“Hong Kong should learn from China’s experience and adapt its successful strategies on developing a framework that reflects the best and most innovative approaches to address climate change, reduce emissions and promote participation of all,” it said.

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France unveils prototype zero-emission cargo ship powered by hydrogen

France unveils prototype zero-emission cargo ship powered by hydrogen

The city should also consider adopting the European Union’s standard, which demands a 70 per cent reduction in greenhouse gas emissions throughout the life cycle of hydrogen fuel, said Lawrence Lu, executive director of the Civic Exchange and one of the authors of the report.

Hong Kong’s proximity to mainland China – the world’s largest producer and consumer of hydrogen – puts it in an advantageous position to join the global trend of decarbonisation with hydrogen, but it must eliminate stakeholder uncertainty and drive demand, according to the report.

The clean-burning alternative to fossil fuels has the potential to decarbonise the power generation and transport sectors, which together account for 82 per cent of the city’s greenhouse gas emissions, the think tank said. Hong Kong has set a target to achieve carbon neutrality by 2050.

The challenges hindering hydrogen’s adoption in the city include slow policy formulation and high costs of the fuel and infrastructure, which can only be overcome with subsidies and scaled-up applications, Civic Exchange said.

While Hong Kong has set aside HK$200 million (US$25.6 million) for subsidising hydrogen-vehicle trial projects in last year’s budget, the eligibility criteria has yet to be announced.

On Wednesday, Secretary for Environment and Ecology Tse Chin-wan said in a blog that Hong Kong should not be “overly aggressive”, as hydrogen’s adoption is still at an early stage globally.

The cost of fossil-fuel-based “grey” hydrogen is nearly double that of diesel, while green hydrogen – produced by using renewable energy to split water into hydrogen and oxygen – is even more expensive, he noted.

“Although the cost of green hydrogen will fall, that of other green energy is also decreasing,” he wrote. “There is still uncertainty as to whether green hydrogen will have an edge, so when devising the local hydrogen development strategy, we must maintain a degree of flexibility on scale and pace.”

Various jurisdictions have announced development strategies, plans and targets since 2017, the Civic Exchange researchers noted, adding that the development of a hydrogen industry will bring substantial economic benefits.

For example, mainland China has set a goal to expand its annual green hydrogen capacity to over 100,000 tonnes by next year, while the UK is targeting an annual capacity of 1.8 million tonnes by 2030.

South Korea’s national hydrogen plan, a public-private partnership with a host of incentive policies, is likely to add another 2 per cent to the gross domestic product and create 420,000 new jobs.

Setting stringent definition and a transition pathway from grey hydrogen to green hydrogen is important for establishing Hong Kong as a credible place for hydrogen investment, the report said.

“Key businesses have demonstrated a readiness to pay a premium for green hydrogen,” the report said. “Implementing this grey-to-green transition road map will provide assurance of future green hydrogen availability in Hong Kong. This, in turn, will boost businesses’ confidence in investing in hydrogen-related projects.”