Hong Kong, 29 January 2019: Business Environment Council (BEC), WBCSD’s Global Network partner in Hong Kong, analyzed buildings energy efficiency policies across Hong Kong and 7 selected cities (Singapore, Tokyo, New York City, Sydney, Essen, Beijing and Shenzhen) and developed a set of policy recommendations for the Government.

The resulting report, titled Investing in the Buildings Energy Efficiency – How to Enhance Hong Kong’s Policy Framework, found that tighter collaboration between landlords and tenants, for example through adoption of green leases, and establishment of publicly accessible citywide benchmarks for buildings energy performance are keys to enhance energy efficiency in buildings in Hong Kong.

Buildings are the major source of greenhouse gas emissions in Hong Kong. In 2016, existing commercial and residential buildings contribute to 92% of electricity and 95% of gas consumptions in Hong Kong, which are responsible for over 60% of total greenhouse gas emissions in the city. Given such weight of the building sector, these recommendations should also form a crucial part of our long-term decarbonization roadmap.

“Regrettably, we see limited improvement in the energy performance of buildings in Hong Kong in recent years. With the dire climate change situation, Hong Kong has no choice but to sharpen our tools and policies to further improve buildings energy efficiency. With the appropriate policy support in incentives, regulations and partnership, energy savings can contribute to the global and local emission reduction targets, air quality improvement and cost savings.” Mr Simon Ng, Director – Policy & Research of Business Environment Council explained.

This study primarily focused on the use of electricity in buildings. Consolidating desk research, interviews, and discussions in workshops comprising Hong Kong’s business community, NGOs, academics and other experts, the report lists out 20 policy recommendations for Hong Kong, covering 7 areas including information/ education provision, government leadership, non-financial incentives, financial incentives, green finance, building/ appliance standards and green leases. Among the recommendations, the research team highlighted two aspects that seem to be most impactful but often overlooked:

1. Incentivize landlord-tenant collaboration: Currently in Hong Kong, landlords and tenants both have little incentive to invest in energy efficiency upgrades, especially under the typical office lease term of 3 years, which is shorter than the payback period of major energy efficiency retrofits. The situation is exacerbated by reinstatement clauses that require tenants to restore the rented premises to their original conditions. Cases in Sydney and New York City show that revising and relaxing the leasing terms to encourage energy efficiency, including the provision of incentives for longer tenancy terms without reinstatement clauses, and requiring performance-related reporting of energy usage in tenanted parts of buildings will help improve buildings energy efficiency. This can also be supplemented by the installation of smart meters and sub-meters, which will enable a better collection of data for reporting and analytics.

2. Improve transparency of building-level data and establish buildings energy efficiency benchmarks: In Hong Kong, the only building-level data disclosed is the Energy Utilization Index of central building services installations from the mandatory energy audit reports submitted to the government every 10 years, making it hard to compare the energy performance between different buildings. This BEC report suggests the implementation of a mandatory reporting system for all existing buildings to submit their energy performance data in both shared and tenanted spaces, possibly aggregated and anonymized in the first place. The collected data can then be utilised to develop a set of comprehensive and robust benchmarks published in the right format to maximize their usage. This will not only allow building owners to understand their buildings’ energy performance against a benchmark but can also help facility managers build a business case for improving their buildings’ energy efficiency if they are underperforming.

BEC will submit the report to relevant government departments and business network for policy advocacy, hoping that the policy recommendations suggested in the report will be carefully examined by the authority, and supported by the key players including property owners, facility managers, tenants, construction companies, architects, designers and the finance sector. BEC is now working on a new project to establish building energy efficiency benchmarks, and will carry out engagement work to facilitate landlord-tenant collaboration.

This BEC study has been funded by Konrad Adenauer Stiftung and supported by BEC’s Energy Advisory Group.

More information

Peryl Tse,
Manager, Communications
Business Environment Council Limited

peryltse@bec.org.hk

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