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Carbon Emissions, Energy Consumption and Economic Activity in Hong Kong
Gaofeng Han, Alfred Wong 2023-02-15
This paper studies the relationship between carbon emissions, energy consumption and economic activity in Hong Kong. We estimate and analyse the driving forces of carbon emissions at the sectoral and macro levels through applying the logarithmic mean Divisia index additive decomposition to an extended Kaya identity framework. The results show that Hong Kong has fared reasonably well internationally in its performance in reducing carbon emissions over the past two decades. Economic growth, population growth and changes in energy consumption structure are found to be principal factors causing emissions to rise, while changes in the structure of the economy provide the single most important mitigating force. Stripping off the effects of economic growth and population growth, all five sectors under study are found to have contributed to reduction in emissions, with the energy sector making the most significant contribution. Improvement in carbon and energy intensities plays only a small role in helping contain emissions, which may pose challenges to policymakers on the path to carbon neutrality going forward.
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