Image: Charles Rondeau, Green Dollar,

Core Climate, a new carbon marketplace, was launched by Hong Kong Exchanges and Clearing Limited (“HKEX”) in October 2022.  How can Hong Kong, a special administrative region of China, leverage Core Climate to assist the country’s Greater Bay Area—which covers Hong Kong, Macao, and nine cities in Guangdong Province1 —and the rest of the country to accomplish their climate goals?  Will Core Climate be able to help Hong Kong become a leader in sustainable finance in Asia?

How Core Climate Works

Core Climate was initiated amid a trend of establishing voluntary carbon trading platforms in various countries, including Canada, Japan, New Zealand, and Singapore.  Designed to incentivize economic stakeholders to invest in climate-friendly solutions and thereby help achieve net zero emissions,2 these platforms exemplify the importance of the Paris Agreement of 2015.  With nearly 200 member countries, the Paris Agreement, as described by the United Nations Framework Convention on Climate Change:3

is a landmark in the multilateral climate change process because, for the first time, a binding agreement brings all nations into a common cause to undertake ambitious efforts to combat climate change and adapt to its effects.

[emphasis added]

The Paris Agreement’s success in bringing together countries, regardless of their levels of economic development, stands in striking contrast to the Kyoto Protocol of 1997, which has been criticized for requiring developed countries to reduce emissions while not compelling developing countries to take actions.4  To encourage cooperation among all committed countries, Article 6 of the Paris Agreement provides the basis for a country to trade carbon credits generated from the reduction of greenhouse gas (“GHG”) emissions to help one or more other countries achieve climate goals so long as robust accounting rules are followed to stop double counting of the credits.5

In line with the Paris Agreement, Core Climate, like other emissions trading systems in the world, allows participants to purchase carbon credits generated by carbon avoidance, reduction, and removal projects.  All such projects are verified against Verra’s Verified Carbon Standard, the world’s most widely used GHG crediting program, to ensure their quality and integrity.6

“[…] unlike other emissions trading systems, Core Climate allows participants to purchase carbon credits in RMB or HKD, giving participants flexibility and, more importantly, the prospects of reaching a wide range of stakeholders […]”

However, unlike other emissions trading systems, Core Climate allows participants to purchase carbon credits in RMB or HKD, giving participants flexibility and, more importantly, the prospects of reaching a wide range of stakeholders who are ready to use RMB or HKD to make these purchases. 

Implications for China’s Greater Bay Area & Rest of China

The ability to purchase Core Climate’s carbon credits in RMB, together with Hong Kong’s close relationship with mainland China, clearly makes Core Climate an appealing platform to stakeholders in China’s Greater Bay Area and even the entire country.

These stakeholders have ambitious climate goals that Core Climate is well-positioned to help accomplish.  Take the Greater Bay Area as an example.  According to a development plan issued by the national authorities in 2019, the Greater Bay Area needs to focus on, inter alia, “green development, ecological protection”.7  This task is especially onerous, considering that the Greater Bay Area has a population of nearly 90 million and a GDP of approximately USD 1700 billion.8

The approach taken by the Greater Bay Area to bring about “green development, ecological protection” will be closely watched by other regions in the country because together, they need to make sure that China will reach a peak in CO2 emissions before 2030 and will achieve “carbon neutrality” (i.e.,  a state of net-zero carbon dioxide emissions) before 2060.9

Before Core Climate was launched, China initiated its national emissions trading system in 2021 to help reduce the country’s carbon emissions.  Stakeholders in mainland China, however, continued to draw on HKEX’s expertise to explore additional climate solutions and opportunities.  Two examples are illustrative:

  • In March 2022, HKEX signed a Memorandum of Understanding with the China Emissions Exchange, which is based in Guangzhou, Guangdong Province’s capital city, to explore cooperation in “tackling climate change and promoting sustainability through carbon finance”.  Specifically, the two exchanges will share their research and experience on carbon market financing, in the hope of “internationalizing” China’s carbon market.10
  • According to statistics posted by HKEX on September 30, 2022, 292 mainland Chinese companies had already been listed on HKEX right before the launch of Climate Core in October 2022 (and this number grew to 300 by the end of the year11).  Many of these companies cover key carbon-intensive industries such as oil and gas, mining, electricity, and transportation.  Their listing on HKEX is a vote of confidence in the exchange’s expertise and global reach.

