Overview

• Hong Kong’s environmental protection industry focuses on six areas, including (1) environmental equipment supply; (2) environmental consulting services; (3) water conservation and pollution control; (4) air and odour pollution control; (5) waste handling, disposal and management system and; (6) noise control and mitigation equipment.

• Green products manufactured by other industries are of close relation to environmental protection. Amid the rise of green consumerism and increasingly stringent regulatory requirements around the world, there are an increasing number of Hong Kong companies making their manufacturing process and products "green".

• In the supplement V to CEPA, the mainland agreed that with effect from 1 January 2009, the Guangdong province is permitted to approve the qualification of the Hong Kong service suppliers for setting up enterprises to operate environmental pollution control facilities in Guangdong.

Industry Features

Hong Kong’s environmental protection industry consists of about 300 establishments with employment of some 26,000 persons. Most of them are small and medium-sized enterprises. According to a HKTDC survey in 2008, most Hong Kong environmental enterprises provide these environmental services: environmental equipment supply (61%); water conservation and pollution control services (44%); environmental consulting services (40%); air and odour pollution control services (37%); waste handling, disposal and management services (20%); recycling services (20%) and noise control and mitigation (20%).

• Environmental Equipment Supply

While some locally based applications and technologies have been developed by certain Hong Kong companies, most environmental equipment supply in Hong Kong are from foreign companies. These include a variety of equipment, such as heat pumps, waste oil and water treatment systems, low energy process equipment and equipment for adoption of alternative energy. Hong Kong companies act as agents and distribute their equipment in Hong Kong and the mainland, usually also providing installation and operation services to clients.

• Environmental Consulting Services

Hong Kong environmental companies competitive edge lies in technology application, adapting foreign technology and equipment to markets in Hong Kong and the mainland. With a good understanding of the availability and application of environmental products and services, Hong Kong companies are actively assisting mainland manufacturers, especially in the PRD region to improve their existing operations and lessen pollution by providing environmental consulting services.

• Water Conservation and Pollution Control

This involves the supply of advanced treatment, biological treatment, chemical treatment, packaged wastewater pollution control, physical treatment, sludge treatment water conservation, monitoring & measurement/analytical equipments, other pumping system and chemicals.

• Air and Odour Pollution Control

This involves the supply of gas control equipiment, odour/organic gases control, particulate control, monitoring & measurement/analytical equipment and chemicals such as activated carbon, catalysts and scrubbing solution.

• Waste Handling, Disposal and Management System

This involves the supply of waste-disposal system and equipment, waste handling and storage systems, waste reclamation, waste transportation and process waste recovery and control systems.

• Noise Control and Mitigation Equipment

This involves the supply of noise control equipment, noise barriers and vibration isolator, building noise control systems.

In most cases, Hong Kong companies are responsible for design, supply and installation of the equipment. Sometimes, operation and maintenance arrangement are also provided as value-added services. For example, a Hong Kong-based environmental service company upgraded the pumps and fans for coal-fired and gas-fired power plants in Jiangsu province and has entered a contract with one of China’s larger cement producers to upgrade its production line. Another Hong Kong-based environmental service company that specializes in energy effcient lighting solutions, provided consultancy and replacement services to toy and textile manufacturers in Guangdong and Shenzhen.

Hong Kong has long been maintaining a good business relationship with the region and global businesses. In addition, Hong Kong’s linguistic advantage and excellent communication infrastructure enable Hong Kong companies to readily access global environmental protection information. The industry is in a favourable position to be the leader and middleman in transferring the latest technologies, especially from overseas to the mainland.

Hong Kong-Mainland cross-boundary cooperation

In green manufacturing, the Hong Kong government has set up a grant of up to a maximum of HK$90 million over five years from 2008/09 to facilitate Hong Kong-owned factories in the PRD to improve energy efficiency and reduce air pollution. The grant is for subsidizing the cost of 1) carrying out verification of the effectiveness of improvement projects, 2) on-site improvement assessment projects and 3) demonstration projects. Verification projects are undertaken by the Hong Kong Productivity Council, while private environmental technology services providers registered under the programme are engaged for assessment projects and demonstration projects.

The Solar Energy Technology Support Centre was opened in the Hong Kong Science and Technology Park (HKSTP) in March 2009. The centre is part of a strategic collaboration between Hong Kong and Shenzhen Municipal Governments for the photovoltaic industry to form an R&D hub in Hong Kong, with Shenzhen as the manufacturing base. DuPont is our first partner in this major cross-boundary initiative. The HKSTP has recently proposed establishing a Green Tech Cluster to attract businesses in the field of renewable energy and environmental technologies, including energy management to Hong Kong and Shenzhen.

