Climate Change, Green City and Economic Growth: An Integrated Assessment of the Economic Effects of Hong Kong’s Climate and Energy Policies

Project: Research

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Climate change and global warming, as the results of greenhouse gases emissions overlast decades, have become one of the most sophisticated challenges on the globe, andhence attracted increasingly both the public concerns and the governmentalcommunications. The CO2 emissions have been rising continuously in Hong Kong since2000, amounting to over 40 million tonnes of carbon dioxide equivalent in 2012.Specifically, Hong Kong government has set its plan to achieve a reduction in carbonintensity by 50 to 60 percent from the 2005 level by 2020. The government has also setthe energy saving targets and a new fuel mix for electricity generation after 2020.Climate or energy policies have important economic consequences. Emission mitigationand energy saving plan can substantially affect the energy use, the supply of energygoods, stakeholder investment, economic structure, as well as the economic growth of thecity. An accurate study of the impacts of climate and energy policies on the local levelrequires that, a macroeconomic model of the Hong Kong economy needs a detailedrepresentation of energy production, sectoral investment, and induced innovation.The underlying research question of this project is to estimate the impacts ofenvironmental change and mitigation of GHGs on the structural change, economicgrowth, and consumer welfare in Hong Kong. This project will develop a macroeconomicframework with endogenous growth, coupled with climate-energy models of carboncycle. The generation and supply of energy/electricity are specified by technology details.In terms of methodology, the project will utilize several economic methods: econometricanalysis, data disaggregation, numerical simulation.The contributions of this project are multiple. First, by providing a detailedrepresentation of the economic structure of the Hong Kong economy, it develops aworkhorse which can be used as the core for the numerical investigation of themacroeconomic effects of any public policies. Second, it develops a disaggregatedclimate-energy model, which is a powerful tool to assess several novel dimensions ofHong Kong’s climate and energy policies. Third, the disaggregated climate-energy modelis linked to the macroeconomic model. This brings about a brand new modelingworkhorse for future research on climate-economy-energy nexus. Fourth, this pilotproject will fuel a further discussion in the modeling community of how economic modelscan take into account realistic climate-energy related specific technology features andfinally reconcile the aggregate economic index with disaggregate climate-energy details.


Project number9048111
Grant typeECS
Effective start/end date1/12/17 → …