After Core Climate was launched, its potential to have a significant impact on China’s Greater Bay Area and other regions has become more evident because of its early success.  In the first four weeks after its launch, Core Climate completed more than 40 trades involving over 20 participants and presented more than 30 international projects on the platform.12

Moving forward, with HKEX’s expertise and global networks, Core Climate is well-positioned to help connect the existing national and provincial emissions trading systems in China with the rest of the world.  China’s emissions trading market has included more than 2,000 key emission entities, covering annual CO2 emissions of 4,500 metric tons.13  This market is almost three times larger than the European carbon market,14 but the former’s trade volume (i.e., 412 metric tonnes) is only around 3.4% of that of the latter (i.e., 12,214 metric tonnes).15  In other words, China’s emissions trading market promises significant growth opportunities, which, if seized properly, will fuel the development of Core Climate.

Core Climate & Hong Kong’s Position in Sustainable Finance in Asia

The preliminary success of Core Climate may further empower Hong Kong’s quest for leadership in sustainable finance in Asia.  The ambition for such a leadership has been reflected in the city’s establishment of the Government Green Bond Programme in 2019 to finance environment-friendly projects by debt security, and subsequent efforts to hit various milestones, including the handling of the world’s largest retail green bond issuance in 2022.16

Hong Kong’s ambition to become a leader in sustainable finance in Asia became more apparent in August 2022 when Mr. Paul Chan, the city’s Financial Secretary, highlighted the importance of green bonds in this way:17

Green bonds are an important tool to facilitate capital flow towards green projects. So far, [Hong Kong has] successfully issued government green bonds totaling close to US$10 billion equivalent, funding various green projects in Hong Kong and providing important benchmarks for potential issuers.  […] We will continue to promote market development through various measures so as to consolidate Hong Kong’s position as a regional and international green and sustainable finance hub.

[emphasis added]

While Hong Kong has good potential to become a leader in sustainable finance in Asia, Singapore stands out as its strong competitor.  At present, although Hong Kong is ahead of Singapore in terms of issuing sovereign green bonds and the momentum is expected to continue due to the city’s proximity to mainland China, where opportunities are not in short supply, Singapore is currently outperforming Hong Kong in terms of the number of listed sustainability, green, social, and transition bonds as well as the number of green loans that have been provided.

In addition, while Hong Kong’s Core Climate has been off to a positive start since its operation began in October 2022, Singapore actually moved a few months earlier, in March 2022, to launch Climate Impact X, a global marketplace and exchange that targets voluntary carbon credits not only in Asia but also the entire Asia-Pacific region.

To ensure its competitiveness, one might argue that Hong Kong should focus on climate fintech to encompass a wide range of business activities, including carbon accounting, climate risk management, carbon offsetting, and ESG (i.e., Environment, Social, and Governance) reporting.  All of these activities go hand-in-hand with the development of Core Climate.  However, even development on this front does not guarantee Hong Kong’s unrivalled leadership in sustainable finance in Asia, as, for example, the Monetary Authority of Singapore already launched the ESG Impact Hub on October 5, 2022 to offer competitive services along these lines.18

In short, the competition between Hong Kong and Singapore is likely to continue, leaving unclear who can claim ultimate leadership.

A Bigger Prize Is Ahead for Collaborative Players

“As Hong Kong and Singapore stand poised to fight for the top position as the leader in sustainable finance in Asia, the two international finance hubs must remember this saying: […]”

As Hong Kong and Singapore stand poised to fight for the top position as the leader in sustainable finance in Asia, the two international finance hubs must remember this saying: if you want to go fast, go alone, if you want to go far, go together.

