Part 1: Comparing Policy Differences in Hong Kong and Mainland China
In building construction, embodied carbon represents the greenhouse gas emissions generated during the production, transportation, and installation of building materials, such as steel and concrete. Decarbonizing the embodied carbon emissions in construction, especially in fast growing regions like Hong Kong and the Greater Bay Area (GBA), is pivotal for China to achieve its ambitious carbon neutrality goals, as the manufacturing of construction materials like steel and cement contribute to approximately 13.5% of global and 17% of China’s total CO2 emissions annually. In China, where construction drives over 40% of steel consumption despite recent real estate challenges, adopting low-carbon materials and methods becomes a critical decarbonization strategy. However, embodied carbon is often overlooked due to the challenges of data collection and implementing reductions across the supply chain. We dive into this critical topic in our three-part series, Accelerating Low Embodied Carbon Constructions: Sectoral Roadmap Perspectives.
In part 1, we analyse the current state of low-carbon construction in Hong Kong and Mainland China; in part 2, we propose strategies and industry actions to scale procurement of low carbon construction; and in part 3, we assess the climate, economic, and social impacts alongside prospects.
The series is co-authored by Joanna Cheng and Nelson Tsui, RESET’s subject matter experts in buildings sector decarbonization. The article series is complementary to our newly released Sectoral Roadmap to Scaling Low Carbon Construction in Hong Kong and Mainland China.
What are the Government’s and Market’s Approaches to Addressing Construction Embodied Emissions?
Hong Kong’s Market-Driven Approach
Hong Kong has historically relied on a market-driven strategy to tackle embodied emissions from construction. Hong Kong’s Climate Action Plan 2050 mainly targets operational carbon reductions – for example, it promotes energy efficiency through laws like the Buildings Energy Efficiency Ordinance – but it doesn’t include planning for addressing embodied carbon from the construction of the buildings.
Without strong government rules, developers aren’t regulated to use low-carbon materials or disclose construction embodied emission performance. Instead, changes happen through industry initiatives and investor pressures, where companies choose to adopt greener building methods on their own to serve their climate action ambition. Prominent climate frameworks, industry institutions and industry initiatives addressing construction embodied emissions in Hong Kong’s real estate sector include Science Based Target Initiative, CIC Carbon Assessment Tool, CIC Green Product Certification, Climate Change Framework for Built Environment and Technical Procurement Guideline on Low Embodied Carbon Construction
However, the absence of robust regulatory frameworks means progress is uneven, often dependent on corporate goodwill or market trends.
Mainland China’s Government-Driven Approach
In contrast to Hong Kong, mainland China has a top-down, government-led strategy for low-carbon construction. Central policies including the “dual carbon” goals (carbon peak by 2030, neutrality by 2060) and the “Carbon Peak Implementation Plan for the Building Materials Industry” target high-emission sectors like cement and steel. This top-down strategy created a cascading effect to the commodity market, heavy emitting industries and regional authorities.
As the regional government and enforcement departments adapt from the top-down approach, there are multiple rules and guidance materials currently under development in the China market. However, interpretation of the top-down approaches by various government bodies might see misalignment of focuses and missed opportunity from a better coordination of efforts. For example, green building certifications and public procurement policies lack strict embodied carbon requirements, and building-level carbon performance is still mostly voluntary.
Why is Policy-Driven Decarbonization a Critical Step to Addressing Construction Embodied Emissions?
Limitations of the Voluntary Model
The real estate sector in both regions faces economic pressures that hinder efforts to reduce embodied carbon emissions in construction, especially when the current carbon reduction targets in the construction sector are predominantly voluntary. Three key challenges stand out.
- Carbon targets often take a backseat to financial considerations: In a sector grappling with high financing costs, declining property values, and reduced demand, sustainability is frequently deprioritised in favour of immediate profitability.
- Fast-changing development planning creates uncertainty: In Hong Kong and China, developers have been continuously reevaluating and pivoting their investment and project development plan to match with the market trend for the most lucrative building types. These constant changes made low-carbon planning difficult in project execution and sidelined low-carbon construction solutions to meet tight timelines.
- The lack of mainstream market signals to suppliers stifles innovation across the supply chain: Without mandates or incentives, the market has failed to see the scale-up of low carbon solutions uptake in the mainstream construction activities. Material producers and suppliers have little motivation to invest in low-carbon alternatives or retool manufacturing processes.
Building a Business Case Through Policy
Achieving sustainability ambition requires substantial capital for research, development, and deployment of sustainable materials and practices. Supportive policies are critical to creating a business case for these investments, especially under the current commercial pressures in the real estate sector. In the mainland, where government-driven policies are more prevalent, clearer and consistently enforced regulations could align regional efforts with national carbon goals, fostering investment in scalable solutions. When disclosing and cutting emissions are mandated by regulations, early investment in decarbonization by the leading developers and construction companies are transformed from a cost burden into a competitive advantage.
Policy Over Voluntary Programs
While voluntary industry programs have spurred innovation, their impact is limited by scale, consistency, and market penetration. Policy-focused actions offer a higher magnitude of impact by creating mass demand for disclosing and cutting emissions across the construction value chain. Policies also provide long-term certainty, enabling companies in the supply chain to plan investments with confidence. By integrating decarbonization into regulatory frameworks, governments can accelerate progress, ensuring the construction sector contributes meaningfully to regional and global climate commitments.
Key Takeaways & What’s Next
Decarbonizing embodied emissions in the construction industry is a critical step for Hong Kong and China to meet their carbon commitments. While market-driven efforts in Hong Kong and government-led initiatives in the mainland show promise, economic challenges and the limitations of voluntary targets highlight the need for stronger policies. By prioritizing regulatory frameworks and incentives, both regions can transform the construction sector into a leader in sustainable development, ensuring a resilient, low-carbon future.
Further analysis of the status-quo of the local market and policy environment are available in our newly released Sectoral Roadmap to Scaling Low Carbon Construction in Hong Kong and Mainland China.
In our next article of the series, we will explore the policy instrument options and recommendations of strategies for governments and market bodies to bridge these gaps.
If your organization is looking to take action on low embodied carbon, contact our team to learn more.