As the Environment Secretary, I must commend you for leading a timely mission to Hong Kong, on your way to the Mainland, for you have come to this part of the world at the right time and at the right place. 

You have picked the right time, as you have come as China's efforts to build a low carbon economy are gathering momentum throughout the country.  

Secretary Locke, if history says 1999 marked China's determination to join the WTO and led to its subsequent accession two years later, 2009 was the year that marks China's determination to lead the nation towards low carbon development.

You have come shortly after China announced her action agenda to reduce the country's carbon intensity by 40% to 45% from the 2005 level by 2020.

set This proposal does not just express a strong determination by our nation to go low carbon, but is also an honorable commitment made to the world in tackling climate change. Hong Kong will seek to follow if not excel on this.

The action agenda calls for actions as well as changes. It calls for concrete measures to be implemented at the national, provincial, municipal and all the way down to the local level to achieve the reduction goal. It will also re-shape the nation's development through a sustainable greener pathway, as we strive to bring economic prosperity.

You have come to the right place because Hong Kong has positioned herself as a green city that strives to work with our neighboring province, Guangdong, to build a Green Pearl River Delta that will become the greenest part of our nation.

You have come only weeks after Guangdong and Hong Kong signed a Framework Agreement for bilateral cooperation to build a Green Pearl River Delta area that will bring about a cluster of livable cities with cleaner air, lower pollution and a lower carbon environment.

This is not just a bilateral agreement between the two places but the concept of the Green PRD will find home in the upcoming 12th Five Year Plan of the nation to be finalised next year.

With the blessing of the central government, we agreed to seek to attain an environmental standard that is above that of the national level. I hope you will use your very short stay here to find out more about the latest developments which will help chart the future of the country as a low carbon economy, and Hong Kong and our neighbourhood as a green region.

In business, "location, location, location" is a well-known mantra of success. One may ask, with the advent of the low-carbon economy, does this formula still augur well for companies in making their investment decisions? I do not think I have to do much convincing with the audience here today. You have given your answer by choosing Hong Kong as the first destination of your visit to China.

I have said that you have come at a critical time when Hong Kong and the Mainland are taking steps to adopt a green growth strategy. And we believe Hong Kong and Guangdong could be the place where you can find the green engine and the green partners.

First, we have a common goal and a working mechanism with Guangdong. What unites our efforts are not only our close economic ties but also the common pollution problems that we must jointly tackle.

The cooperation between Hong Kong and Guangdong dates back to the late-1970s when China first embarked on its open-door policy. But it was only at the beginning of this century that the two sides decided to take their cooperation forward to the area of environmental protection.

In 2002, the two sides jointly agreed to a set of emission-reduction targets that would see the regional emission of four pollutants - namely sulphur dioxide, nitrogen oxide, respirable suspended particulates and volatile organic compounds - reduced by a range of 20% to 55% by the end of 2010.

But it did not take long for the momentum of cooperation to accelerate and rise to a new level. In 2008, Chief Executive Donald Tsang and the then party secretary-designate of Guangdong, Wang Yang, mooted a concept that would become the vision of the Pearl River Delta, the "Green Pearl River Delta Quality Living Area".

Under this concept, we will work together to pursue a green agenda with a view to making the region a high-quality living area for the 50 million-plus people calling the region their home.

Last month, the leaders of Hong Kong and Guangdong signed a landmark Guangdong-Hong Kong Co-operation Agreement in the presence of state leaders in Beijing. The document covers a wide range of areas of bilateral cooperation, from air quality improvement to water conservation, linking up of ecological conservation zones, and, most importantly, the development of environmental industries in a regional setting.

Under the agreement, Hong Kong and the Pearl River Delta will work together to develop a "circular economy" by making good use of its waste and recyclables, promote Electric Vehicles both as a transportation means and an industry, and expand the Cleaner Production Programme.

This bilateral agreement, premised under 'One country, two systems', provides an uniquely important tripartite relationship between Hong Kong and Guangdong in the pursuit of greener development under the full support of the Central Government, with a clear vision that Hong Kong and Guangdong will be the new green engine for building a greener region for a greener nation.

How does this play out for the business sector? National and local efforts to reduce carbon intensity, as well as measures to implement the "Green Pearl River Delta" agenda, will spawn a huge demand for green technology, services and products.

The proliferation of green tech in the region would be a win-win situation for all. For a region with a permanent population of over 50 million, the demand for the ingredients of a low-carbon economy, be it renewable energy, waste-to-energy technologies, electric vehicles or building energy enhancement, will be huge. So, my advice number one is: pick the right location - a location in China's greenest region.

Hong Kong has thrived on our core strengths as an international financial centre for our rule of law, free flow of information, highly efficient system and intellectual property rights protection. I see a strong position for the traditional advantages of Hong Kong in the green growth of the region.

