Offshore wind power will not be featured in the company’s decarbonisation plan until at least 2030, he said, but CLP will continue to monitor technological developments and review its feasibility with the government.

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The energy giant, which plans a phase out of coal-based assets by 2040, also operates in mainland China, India and Australia. It released its latest “climate vision 2050” plan on Friday.

The plan includes a strengthening of the company-wide direct and indirect greenhouse gas emissions reduction goal for 2030, to 0.26 kilograms of carbon dioxide equivalent per kilo-watt-hour of power sold. This represents a near halving from last year’s intensity of 0.54kg. The updated 2030 target is more aggressive than the 0.3kg target announced in September 2021, when it had strengthened its targets to 0.1kg for 2040 and to zero for 2050.

It seeks to achieve net-zero greenhouse gas emissions across its operations by 2050.

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“We are well advanced on switching from coal to gas for our power plants in Hong Kong, with the commissioning of our liquefied natural gas receiving terminal and two new gas turbine units,” Simmonds said. “We have also found opportunities in mainland China and India to expand our renewable energy asset portfolio, which … gave us the confidence to strengthen the target.”

In 2022, CLP sold its 70 per cent stake in the 1,806 mega-watt Fangchenggang power station in Guangxi Zhuang autonomous region for HK$1.65 billion, at a loss of HK$185 million in order to accelerate the phase-out of its coal assets.

The plant, despite being one of the country’s most efficient coal-fired projects, saw a substantial drop in utilisation rate that year. The sale halved CLP’s mainland coal power capacity.

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For the company, decarbonisation is both a risk management issue and business opportunity, Simmonds said.

Consulting giant McKinsey estimates that to reach net zero by 2050, about US$275 trillion in cumulative spending on low-emissions assets will be required over the next 30 years worldwide, representing around 7.5 per cent of global GDP every year for 30 years. It added that failure to decarbonise could, on average, risk up to 20 per cent in economic profit for companies by 2030, based on factors including stranded assets, increasing cost of capital, and loss of market share.

“Over time, coal will not be the energy wanted around the world, if we are not exiting from coal there will be big risks for us as time goes on,” he said. “Decarbonisation is also a real opportunity for us because … electricity demand will grow substantially in the decades ahead as electrification allows other industries to decarbonise.”

CLP said in its annual results announcement late last month that its residual coal-fired assets in mainland China had a difficult year.

“The financial performance was affected by low electricity tariffs and high coal prices, coupled with a drop in overall asset utilisation due to increased renewable energy supply in the market,” it explained.

In the longer term, Simmonds said hydrogen will play a role in the power industry’s decarbonisation, but the degree will depend much on technological breakthroughs in the decade ahead.

“We are watching carefully with the development of the hydrogen industry on the mainland, because that’s where we believe that the green hydrogen is most economic for us to source from in the long term,” he said.