Internationalising China’s Carbon Market: The Role of Hong Kong as an International Financial Centre
11 Dec 2024
As corporates in Hong Kong actively work to mitigate climate risks, the carbon market is emerging as a key strategy. A notable milestone in this endeavour is the establishment of the Core Climate in 2022, an international carbon marketplace launched by the Hong Kong Exchanges and Clearing Limited (HKEX). This platform has laid a foundation for capturing regional carbon trading activity and supporting the global effort to manage climate challenges.
The Financial Services Development Council (FSDC) has been a keen advocate for these initiatives. In November 2024, the FSDC participated in the United Nations Climate Change Conference (COP29), highlighting how Hong Kong’s financial services and its position as an international hub could drive a sustainable future. This participation underscored the FSDC’s commitment to supporting Hong Kong's becoming a green and sustainable finance hub.
Building on the foundation laid by a previous report published by the FSDC, "Road to Carbon Neutrality: Hong Kong's Role in Capturing the Rise of Carbon Market Opportunities”, it is time to explore how Hong Kong can lead the regional carbon market. This can be done by capitalising on the internationalisation of Mainland China’s burgeoning carbon market, which aligns with the country’s national strategy to build an effective, vibrant, and internationally influential carbon market. In addition to forming a Working Group to conduct a research study, the FSDC has also sought market insights through in-depth interviews with various carbon market experts and practitioners.
This study highlights the importance of internationalising Mainland China’s carbon market, outlines the challenges faced in this process, highlights Hong Kong’s pivotal role in overcoming these obstacles, and proposes policy recommendations for the Hong Kong SAR Government to consider.