HKUST report calls for integrating Kigali Amendment into Hong Kong’s building retrofit strategy and proposes targeted tax reform to accelerate cooling transition

A new report published by the Hong Kong University of Science and Technology (HKUST) proposes that Hong Kong’s implementation of the Kigali Amendment to the Montreal Protocol should be treated as a driver of building retrofits, not merely a technical compliance exercise.
 
Titled Integrating the Kigali Amendment into Hong Kong’s Building Retrofit Strategy: From Energy Efficiency to Cooling Efficiency in the Next Climate Action Plan, the report explains why the legally binding phase-down of high-global-warming-potential (GWP) refrigerants will fundamentally reshape the economics, timing, and governance of building upgrades in Hong Kong.
 
Why Kigali matters for Hong Kong now
Existing buildings account for roughly half of Hong Kong’s carbon emissions, with air-conditioning dominating electricity demand. While past policies have focused mainly on energy saving, the Kigali Amendment adds a new, binding obligation - a rapid reduction in high-GWP refrigerants used in cooling systems.
 
Because Hong Kong is treated as a developed economy under the Kigali framework, it faces an earlier and steeper phase-down schedule than emerging economies. As quotas tighten, high-GWP refrigerants will become scarcer and more expensive, creating rising maintenance risks for older cooling systems and accelerating asset obsolescence.
 
The report argues that cooling efficiency and energy efficiency must now be addressed together. Kigali-aligned cooling upgrades reduce both:

• Direct emissions from refrigerant leakage, and
• Indirect emissions from electricity consumption.

 
For dense, high-rise cities like Hong Kong, this dual pathway represents one of the most cost-effective and scalable routes to emissions reduction in the near term.
 
From compliance cost to investment opportunity
Building on HKUST’s earlier work on financing retrofits, the report shows how Kigali compliance can de-risk investment by providing regulatory certainty and clear transition timelines. When combined with performance-based contracting and measurable indicators, Kigali-aligned projects can become finance-ready assets suitable for green and sustainability-linked finance.
 
The report identifies a gap: Hong Kong’s tax system does not yet recognise refrigerant-based climate mitigation, even though it already provides generous incentives for other environmental investments.
 
A targeted tax idea for the Financial Secretary’s Budget: extend Schedule 17 to Kigali-compliant cooling equipment. The report proposes a practical, low-friction tax reform that builds on existing incentives for environmentally friendly assets. This would be done by amending Schedule 17 of the Inland Revenue Ordinance to allow 100% immediate tax deduction for refrigeration, air-conditioning and heat-pump equipment certified as compliant with the Kigali Amendment.

Such an amendment would:

• Lower the upfront cost of legally required refrigerant transition,
• Avoid delaying upgrades while waiting for energy-efficiency registration,
• Preserve coherence between refrigerant regulation and tax policy, and
• Build on well-established precedents already used for renewable energy, electric vehicles, and energy-efficient building installations.

 
Looking ahead to the 2026 Climate Action Plan
With Hong Kong preparing its 2026 update of the Climate Action Plan 2050, the report proposes that Kigali compliance could be explicitly integrated into climate, building, finance and tax policy, rather than treated as a standalone environmental obligation.
 
The Kigali Amendment can act as a structural governance lever aligning international climate commitments with local regulation, market behaviour, and private capital mobilisation.

The full report, Integrating the Kigali Amendment into Hong Kong’s Building Retrofit Strategy, is available for download at https://shorturl.at/GzgP7