Hong Kong needs to ask the hard questions about its net-zero challenge

Net-zero com­mit­ments are now com­mon­place across Hong Kong’s prop­erty sec­tor. Many major developers have announced tar­gets for 2030 and 2050, often framed around energy effi­ciency, renew­able energy and greener build­ings.

This is wel­come. However, as cli­mate ambi­tion becomes the norm, a more uncom­fort­able ques­tion comes into focus: how many of these com­mit­ments are groun­ded in a ser­i­ous under­stand­ing of what decar­bon­isa­tion actu­ally entails?

What remains largely miss­ing from Hong Kong’s cli­mate con­ver­sa­tion is ana­lyt­ical depth. Tar­gets are plen­ti­ful; path­ways are not. We talk often about goals, tech­no­lo­gies and timelines, but far less about trade-offs, con­straints and the hard arith­metic of emis­sions reduc­tion.

In this respect, a recent report by Hang Lung Prop­er­ties, “Our Jour­ney to Net Zero”, stands out. This is not because it has all the answers, but rather because it is will­ing to ask the dif­fi­cult ques­tions.

What makes the report not­able is its hon­esty. Rather than present­ing net zero as a smooth or inev­it­able jour­ney, it applies a bot­tom-up decar­bon­isa­tion model to exam­ine how emis­sions evolve under dif­fer­ent scen­arios, assump­tions and growth tra­ject­or­ies through to 2050. It tests pos­sib­il­it­ies rather than prom­ising out­comes. In doing so, it sur­faces uncom­fort­able truths that the prop­erty sec­tor should not ignore.

First, new con­struc­tion is the single most con­sequen­tial vari­able shap­ing longterm emis­sions out­comes. Oper­a­tional improve­ments and renew­able energy pro­cure­ment deliver mean­ing­ful reduc­tions, par­tic­u­larly in the near term. But over time, embod­ied car­bon from steel, con­crete and alu­minium dom­in­ates the pic­ture. Even mod­est growth can over­whelm effi­ciency gains unless con­struc­tion mater­i­als them­selves decar­bon­ise rap­idly.

The report quan­ti­fies this starkly for Hang Lung. With just 1 per cent annual floor area growth after 2030, new con­struc­tion would raise 2050 emis­sions by 38 to 46 per cent com­pared with a no-growth baseline. This makes clear that growth, mater­i­als and emis­sions are insep­ar­able.

Under some scen­arios, new con­struc­tion could raise 2050 emis­sions by around 40 per cent com­pared with a no-growth baseline.

Second, the report shows that as the largest sources of emis­sions decline, smal­ler and often over­looked cat­egor­ies become increas­ingly import­ant. Pur­chased ser­vices, waste, trans­port and other such emis­sions – some of the sources of what are known as Scope 3 emis­sions – can make up the bulk of resid­ual emis­sions by mid-cen­tury.

Net zero, it turns out, is not just about flag­ship tech­no­lo­gies or land­mark projects; it is also about the unglam­or­ous work of pro­cure­ment, ser­vices, logist­ics and data qual­ity. Ignor­ing these cat­egor­ies might make path­ways look smoother on paper, but it under­mines cred­ib­il­ity in prac­tice.

Third, by lay­ing out altern­at­ive path­ways side by side, the report impli­citly high­lights the cost and fin­an­cing dimen­sion of cli­mate action. Dif­fer­ent decar­bon­isa­tion routes imply a wide range of cap­ital needs, risk pro­files and timelines.

Con­struc­tion-heavy path­ways lock in large amounts of cap­ital to car­bon­in­tens­ive mater­i­als unless low-car­bon steel, con­crete and alu­minium scale rap­idly. Other path­ways rely more heav­ily on oper­a­tional upgrades, renew­able energy pro­cure­ment and sys­tem effi­ciency. These dif­fer­ences should mat­ter to banks, investors and insurers seek­ing to price trans­ition risk and alloc­ate cap­ital prudently.

The mod­el­ling also has an import­ant implic­a­tion for how the sec­tor thinks about exist­ing build­ings. Emis­sions fall most sharply in scen­arios where new con­struc­tion slows, high­light­ing the cli­mate and cap­ital effi­ciency of ret­ro­fit­ting exist­ing assets.

Invest­ments in retro-com­mis­sion­ing, energy effi­ciency upgrades and adapt­ive reuse avoid large embod­ied-car­bon costs while deliv­er­ing faster, lower-risk emis­sions reduc­tions. This insight is par­tic­u­larly rel­ev­ant in mature cit­ies such as Hong Kong, where the bulk of the 2050 build­ing stock already exists and where cap­ital effi­ciency mat­ters as much as ambi­tion.

Equally strik­ing is what is not glossed over in the report. It acknow­ledges lim­it­a­tions in data, uncer­tain­ties around grid decar­bon­isa­tion and blind spots such as refri­ger­ants and ten­ant fit-outs – areas that could sig­ni­fic­antly affect long-term emis­sions but are often under­coun­ted or ignored. By mak­ing these gaps expli­cit, the report invites scru­tiny and improve­ment rather than com­pla­cency. It treats decar­bon­isa­tion not as a brand­ing exer­cise, but as a learn­ing pro­cess.

This kind of trans­par­ency is rare. Such scen­ario-based ana­lyses allow us to under­stand the scale of the chal­lenge. Without shared ana­lyt­ical ref­er­ence points, it is dif­fi­cult for poli­cy­makers, fin­an­ci­ers and the pub­lic to dis­tin­guish between genu­ine pro­gress and well-inten­tioned aspir­a­tion.

The sig­ni­fic­ance of this approach is par­tic­u­larly rel­ev­ant to the Hong Kong gov­ern­ment as it pre­pares its next Cli­mate Action Plan 2050. The tar­gets are there, but how to get there is less clear. Hav­ing deep, sec­tor-spe­cific mod­el­ling that com­pares dif­fer­ent decar­bon­isa­tion path­ways and makes trade-offs expli­cit would be essen­tial.

Emis­sions tra­ject­or­ies are shaped not just by tech­no­logy, but by land use decisions, infra­struc­ture choices, mar­ket struc­tures and pat­terns of growth. Gov­ern­ment-led, sec­toral decar­bon­isa­tion mod­el­ling would not dic­tate out­comes, nor should it.

However, it could cla­rify what is feas­ible, what is costly, what is uncer­tain and where policy inter­ven­tion deliv­ers the greatest impact. It would provide a shared ana­lyt­ical found­a­tion for engage­ment with busi­ness, fin­ance and civil soci­ety. And it would allow informed debate and choices.

We can all bene­fit from clar­ity. The kind of clear-eyed, scen­ario-based think­ing demon­strated in this report offers a glimpse of what that might look like. Net-zero tar­gets tell us where we want to go. Deep decar­bon­isa­tion mod­el­ling tells us how to get there and at what cost.

Contributed by Prof. Christine Loh. The article was published on SCMP:  

https://www.scmp.com/opinion/hong-kong-opinion/article/3339817/hong-kong-needs-ask-hard-questions-about-its-net-zero-challenge