The 2023 United Nations Climate Change Conference, or COP28, held in Dubai from Nov 30 to Dec 12, delivered a historic moment in the fight against climate change with the UAE Consensus, announced by COP28 President Sultan Ahmed Al Jaber, in an agreement that was unanimously approved by 198 parties.

The agreement calls on all countries to move away from the use of fossil fuels, but not to phase them out. Countries will “contribute … to transitioning away from fossil fuels in energy systems in a just, orderly and equitable manner”. This is the first time there has been a clear reference to the future of all fossil fuels (coal, oil and gas) in a COP text.

The agreement also proposes accelerating a phase-down of unabated coal power, while recognizing the need for deep, rapid and sustained reductions if humanity is to limit temperature increases to 1.5 degrees C. Furthermore, there is recognition that global emissions will likely peak before 2025, and that for developing nations, this may be later.

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However, on adaptation and finance, the language appears to have been weakened, with the text “reiterating” rather than “requesting” developed countries give support to vulnerable nations facing climate change. The agreement also promises to triple renewable energy sources, and the requirements for new carbon-cutting plans are significant.

While some have dismissed this document as weak, the truth is that it is a historic moment in the fight against climate change. Undoubtedly, this document could have been more ambitious, but, overall, it can be considered a good step in the fight against climate change.

China is a key player in a possible fossil fuel phase-out, and Xie Zhenhua, China’s then-climate envoy, said China would like to see nations agree to substitute renewable energy for fossil fuels.

Xie gave an indication of what China sees as a possible compromise, by referring to a joint statement made with John Kerry, the US climate envoy, at a meeting at the Sunnylands estate in Rancho Mirage, California, in November. Xie said at a small news conference just before COP 28 that “We had this language which said that both China and the US will massively promote renewable energy deployment and use it to gradually and orderly substitute oil, gas and coal power generation, so that we can reduce greenhouse gas emissions.”

China is indeed reducing its dependence on coal: China’s goal is that of reaching its carbon emissions peak before 2030 and becoming carbon neutral before 2060, as listed in its national 14th Five-Year Plan (2021-25) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035.

Both of China’s objectives are crucial for achieving green development. By way of comparison, the US and the European Union aim to achieve carbon neutrality by 2050. If they meet their targets, it will have taken the US around 45 years and the EU around 60 years to move from their carbon emissions peak to achieve neutrality, but China plans to do it in just 30 years, which is a very ambitious, yet reachable, goal.

When it comes to Hong Kong, the United Nations’ resident coordinator in China, Siddharth Chatterjee, while speaking at the Hong Kong Financial Forum 2023, said that the Hong Kong Special Administrative Region has a unique role to play as China’s offshore capital hub for green finance, as the country needs to accelerate environmentally friendly projects if it is to transition to a low-carbon economy.

More specifically, Chatterjee mentioned that, “while China is working to address its environmental and climate challenges, it remains the largest emitter of greenhouse gases”. (Editor’s note: China’s per capita emissions, at 10.1 metric tons/capita in 2019, remain considerably lower than those of the developed world; for example, the United States, at 17.6 metric tons/capita.) “China must build on the substantial progress it has made in green finance by expanding and accelerating projects with environmental benefits.

“This is where the HKSAR has a unique role to play as China’s offshore capital hub, for both traditional finance, and green finance.”

Hong Kong’s interest in strengthening its position as a green tech and green finance hub is not new. As I mentioned in an op-ed titled Hong Kong Rightfully Becoming a Green Finance Hub (China Daily Hong Kong Edition, April 23, 2021), by embracing green finance even more, the special administrative region would be acting in a way that is consistent with China’s carbon goals.

Therefore, Hong Kong tapping into green and sustainable finance is not only beneficial to the special administrative region, but is also consistent with the country’s objective of paying enormous attention to sustainability and climate change.

Green bond markets have been increasing in size and value for more than a decade. Since the first green bond market opened in 2007, more than $1 trillion worth of green bonds have been issued globally as investors have identified a sustainable and profitable investment option. As a matter of fact, oversubscription, in which demand exceeds the number of green bonds available, has become the norm for green bond issuances.

Hong Kong is, thus far, quite advanced when it comes to embracing the opportunities offered by green finance and green bonds.

To sum up, China has the potential to become a key player in a possible fossil fuel phase-out. While China’s carbon emissions peak has not yet been reached, China is committed, as established in its 14th Five-Year Plan, to become carbon neutral by 2060.

As for Hong Kong, while the city remains and will continue to be one of the most important financial centers in the world, it seems the perfect time for the city to promote its role as a green tech and green finance hub. As Financial Secretary Paul Chan Mo-po has mentioned, there is a huge demand for green financing in the region, and I am sure the investment will pay off, given the HKSAR’s unique role within China, particularly in the Guangdong-Hong Kong-Macao Greater Bay Area.

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In this sense, both Hong Kong and the GBA will benefit from contributing to the achievement of the COP28 targets by promoting green tech and green finance to serve the needs of the country’s low-carbon economy. According to a report released in late July by HSBC and the CECEP Environmental Consulting Group, a unit of the China Energy Conservation and Environmental Protection Group, green and sustainable finance deals in the GBA rose to a record level in the second quarter of 2023. Volume grew 80 percent to 121.7 billion yuan ($16.91 billion) in the first half of 2023 compared with the same period in 2022. I expect these numbers to keep growing in the quarters to come.

The study also found that of the more than 2,000 listed companies registered or operating primarily in the area, some 73 percent have made ESG (environmental, social, governance) disclosures for the 2022 financial year, up from 71 percent in the previous year. Hong Kong and Macao firms led with disclosure rates of 94 percent and 92 percent respectively.

In addition to this, the Green Silk Road project should also prove to be very relevant in the future: The Green Silk Road project looks at making Belt and Road Initiative projects greener and more sustainable. The scope of the Green Silk Road includes reducing climate emissions, reducing pollution, and protecting biodiversity, while ensuring improved economic opportunities for the countries involved.

The author is a fintech adviser, a researcher, and a former business analyst for a Hong Kong publicly listed company.

The views do not necessarily reflect those of China Daily.