New Climate Bonds Low-Carbon Transport Working Group kicks off development of certification eligibility criteria for low-carbon transport related bonds

The Climate Bonds Standard has established a Low-Carbon Transport Working Group to develop eligibility criteria for the certification of low-carbon transport related bonds – a means to enhance private investors’ confidence in financing the low-carbon economy.

Committee members confirmed to date are from the Institute for Transportation and Development Policy in Washington DC; the Transport Research Laboratory UK; the Transport and Environment NGO in Brussels; the China Sustainable Transportation Centre in Beijing; Siemens; the Netherlands Organisation for Applied Scientific Research; and University of California's Berkeley Institute for Environment Design and Davis Institute of Transportation Studies.

The group held its first teleconference meeting just before Christmas to begin work on developing eligibility criteria for key investments areas in low carbon transport.

The Working Group will examine issues such as what sorts of rail transport should and should not be included in a green or climate bond (e.g. rail lines for transporting fossil fuels are expected to be excluded), whether low emission cars and hybrids should be included and if so, at what levels of fuel efficiency; and are there circumstances where electric rail or electric vehicles might not be eligible, such as in countries with a very high carbon electricity grid.

According to the International Energy Agency (IEA), the transport sector is responsible for 23% of all energy-related CO2 emissions globally and 13% of total GHG emissions.

"More miles driven will come at a huge cost to the climate unless we start decarbonising transport today, and will not only result in a significant increase in energy use, congestion and CO2 emissions but also impact wider development ambitions," said Heather Allen, Program Director for Sustainable Transport at UK's Transport Research Laboratory and a Working Group member.

“Current transport financing practices are unfit to meet 21st century needs,” Michael Replogle, Working Group member and Global Policy Director and Founder of the Institute for Transportation and Development Policy in Washington DC. “As much as $700 billion is spent annually subsidizing motor fuels, while hundreds of billions more in public and global aid funds subsidize the growing use of cars,” he said.

Sean Kidney, Climate Bonds Chair, said: "Climate Bonds are well suited to the long term investment needed to finance low carbon transport solutions. As the world becomes increasingly urbanized, large scale improvements in the transport sector are essential if we are to achieve a transition to a low-carbon and climate resilient economy."

“We expect to see a significant increase in investments for low carbon transport emerge in coming years; low-carbon transport bonds certified under the Climate Bonds Standard will provide investors with assurance about the environmental benefits of specific projects”.

Eligibility criteria for existing urban electric rail assets and electric vehicles are expected to be made available by the first quarter of 2014.

Low-Carbon Transport Working Group members are

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Notes to editors:

The Climate Bonds Standard is a screening tool for investors and governments for green bonds and climate bonds that help deliver a Low Carbon Economy. It has been developed by the Climate Bonds Initiative. 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.

  • The Standard is supervised by a board comprising:
  • The California State Teachers Retirement System (CalSTRS)
  • The Nature Resources Defense Council
  • The Carbon Disclosure Project
  • The Ceres Investor Network on Climate Risk
  • The (Australian) Investor Group on Climate Change
  • The State Treasurer of California, Bill Lockyer

The Climate Bonds Initiative is an investor-focused not-for-profit, promoting large-scale investment in the low-carbon economy. The Climate Bonds Initiative is developing: proposals for governance architecture — regulatory mechanisms, standards, tax policies, green banks — that will support a rapid scaling up of investment. Models for engineering investibility in projects and assets necessary for attracting bond financing such as renewable energy, energy efficiency and forestry.