As the Chinese mainland increases its effort and investment in environmental protection and ecological regeneration, more opportunities are created for Hong Kong together with their mainland counterparts to jointly work on mainland and overseas projects. Of the Rmb100 billion additional investments already endorsed by the state in 2008, Rmb8.5 billion has been allocated for environmental protection. This includes Rmb5 billion for urban sewage works and garbage treatment, Rmb1 billion for sewage treatment, waste-water reuse and piping networks in key river basins and Rmb2.5 billion for 10 major energy conservation projects and the development of a recycling economy. The Rmb4 trillion economic stimulus plan also budgeted for environmental protection projects across mainland. The Hong Kong Government estimates that mainland authorities will spend more than Rmb200 billion on environmental protection in the next two years.

Other prominent environmental protection efforts in Hong Kong

To further improve energy efficiency in buildings, the proposal on the mandatory implementation of the Building Energy Codes (BECs) was introduced, with public consultation on the proposal concluded in Mar 2008. There is also the Environment and Conservation Fund of $450 million allocated for private building owners to conduct energy-cum-carbon audits and energy efficiency improvement projects. Hong Kong architects and developers are experienced in incorporating green building features such as natural ventilation and lighting into buildings and making use of energy technologies and products to achieve sustainability. These initiatives will further create opportunities for the environmental protection and other related sectors.

Hong Kong has become the first place in Asia, except Japan, to sign a Memorandum of Understanding (MoU) to promote the use of electric vehicles. The evaluation of the vehicle is expected to begin in May 2009. The trial will help the government understand the performance of the new generation electric vehicles and the charging requirements for large scale introduction to Hong Kong in the near future.

The Hong Kong government is also committed to promoting green procurement. The 2009 Policy Address indicates that when procuring government vehicles, the Government will give preference to models which comply with environmental and efficiency standards. The Government is also gradually replacing the conventional traffic signals with light-emitting diode (LED) traffic signals. With regard to stores procurement, the Government has been expanding its green procurement list.

Green Products and Green Manufacturing

In many cases, green products and green manufacturing are of close relation to environmental protection. This is due partly to the rise of the so-called green consumerism in overseas market. Increasingly, consumers are buying products with green attributes amid increasing concerns on the environment. More stringent regulatory requirements on grounds of environmental protection have also pushed Hong Kong companies to adopt green practices in the manufacturing process and finished products.

The European law on chemicals, REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals), was operational since June 2007. REACH requires registration of all substances and substances in articles manufactured in, or imported into, the EU market in quantities of 1 tonne or more per year. EU manufacturers and importers are also responsible for the collection, recovery and recycling of used products under the Directive on Waste Electrical and Electronic equipment (WEEE) and to restrict the types of hazardous materials in electrical and electronic equipment under the Directive on the Restriction of the Use of certain Hazardous Substances (RoHS).

The Chinese mainland has adopted similar regulations. These include the already effective Management Methods on Prevention and Control of Pollution Caused by Electronic Information Products since March 2007 and the Management Methods on Prevention of Waste Electronic Equipment Pollution on Environment since February 2008. The regulation on recycling and treatment of waste electrical and electronic equipment is effective from 1 January 2011 and though still in the consultation stage on details of implementation, a special fund will likely be set up for the treatment of waste eletrical and electronic equipment. Manufacturers, importers and agents of specific electrical and electronic equipment will have to contribute to this fund used to subsidize the cost of waste recycling and treatment.

CEPA Provisions

In the Supplement IV to CEPA, Hong Kong service suppliers are allowed to set up wholly-owned enterprises in the Mainland to provide environmental protection services from 2008. Market entry for Hong Kong service providers is further eased in the latest liberalization measure to permit the Guangdong Province to approve the qualification of the Hong Kong service suppliers for setting up enterprises to operate environmental pollution control facilities in Guangdong.

For trade in goods, since the implementation of the second supplement to CEPA in January 2006, all products of Hong Kong origin can be imported into the mainland at zero tariff. According to the stipulated procedures, products which have no existing CEPA rules of origin will enjoy tariff-free treatment upon applications by local manufacturers and upon the CEPA rule of origins being agreed and met.

List of goods entitiled to CEPA zero tariff preference in 2009 is found here:
http://www.tid.gov.hk/english/cepa/tradegoods/files/mainland_2009.pdf