Extension of the Climate Bonds Standard to the transition: the public consultation opens on the criteria for cement
Extension of the Climate Bonds Standard in transition
Opening of the public consultation on the criteria for cement
First stage of the 2022 program focused on heavy industry
LONDON: 02/21/2022 09:00 GMT: The Climate Bonds Standard will be expanded to include criteria and credible transition certification for heavy industry sectors in 2022, starting with the cement industry.
The public consultation on the new draft criteria for the cement industry is open from 22n/a of February and to close on the 23rd From April. Comments are sought from a wide range of stakeholders, including industry, civil society and investors. Cement will be the first criterion of the Climate Bonds Standard addressing industrial transition.
The criteria were developed by a Technical Working Group (TWG), with an Industry Working Group (IWG) providing consultation and advice. They will provide a succinct set of decision rules for determining when cement assets and operations are compatible with a low-carbon, climate-resilient economy, and are eligible for certification under the Climate Bonds standard.
Specifically, the Cement Criteria will provide science-based requirements that will identify when investment and activity in the sector is aligned with the transition to the goals of the Paris Agreement.
Expansion of the Climate Bonds Standard in 2022
The launch of the Cement Criteria marks a major expansion of the Climate Bonds Standard into heavy industry sectors and is the first step in Climate Bonds’ 2022 expansion program for the global standard. Climate Bonds has developed credible transition principles that will guide efforts to align high-emitting industries with zero emissions goals.
Following the launch of the cement criteria, Climate Bonds will also publish criteria for the basic chemical and steel industries, extending the scope of the standard and providing a pathway for certification of transitional investments in essential industries.
In 2021, three new sectoral criteria for certification were launched as part of the standard, including networks and storage, hydropower and livestock.
Cement and emissions
Cement is the most used construction material in the world, the second most consumed material on earth after water and its production accounts for nearly 8% of global CO2 emissions. Demand for cement is expected to increase 12-23% by 2050 compared to 2014 as economies around the world continue to grow.
About 60 to 70% of the cement sector’s total emissions are process-related. To reduce emissions, cement manufacturing will need to implement a series of mitigating factors, including improving thermal and electrical efficiency and switching to alternative fuels, as well as reducing clinker content and the implementation of certain carbon capture measures.
Generally, debt-based investments are eligible for certification under the Climate Bonds Standard when the use of the proceeds:
- Promote greenhouse gas (GHG) mitigation by reducing emissions or increasing carbon sequestration; and
- Promote adaptation to climate change and facilitate increased climate resilience in the systems in which they are found.
The mitigation requirements underpin an ambitious emissions trajectory for cement plants, while the criteria also identify specific measures that deliver significant mitigation benefits.
Adaptation & Resilience
The adaptation and resilience requirements follow the framework of the Climate Resilience Principles developed in 2019 by a group of adaptation and resilience experts and Climate Bonds. Additional cement-specific requirements are defined that address quarry remediation and other impacts.
Climate Bonds aims to certify companies and related financial instruments at the corporate level later this year. These criteria will also form the backbone of these future Certifications.
Opening of the consultation/Information webinar:
“Transition to Low Carbon Cement – New Standard Criteria for Climate Bonds”
Dated: tuesday 22n/a from February 2022
Time: 3:00 p.m. Paris / 2:00 p.m. London / 9:00 a.m. New York / 10:00 p.m. Hong Kong, Singapore
Register via Zoom in here.
Senior Communication and Digital Manager,
Climate Bonds Initiative (London).
+44 (0) 7593 320 198
Climate Bonds Initiative (London).
+44 7546 645 591
Notes for journalists:
About the Climate Bonds Initiative: CBI is an international, investor-focused non-profit organization working to mobilize the $100 trillion bond market for climate change solutions. The Climate Bonds Initiative conducts market analysis, policy research, market development; advises governments and regulators; and administers a global green bond certification scheme. For more information, please visit http://www.climatebonds.net.
About the Climate Bonds Standard: It is a global, cross-industry science-based standard overseen by the Climate Bonds Standards Board that allows investors and intermediaries to easily assess the climate credentials and environmental integrity of bonds and other green debt products.
Launched in 2011, with periodic updates, the Climate Bonds Standard is the most detailed and climate-aligned investment criteria available on the market and provides guidance to issuers, investors, governments and regulators.
The V3.0 standard and associated documentation are available here.
About Cement Criteria: The Cement Criteria set out the requirements that cement production assets, projects must meet to be eligible for inclusion in a Certified Climate Bond and for companies on a credible transition path to issue transition-labeled debt. The criteria apply to cement manufacturing and production and do not address other stages of the value chain.
The criteria contain mitigation requirements, adaptation and resilience requirements, and transition requirements. Documentation can be found on our cement resource page.
The bonds and loans related to these eligible assets and projects will be aligned with the objectives of the Paris Agreement.
About TWG and IWG cement criteria. Climate Bonds Initiative convened a Technical Working Group (TWG) and an Industry Working Group (IWG) expert group in the first quarter of 2019 to develop criteria for this sector. Full members of the TWG and IWG can be found here.
About Climate Bond Certification: The Climate Bond Certification Framework has been designed to work in parallel with the normal process of issuing bonds, loans or other debt products. It has 2 phases, pre-issue or post-issue. Certification of a climate bond during the pre-issuance phase allows the issuer and underwriters to market the bond or debt product as certified.
Other assurance activities in the post-issuance phase must be undertaken to maintain certification of climate bonds.
The full database of certified climate bond emissions can be viewed here.
The complete directory of approved verifiers’ climate obligations is available here.