CLIMATE CHANGE: CHINA WANTS GREATER HONG KONG

UNCLAS SECTION 01 OF 02 HONG KONG 001944 SIPDIS DEPT FOR EAP/CM, EAP/EP:MACFARLANE, OES/PCI: MIRZA, OES/EGC, EEB/ESC/IEC/ENR:MONOSSON, S/SECC:HOUSER AND SIERAWSKI E.O. 12958: N/A TAGS: SENV ENGR KGHG SOCI HK CH SUBJECT: CLIMATE CHANGE: CHINA WANTS GREATER HONG KONG CONTRIBUTIONS REF: HONG KONG 599 ¶1. SUMMARY: At the Hong Kong-hosted Second Annual International Climate Change Conference, October 7-9, participating Guangdong and central government representatives repeatedly called on Hong Kong to speed up technology transfer to China by becoming a model low carbon city and a leader in green financing and R&D. The conference focused on climate change business opportunities and cooperation in the Pearl River Delta (PRD),and while participants encouraged the U.S. to raise its emission targets, there was little criticism of U.S. climate policy. PRC officials reiterated calls for developed countries to take the lead in reducing greenhouse gas (GHG) emissions. The growth of green business in China continues to be hampered by the lack of technical and financial expertise needed for complex transactions. END SUMMARY Stress on Market Approaches -------------- ¶2. The Second Annual International Climate Change Conference (ICCC) took place October 7-9 in Hong Kong, jointly organized by The Climate Group and the Hong Kong Climate Change Forum. The ICCC brought together leading experts from a wide range of disciplines to discuss the impact of climate change on the Pearl River Delta region and to discuss policies for managing risk and sustaining economic growth. Edward Yau, Hong Kong's Secretary of Environment and Professor Yanhua Liu, PRC's Vice Minister of Science and Technology, opened the conference. ¶3. Participants advocated a wide range of approaches to dealing with climate change, including the need to have multiple government and non-government players in the fight against climate change; encouraging low carbon development through cooperation between industrial and developing countries; crafting clear government policy; capital and financing; technology development/transfer; and carbon pricing mechanisms to reflect the true costs of combating climate change. ¶4. Vice Minister Liu complained that developing countries were being expected to shoulder an unfair proportion of responsibility for reducing carbon and GHG emissions and urged developed countries to share carbon reduction technology. He reiterated Beijing,s stance that developed countries should take the lead in committing to binding emissions reductions. U.S. Targets Too Modest -------------- ¶5. Lumumba Stanislaus-Ka Di-Aping, the Sudanese Ambassador and Deputy PermRep to the UN and Chair of the Group of 77, reporting back from the just-ended UNFCC meeting in Bangkok, remarked that the "ambitions of developed countries were irresponsibly modest" and that the U.S. and its allies were exhibiting "isolationism and exceptionalism". Aside from Di-Aping,s remarks, there was little direct criticism of U.S. climate policy, although several participants called on the U.S. to raise its emissions targets. Participants also regretted that no U.S. climate officials, businesses, or NGOs attended the conference. Besides Hong Kong officials, the PRC, Denmark, Argentina, Canada, France, and United Kingdom fielded delegates. China Wants Hong Kong To Lead, But Hong Kong Falls Short -------------- -------------- ¶6. In their various interventions and speeches, Guangdong and central government representatives repeatedly called on Hong Kong to speed up technology transfer to China by becoming a leader in green financing and R&D as well as a model low carbon city. The Hong Kong Government,s focus on mitigation activities, however, such as energy efficient building retrofits and electric vehicles, aimed at a 25 percent reduction in energy intensity from 2005 levels by 2030, was criticized by Mainland counterparts as insufficient. Many voiced the view that Hong Kong, as the &wealthy brother8, should adopt more aggressive emission standards. The HKSAR Government did not publicly respond to these calls during the conference. ¶7. Note: HK's Chief Executive Donald Tsang in his Annual Policy Address October 14 stated that Hong Kong attached importance to the issue of climate change and the need to transition to a low carbon economy; however, he fell short of announcing any major new policy changes. Two new inititaives HONG KONG 00001944 002 OF 002 were announced, however -- a coupon scheme to replace incandescent light bulbs with compact fluorescent lamps (CFL) and a leasing scheme to promote electric vehicle usage. He also reiterated Hong Kong's commitment to reduce energy intensity levels, arguing that, since Hong Kong was driven by non-energy intensive service industries, it would be able to reduce carbon emissions further through clean fuels and improved energy efficiency. The CE stated that Hong Kong needed to extend landfills and construct a new integrated waste management facility, as well as a new food waste recycling center. He also referenced HKSAR Government's on-going study to develop comprehensive strategies and measures to deal with climate change, scheduled for completion early next year. End Note Barriers to Green Trade Persist -------------- ¶8. Although much of the conference focused on the vast business opportunities arising from the global transition to a low carbon economy, it also highlighted the importance of entrepreneurs having access to finance in order to propel green investment and technology development. Hong Kong banking and finance industry representatives acknowledged that they could play a key role but cautioned that current uncertainties over the outcome of Copenhagen were constraining business potential. Finance industry reps also highlighted an additional barrier to green business in China. As projects grew more technically complex, the need for advisers and technical consultants increases, but to date, Chinese companies have been unwilling to hire financial and technical advisers necessary to make these deals possible. MARUT