Hong Kong sets sights on world’s largest carbon trading market

Hong Kong is aiming to build the world´s largest Emissions Trading System (ETS), with global partners and innovative captive solutions.

At the launch of the Carbon Offset Association, international partners announced a series of initiatives designed to accelerate the development of a carbon market that could become the largest in the world.

A symbolic pilot deal of $10 million, covering 274,000 metric tons of CO₂, was presented as a first step. More importantly, projects already under discussion with banks and investors indicate transaction volumes of more than HK$15 billion ($1.9 billion) over the next three years.

“Establishing operations in Hong Kong was a natural choice,” said a Planex representative. “Its role as a financial bridge between China and the West, combined with multi-currency settlement capabilities, offers unmatched advantages.”

Nicholas Ng Yat-fung, chief executive of the Carbon Offset Association, underlined Hong Kong’s unique position: “It is the only jurisdiction worldwide where carbon trades can be settled in US dollars, Hong Kong dollars, and Renminbi. Our financial infrastructure, talent pool, and policy support make this the right place to scale carbon markets.”

A central pillar of the initiative is provided by RYSKEX, the Connecticut - and London- based InsurTech pioneer. As a recognised specialist in parametric risk transfer within the London Market, RYSKEX delivers the risk umbrella that makes such deals insurable, transparent, and bankable. Dr. Marcus Schmalbach, chief executive of RYSKEX, explained: “Parametric risk transfer is the missing link to make emissions trading a trustworthy and investable asset class. Together with our partners in Hong Kong, we are creating a structure that combines the scale of China’s ETS with the governance and credibility of Europe’s ETS.”

The development also opens a pathway to extend Hong Kong’s captive insurance sector with innovative structures. By embedding parametric solutions within captives, the city can not only support carbon markets but also position itself as a hub for new forms of alternative risk transfer in Asia.

Backed by Hong Kong’s largest political party (DAB), high-level government representatives, and the Hong Kong Stock Exchange’s Core Climate platform, the initiative demonstrates global ambition. According to the organisers, while Europe is still debating ETS reforms, Hong Kong is moving at speed to attract international investors and that the message is clear: those who want to play a role in carbon trading cannot afford to ignore Hong Kong.

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