The Climate Bonds Standard Board has now approved Low Carbon Transport eligibility criteria for use with the Climate Bonds Standard.
The first bond certification under the new criteria has already been completed, for the Metropolitan Transport Authority (MTA). That bond was issued on February 10th 2016 supported by a New York City advertising campaign by MTA featuring the Climate Bonds Certification mark.
Approval allows Climate Bonds Certification of investments in land transport infrastructure or assets that are compatible with an emissions trajectory that limits global temperature rises to 2°C. It opens the door to a suite of opportunities for the transport sector.
The key features of the eligibility criteria are CO2 emissions thresholds. These have been set for both passenger (per p-km) and freight (per t-km) transport and apply to all land transport modes. As an example, for cars to be considered green under the Climate Bonds Standard they must meet, or be below, a maximum emissions level of 85-90 grams CO2 per p-km. Financed projects or assets must meet the emission thresholds to be Climate Bonds Certifiable.
The emission thresholds decrease over time in line with reductions needed from the transport sector to limit global warming to 2°C. The thresholds are based on the global stock-wide average of emissions accounted for in the International Energy Agency’s (IEA) 2 Degree Scenario mobility model.
Implications in key transport sectors:
- Rail: subway systems, light rail, electrified rail and rolling stock essentially meets the criteria; rail track qualifies as does supporting infrastructure such as IT upgrades, signaling, communication technologies and charging infrastructure. Diesel rolling stock will need to show it first meets the CO2 hurdle rates.
- Vehicles: Electric vehicles, hybrid vehicles, buses, related infrastructure and dedicated manufacturing meet the criteria, as do hydrogen fuel cell vehicles and infrastructure. Hybrid vehicles will need to prove their emissions are below a 90g CO2 per p-km threshold. This threshold gradually tightens until 2050.
- Cycling: Bicycle transport schemes of all kinds are eligible.
Climate Bonds CEO Sean Kidney said:
“The new transport criteria support a clear assurance mechanism to assess debt capital investments in low carbon transport. They provide investors greater clarity around what’s eligible for green bonds in the transport sector. The aim is to support the flow of capital to the sector.”
Approval follows more than a year of development by a global Technical Working Group (TWG), convened by the Climate Bonds Initiative. The TWG is made up of internationally recognised academics and experts, including:
- Heather Allen, Transport Research Laboratory, London
- Lewis Fulton, University of California Davis Institute of Transportation Studies, Davis CA
- Michael Replogle, Institute for Transportation and Development Policy, Washington DC
- Max Jensen, European Investment Bank
- He Dongquan, China Sustainable Transportation Centre, China Energy Foundation, Beijing
- Gary Hoffman, Consultant, GM, Hoffman Consulting, Washington D.C.
- Elizabeth Deakin, University of California's Berkeley Institute For Environment Design, Berkeley CA
- Karl-Josef Kuhn, Siemens, Munich
- Rupert Faussett, Green Cities program, Forum for the Future, London
- Cornie Huizenga, SLoCaT partnership for sustainable low carbon transport, Shanghai
- Benoit Lefevre, World Resources Institute, Washington DC
- Arie Bleijenberg, TNO, the Netherlands Organisation for Applied Scientific Research, Delft
- Nina Renshaw, Transport & Environment, Brussels
- Danang Parikesit, Prof. Transportation, University Gadjah Mada, President, Indonesia Transportation Society
- Carol Lee, Director, Transportation Program, Ceres, Boston
- John Dulac, International Energy Agency (IEA)
The Climate Bonds Standards
The Climate Bonds Standard is a screening tool for investors and governments that allows them to prioritise climate and green bonds with confidence that the funds are being used to deliver climate change solutions.
Certified bonds must meet the requirements of the Climate Bonds Standard with assets and projects funded falling in line with the relevant eligibility criteria.
Want more information?
- Read more about the Low Carbon Transport eligibility criteria
- Stay tuned for our late March webinar: “New Transport criteria for climate bonds certification: opening up a world of opportunities” with Sean Kidney and Justine Leigh-Bell.
