- Hong Kong deputies advocate for increased carbon credit trading.
- Hong Kong aims to connect mainland enterprises to carbon markets.
- Carbon credit price gap presents opportunities for Hong Kong.
- Deputies see Hong Kong’s certification role strengthening global markets.
Hong Kong deputies to China’s top legislative body have called for the city to increase its role as a “super-connector” in the global carbon credit trading market. They aim to enable Chinese mainland enterprises to access Hong Kong’s voluntary carbon market. This move aligns with China’s broader green economic goals for the upcoming years.
In fact, the push for enhanced carbon market participation is part of the 2025 development plan discussed in last week’s Government Work Report. Notably, the report highlights environmental improvements as a key target for the year.
The term “green” appeared 17 times throughout the document. 2025 is also the final year of the 14th Five-Year Plan. Hong Kong’s role in China’s green economy will likely be shaped in the 15th Five-Year Plan (2026-30).
Current Challenges
Despite the launch of Core Climate in 2022, Hong Kong’s carbon market faces several challenges. Frank Chan Fan, a Hong Kong deputy and vice-chairman of the Hong Kong Institution of Engineers (HKIE), explained that the voluntary-based carbon market lacks authoritative regional standards.
Consequently, this absence has contributed to its low trading volume, limited product offerings, and insufficient liquidity. As a result, the market has struggled to meet the demands for a large-scale, transparent, and influential carbon trading platform.
In response, Core Climate, operated by Hong Kong Exchanges and Clearing Limited (HKEX), was designed to fill this gap. The platform aligns with international standards like the Verified Carbon Standard. This is one of the most widely recognized carbon certification frameworks globally.
However, it is important to note that the platform has not yet published its transaction volume data. It operates largely through private, over-the-counter deals.
Opportunity for Growth
Despite these challenges, Hong Kong’s carbon market holds significant potential. Chan highlighted the price gap between carbon credits in the EU and China. This presents a key opportunity for Hong Kong to capitalize on its “super-connector” role. EU carbon credits are priced between 80 euros ($86) and 100 euros per ton. In contrast, China’s credits are much cheaper, selling for less than 100 yuan ($14) per ton.
If Hong Kong can bridge this gap by certifying carbon credits from both regions to meet common standards, it could attract international buyers. In turn, this would position Hong Kong as a central player in global carbon markets.
Hong Kong’s Strategic Role
Iris Wong Ping-fan, another Hong Kong deputy, emphasized the potential for Hong Kong to serve as a hub for carbon credit validation and certification. Under the “one country, two systems” framework, Hong Kong could offer renminbi-priced carbon credits. This would bolster the yuan’s role in global carbon markets. Core Climate currently allows for both Hong Kong dollar and yuan settlement options for international carbon credit trading.
Wong believes that Hong Kong’s expertise in certification, combined with mainland China’s resources, could create a powerful partnership for scaling up carbon market activities. As she explained, “Hong Kong has both the conditions and capabilities to do this well.”
The Future of Hong Kong’s Carbon Market
Hong Kong’s role as a “super-connector” could be further solidified if mainland carbon emitters are allowed to offset a portion of their emission quotas using credits from Core Climate. Nicholas Chan Hiu-fung, a Hong Kong deputy and partner at the international law firm Squire Patton Boggs, suggested that allowing mainland companies to offset 3-5 percent of their quotas would generate massive demand for carbon credits. This would significantly boost the market’s scale.
Additionally, Chan also discussed how Hong Kong could leverage its multi-currency settlement systems and legal infrastructure. By doing so, it could create a platform connecting mainland China with global carbon markets. Through managing risks related to price differences and providing hedging options, Hong Kong could become a key node in global carbon asset allocation.
In conclusion, Hong Kong’s push to enhance its carbon credit market aligns with China’s long-term green economic goals. Deputies argue that by leveraging its unique position as a “super-connector” and improving certification and validation processes, Hong Kong could play a crucial role in bridging the gap between international and mainland carbon markets.
As the city works to overcome current challenges and unlock the potential of its carbon market, it could emerge as a key player in the global transition to a low-carbon economy. If successful, Hong Kong’s efforts would have far-reaching impacts on global carbon pricing systems. This could reinforce its status as a vital player in the fight against climate change.