If the competition between Hong Kong and Singapore turns out to be a healthy driver for them to develop long-term visions with sustainable development at the heart of their policies, what is awaiting these two international finance hubs is a bigger prize.  The prize is likely to be in the form of not only securing co-leadership in carbon trading or sustainable finance beyond Asia, but also helping find truly effective solutions to challenges that nature has presented to all humankind.

The citation of this article is: Dr. Jennifer Baccanello & Jingjia Zhang, Getting to the Core of Green Business: Hong Kong’s Core Climate, SINOTALKS.COM®, SinoForum&Foresight™, Jan. 25, 2023,

The original, English version of this article was edited by Nathan Harpainter and Dr. Mei Gechlik.  The information and views set out in this article are the responsibility of the authors and do not necessarily reflect the work or views of SINOTALKS®.

1 The nine cities in Guangdong Province are Dongguan, Foshan, Guangzhou, Huizhou, Jiangmen, Shenzhen, Zhaoqing, Zhongshan, and Zhuhai.  For more information about these cities, see, e.g., GBA Cities, GovHK,

2 For a brief discussion of carbon trading and the importance of collaboration among all stakeholders, see, e.g., Is Carbon Trading the Next Step Towards Decarbonisation?, The Agenda Weekly, Sept. 16, 2022,

3 The United Nations Framework Convention on Climate Change, The Paris Agreement,

4 Because of this differentiation between developed countries and developing countries, an economist considered the Protocol to be “doomed from its birth in 1997”.  See Colin Hunt, Kyoto Protocol Fails: Get Ready for a Hotter World, The Conversation, Nov. 15, 2012,  For a detailed discussion of the Paris Agreement and its main differences from the Kyoto Protocol, see Daniel Bodansky, Paris Agreement, United Nations Audiovisual Library of International Law, 2021,

5 For a concise explanation of Article 6 of the Paris Agreement and related roles of the World Bank, see What You Need to Know About Article 6 of the Paris Agreement, Climate Explainer Series, May 17, 2022,

6 For an overview of the program, see Verified Carbon Standard, Verra,

7《粤港澳大湾区发展规划纲要》(Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area), issued by the Communist Party of China Central Committee and the State Council on Feb. 18, 2019, effective as of Feb. 18, 2019,

8 See, e.g., Overview, GovHK,

9 See China’s Achievements, New Goals and New Measures for Nationally Determined Contributions, submitted by China to the Secretariat of the United Nations Framework Convention on Climate Change in October 2021,

10 See HKEX Signs MOU With CEEX to Explore Greater Bay Area, International Carbon Opportunities, Corporate News Release, Mar. 24, 2022,

11 See List of H Share Companies, Statistics, Dec. 31, 2022,

12 See Early Momentum for Core Climate, Hong Kong’s New International Carbon Marketplace, Corporate News Release, Nov. 24, 2022,

13 中华人民共和国生态环境部 (Ministry of Ecology and Environment of the People’s Republic of China), 全国碳市场第一个履约周期顺利结束 (The First Compliance Cycle of the National Carbon Market Ended Successfully), Dec. 31, 2021,

14 See Yuan Lin, China’s National Carbon Market Exceeds Expectations, Trading Insights, June 22, 2021,

15 Fitri Wulandari, Carbon Price Forecast: Will Price Hit €100/tonne This Year?,, June 14, 2022,

16 For details about Hong Kong’s Government Green Bond Programme, see Green Bond Report 2022, GovHK,

17 HKSAR Government Releases Green Bond Report 2022, GovHK, Aug. 31, 2022,

18 See MAS Launches ESG Impact Hub to Spur Growth of ESG Ecosystem, Monetary Authority of Singapore, Oct. 5, 2022,