In 2009, we were the No.1 location for regional operations in Asia, with 1,252 companies having chosen Hong Kong as the destination to set up their regional headquarters while another 2,328 use Hong Kong as their regional offices. Many of these companies have taken advantage of the combined strength of Hong Kong as a business centre, and the Pearl River Delta cities across the border as their production base and market.

Strong business fundamentals

More important, as we continue to foster our cooperation with the Pearl River Delta, our competitiveness will go from strength to strength, drawing on the talent, R&D capabilities and connectivity with other parts of China. So, my advice number two: pick the right location - a location of strong business fundamentals, with going green as the booster of our competitiveness.

The number three advice I am going to give you is, still, pick the right location - a location that will be a springboard for your entrance into the vast Chinese market. In the context of environmental industries, Hong Kong offers a range of government-to-government arrangements that help facilitate businesses.

* The supplementary arrangement for the Closer Economic Cooperation Arrangement between the Mainland and Hong Kong signed in June 2007 provides for qualified Hong Kong service suppliers to set up wholly-owned enterprises on the Mainland for the construction and operation of networks of gas, heating, water supply and drainage in medium-sized cities on the Mainland.

* A later supplementary arrangement signed in July 2008 further allows Hong Kong service suppliers to set up wholly-owned enterprises on the Mainland to provide environmental protection services, such as sewage, refuse disposal, noise abatement and nature and landscape protection services.

* The August 2008 Memorandum of Understanding on Energy Cooperation between the Mainland and Hong Kong provides for an LNG terminal to be jointly built between Hong Kong and the Mainland.

*In March 2009, Hong Kong secured an agreement from Beijing for Hong Kong companies to take part in Clean Development Mechanism projects.

All these provide business opportunities for Hong Kong companies. When I say Hong Kong companies, they are any companies registered in Hong Kong, regardless of their origin. In other words, locating in Hong Kong helps you radiate your investment to other parts of China, especially in bringing green and clean tech that are in great demand in the Mainland.

There is a local dimension of business opportunity that you should not overlook. I will give you two figures to illustrate why we cannot shy away from cleaning up our power sector. First, electricity generation contributes about 89% of our domestically produced sulphur dioxide emissions. The same activity also accounts for 62% of our greenhouse gas emissions.

Cleaning up the power sector serves the dual purpose of bringing cleaner air and tackling climate change. There are double incentives for us to do so. If I can put things into perspective, Hong Kong's electricity consumption stood at 44.6 billion kWh in 2008. We rank about 49th among the world economies. Ours is not a small market.

In addition to revamping our fuel mix, promoting renewable energy is another key area of our clean-energy strategy. Our geographical constraints have put a limit on our potential for solar and wind-powered energy, while hydro-power is off the map.

But Hong Kong will stay tuned to the technological progress in these two areas. In fact, we are home to solar projects, including the thin film photovoltaic project of Dupont, and are actively considering windfarm projects of a limited scale.

One area of renewable energy in Hong Kong, which until now has remained largely untapped, is on the waste-to-energy front. At present, nearly 100% of the municipal wastes generated in Hong Kong are landfilled. This is obviously not the most sustainable way of waste treatment for Hong Kong, where land is so precious. At the same time, we are burying our city's waste, which could otherwise be turned into a form of renewable energy. Here are our plans:

* To make use of the landfill gas from our three strategic landfills for towngas production;

* To build organic waste facilities initially to handle 200 tonnes of organic waste daily. The biogas generated in the treatment process will also be used for power generation to provide electricity for 2,000 households;

* To build a sludge treatment facility, with an ultimate capacity of 2,000 tonnes of sludge a day, to handle the daily output of sludge generated from our clean-the-harbour programme; and

* To build waste-to-energy facilities to handle the municipal wastes generated as a result of urban life in Hong Kong. The first phase will render a daily treatment capacity of 3,000 tonnes of waste for the supply of electricity sufficient for use by 100,000 households.

For the transportation sector, the use of clean fuels is also instrumental in reducing our roadside emissions. We are constantly updating our policy on biodiesel. In addition to a standing duty-free policy for this kind of renewable fuel, the statutory control over the specification and labelling requirements of motor vehicle biodiesel will come into effect in July this year.

One of the subjects close to the heart of this Administration is the promotion of electric vehicles in Hong Kong. Thanks to our strong policy support, Hong Kong will become the first Asian destination outside Japan where EVs will be supplied. We are working towards a target of having hundreds of EVs supplied to our market within the next year.

Being a green field itself, clean tech and energy development is an area where companies are striving to compete for a strong foothold. I look forward to seeing more and more US companies in Hong Kong to work in partnership with my colleagues and companies here to contribute to turning the region into a Green Pearl River Delta.

Secretary for the Environment Edward Yau gave this address at the Clean Energy Forum.