The Climate Bonds Standard continues to expand in transition: a public consultation will open on criteria for commodity chemicals: certification will soon be available for all facilities and assets producing commodity chemicals
Climate Bonds Standard continues to expand in transition
Opening of a public consultation on the criteria for basic chemicals
Certification coming soon for entire facilities and assets producing commodity chemicals
LONDON: 06/04/2022 10:00 GMT: The expansion of the Climate Bonds Standard continues in the transition of heavy industry sectors with its draft Criteria for the basic chemical industry.
The public consultation on the new draft criteria for the basic chemical industry will be open from 6 April to 5and of June. Comments are sought from a wide range of stakeholders, including industry, civil society and investors. Commodity chemicals will be the second criterion in the Climate Bonds Standard tackling industrial transition, following the release of the draft cement criteria in February.
Decarbonizing the chemical industry is a crucial step towards a net zero future. The chemical sector is one of the largest industries in the world and the largest industrial consumer of energy, accounting for 30% of energy consumption. It also accounts for around 5% of total global GHG emissions.
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 commodity chemical production assets and activities are compatible with a low-carbon, climate-resilient economy, and are eligible for certification under the standard. Climate Bonds.
Specifically, the Core Criteria for Chemicals will provide science-based requirements that will identify when investments and activities in the sector are aligned with the transition to the goals of the Paris Agreement.
Expansion of the Climate Bonds Standard in 2022
The launch of the Core Chemical Criteria continues a major expansion of the climate bond standard into heavy industry sectors. Climate Bonds has developed credible transition principles that will guide efforts to align high-emitting industries with zero emissions goals.
In addition to criteria for cement and commodity chemicals now open for consultation, Climate Bonds will also publish criteria for the steel industry later this year, broadening the scope of the standard and providing a pathway for certification of transition investments in hard-to-reach countries. -cut down industries.
In 2021, three new sectoral certification criteria were launched as part of the standard, including networks and storage, hydropower and livestock.
Basic chemicals, emissions and investment
Basic chemicals are the building blocks of thousands of products and materials. These chemicals include olefins, aromatics, methanol and ammonia, with the largest volume and energy consumption accounting for around 60% of the chemical industry’s total direct CO2 emissions.
Given the importance and expected growth in market volume and the contribution of direct emissions from chemical production, there is an urgent need to decarbonize this sector which will grow in the coming years. Some of the technologies and measures to decarbonize this sector are CCUS, electrification, fuel substitution and feedstock substitution.
It is estimated that the global decarbonization of the chemical and petrochemical industry will require 63 billion euros by 2050 (divided into 26 billion for new chemical plants and 37 billion for energy supply). In the EU, a recovery plan will provide more than 750 billion euros to invest in sustainable technologies, including Li-ion batteries, production and storage of green hydrogen, biorefining and recycling of plastics, some of which will be destined for the chemical sector.
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
● Promote adaptation to climate change and facilitate increased climate resilience in the systems in which they are found
● Promote transparency and disclosure of other environmental impacts and measures to address them
The mitigation requirements apply to all facilities producing commodity chemicals and to the specific mitigation measures implemented at the facility.
The criteria for whole assets contain three main elements:
- Carbon or energy intensity thresholds that decrease over time
- Cross-Cutting Criteria for Mitigation Measures
- Scope 3 emission control
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 requirements are defined for chemicals in the list of restricted substances (hazardous substances)
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:
“Credible Transition for Chemicals – Climate Bond Standard Extends to Basic Chemicals”
Dated: Tuesday, April 6, 2022
Weather: 12:30 p.m. BST (London) / 1:30 p.m. CEST (Paris) / 7:30 a.m. EDT (New York) / 7:30 p.m. (Singapore)
Register via Zoom 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: The Climate Bonds Initiative is an investor-focused non-profit organization that promotes large-scale investment in the low-carbon economy. More information on our website here. The Climate Bonds Initiative conducts market analysis, policy research, market development; advises governments and regulators; and administers a global standardization and certification program for climate bonds. 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 Basic Chemical Criteria: The Core Criteria for Chemicals sets out the requirements that commodity chemical production assets and projects must meet to be eligible for inclusion in a Certified Climate Bond and for companies on a credible transition path to emissions. a debt labeled transition.
The criteria contain mitigation requirements, adaptation and resilience requirements, and transition requirements. Documentation can be found on our Basic Chemicals resource page.
The bonds and loans related to these eligible assets and projects will be aligned with the objectives of the Paris Agreement.
About the basic chemical criteria TWG and IWG. Climate Bonds Initiative convened a Technical Working Group (TWG) and an Industry Working Group (IWG) expert group in 2021 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 full directory of approved verifiers’ climate obligations is available here.