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A strong business case for going green: Secretary for the Environment Edward Yau

From the largest corporations to individual homeowners, everyone, it seems, is trying to burnish their environmental credentials. A byproduct of this rush to save the earth is a growing number of business opportunities for small and medium-sized enterprises (SMEs), especially in Hong Kong.

There are currently about 57,500 factories in the Pearl River Delta (PRD) owned by Hong Kong companies. Most of them are engaged in six industries: electronics, IT and communications products; textiles, garments and footwear; plastic injection moulding; metal plating and processing; printing and packaging; and chemicals.

The estimated size for environmental technology, goods and services for these sectors was about HK$40 billion in 2006, according to a Hong Kong Trade Development Council study. If the same level of growth continues, and taking into account environmental projects budgeted by the Guangdong government, the market could reach HK$90 billion by 2018. Opportunities for SMEs will most likely occur in the air emissions, energy efficiency and wastewater treatment and solid waste disposal sectors.

The Hong Kong Government announced in February that it would allocate HK$450 million to enhance the energy efficiency of privately owned facilities. This is expected to create at least 200 jobs. The government is also allocating another HK$450 million to install energy-efficient systems for lighting, air conditioning, elevators and escalators in government buildings, creating more jobs.

The Low-hanging Fruit

"The reason we are focusing on energy efficiency is that there is a very strong business case for doing so and a huge environmental benefit," said Edward Yau, Hong Kong's Secretary for the Environment. "Hong Kong has many large buildings, and if energy audits can identify a 20-30 per cent savings, if they go for alternative devices, this is the low-hanging fruit. People can go in and, by changing the lighting or making adjustments for air conditioning or new systems for lifts, they stand a chance of gaining something. There is actually a very strong case for the bottom line. There are tremendous incentives for people to go for energy efficiency.

"Another reason that we have picked energy efficiency is, first, 63 per cent of our carbon emissions come from our energy generation. Then, 89 per cent of our energy consumption goes to buildings. So there's a strong environmental case to focus on energy efficiency" to create new job opportunities, Mr Yau said.

"The major challenge now is how to drive this change," he added. "Others do it with a loan scheme to drive people to change, and the savings are plowed back into repaying the loan. In Hong Kong, most buildings have multiple owners, so we have to find a way to incentivise the scheme, and that's why we have set up funds for the audits and improvements."

Those funds total HK$150 million for energy audits and HK$300 million for improvements, which have to be matched dollar-for-dollar by the developers or owners. The government also is spending HK$450 million for audits and improvements on public buildings.

"I think this will drive new business for environmental consultants and auditors and so on. It's not only engineers who will drive the new business. Property managers have a direct responsibility and incentive to be part of the process. Then you have air con suppliers and others, where selling energy-efficient products is becoming a top choice."

Noting that 95 per cent of the companies in Hong Kong are SMEs, Mr Yau said: "It's all about getting money in the hands of entrepreneurs. The first hurdle is for SMEs to recognise that there is a business case for going green. People in Hong Kong realise we have to do something. Just look at the air."

Eco Companies


	Eco-glass blocks, made from recycled material, can also help clean the air

Many Hong Kong companies have taken environmentalism to heart.

The Laputa Eco Construction Material Co Ltd, for example, takes waste glass bottles, construction and demolition wastes and fly ash from power plants, to produce paving blocks for pathways and roads that help reduce air pollution.

Another company, E-Tech Management Ltd, takes old computers and other electronic scrap, recycling nearly 100 per cent of it.

BillionGroup Technologies Ltd, meanwhile, offers energy consultant and implementation services in electrical, air-conditioning, manufacturing and lighting systems.

Laputa was started in 2005 and holds the license for the technology developed at the Hong Kong Polytechnic University, according to company consultant Henry Chiu.

The technology to make the eco-blocks could prove a boon to several industries, ranging from construction and waste disposal. Even the government, according to Mr Chiu, could save millions of dollars by eliminating the need to ship unwanted construction and demolition waste to the Chinese mainland.

"The technology actually replaces or uses three environmental ingredients," Mr Chiu said. "We replace the sand with crushed glass from waste bottles, we replace the aggregate in the paving blocks with recycled aggregate from construction waste, and we combine fly ash from the city's power plants. This is what we call the eco-glass block."

The company also produces so-called "air pollution removal pavers" – paving blocks that contain titanium dioxide, which converts or helps to convert the nitrogen oxides from vehicle exhaust, turning it into nitrate, which is basically a fertiliser.

Market Potential

Mr Chiu said there are more opportunities for SMEs to get involved in businesses like Laputa's because it is an industry that can only go up.

"If the market is big and there is money to be made, you will see others falling in line." Mr Chiu said one likely growth area was the construction and demolition waste business, because there's only one company currently operating in the sector in Hong Kong.

"Tailor Recycled Aggregates is the only one in Hong Kong that crushes demolition waste," he said. "The market doesn't seem to be that attractive at the moment, but these wastes are the culprits that are filling up the landfills, and the government is spending billions to ship other waste to China. But somebody has to make a start for the environment. And if there is a market, hopefully other companies will join the operations and the business."

The Federation of Hong Kong Industries and the Business Environment Council have set up a website designed to help Hong Kong SMEs deal with environmental problems. Business Environment Council CEO Dr Andrew Thomson said that business efforts to go green are not merely a public relations ploy.

"If you look at what many of these businesses are required to do, it's really nothing," Dr Thomson said. "So any steps they take are positive. And yes, there are a lot of opportunities out there, but there also are a lot of threats," because of pending legislation in many countries that will affect how products are made at Hong Kong-owned factories in the PRD.

"All these new regulations present challenges, and they will be the tip of the iceberg," Dr Thomson said. "We're looking forward to living in a low-carbon economy, and the opportunities are there for businesses that are responding to the needs of others for low-carbon products. This, in turn, is going to affect manufacturers in the PRD and how their products are delivered to the marketplace."

Green Manufacturing