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Supporting the next generation of electricity grids: Public consultation now open
Published: 22 Jul 2026
The energy sector is the largest source of GHG emissions globally. To limit global warming to 1.5°C, the energy system must undergo rapid decarbonisation. Nowadays, around 49% of global electricity generation comes from clean energy sources, marking an important milestone in power sector decarbonisation.
At the same time, according to the World Economic Forum, investment in electricity grids continues to grow, with around USD 270 billion, approximately two-thirds of global grid investment, currently directed towards expanding and modernising distribution networks.
To reflect this evolving landscape, Climate Bonds is launching a public consultation on proposed updates to the Electricity Transmission, Distribution and Storage Systems under the Climate Bonds Standard.
The proposed update expands the Criteria to also recognise countries with credible, forward-looking decarbonisation pathways that may not yet meet the current thresholds. This creates an opportunity for more countries, particularly across Africa, Latin America and the Caribbean, and Asia, to access green finance for the electricity grid investments needed to support their energy transition, while maintaining the scientific integrity and ambition of the Climate Bonds Standard.
Why are the Criteria being updated?
Electricity grids are fundamental to decarbonisation. They enable renewable electricity to reach consumers, support the electrification of transport, buildings and industry, and help replace fossil fuel-based generation.
The current Climate Bonds Criteria assess transmission and distribution systems using two backward-looking indicators:
- More than 67% of newly connected generation capacity in the system is below 100 gCO₂e/kWh (life-cycle basis) over a rolling five-year period; or
- The electricity system has an average grid emissions factor below 100 gCO₂e/kWh (life-cycle basis) over a rolling five-year average.
These thresholds are consistent with the EU Taxonomy and many national sustainable finance taxonomies. While these existing Criteria continue to provide a robust, science-based framework, they primarily recognise electricity systems that have already reached relatively low emissions levels.
Introducing a forward-looking approach
To address this challenge, the proposed update introduces an additional eligibility pathway based on a forward-looking assessment of the electricity system's decarbonisation trajectory.
Under the proposed Criteria, transmission and distribution projects could also be considered eligible where the electricity system is covered by legislation, official policy or formal commitments that establish at least one of the following:
- A pathway towards a near net-zero power system by 2050, supported by sector-specific decarbonisation targets such as energy transition plans, renewable energy roadmaps or power sector development strategies; or
- A commitment that any new coal or fossil gas-fired power plants have an abatement rate of at least 90%, alongside an officially adopted phase-out plan for coal and/or fossil gas generation with lower abatement rates by 2050.
This forward-looking approach aims to recognise countries that are making credible progress towards decarbonising their electricity systems, even where current emissions remain above existing eligibility thresholds.
By doing so, the proposed update expands access to green finance using clear, science-based criteria aligned with a 1.5°C pathway, responding to growing market demand for greater clarity on what constitutes eligible investment in electricity grids.
Reflecting the changing role of electricity grids
Electricity transmission, distribution and storage systems have changed significantly over recent years. Rather than simply connecting large centralised power plants, today's networks increasingly integrate geographically dispersed renewable generation, distributed energy resources and microgrids.
The proposed Criteria have been updated to better reflect this evolving landscape and covers two activities, both assessed at a system level:
- Electricity transmission and distribution through the main grid;
- Electricity transmission and distribution through microgrids, recognising their growing role in modern electricity systems.
The update also identifies five decarbonisation measures that support emissions reductions through investments in electricity networks.
System-level measures include:
- Reinforcement, expansion and modernisation of existing transmission and distribution systems;
- Interconnection of existing transmission and distribution systems.
Project-level measures include:
- Connecting low-carbon electricity generation to transmission and distribution networks;
- Reducing renewable energy curtailment;
- Connecting isolated regions currently powered by diesel or oil generators to the electricity grid.
- Introducing Do No Significant Harm (DNSH) Criteria
While transmission and distribution systems play a critical role in enabling decarbonisation, the infrastructure itself can have environmental impacts.
To address these risks, the proposed update introduces Do No Significant Harm (DNSH) Criteria, ensuring that eligible projects minimise adverse impacts on surrounding ecosystems while continuing to support climate mitigation objectives.
The Climate Bonds Resilience Taxonomy (CBRT), also includes resilience-related criteria for electricity transmission, distribution and storage systems.
Have your say
Climate Bonds is inviting stakeholders across finance, utilities, government, industry and civil society to provide feedback on the proposed updates to the Electricity Transmission, Distribution and Storage Systems Criteria.
Your input will help ensure the Criteria continues to provide robust, science-based guidance while remaining practical and applicable across a diverse range of electricity markets.
The public consultation is now open.
'Till next time,
Climate Bonds
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