Letters | Carbon tax no longer an option for Hong Kong but a necessity

Readers discuss how a carbon tax can help the city meet its climate targets, the impact of a sales tax, and China’s top-down science strategy

Reading Time:3 minutes

A container ship sails through Hong Kong waters on April 2. A carbon tax is a powerful tool for pricing emissions and creating economic incentives for greener behaviour. Photo: AFP

Published: 11:30am, 4 Apr 2025

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Hong Kong has set ambitious climate targets, aiming to cut emissions in half by 2035, compared to 2005 levels, and achieve carbon neutrality by 2050. The Climate Action Plan 2050 outlines strategies in clean electricity, energy-efficient buildings, green transport and waste reduction. However, a key element is missing: a carbon tax. This policy is a powerful tool for pricing emissions and creating economic incentives for greener behaviour.

Countries like Singapore, Japan and Sweden offer valuable lessons. Singapore introduced a carbon tax in 2019, starting at S$5 (US$3.75) per tonne of carbon dioxide. It rose to S$25 last year, and is expected to rise to S$50-S$80 by 2030. After Japan implemented a carbon tax in 2012, the country reduced emissions by around 20 per cent between 2013 to 2022.

Sweden’s carbon tax helped reduced emissions by 26 per cent from 1990 to 2017. During the period, its economy grew by 78 per cent, according to Clean Prosperity. This proves that carbon taxes can effectively reduce emissions without harming economic growth.

For Hong Kong, a carbon tax could target high-emission sectors such as electricity, transport and waste. A phased roll-out like Singapore’s would allow businesses time to adapt. Sectors exposed to trade could be exempt. Revenue could be reinvested in climate initiatives, subsidies for marginalised groups or tax reductions, providing both environmental and economic benefits.

Social equity is a concern as carbon taxes can have an impact on lower-income households. However, redistributing a portion of tax revenue through rebates or “carbon dividends” could offset these costs. The International Monetary Fund suggests allocating 16 per cent of the revenue to the poorest 40 per cent of households would be sustainable. Small businesses could receive targeted support, similar to Singapore’s approach.