Financing a Net-Zero Future
Decarbonisation requires sustained funding, clear rules and collaboration across sectors and regions. In this post, I explore Hong Kong’s crucial role in mobilising capital towards projects that reduce emissions at the source and support an orderly energy transition.
05 February 2026
As the energy transition progresses, it is essential to ensure that capital is deployed not only efficiently but also in ways that create lasting value for the communities we serve. This requires anticipating emerging trends, understanding stakeholder needs and making disciplined financial decisions that advance both climate goals and system resilience.
Transition finance is central to these efforts. Our progress towards a net-zero future will depend on our ability to mobilise capital with clarity and credibility, which are key to accelerating progress. In this context, a sustainable finance taxonomy provides the necessary common language by setting clear and consistent criteria for what counts as sustainable. It helps companies, banks and investors channel capital more effectively towards projects that accelerate the transition and deliver measurable outcomes.
Evolving Framework for Sustainable Finance
Around the world, initiatives such as the EU Taxonomy and the ASEAN Taxonomy offer clear principles and sector‑specific guidance for sustainable investment. These efforts also support the development of local taxonomies to steer capital towards orderly, just and credible transition pathways. In Singapore, a consultation conducted late last year aims to refine its existing taxonomy to better reflect the reality and practicality of key sectors in Asian markets.
In May 2024, the Hong Kong Monetary Authority (HKMA) launched the Hong Kong Taxonomy for Sustainable Finance, marking a significant milestone in the city’s sustainable finance journey. CLP supports the adoption of a science‑based, multi‑objective taxonomy framework that aligns with applicable international practices, while recognising that it must be tailored to Hong Kong’s local and regional context, including its energy mix, market structure and policy priorities. We are therefore happy to see that Phase 2A of the Hong Kong Taxonomy — issued in January 2026 — has further strengthened the framework by expanding its scope and integrating transition features designed to guide the decarbonisation of more sectors.
In Phase 2A, sector coverage has broadened to include manufacturing, and information and communications technology, bringing the total number of economic activities from 12 to 25 with inclusion of additional energy‑related activities. The framework also incorporates transition elements such as interim milestones and sunset dates, setting time-bound expectations for decarbonisation progress. In addition, a new environmental objective — climate change adaptation — has been added.
As an evolving framework, the taxonomy will continue to expand. For example, in recognition of their critical roles in supporting Hong Kong’s decarbonisation pathway, natural gas-fired power generation and nuclear energy are being considered for inclusion as transition activities under Phase 2B.
Implementing the taxonomy, however, will present challenges for the power sector, given Hong Kong’s unique structural constraints. The city faces limited space for large-scale domestic renewable energy, depends on imported nuclear electricity, and must maintain a highly reliable power system for a dense urban population.
In Phase 2A, the taxonomy sets stringent emissions intensity thresholds. If such thresholds were to apply to gas‑fired power plants, only those equipped with advanced carbon capture facilities or substantial low‑carbon fuel blending would be able to meet the standards. This implies that even the most efficient unabated gas plants operating today would fall short of the less stringent emissions requirements under the new transition category for carbon-intensive activities. As Hong Kong continues its decarbonisation journey, it will be important for future updates to the taxonomy to consider the practical need for higher-emitting baseload generation to maintain system reliability during the transition.
Mobilising Capital for Change
Given these realities, CLP supports the HKMA’s ongoing work to ensure that threshold setting remains appropriately ambitious while reflecting Hong Kong’s transition pathway as laid out in the Climate Action Plan 2050. We also support the future consideration of nuclear energy and unabated natural gas-fired generation within the framework. Natural gas-fired power generation will continue to play a vital role in ensuring energy reliability in the short to medium term, while enabling the phase‑down of more carbon‑intensive fuels such as coal. Nuclear energy, meanwhile, can deliver stable, zero-carbon baseload power to support deeper decarbonisation over the long term.
CLP has already translated its decarbonisation goals into concrete investment projects through sustainable financing. In 2025, close to 70% of financing for CLP’s Scheme of Control (SoC) business in Hong Kong came from sustainable sources. Under CLP’s Climate Action Finance Framework (CAFF), CLP has HK$18 billion outstanding in energy transition and new energy-labelled bonds and loans raised since 2017. These funds support qualified projects in Hong Kong such as smart meter rollouts, landfill gas generation, offshore LNG terminal and combined-cycle gas-turbine units at Black Point Power Station. By mobilising capital for these initiatives, we are accelerating Hong Kong’s energy transformation and reinforcing its position as a regional hub for sustainable finance.
In addition, CLP has incorporated sustainability elements in bank facilities that support the general operations of its SoC business. As of December 2025, the SoC entities had HK$11 billion in emission reduction-linked facilities outstanding, representing around 75% of their total outstanding general-purpose bank facilities.
Looking ahead, our focus is on ensuring that capital is deployed in ways that strengthen the reliability of our energy system while supporting the shift towards lower‑carbon solutions. This includes updating the CAFF to reflect evolving best practices and working closely with partners to enable funding for projects that enhance efficiency, resilience and long‑term value for our stakeholders.
Hong Kong is shaping a more transparent and dynamic climate finance ecosystem. By pairing clear definitions with workable transition pathways, strong disclosure, and ongoing collaboration, the city can channel capital to projects that cut emissions at source and strengthen resilience. CLP is committed to playing an active role in this transformation – working with partners to deliver practical solutions that reduce emissions and enable an orderly energy transition. Together, let’s forge a more resilient, low-carbon future for all.
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