The eco-friendly effort collides with economic viability, as high costs and energy appetite weaken global pledges. The Chinese mainland and Hong Kong now seek a pragmatic path, balancing clean power with cheap, reliable supply. Luo Weiteng writes.

As far as Zhang Zhongjun's plans go, Hong Kong looms large. Zhang, who oversees technology development and promotion at the Foshan Institute of Environment and Energy Technology, views the financial hub as the missing piece in Foshan's hydrogen puzzle — capital.

One of the nation's key manufacturing bases, Foshan — located in Guangdong province, and just a two-hour drive from the special administrative region — pushed out its energy-hungry ceramics and textile factories a decade ago and recast itself as a hydrogen production hub.

The vision remains bold, but the economics have proven stubborn — hydrogen is expensive, energy-intensive and still without a commercially viable use case in the Guangdong-Hong Kong-Macao Greater Bay Area.

State money remains the chief and often the only source of funding for enterprises, however big or small. Yet, with profitability nowhere in sight, even State investors are hitting their limits, according to Zhang. "The market is there. But capital won't come by itself. Hong Kong could be the one to bring money to the table," he says.

Seek capital solutions

A truly green hydrogen supply chain requires the gas to be produced from the electrolysis of water with renewable energy — a largely emission-free process but the most costly method currently available.

Beyond economics, hydrogen's green credentials remain unsettled. Nearly 80 percent of the hydrogen China makes today still comes from coal, natural gas and industrial byproducts. Globally, low-emission hydrogen represents less than one percent of supply, according to China's National Energy Administration and the International Energy Agency. Although China hosted half of the world's green hydrogen production capacity last year, demand has yet to catch up.

Hydrogen's dilemma isn't unique. Technologies billed as part of a cleaner future often lean heavily on today's carbon-heavy energy systems before they become genuinely green. The tension is playing out even more sharply in the global race to build artificial intelligence data centers.

From the deserts of the United Arab Emirates to the outskirts of Dublin, Ireland, AI's growing energy appetite is on course to double to 3 percent of global power use by 2030. Renewables can't keep pace, while the IEA expects coal and gas to shoulder some 40 percent of the load.

The environmental bill is already mounting. Amazon, Microsoft, Alphabet, and Meta saw their indirect carbon emissions soar by over 150 percent in the last three years, due to "expanding data infrastructure and energy use", a United Nations report found.

Ireland, Europe's capital of "hyperscaler" cloud computing, faces a stark choice. With the most energy-hungry and carbon-intensive assets of the digital economy consuming more than one-fifth of national power, Dublin is considering allowing data centers to run on fossil fuels just months after admitting it would miss its climate targets.

It's a test many are now struggling to meet. From Walmart to banking giant HSBC, businesses and financial institutions that once touted carbon-cutting have been abandoning or weakening their climate pledges. BlackRock and Blackstone quit the UN-sponsored Net Zero Asset Managers initiative earlier this year. Both now sit at the center of the data center surge, expanding utility holdings and chasing deals to access nearly 11 million electricity customers, says Global Energy Monitor.

As climate finance resets, Tim Colyer, partner and head of climate and sustainability for Asia Pacific at Oliver Wyman, has observed diverging fortunes for the green economy.

The commercially proven segments — renewables, electric vehicles and green buildings — remain magnets for capital. But deep-decarbonization solutions, from sustainable aviation and shipping fuel to cleaner steel and cement production, are still costly and commercially uncertain. Investors now demand proof, not promises.

"When the sustainability narrative was strong, cheaper financing convinced companies that even uneconomic low-carbon technologies were part of the investable future," Colyer says. "Now, as the conversation quiets down and political signals look shakier, companies are getting more reasonable. Harder-to-abate sectors are where the slowdown is happening. Capital is staying with what already makes economic sense."

Colyer says, until clean energy begins to displace fossil fuels at scale, the legacy sectors won't feel the deepest pain of transition. For now, the "biggest disruption and transformation of the automotive sector in our lifetime" offers the only true prelude to the coming shock: EVs are already undercutting combustion cars.

The path to broad sector disruption, however, is blocked by a structural constraint: intermittency. Renewables can't produce constant and reliable electricity when the sun isn't shining and the wind isn't blowing.

This is where Colyer sees both a challenge and a distant hope. Intermittency, he says, may inevitably create "periods of overabundance" that could make the production of power-hungry technologies, such as green hydrogen, economically viable. "We're not yet at that point. We're on the path, but still quite far away from a predominantly renewable energy system," he says.

Intermittency is here to stay, and could worsen with climate change, while the 24/7 power demands of data centers may face AI-driven non-linear growth. This clash threatens to extend the life of the fossil fuel generation.

Confront energy challenges

Worldwide, politically powerful fossil fuel companies won't fade quietly. Hortense Bioy, head of sustainable investing research at Morningstar, paints a complicated picture of "green retreat" or "greenhushing" — corporations downplaying their sustainability efforts — across the Atlantic.

In the US, the pullback reflects intertwined pressures seen as the earliest and clearest expressions: political and economic resistance from fossil-fuel interests, and a social backlash amid conservative rhetoric.

That was underway even before the Trump administration's return. The US president's second withdrawal from the Paris Agreement, cuts to green-funding pipelines and support for fossil-fuel-powered AI all underscored Washington's pivot.

In Europe, Bioy traces the turn to regulatory fatigue, calling it "a reaction to excessive regulation." The European Union watered down planned corporate sustainability regulations in October amid complaints that such rules erode its competitiveness against the US and Asia.

