Electrical Utilities Background Paper Development of Eligibility Criteria under the Climate Bonds Standard & Certification Scheme

The report outlines the development of certification criteria for electrical utilities to ensure their financing aligns with the Paris Agreement. It establishes a global emissions intensity transition pathway based on the IEA Net Zero Emissions (NZE) by 2050 scenario, targeting near-zero emissions for the power sector by 2040. The criteria distinguish between existing capacity, which must follow phase-out or retrofitting benchmarks, and new capacity, which must be low-carbon as no new fossil fuel plants are eligible. It also details specific thresholds for non-combustion emissions in hydropower, geothermal, and bioenergy, and sets requirements for decarbonization measures like Carbon Capture and Storage (CCS) and hydrogen co-firing.

• The criteria adopt a global emissions intensity transition pathway based on the IEA NZE 2023 update, targeting a reduction from 460 gCO2/kWh in 2025 to 0 gCO2/kWh by 2050, with a near-zero target of 3 gCO2/kWh by 2040.
• New investments in fossil fuel power plants (coal, oil, or gas) are strictly ineligible for certification to avoid carbon lock-in and align with 1.5°C scenarios.
• Existing fossil fuel plants must adhere to phase-out benchmarks: advanced economies must phase out coal and oil by 2030 and gas by 2040, while emerging economies have until 2040 for all three fuels.
• Decarbonization measures for existing fossil plants, such as CCS and co-firing, are eligible if they meet high performance benchmarks, including a carbon capture rate exceeding 90% and a target of 100% low-carbon fuel co-firing by 2040.
• New low-carbon generation facilities must meet specific GHG emission limits: 50 gCO2e/kWh for hydropower, geothermal, and bioenergy.
• The criteria incorporate a 'switching coal to gas' exception only when grid security is at risk, provided the gas plant replaces a coal plant and does not exceed its capacity by more than 15%.
• Hydrogen is accepted for electricity generation only when direct electrification is not possible, and it must meet strict carbon intensity thresholds, decreasing from 3.0 kgCO2e/kgH2 in 2023 to 0 kgCO2e/kgH2 by 2050.
• To prevent high-GWP emissions, fossil gas plants must implement methane leakage detection and repair programs following EU Taxonomy regulations.

APA

Climate Bonds Initiative (2023). Electrical Utilities Background Paper Development of Eligibility Criteria under the Climate Bonds Standard & Certification Scheme. https://www.climatebonds.net/files/drupal-files/files/sector-criteria-electrical-utilities-background-document12132023.pdf

Chicago

Climate Bonds Initiative. Electrical Utilities Background Paper Development of Eligibility Criteria under the Climate Bonds Standard & Certification Scheme. 2023. https://www.climatebonds.net/files/drupal-files/files/sector-criteria-electrical-utilities-background-document12132023.pdf.

Wikipedia

{{cite report |author=Climate Bonds Initiative |title=Electrical Utilities Background Paper Development of Eligibility Criteria under the Climate Bonds Standard & Certification Scheme |date=5 December 2023 |url=https://www.climatebonds.net/files/drupal-files/files/sector-criteria-electrical-utilities-background-document12132023.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatebondsinitiative2023electrical, author = {{Climate Bonds Initiative}}, title = {{Electrical Utilities Background Paper Development of Eligibility Criteria under the Climate Bonds Standard \& Certification Scheme}}, institution = {Climate Bonds Initiative}, year = {2023}, month = dec, url = {https://www.climatebonds.net/files/drupal-files/files/sector-criteria-electrical-utilities-background-document12132023.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }