Electrical Utilities Background Paper

The report establishes a framework for certifying electrical utilities and their debt instruments based on their alignment with a 1.5-degree warming scenario. It defines a global emission intensity transition pathway based on IEA Net Zero (NZE) 2023 data, requiring utilities to reduce carbon intensity from 460 gCO2/kWh in 2025 to 0 by 2050. The criteria distinguish between existing capacity, which may be retrofitted with carbon capture or low-carbon co-firing, and new capacity, for which no new fossil fuel investments are eligible. It also sets specific non-combustion emission thresholds for hydropower, geothermal, and bioenergy, and incorporates EU Taxonomy standards for CO2 transport and methane leakages.

• The Climate Bonds Initiative adopted the IEA NZE 2023 update as the global emission intensity transition pathway for electrical utilities, targeting 0 gCO2/kWh by 2050.
• New investments in fossil fuel power plants (coal, oil, or fossil gas) are strictly ineligible for certification to avoid carbon lock-in.
• Existing fossil fuel plants may be certified if they follow regional phase-out benchmarks: advanced economies must phase out coal and oil by 2030, while emerging economies have until 2040 for coal, gas, and oil.
• Eligible mitigation measures for existing fossil plants include carbon capture and storage (CCS/CCUS) with a minimum capture rate of 90%, or co-firing with 100% low-carbon fuels by 2040.
• Non-combustion emission thresholds are set at 50 gCO2e/kWh for new hydropower, geothermal, and bioenergy facilities to ensure they are best-in-class.
• For existing low-carbon capacity, a GHG threshold of 100 gCO2e/kWh is required for hydropower and geothermal generation.
• The criteria for CO2 transport and storage adopt EU Taxonomy standards, limiting leakages to 0.5% of the mass of CO2 transported.
• To prevent 'cannibalization' of renewable capacity, hydrogen is recommended primarily for hard-to-abate sectors, but is accepted in electricity generation if it meets strict carbon intensity thresholds (e.g., 0 kgCO2e/kgH2 by 2050).
• The framework allows switching coal capacity to fossil gas only if grid security is at risk, the gas plant does not exceed the replaced coal plant's capacity, and a phase-out plan is in place.

APA

Climate Bonds Initiative (2024). Electrical Utilities Background Paper. https://www.climatebonds.net/files/drupal-files/files/cbs-electrical-utilities-background-document.pdf

Chicago

Climate Bonds Initiative. Electrical Utilities Background Paper. 2024. https://www.climatebonds.net/files/drupal-files/files/cbs-electrical-utilities-background-document.pdf.

Wikipedia

{{cite report |author=Climate Bonds Initiative |title=Electrical Utilities Background Paper |date=March 2024 |url=https://www.climatebonds.net/files/drupal-files/files/cbs-electrical-utilities-background-document.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatebondsinitiative2024electrical, author = {{Climate Bonds Initiative}}, title = {{Electrical Utilities Background Paper}}, institution = {Climate Bonds Initiative}, year = {2024}, month = mar, url = {https://www.climatebonds.net/files/drupal-files/files/cbs-electrical-utilities-background-document.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }