COPENHAGEN CONFERENCE: HONG KONG WANTS GREATER

UNCLAS SECTION 01 OF 02 HONG KONG 002225 SENSITIVE 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: COPENHAGEN CONFERENCE: HONG KONG WANTS GREATER ROLE IN CHINA ¶1. (U) SUMMARY: Hong Kong NGOs, business executives, academics, and civic organizations, although hopeful that the UN Copenhagen Conference will produce meaningful international commitments to enable a smooth transition to a low-carbon future, are frustrated that the Hong Kong Government is unwilling to play a leading role within China. They believe that Hong Kong is missing opportunities to become a model urban low-carbon city. NGOs and academics advocate that China should adopt the "common but differentiated responsibilities" principle within its country and follow a hybrid approach to emission reduction. END SUMMARY ¶2. (U) EconOff recently met with Hong Kong-based green NGOs, private sector executives, academics and civic organizations on Hong Kong's expectations for the United Nations Climate Change Conference 2009 (COP15) in Copenhagen. These included executives from HSBC, CLP Holdings Limited (CLP),one of the largest privately owned power companies in Asia, and Meiya Power Company Ltd, an independently owned power producer with several power projects in mainland China, academics from Hong Kong University, researchers from Civic Exchange, a prominent civic organization, as well as environmental activists from WWF, Greenpeace and Friends of the Earth. Companies Want Smooth Transition to a Low-Carbon Economy -------------- -------------- ¶3. (U) Private industry contacts cautioned against a "one-size-fits-all" approach to carbon reductions and warned against binding agreements that did not cut emissions deeply or fast enough. HSBC's Teresa Au, Head of Corporate Sustainability in Asia Pacific, stressed that concrete agreements and policies had to follow soon after COP15 so that the private sector could plan for and invest in long-term projects based on the new policies. The policies should neither adversely impact the investment climate nor undermine the stability of existing industries and investments. Dr. Jeanne Ng, Director of Group Environmental Affairs at CLP, said that without appropriate policies and regulations, the rules for existing businesses simply could not change enough to deliver a low-carbon future. Ms. Au maintained that the financial industry was an important enabler for this change but that its business customers needed clear policies and incentives to be motivated to make green investments. According to Au, HSBC had developed green financing products, however, these products were only effective in partnership with government incentive schemes. ¶4. (U) Executives told EconOff that measures such as the Clean Development Mechanism (CDM) had not been effective drivers for clean energy initiatives, mainly due to the volatility of the carbon credits market. As an example, Dr. Ng noted that, although CLP currently had nine CDM projects in China, CDMs had not been a reliable source of revenue because of unstable carbon prices. Policy measures such as renewable energy targets, preferential electricity tariffs, tax breaks, subsidies and customs duty relief, were more effective in encouraging renewable energy investment. Hong Kong's Carbon Footprint -------------- ¶5. (U) Several studies have calculated Hong Kong's carbon footprint to be at least double the world average for carbon emission per capita, but the Hong Kong Government has maintained that it is a relatively small greenhouse gas (GHG) emitter compared to other developed economies. Hong Kong has no energy intensive industries, so its GHG emissions come mainly from power plants and secondly from transportation. Buildings consume 89 percent of total electricity. Consequently, Hong Kong's efforts to reduce GHG levels have focused primarily on building energy efficiency, product energy efficiency labeling, banning of new coal-fired power plants, promoting electric cars, and creating incentives to encourage renewable energy development. However, Dr. William Barron, a leading environmental researcher from Hong Kong University of Science and Technology's Institute for the Environment, believed that Hong Kong's carbon footprint was higher than figures quoted by the Government since the carbon emitted from the roughly 70,000 Hong Kong investor-owned factories in mainland China was not counted in Hong Kong's total. Calls to Adopt More Stringent Targets Falls on Deaf Ears -------------- -------------- HONG KONG 00002225 002 OF 002 ¶6. (SBU) Hong Kong NGOs, including WWF, Greenpeace, and Friends of the Earth, all expressed frustration that the Hong Kong Government was not taking a leading role within China. Despite Hong Kong's considerable economic prowess and high standard of living, the Government had only set a 25 percent energy intensity reduction target. NGOs want Hong Kong to voluntarily adopt developed economies' carbon reduction targets and "stop hiding behind mainland China." Business executives and academics also agreed that the Hong Kong Special Administrative Region Government (HKSARG) did not have the political will and feared that Hong Kong would fall behind the Mainland and other cities such as Singapore if it did not change its "complacent" mindset and become more competitive and leadership-oriented. ¶7. (SBU) Hong Kong has repeatedly stated its desire to work to fulfill China's obligations under United Nations Framework Convention on Climate Change (UNFCCC). In September 2007, Hong Kong adopted APEC's 25 percent energy intensity reduction target, but NGOs and academics criticized that this was not commensurate with Hong Kong's economic development. Moreover, the target now appeared to be far less stringent than China's new pledge to reduce its carbon intensity 40 percent by 2020. While Hong Kong's Secretary for the Environment Yau gave no indication that Hong Kong would re-align with PRC's targets, an HKSARG Environmental Protection Department official separately opined that Hong Kong would re-align with China's carbon intensity targets or other targets established at COP15 after the Conference. Hong Kong Could Lead within China under "Common but Differentiated Responsibilities" -------------- -------------- ¶8. (U) At a recent climate change forum organized by Civic Exchange, Hong Kong's leading civic organization, scholars advocated that the principle of "common but differentiated responsibilities" be applied within a country like China where there were developed cities, such as Hong Kong, Beijing, and Shanghai, as well as very rural, less developed areas. A hybrid approach of having higher binding targets for its developed cities, while still having its overall targets at developing country levels, would enable China to 'save face' in the COP15 negotiations. It would also allow China's continued economic growth and at the same time help China gain respect from industrialized countries by setting binding targets for its developed cities. Dr. Barron told EconOff that Pearl River Delta and Central PRC government officials with whom he had spoken were receptive to this concept. MARUT