Budget should help push green finance as the idea's time comes

The financial secretary's budget provides funding for the chief executive's policies, and gives an account of the overall financial management of the HKSAR government.

The chief executive's policies encompass both capital spending, such as housing and infrastructure projects, one-off payments to ease hardship during the pandemic, and new recurrent expenditures.

The financial secretary's added value is where he chooses to spend personal time to strengthen Hong Kong's capabilities and capacities. After all, he is the second-highest political officer with direct responsibility for financial, monetary, tax, economic, trade, development, as well as innovation and technology matters.

As such, the ministers of commerce and economic development, financial services and the Treasury, innovation and technology, as well as development, report to him. The monetary authority - Hong Kong's equivalent of the central bank - also comes under the purview of the financial secretary.

During this term of administration, which started in 2017, the financial secretary became a convert of green finance, and Hong Kong has staked a claim to be Asia's international green finance hub.

Green finance is shorthand for directing capital away from the "brown to green" transition. This has become increasingly prominent as governments around the world focus on the need to decarbonize to avert the threat of climate change.

The financial secretary acknowledged in this year's budget that "green development is a major global trend" and that there is "a social consensus" to decarbonize and improve environmental sustainability.

He pointed to the EU's and China's commitment to achieving carbon neutrality by 2050 and 2060 respectively. He noted that "a significant synergy effect" exists between greening the economy and finance and technology, and that Hong Kong's role is to raise capital for the Chinese mainland to meet its green development goals.

The financial secretary discussed the government's plan to issue green bonds regularly and expand its scale over the next five years. He will personally lead a high-level policy and regulatory steering group to formulate a road map for promoting the development of Hong Kong's bond market.

This is all positive. It would be even better if he would also chair senior-level discussion groups to bring decarbonization and environmental sustainability explicitly into the areas he has direct responsibility for.

It would make sense because "green" is a powerful driver for economic development in Hong Kong, the mainland and globally.

China has already made clear that its two-pronged strategy going forward is dual circulation and carbon neutrality. What it means is that the continuing evolution of the mainland's domestic market is through carbon neutrality, as are its external relations.

China is planning to decarbonize its economy aggressively through replacing fossil fuels with clean energy, which also involves dramatically improving energy and resource efficiencies, reusing and recycling resources, as well as making consumption much more environmentally sustainable.

As the world's largest manufacturing economy, China's efforts in decarbonizing production, and also transportation and logistics, will be nothing short of revolutionary.

The financial secretary is aware that the mainland requires trillions of dollars to make this transition, and he wants Hong Kong to have a slice of the green finance business.

What he needs to do is to truly capacitate Hong Kong through aligning those policy bureaus under his purview to make decarbonization a key pursuit.

The bureaus all have to play a part to strengthen Hong Kong's commercial and public sectors to service the many activities arising from decarbonization if Hong Kong's service sector is going to be a green finance hub.

The mainland's ambition includes developing environmental markets. It has just launched a nationwide carbon emissions trading market after a decade of piloting. Now that it has come alive, it will spur all kinds of carbon reduction technologies and innovations.

Hong Kong is a natural place to contribute to the development of such markets but the government hasn't yet focused on the opportunity. Market participants have also not done anything because there is still plenty of money to be made in stocks, precious metals and other established products. Perhaps they will now start to pay attention as China's carbon market is the largest in the world.

The purpose of emissions trading is to establish a carbon price. The EU has had a carbon trading scheme since 2005. The EU is considering whether to impose a carbon tax on imports, which would affect Hong Kong and the mainland as trade counterparts.

Apart from heading a steering committee on bonds, the financial secretary could add emissions trading to its terms of reference. Emissions trading is more challenging than bonds as it is a new type of financial product that Hong Kong has no experience in.

The financial secretary should also take a personal look into the work of the development bureau, whose responsibilities cover infrastructure, public works, as well as updating codes for buildings - all of which play a big part in the decarbonization of the city.

Moreover, they provide training grounds for all kinds of professional services from architecture, planning, engineering, energy, construction, law, arbitration, accounting, insurance, and finance.

Professionals in Hong Kong can service projects on the mainland and elsewhere in Asia better with hands-on experience in decarbonization gained locally. For Hong Kong to become a strong green finance center, the rest of its professional services need to know and go green too.

The financial secretary has exciting work to do; and he should represent Hong Kong at international meetings relating to climate change and climate finance.

The views do not necessarily reflect those of China Daily.