change. In this era of green buildings, Hong Kong is on par with other markets to play a bigger role.
This article is written by Michael Smith, Director, Property Management, CBRE Hong Kong
*Note:The green office building adoption percentage is calculated using CBRE Research data on total office stock. Local green building rating systems are used for Hong Kong, Sydney and Singapore, while LEED is used for Beijing and Shanghai and Tokyo. Sources on the US ratio are theU.S. Green Building Adoption Index 2018 and CBRE. The full report can be found here.
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