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 over last decades, have become one of the most sophisticated challenges on the globe, and hence attracted increasingly both the public concerns and the governmental communications. The CO2 emissions have been rising continuously in Hong Kong since 2000, 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 carbon intensity by 50 to 60 percent from the 2005 level by 2020. The government has also set the energy saving targets and a new fuel mix for electricity generation after 2020. Climate or energy policies have important economic consequences. Emission mitigation and energy saving plan can substantially affect the energy use, the supply of energy goods, stakeholder investment, economic structure, as well as the economic growth of the city. An accurate study of the impacts of climate and energy policies on the local level requires that, a macroeconomic model of the Hong Kong economy needs a detailed representation of energy production, sectoral investment, and induced innovation.The underlying research question of this project is to estimate the impacts of environmental change and mitigation of GHGs on the structural change, economic growth, and consumer welfare in Hong Kong. This project will develop a macroeconomic framework with endogenous growth, coupled with climate-energy models of carbon cycle. The generation and supply of energy/electricity are specified by technology details. In terms of methodology, the project will utilize several economic methods: econometric analysis, data disaggregation, numerical simulation.The contributions of this project are multiple. First, by providing a detailed representation of the economic structure of the Hong Kong economy, it develops a workhorse which can be used as the core for the numerical investigation of the macroeconomic effects of any public policies. Second, it develops a disaggregated climate-energy model, which is a powerful tool to assess several novel dimensions of Hong Kong’s climate and energy policies. Third, the disaggregated climate-energy model is linked to the macroeconomic model. This brings about a brand new modeling workhorse for future research on climate-economy-energy nexus. Fourth, this pilot project will fuel a further discussion in the modeling community of how economic models can take into account realistic climate-energy related specific technology features and finally reconcile the aggregate economic index with disaggregate climate-energy details.


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