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Solar eligibility criteria under Climate Bond Standard released for comment: all PV yes; CSP yes, but only if FF back-up is less than 15%; supply chain criteria still to come
The criteria are now subject to a 30 day period of public consultation – if you’re interested you can comment on this page (see below). You can also see read the background paper and rationale for the criteria.
After 30 days the criteria will be submitted to the Climate Bond Standards Board for confirmation. Board members are CalSTRS, the (US) Investor Network on Climate Risk, the (Australian) Investor Group on Climate Change, NRDC, the Carbon Disclosure Project, and the State Treasurer of California, Bill Lockyer.
According to Climate Bonds CEO Sean Kidney: “Certification will be most useful for utilities and banks looking to issue corporate bonds, where the proceeds are then allocated to solar assets. Solar eligibility criteria confirm assets that can be counted in pools qualifying for Climate Bonds labelling. The rest of the Climate Bond Standard provides assurance for investors around the proper use of proceeds.”
Matthew Hale, Managing Director, Environment Executive at Bank of America Merrill Lynch, welcomed the criteria saying, “This will be a very useful tool for us to apply with bond issuing clients who want to be recognised for their contribution to a low carbon economy.” The project has received funding from the Bank of America Foundation.
Working group member Jenny Chase, Solar Analyst at Bloomberg New Energy Finance, said, “Bond finance is becoming increasingly relevant for solar project financing, particularly in the US. This criteria will allow investors to incorporate solar bonds into their environmentally mandated portfolios and signal their eagerness to finance a transition to a low carbon economy.”
The Solar Technical Working Group convened at the beginning of the year to examine the best way to formulate the eligibility criteria for solar energy. The group includes experts from:
- Imperial College
- The International Energy Agency (IEA)
- SolarPACES research consortium
- The US National Renewable Energy Laboratory (NREL)
- Bloomberg New Energy Finance
- Semiconductor Equipment and Materials International (SEMI)
- The European Photovoltaic Industry Association (EPIA)
- Dii (formerly Desertec Industrial Initiative)
Sean Kidney said: ”Solar energy seems like a straightforward fixed asset to include in our definition of a low carbon economy, but we needed to address questions around potential environmental impacts, fossil fuel back up plants included in some plants, and supply chain manufacturing, to make sure we have all bases covered. For that we needed an expert working group. We are now seeking public comment on the position the expert group has taken.”
The first set of criteria released by the working group for public consultation relates to fixed assets for solar power generation, or for transmission infrastructure to deliver such electricity. The criteria specifies the amount of non-solar fuel back-up or hybridization allowed for projects such as concentrated solar power plants at 15%.
Criteria for manufacturers in the solar supply chain will follow in the Autumn. The criteria and background paper are available on the website, standards.climatebonds.net
The solar criteria are added to those for wind energy to become the second batch of eligible assets for bond certification. Work is also underway on criteria for low-carbon buildings (due in the next few months) and a range of other areas, from transport to biofuels.
The Climate Bond Standard is a screening tool for investors and governments to support investment in delivering a Low Carbon Economy. Bonds complying with the Standard will be certified as ‘Climate Bonds’, a mark that assures their contribution to the delivery of a Low Carbon Economy.
This project was supported by the Bank of America Foundation