Transforming Hong Kong into a climate tech powerhouse

Exploring the dynamic growth of Hong Kong's climate tech startup ecosystem

Growing awareness of the importance of addressing environmental challenges is driving demand for innovative climate tech solutions around the world. With the rapid evolution of the climate technology industry in Hong Kong, the city is positioned as a leader in this sector and a key player in the global sustainability journey.

Hong Kong’s progress is bolstered by Mainland China's advancements in electric vehicles (EVs), renewable energy, and green finance. China has transformed itself into an EV leader: it was responsible for 35% of global EV exports in 2022, when domestic EV sales increased by 82% to account for nearly 60% of global EV purchases. The country has also been the world’s largest and fastest-growing producer of renewable power for more than ten years. China’s goal to achieve carbon neutrality by 2060, with carbon emissions peaking by 2030, is a top priority for the Chinese government. The 14th Five-Year Plan reiterated the importance of investing in the development of clean energy technology over the 2021-2025 period to ensure China can achieve these targets.

Mainland China’s success in building out its greentech industries has set the stage for Hong Kong to excel in developing a climate tech startup ecosystem. Already, more than 100 greentech companies and startups operate from Cyberport and Hong Kong Science and Technology Parks (HKSTP), and many of them are working on technologies that can combat global warming and enhance the sustainability of the city and urban centres worldwide.  

Hong Kong’s thriving climate tech landscape

Climate tech development in Hong Kong is gaining momentum as the city strives to address its own environmental challenges. Innovation that is rooted in the city has the potential to drive positive change, foster economic growth, and contribute to a more sustainable future. From renewable energy solutions to waste management breakthroughs, local innovations are reshaping the way that cities interact with the environment.

Among the climate tech startups that call Hong Kong home is one of the world’s leading climate risk analytics companies. Using big data and enhanced artificial intelligence (AI), it empowers financial institutions, corporations, and real estate companies to make climate-informed decisions regarding risk mitigation, resilience planning, and capital allocation.

Hong Kong also boasts one of Asia's leading sustainability data and software-as-a-service providers. The firm leverages environmental, social, and governance (ESG) data sets, satellite imagery, advanced climate models, and financial modelling to help investors quantify their portfolio risks. It also enables fund managers to set up ESG-related fund mandates and supports organisations to simplify ESG reporting.

Another notable climate tech startup in Hong Kong has developed processing technology to transform cellulose, the most abundant organic compound on Earth, into a sustainable composite material. Fully biodegradable within 75 days, this patented new plant-based polymer can replace single-use plastics in applications like disposable dishware and coffee capsules. The technology provides more options for restaurant owners and individual single-use plastic items will soon be banned in Hong Kong.

Showcasing Hong Kong's supportive startup environment on the global stage, a company nurtured at HKSTP has developed a new way to build and recycle lithium-ion batteries for EVs. Its technology reduces greenhouse gas emissions from production by 40% and produces a battery that lasts up to 10% longer. Crucially, the battery’s lithium, cobalt, and nickel components can also be economically recovered and reused.

HKSAR Government’s initiatives to support climate tech startups

As climate tech increasingly plays a pivotal role in addressing the world’s most pressing environmental challenges, the Hong Kong SAR Government is championing the growth of the sector. Through various funding schemes, incubation programmes, and policy incentives, the Government is promoting greentech, which includes climate tech, as a key pillar of Hong Kong's economic future.

The 2024/2025 Hong Kong Budget outlines policies with the potential to boost the city’s fast-growing climate tech sector. These include the introduction of the Green and Sustainable Fintech Proof of Concept Subsidy Scheme, which will provide early-stage funding support for green fintech, facilitating commercialisation and fostering the development of new initiatives.

The Budget also includes a proposal to extend the Green and Sustainable Finance Grant Scheme, originally set to end in mid-2024, until 2027. Additionally, the scope of subsidies will be broadened to include transition bonds and loans. This initiative aims to incentivise industries across the region to utilise Hong Kong's transition financing platform as they progress towards decarbonisation.

The Government is also currently exploring the feasibility of offering green methanol bunkering services for both local and ocean-going vessels. It will announce an action plan within the year and conduct feasibility studies on other green fuel alternatives, creating opportunities for climate tech startups in the sector.

Strengthening Hong Kong’s status as a hub for both greentech and green finance, the Government set up a Green Technology and Finance Development Committee last year to drive development in these areas. In February, the Hong Kong Green Week brought industry leaders from the region to the city to encourage startups to expand as part of the local ecosystem.

In addition, the Financial Services and the Treasury Bureau and Invest Hong Kong fully support the inaugural One Earth Summit on 26 March, which aims to address critical climate issues in the financial sector. The Government will also co-host a Joint Climate Finance Conference in Hong Kong with Dubai towards the end of the year, prioritising knowledge sharing and collaboration to elevate Hong Kong as a centre of climate finance and sustainability for Asia Pacific.

The HKSAR Government’s policies demonstrate its firm commitment to building the climate tech industry. A stronger climate tech ecosystem in the city will not only enhance Hong Kong’s resilience to climate change, create new job opportunities, and improve quality of life for citizens, but also benefit the world.

Hong Kong’s supportive ecosystem for climate tech startups

Hong Kong’s vibrant and dynamic startup ecosystem offers various funding opportunities and venture capital support for climate tech startups.

Last year, a renowned Hong Kong-based global venture accelerator launched a Climate Tech programme specifically tailored for early-stage startups, with a focus on those dedicated to carbon dioxide removal (CDR) solutions. The Government’s Innovation and Technology Fund also supports local climate tech startups through its Technology Start-up Support Scheme for Universities, which helps researchers commercialise their ideas; together with the Innovation and Technology Venture Fund, which encourages venture capital funds to co-invest in local tech startups. Moreover, the Innovation and Technology Commission administers a HK$400 million Green Tech Fund, which has allocated HK$132.5 million to 30 projects since 2020.

On the other hand, the HKSTP Corporation and Cyberport both offer incubation programmes for startups, providing access to resources and financial assistance. The HKSTP Venture Fund, for example, is a HK$1 billion asset-under-management fund that invests in early and growth stage companies and channels all returns back into the fund. 

The future is bright for Hong Kong’s climate tech sector

Looking ahead, the prospects for climate tech in Hong Kong are boundless. With a solid base of innovation and entrepreneurship, coupled with the support of the financial sector and the Government, Hong Kong stands ready to spearhead climate tech advancements and bring about huge business opportunities. By fostering a supportive ecosystem and leveraging its strengths, Hong Kong can become a climate tech hub and a leader contributing to the sustainable development of China, the wider region, and the world.