Cablegate: Copenhagen Conference: Hong Kong Wants Greater

DE RUEHHK #2225/01 3411048
P 071048Z DEC 09




E.O. 12958: N/A

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

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

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

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