Thomas Tang – SCMP | Updated on Nov 05, 2008
The financial crisis has focused the minds of everyone on the economy. Cuts in interest rates to maintain liquidity are the measures currently being discussed in macroeconomic circles. However, despite the ominous likelihood of a recession, does this mean that Hong Kong will just seize up?
An alternative is to adopt a bolder approach, to restructure markets to make them sounder and more rational – and use these mechanisms to address a much longer-term but equally pressing global problem, climate change.
Lord Stern, the former adviser to the British government on climate change, spoke to some of the major business leaders in Hong Kong recently to outline the steps mankind must take to avoid the catastrophic effects of increasing carbon emissions in the atmosphere.
Since 2000, atmospheric carbon dioxide concentrations have climbed by 2 parts per million annually, due to soaring use of fossil fuels to power the world’s economic growth.
The present level of carbon dioxide in the atmosphere is around 438 parts per million; if this amount is allowed to increase at the current rate, then by 2050 we are looking at over 500 parts per million and a corresponding increase in average temperatures.
To staunch this calamitous trend, Lord Stern spoke of the need to cut emissions by 50 per cent by 2050 (based on 1990 levels) to bring global carbon emissions under control. But, as he stressed, it is not a case of forgoing economic growth; it is about growth in a low-carbon economy. Under the Apec Leaders’ Declaration on Climate Change, Energy Security and Clean Development, made in September last year, Hong Kong has committed itself to reducing energy use by 25 per cent by 2030 (using 2005 as a base year).
Hong Kong now emits between nine and 10 tonnes of carbon dioxide per person each year, which is roughly in line with most developed nations. The US emits between 20 and 25 tonnes per capita, while the figure for China is about 5 tonnes.
In his policy address this year, the chief executive put the emphasis on an economy based on low energy consumption and low pollution through energy efficiency, clean fuels and energy conservation.
Mandatory building codes on energy, energy audits and energy labelling are commendable, and a step in the right direction. The government should also consider road pricing and carbon taxes. Meanwhile, there is a growing array of low-carbon technologies that are well suited to Hong Kong’s needs.
The question is one of money. This brings us back to the sourcing and application of funds – surely it would have been far better for investors to spend money on low-carbon technology, rather than on the risky financial products that led to the minibond debacle.
This is where business can lead, by redirecting funds to more appropriate causes, and for government to pursue sensible, viable projects that have both commercial and environmental benefits.
Hong Kong could make a significant contribution abroad. For example, almost a quarter of carbon emissions arise through the loss of natural forests, either through felling or burning. The world’s forests act as global “sinks” for carbon; any disruption in these ecosystems has a profound effect on emission levels. Hong Kong could help protect vital forests by purchasing carbon credits from clean energy projects in developing economies.
Shored up by the mainland, which is committed to reducing emissions as well as maintaining economic growth, Hong Kong is well positioned to become the green finance centre of the region.
As the world battens down for the coming recession, Hong Kong can use its financial clout to shift focus to another global problem – but one that deals with real-life issues. That is what leadership is about.
Dr Thomas Tang is executive director of the Global Institute for Tomorrow