"Sustainability has always seen its ups and downs," says Du Yonghai, chief innovation officer at the Hong Kong Productivity Council. "But, if we view the latest 'retreat', whether economical or political, through the longer lens of human history, it's just a bend in the road, not the end of the road."

To Du, technology has a way of untangling the knots it once tied, breeding new opportunities and industries. He points out that technology development over the past decade has greatly lowered carbon intensity relating to manufacturing photovoltaic (PV) cells. In recent years, innovations in China — the world's largest PV producer and exporter — including intelligent manufacturing, larger and thinner wafers, and high-efficiency cell technologies, have begun to ease the burdens.

A similar dynamic is underway around hydrogen. The IEA says China now commands over 60 percent of global electrolyzer capacity. Such a scale is rapidly reshaping the sector's cost curve to the point where China's renewable hydrogen could become cost-competitive by the end of this decade.

Data centers are pursuing their own mix of solutions. Nuclear is gaining attention as a round-the-clock clean-power option. Google has invested in carbon dioxide-based batteries capable of supplying clean energy for up to 24 hours. Visionaries like Amazon's founder Jeff Bezos are even looking to outer space, where uninterrupted solar power could feed giant AI training clusters.

Yet, rather than building or co-funding power plants, many tech companies and data center operators purchase credits that support existing renewable generation elsewhere, allowing them to claim renewable coverage. In practice, this doesn't mean their facilities directly run on renewables or expand clean energy capacity. Companies like Microsoft mitigate this by buying credits bundled with power purchase agreements to ensure a real shift in the energy mix, not just a paper claim.

Controversy aside, green power credits and other environmental commodities represent a constructive use of financial innovation to reconcile supply and demand, economic realities and climate targets.

A world away from data centers, Hong Kong-based marine technology startup Archireef, known for its 3D-printed terracotta reef tiles, is experimenting with biodiversity credits from the Gulf to the waters off Singapore. "Sustainability always has two dimensions," co-founder Vriko Yu Pik-fan says. "You have climate and carbon on one side, nature and biodiversity on the other."

Yu views biodiversity credits as "a value add-on and catalyst to the increasingly saturated carbon markets" rather than a stand-alone asset class. The field remains nascent. Five years ago, it lacked even a shared definition of biodiversity. "But technological feasibility is improving fast. We may see an inflection point within three to five years," she says.

The hardest part today is precise science-based measurement. Biodiversity varies across geographies and industries, and "over 90 percent of ocean biodiversity is invisible", she says. "Data integrity, transparency and quality matter more than anything." This lack of clarity is widespread: even the data center industry — an empire built on data — reveals little information about its own energy use.

"Collecting representative data is the starting line," Du says. "Still, without a unified way to read it, you don't get clarity."

From the Global Reporting Initiative, the Task Force on Climate-related Financial Disclosures to the International Sustainability Standards Board, initiatives are trying to close the gap. But Du argues a universally accepted framework remains "a long, uphill journey" since priorities and practices differ across borders and continents.

This fragmentation is evident in regional shifts in focus. The energy crisis from the Russia-Ukraine conflict is prompting a strategic rethink across Europe toward energy independence and sovereignty, observes London-based Bioy. Across Asia, Benjamin Soh, founder and managing director of Singapore-based ESGpedia, eyes transition finance as a pragmatic path for the region's developing economies that are latecomers to sustainability.

"It would take a very different world — with much more global collaboration — to get a unified standard," Colyer says.

For now, economies rely on mixed, uneven approaches. Still, according to Du, some core principles apply everywhere. "Standards exist to maximize common ground," he says.

Innovate for sustainability

For the HKSAR, a place where competing rules and narratives meet, Du sees its role as a translator for domestic and international frameworks, explaining China's broader sustainability story to the world. "The global sustainability narrative needs more perspectives," Du says.

Bioy points to China as the clearest illustration. What began as a drive to clean polluted skies has solidified into a defining policy agenda, putting the country in the uneasy dual role of the world's largest emitter and a central force in clean-energy technology.

In the first half of this year, China topped global renewable investments with $169 billion — 44 percent of global financing — according to BloombergNEF.

In September, China outlined its first-ever proposed emissions-cutting road map, targeting 3,600 gigawatts of wind and solar capacity by 2035.

Yet, the nation's energy transition has a dual mandate: power must be clean, but equally cheap, abundant and reliable even amid geopolitical strife.

DeepSeek — its low-cost, energy-efficient open-source AI model that stunned the world — is being embraced at home as a potential answer to data center power issues and a sustainable digital future.

The same cost-effective philosophy is being tested for a cleaner industrial world. Overseas potential low-emissions hydrogen production by 2030 has declined for the first time, mostly due to delayed electrolysis projects, the IEA has warned. China's affordable electrolyzers stand ready to help if tariffs and fragmented standards allow.

Amid promises and hurdles, Du envisages a big story unfolding where China exports not just products, but technology, standards and visions, spreading influence in the global green transition playbook.

Just as Foshan's Zhang looks to Hong Kong for green financing, Du visualizes the SAR as a laboratory for bold ideas and new frontiers, such as the tokenization of sustainability-linked assets encouraging companies' green performance.

"Every piece of experience, success or failure, carries weight," Du asserts. "It's a worthwhile step as China and the Global South are carving out our own sustainability paths."

Contact the writer at sophialuo@chinadailyhk.com